ACIW - Earnings call 3 2023 | ACI Worldwide, Inc.

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Operator

Good morning. My name is Mark, and I will be your conference operator today. At this time, I would like to welcome everyone to the ACI Worldwide Inc.

Third Quarter 2023 Financial Results. [Operator Instructions] Mr. begin may you Kraft, your conference. John

John Kraft

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

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

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

deck both can and release, and CEO; find CFO. this our presentation the Tom in You and available with website our Scott is Warsop, On earnings of of our statements are text SEC. which morning's both call Behrens, and President our full on the

turn I'll call that, Tom. the to With over

Thomas Warsop

growth our I'll on it to conference generate third color full quarter building Good the and and forecast. little XXXX. I'll and to morning, XXXX more of discuss start revenue brief comments on of morning joining outlook call. with for XXXX, year's the some a quarter, to Scott year we hand how then thank you discuss over remainder detailed blocks financials for the including this also earnings expectations all next the He's going for

usual, the we'll course, Of as then line for open questions.

exchange $XXX were was QX and million, million, Total the revenue up that banking ahead when strong. was impact in business. results revenue corporate of online XX% Our adjust $XXX and divestiture year-over-year, was were They our foreign for recurring expectations. of up the we XX%

few derisk us to in pipeline above range, guidance were sign full in helped than base helps earlier our year hitting news, new we expected, our in those to how as the come timing last As and which [indiscernible] we relative half renewals come we expected, second QX our discussed, which this of is our quarter's good guidance. able renewals year we But deals year. also towards little quarterly certainly the saw a previously a the weighted

were licenses bookings We for ARR some were bookings and bookings, tough quarter XX% that quarter, XX% were year's and by the support quarter continued purchasing pretty ARR $XX new-term was This total the as in in sector million. for million new international signed ARR transaction up bookings $XX new bookings was and months faced nonrecurring QX. additional but from in with to million, banks $XX up such were the New XX trailing volume. the our strength capacity last comparisons the banking their growing several in driven

written see increases we're in price their volumes, here. drivers recurring contracts, which SaaS executed. our XX% strength revenue addition encouraging, to a the segment, and are inflationary contracts as growth newer The Banking to you would continuing continued In we've year-over-year. know, to of in also have, couple license grew banking, I point we ramping which into

on Staying topic of the banking segment demand.

may to delivery long-time our with our modernizing demand, in public than that and As be we're only of core solutions we customers, continue invest traditional SaaS accelerating somewhat new banking options make available, not some smaller and also banks that SaaS reliability delivery seeing to in but customers scalability with of to known ACI they're for, our area, is the well highest interested mega tended more and historic and of advantage or seeking levels taking banks. that's focus are institutions options. and X These so be often Tier cloud

it. allocate real-time orchestration with newer is resources continue and financial for next-generation largest be the incremental segment and we an about exciting payment challenge for us aspiring payments a institutions and market banks intelligence a opportunity This hubs. talking To us, I'm clear, with of to to to

driven fully EBITDA of onboarding expected acceleration pleased customers grew to revenue XX% Biller the grew in strength revenue Net Biller. was in on I to utility the XX%, when the was quarter. Gross the be particularly to our customer that see grew Moving it's continued XX%. results. customer mentioned largest the newly-signed client is vertical finance we've and onboarded. in previously including by This

improvement those interchange the pricing talked have profitability. from about that benefited hold. efforts on have These and taken before, interchange clearly I've adjustments impacts lasting also We our will

we Merchant and market. that continue prevention mentioned It's the revenue we segment be fraud gaining that and has to stabilized, EBITDA call growth business is saw flat. on The the last in to segment were anti-fraud see XX% QX into and We in The the portion to I continue the XXXX. solutions quarter. well. is growth then expect traction to of perform during and very solution notable continue something in AI-enhanced that about our excited

including community. we're company to take cloud-based our real-time an the investment We're on on position strong, keeping and even we're demand promises solutions. to delivering for ball Overall, technologies. executing our We're and our greater our the in space, eye well. operationally, of increasing payments the working opportunities to share seeing We're even

to I'm payments, orchestration say ability it Kuruvilla. over solutions. to in Scott now discuss hired going that real-time new our guidance. to intelligent Abe CTO, confident in and I'm we payments and happy initiatives, and in going our team to continue delivery transformational also achieve our has to in Abe as to invaluable and Scott? on we've to focus record leadership track be our SaaS-enabled the financials goals. established he's an I'm technology a spearheading advancing turn

