Earnings call transcript Q4 2022

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the ACI Worldwide, Inc. Fourth Quarter and Full Year ended 2022 Financial Results. I would now like to turn the call over to John Kraft, Senior Vice President of Strategy and Finance. Please go ahead.

John Kraft

Thank you, and good morning, everyone. will results company's for and of year. we full quarter the call, the XXXX year our today's discuss fourth the and rest On financial outlook

accompanying questions at found under after the and end. We the can tab aciworldwide.com at Relations remain take and webcast your The will slides will this Investor call. call be the available

Today's our events. of statements like call all is subject to Safe Harbor and forward-looking

a of this copy the statements You which can on both and our our find presentation our final and SEC. is Scott of on deck, the available CFO. CEO; Warsop, the pages of with is President our morning's full first and and Interim Behrens, Tom text website call On

I'd like turn that, over to to call With the Tom. Tom?

Thomas W. Warsop

joining we course, and including as for perspectives I'm My morning. Good last to from results, challenges our including agenda on several today. who transition. over time you going our about us Scott, have including details role XXXX, to packed fairly in morning. usual, of speak about our initial our my going more outlook. XXXX point, talked topics, all And we pretty the CEO this for recent the update to outlook Thank on results At turn an and the interchange that is I'll call performance on our provide call. this sales and

and clearly, a some a in and leader is CEO, phase me. our months different leader. we've very change announced I for from and in we fantastic since have ACI, And ACI. our new tell of Interim What needs months it's as interesting entered you for stepped X the about been that we In very can X I a

accelerating key our even Number our one, to continue We further our capitalizing across three a as payments customers. differentiator growth shifting on are mature industry. discontinuities take for hold emphasis towards our position as market toward

becoming customers more payment it's opportunity, talk models operating but open accelerating. often and few for around more And world and to minutes. payments cloud are I'll real the that, it's Second, as the in is infrastructure new that than revolution real-time finally, itself a manifests about more and

large-scale ACI and around great take be. about to a all place intense services for on leadership, with sales service world, profile. ideal When capabilities significant solutions growth the our acumen of complex of demonstrated experiences expertise organization. the strategies have advantage our and in excellence payments those proven market A focus that's customers I balanced provides next basis to experience, and dynamics CEO, regulated underpin highly successful financial CEO will next set think of transformational and the

leading already. a several firm engaged identified candidates and promising We've very they've search executive

to to expect in We one the thing I clear. months. make CEO the coming identify next want absolutely

not ACI. in expect strategy from shifts should You major

strong. our business The is foundation of

the on right We are track.

even drive We the our are results in execution intensifying past. to recent faster than focus

I'm future detail was As I level even company, diving for you CEO. of the I since the non-Executive years. served XX XXXX new may When know, on optimistic than and tell optimistic Chairman customer more and that Board I'm very you on a company after about of off was more the familiar with can ACI's the the ACI, I as a into having of and as

clients extremely products financial of business. customers' sticky. the do portion of substantial the billers. our for are They're around and And market including world, financial the institutions, market-leading, mission-critical. they're account merchants absolute at of services Our our core What is and a leading we course,

opportunity and position the and market growing have fast. untapped a substantial is We massive

take impacted and The by organic as economic balance aimed excellent advantage with opportunities us ACI cyclical flexibility shareholder business value. us a and a is not generator our consistent a extremely recession. of all such strong a arise, to potential in at inorganic as delivering financial and it's business gives cash sheet that they of strength isn't swings, growth that particularly allows

the already to I well-positioned is on ACI mentioned. real-time capitalize revolution

With and pan-regional the payment three additions the continents. real-time across schemes Middle now X domestic of XX central in East, powers ACI bank infrastructures

fully work We a map we on the to ready more we have to capitalize have do opportunities And execute. to and road ahead. are strong

delivered walk revenue I in guidance adjusted will for about and let line Overall, exchange make the that's growth, last details, better divestiture. XXXX, X% our a will fluctuations XXXX Scott delivered high-level we through Again, but the in of or results results. our than comments mid-single-digit I we organic when rate in couple provided. we

pressure the with XXXX on despite discussed we our flat issue levels last from call. nearly was interchange EBITDA significant Our

creating ARR we future. record, XXXX, the $XXX annual more revenue, than in bookings During a set XX%, recurring strong up for an delivering new foundation million new all-time

Specifically, ARR new in XX% new as over signed XXXX of bookings we over Biller double number well our grew levels. the

provides from increased merchant new our segment calendar Scott coming XX% Our ARR segment new that us visibility outlook revenue in confidence combined will banking significant XX bookings our renewal logos. into our discuss. This, with

we pursue shareholder quarter, And our last million the significantly shares completed we that repurchased has our to increased Board which $XXX authorization. million authorization year, million, in also fourth In as our total opportunities up announcing repurchase repurchase for effectively to continue to increased previous $XXX X.X activity. value. enhance we actively Today, we're

deliver XXXX, had to XXXX. solid sales performance building revenue in X%and we growth in expect on X% between We the

on expected X% to organic Our but walk to growth statements details, our of grow line will in EBITDA XXXX. single-digit some prior through Scott XX% our with between million and $XXX to in a range this and target positions is trajectory, this million more by about ACI's to year. upper us is $XXX deliver of it

about of call. Biller business last comments to talked I in about make the couple the our we a interchange, inflation-driven want to impact

costs our average Utility As mentioned saw in November, increase in larger by in interchange we an bill size segment. primarily driven

full our and lower to and of our rates dedicated We that on contract to our team advantage performance. take wherever to a programs eliminate impact this net contract possible to by segment and optimize noted in offsetting focused interchange or working have revenue we special that reduce exposure volumes

isn't comment completed over starting and interest pop XX% aligned no this don't long-term for is team is the I remainder many and to of you best during the matter our fully to say you clients on our doing rumors, work for how rumors to shareholders. We've make with shareholders know, can to many but is I to unusual weeks what change leadership circulate spoken up. market transition. a tell end. as that through the considered on work our the of speculation, discussion my I've to That we accounts, clear. stories not It's and going of coming are point cited on a to approximately client I but going We months.

and progress good our sum me is Let for up. and expanding our accelerating customers. growth We've recurring revenue organic mission-critical annual revenue. ACI made securing

We capital are a strong a and consistent allocator. and disciplined cash generator

cloud modernization many and our strengthening payment capabilities. payment with driving including real-time customers, are We

are and us. executing technology investing We many to enhancing continue in to front excellence operational of transformation the capitalize opportunities on

While near-term I strategy expect from uncertainty ACI's should may you CEO. regarding the not you leadership, major ACI new some have understand with shifts in

degree And I for to going hold is year, calendar the me we on a renewal our shareholders of visibility intend Operationally high forward. confidence with drive signed I which combined track. and bookings and focused provide in future, our more and our role last with financially, no ACI lastly, matter

to financials and will guidance. very I Thank it discuss turn to your for over support, and much Scott? you Scott

Scott Behrens

and Tom, morning, good Thanks, everyone.

First, review then will results our for I including XXXX. outlook, plan forward financial guidance. provide to I XXXX our

will the line for then We open questions.

$XXX up growth XXXX $X.XXX comments compared Adjusting adjusted I and growth year X%. billion, X. X%, to was year was XXXX fluctuations the EBITDA revenue Full foreign total was adjusted divestiture million revenue of product, my our will EBITDA corporate banking XXXX. Slide X% was in be million on XXXX. for And online currency starting from full and $XXX total

X, in And As on XXXX, online closed sale the approximately million over previously grew products forXXXX announced, total we XX% of banking our corporate for bookings cash. ARR $XXX XXXX. on September

to segment Merchant and increased foreign segment Merchant XXXX segment our Bank a versus EBITDA EBITDA adjusted adjusted constant on and X% revenue XXXX of corporate Bank Moving currency online X% X% X% segment the and increased revenue versus adjusted product. for banking decreased increased divestiture the currency basis. segment results.

selling our Biller inflationary Biller improve segment segment Throughout price growth to size. in with XXXX, in the adjusted the beyond. XXXX an is XXXX, but interchange while higher vertical, X%, versus and ticket we in we decreased EBITDA we received increased we and our initiatives, revenue expect product where fluctuates environment in interchange which and to the in increased which average XXXX. marketing operated transaction During cost resulted investment us XX% and contracts utilities fixed, per fees

in improve ACI cash mitigate profitability outstanding we implemented several initiatives, ended of second with price hand $XXX XXXX $X million half impact billion. XXXX, total the the and adjustments XXXX. approximately in and debt In of on to including

was ratio our X.Xx, leverage long-term is target debt which of within net Our X.Xx.

$XXX our last months. our share repurchase $XXX over of the million amount million the During and $XXX stock, we repurchased fourth million XX bringing total quarter, to XXXX

to XXXX, expect of deploy buybacks. During flow a to share we cash significant continue our portion to

with of products. of X uncertainties to in to revenue organic range in XXXX we online currency growth X% a $X.XXX sale And finally, the outlook expect the XXXX, revenue for X% a in over and on Slide to Despite banking corporate basis mid-single-digit for constant representing to$X.XXX turning the with our adjusting billion billion market, once XXXX. produce growth again our

which million, currency X% expect of XX% EBITDA constant represents a and growth million $XXX to for to basis We adjusted adjusting on the divestiture. XXXX $XXX

and pro X, the constant to our initiatives. currency modeling on to public on costs cloud XXXX of XXXX. savings banking Slide XXXX purposes European basis your excludes related cost shown here basis online the have with corporate centers we sale have For our for forma This a one-time data products reflected the and of move on a

range million to $XX For revenue of and be to $XX to in range million. million $XXX a expect adjusted in million $XXX of be a QX XXXX, EBITDA we to

or weighted like license phasing XXXX more would more XXXX quarterly are bank to in renewals second we of so XXXX, half and XXXX. look than our in EBITDA XXXX revenue expect Our

here strong achieved confidence of Day. at in organic deliver revenue our and on XXXX give highlighted in in full year go us the XXXX Further, XXXX benefit expectation that track a we Analyst and XXXX with bookings we provides and our in we our the growth to that will us XXXX projects growth growth target those remain live to X% in trajectory long-term X%

expect share are targets, we Board flow Our up repurchases. in to our the and the for use our of debt significant balances a million. increase approved continue to has authorization portion an And near repurchase cash share to leverage $XXX

With line will now that, for Operator? questions. open we the

Operator

Our Saini from from Please the comes Canaccord. first question Instructions] of proceed. [Operator line Pallav

Pallav Saini

last here remind us year? can And And right I you expecting I of some your business. grew now XXXX for have there? you morning. business drivers how have Good Maybe my on in of Thanks type how a a taking your are is what couple questions. much time follow-up. big and growth payments and real it RTP the

Scott Behrens

say let within all our product payment business, capability. look time time our our me I is solutions, about from to is perspective. But time of productize Well, Yes. XX% at when real really strategy a when real real overall payments clarify we of product line

a to consumer So pay biller want time, of time with biller real is whether strategy to want right you sets. a all and product to time merchant capabilities our you're implement of real across use your really real our or

again, it's XX% our of particular double growing are throughout the digits. a productizing from it But product suite. set, business, product So we

Pallav Saini

this out it's And rolling for believe is a clarification, year. Got I Scott. that Thanks the it. program now FedNow Fed

maybe And can I the the for you think participating means frame So this opportunity in are broadly U.S. pilot also you in RTP your program. what

So share would from anything that Thank you. helpful. can experience be you

Scott Behrens

Thanks. Yes.

been Fed the So participating is all the making everyone along -- certainly, program year. is and with indeed are. progress, We've launching FedNow we making this

interested Our clients very program. in are the

the States think my I revolution. talked of real earlier the way And rest university the in step many catch I often was the like payments the China -- big to the payments I and up United on behind learn back, street ago. time is of way how to time the daughter And is real anything tell you went story world. the I about and if The because launch of I just starting that. part to U.S. do will about it. about didn't years real FedNow That be had a time

absolutely because environment have how confident time time U.S. with And forecasts a of going for real than in launches, but we for in we've which that payments, lot start for it's been I'm I some that make the we get it has the take FedNow think are fast to past. and is are going to specific real great to grows, So Americans hold. generally making to not position much -- grow time, us the are once is more about a faster to in the -- idea of what comfortable prepared we investments

Pallav Saini

you. Thank Great.

Operator

line next Please of from Our Davidson. proceed. question comes from Heckmann the Peter D.A.

Peter Heckmann

want to last piece. I morning. follow-up Good that on

as time a electronic do of decades have is of how So about paper penetration to some adoption think U.S., about X%, variety countries penetration some put a what and XX%. really had wide, do time unfolding? are opportunity, the guess, portions payments. I ACI's real switch, you range think payments time you that? time at switch, the out I real when percent the interesting see of And And you powering payments banks on payments are in a primary the connecting how guess, white real of the best of real wide U.S. last from wide year -- for payments at

Scott Behrens

primary that U.S. this what's there how the out FedNow, be and banks whatever the that time in would then it's say primary banks. in the real scheme itself it's will really to manifests customer but connecting near-term the the would our the I rolling and case is be connectivity Ultimately of really

software what we whether really those is products the are are does solutions those of cases? use customers the points, how it's the at payments. relationships, billers end having -- running end transactions. portfolio Those What so our develop? SaaS electronic And of our are so or And we it banks, really points merchants and having or our look

no and is does what develop it positioning customers. question that to where be And use itself? provide the cases the we to our will types as we're capability ourselves So how matter U.S. payment to those manifest what that have

Peter Heckmann

cover working Okay. looking for roughly you economic you're one when like I government are of provider general philosophy maybe like playing role guess -- real XX countries, powering software to largest a country. to switches is next And you switches. that perhaps about revenue think we about seem as there. of It doesn't time? at then mean in real pricing the how these the appropriate I the seems feel you're it and You do mentioned pricing I $XXX many bigger payment countries, feel significant million the that time And just as the be. business. a think in benefit Do actually you as ACI but should

Scott Behrens

solution. pretty consistent with I I in -- Yes. is pricing our really mean place is market mean, the the providing the software

And issue on so to transaction. the doing is the we of are similar what requiring are debt say we credit very

low that important So our our price to when of requirement that to be charge of the point. volume now infrastructure. volume and we the going what based, come, But what's it are that capacity is very fee much product. to our it's in waiting and pricing and volume will similar model to central does it's pretty is Most And cost of -- customers has be solution, and based. that's the still the And mass buying still selling years today transaction -- for margin really that. fulfillment obviously, to the volume There's us installed component all at issuing no deliver able critical come. getting been incremental for to license volume the for then

our acquiring volume drive licensed prices. and other to high similar very price based the issuing in and So products volume that so

Thomas W. Warsop

Yes.

sure and to And as start. grow, we I just obviously, characteristics -- much the that important we will will more well. and why of schemes good the meaningful flags. to now, today. That's ourselves we infrastructures make are one It is the us that it trying just That's are volumes Just XX very Scott we on think the I you of we as into thing. off highlighted part business schemes But we can. are just margin inserted as important central as become support many really as very around focused get are highlighted, planting that -- highlighted I these world a add a very is right the to

Operator

from proceed. Our the question of Hallum. next comes George from Please Sutton Craig line

George Sutton

Thank to continued welcome emphasis to the buyback and see the you. Nice Tom, call.

the So, business, Tom, way described the I curious, liked you I'm it.

we've relatively The your growing said has opportunity, You a you a you're untapped thought I I a necessarily us largely mature about. perspective talking process. large that business viewed open-ended fast. opportunity, on give the think, could substantial got as market, just this if without that growth sounding wondered

Thomas W. Warsop

And related it's sure. last think ways. many to Yes, topic the I in

keep as but in And can portion. it's So significantly it's the world, in, word, primarily larger have payments us you But time of should which feel payments bulk It I the transactions same do very and around cash revolution highlighted, entirely XX%-ish the -- an -- different -- around which the countries of become that's with time payment I today, know part business. many really in real for our account this the using as payments. participate we've subsume real a the the world, cash transactions the ecosystem of to for little to it. we

recently, So with that role. supporting think and played with chasing at about And is when a team up. Africa, mean, surface the our scratch the business lot the we look that’s exciting. where after barely is the there really we’ve of in that lesser -- of I geographies there huge set time in of I and spent a Africa opportunities a I particular, some I think I

will. as we the really revolution. payments real So there's haven't geographic opportunities some time strongly that There's as pursued we

live a of our make and now that couple market. couple soon. a a And we've coming are think of we of done previously products recently, have live the that that And final in have we I the that, model, which most point those others about talked is of new up are SaaS, a I Software-as-a-Service not we a then that opens offer again, quite clients today, segment would whole before until

world So smaller around don't institutions that have our the the themselves. to financial software manage infrastructure

expertise. have need, they center the don't the that data So have they don't they

created offerings, institutions. which will financial to Now have even set us we of support allow different a

So interesting ones when I on you, it threw we it and the I together, thin. you challenge, sure the are biggest ourselves difference of bunch at make going put make just lot stuff our biggest but really spread is that's of don't too creates [ph] opportunities. think, that And a all focus a to

George Sutton

we NextGen question believe be There other mention been the that that One wasn't I you address this have, of where quarter. to anticipating call. of just the platform stands? any launched on sort Could

Scott Behrens

be investment Yes, to that's being the is the in going FedNow the capabilities. really hub made it offering, -- rest that's as at overseas relates of least to the ultimately U.S., really

in lead will So FedNow. this Yes, a we later said. the U.S., year, is it to the bit as which

George Sutton

Thanks, Okay. guys.

Scott Behrens

Sure.

Operator

Charles of line Please the from Stephens. from comes Nabhan question next Our proceed.

Charles Nabhan

thank you quick and you heard Had Biller the your morning XX% were negotiations. you a the that one segment. questions. Good of taking on you I correctly, way said for contract my grew If

new growing normalized some of business that new different of so, recently? is and if given profile are So wondering there expect segment with 'XX? the about year-end wins be And or the in the given have the anything new was the the margin year over by the complete you some said, wins to of past I verticals on that of secondly, come that then some

Thomas W. Warsop

Scott will to respond -- second touch I the I question. will the the Let part XX% and on of let me question,

it actually go described So say, change, by send contract. could literally a I and We wish how that is and think a a -- works. out your we letter it situation isn't you need we've contract to this as through, are XX% I where but roughly prices were before,

work what be substantially are that I completed that would is hope to entities. absolute commission similar -- approve it you're local And talking that is, the a bit I if be -- to fees a rates So all with doing. expect tend this of be I'm closed XXX%. their to to year. the will tiny it's I it will give it authority you don't and and called to the clients or just be but and know we they [ph] the just something that we multiple when not to the color be is rates know, utilities of reason that jurisdiction, have approved about hedging on where little not utilities, XXX% as they public or in in to and space, and their particularly in places approve point fees. highly utility are in regulated regulatory have environment it

so And regulated in approval it process, to agreement all through a with come an but environment. a go provider, an has do to have can things utility comment still those period, highly a you to that we

I And it's an our having it at time, So it client we we understand quick increase we day, through haven't saying that your understand. things working to needs through is, to but found doesn't of do a and happy I this these with all yes, to be are I'm because are the answer clients. going happen. that single year. it haven't why discussion paying, they to the as the not one just about But a the at Honestly, they're found -- be what of essentially complete we're expect end they're we question said. slogging

Scott Behrens

One the to to relation are the segment in to line went go have in in benefits live That of going going margin XXXX. Biller benefit XXXX, profile profile of deals you're two a cost in we particular, that revenue XXXX, prior on revenue in XXXX. growth the relative business. margin And Yes. base. full revenue the top layered that fixed from That late of of XXXX we we sold in the in of see to a is see

business has scale. that So

to going year-over-year be drive these profitability this interchange XXXX. second of benefit And in that's will initiatives. So

from go-lives will late next the will second XXXX, hear be year, that but one and growth number in you the So the initiatives. revenue be benefit interchange

improvement. about the will and this QX year, QX, be last quarter lease total par see QX, but year, as a biller QX a significant look So QX you'll at percentage every if year-over-year of you -- with at revenue interchange

Charles Nabhan

Got it.

a Okay. up And a doesn't as I get segment. but was lot slightly target. double-digit it to airtime, below know I the want touch follow-up, X%, revenue on Merchant your of

So is, target segment is little we should when in is quarter? then hitting one, think about normalized you some secondly, of 'XX, growth number expect during to the business a back still be my -- it Merchant to up you of double -- about the question digits? talk a getting -- your it still the And the drivers could

Scott Behrens

short on I ultimately digits. XXXX, Yes, mean the answer yes, in terms of double

of you basis. X% look is exit merchant XXXX If currency QX year-over-year at rate growth a in on recurring constant revenue

So growth little bit going that be --they that's software XXXX. to that business, in of here recurring really the of a have revenue, of but a licensed most continues trajectory is

So that is smaller business a and business. that of light becoming software portion

at e-comm the in-store an at capability, not of electronic trends exited a be capabilities transactions, really because it's is towards whether we double-digit payment merchant This transaction. growth lot Again, are year have really detection, geared growth business -- the e-commerce last X%. is gateways, not that's that fastest-growing e-commerce merchant which very will e-commerce, although growth omni-commerce in in segment secular the fraud card presence recurring present XXXX. in and year our particular alternative revenue is of bulk further what our But driving

secular growth it's e-commerce. really in the So

higher thought end little we'd Merchant in call terms volume. last a year there the Merchant strong on the actually up -- came it we bit came in we think in of transaction volume in we're seeing transaction We in see segment. did I where the in volumes transaction high And

concerns. seeing So as we're there lot global economic to weakness not a it of relates

we with are pretty at into are So we happy where 'XX. going

Charles Nabhan

all for Thanks color. the it. Got

Scott Behrens

you. Thank

Operator

for to John call now to would like over I Kraft remarks. closing the turn

John Kraft

to time Well, day. everybody look great this in a forward weeks. catching thank up the your for morning. We Have you coming

Operator

you, Thank conclude ladies This and Thank for today’s you participation. gentlemen. your does call.

You may disconnect. now

John Kraft	Senior Vice President of Finance and Strategy
Thomas W. Warsop, III	Interim President and CEO
Scott Behrens	Executive VP, CFO and CAO
Pallav Saini	Canaccord Genuity
Peter Heckmann	D.A. Davidson
George Sutton	Craig-Hallum Capital
Charles Nabhan	Stephens, Inc.

ACI Worldwide (ACIW) 1 Mar 232022 Q4 Earnings call transcript