Scott Behrens

of good financial currency effects provide Revenue QX after adjusting in Thanks, our we million, up the that review made of in our QX Tom, compared to was last the banking XX% first and $XXX results corporate last quarter year. XXXX. of September divestiture year, foreign online and rest the the is for to and morning, and plan then I for for outlook everyone.

fee be the more revenue The driven growth by growth would saying been this in half license was strong license renewals second weighted revenue. year. We've

see But solid year. last bank XX% which to of to continue growth license new segment higher revenue, that's than up in compared And our saw we part expecting. were recurring in So QX also we revenue we it. was the

overall, strong EBITDA, adjusted a growth double year. layering are in Again, number but year. which fulfillment EBITDA revenue, contributing million we factors EBITDA, license here, higher flow of was base incremental the recurring to last that $XXX revenue the fixed in high than compared We on also last also strength growth what which leading has through top little a the QX and in has QX cost generated fee cost contributed more to the So revenue higher to relatively very growth. on of saw

revenue XX% license software. and The year. to our predominantly up Turning Bank results. million, QX XXX% segment is to on-premise up last $XXX segment compared was segment $XX EBITDA was million, adjusted Bank

by up will impacted of the SaaS bank So renewal and growth driven the higher this maintenance also year's revenue which most was strong we recurring timing fees. revenue. license segment, by XX%, the be in in But this saw

with improvement in was QX new interchange $XXX this XX% by we last that Merchant we QX growth as segment EBITDA essentially business with is compared segment in and flip million, growth ramp. in of to in million, The up the XX% Biller both finally, revenue come year. and EBITDA new contribute were compared QX revenue our And online expect to begins adjusted to year, as next program. segment driven and progress and our further growth profitability revenue last to $XX year year flat customer go-lives and notable last to exit QX year up and

our hand, cash below billion we're million just ratio debt Notably, which over We of ended at and targeted a QX. of from X.Xx net is balance on debt of down the now a with X.Xx. quarter leverage $XXX X.Xx, of in end down $X the leverage

reduction debt million I more forward share we remaining So And have balanced share expect would allocation between do a our repurchase and authorization. going repurchases. on capital $XXX

our to next Turning outlook.

net to of billion, expect the and in with adjusted we We $XXX continue to million revenue the billion to range million, are year reiterating $X.XXX $XXX $X.XXX EBITDA adjusted full our expansion. EBITDA guidance margin of be in range with to

up go XX% in year-to-date, that us QX next base in strong base We're and year here as in and think we're which year seeing exit look results the into into of And business, the particular, underlying stable, recurring as tracking expected. the provides So XXXX, we is revenue and in revenue X% I we saw on we this the of year. in strength as summary, up reliable QX. with

predictability And renewals license deliver X% to combined XXXX. year the of with X% our sales maturity visibility the of the up and in and well growth next that, the sets us and to pipeline implementation

So with that, I'll closing Tom for some pass to it remarks. back Tom?

Thomas Warsop

Thanks, Scott.

This us to open generate already, that business focusing for ways customers thank to about March tell including accelerate is best working Again, our story. opportunities XX, our and Just on results continue now delivering as and our for our forward next value the working the on the to of to to and York above We're focused significant shareholders. line look XXXX. investments today, Analyst growth our our yielding growth this and up, Day continue focus have more I to sharing ways areas we New in opportunity marketplace. the or on in during and our City investment better results to on it value, attention, on Q&A. sum greatest fine-tune further resources well shareholder to deliver the for we'll We're investments you expectations, as in up joining we

Operator

Davidson. Your from comes first question D.A. the of from [Operator line Instructions] Pete Heckmann

Allison Heckmann

speaking Alli is This for Pete.

to of the growth dynamics point ARR give First year-to-date? XXXX, X% they confidence been given more question, X% in bookings have bit you a some that can that in to soft relatively little you

Scott Behrens

to really, that's second look getting layer up Yes. XX% business, the year's underlying comments revenue. is year-to-date, my I That in next made X% the QX. remarks, here to be turn the in at if in stronger of prepared would the you base recurring the half, revenue of going back I

revenue really that's going year. next So rate base the we into of have growth

the And then book visibility, and on next third especially year the would the net the business. layer Bank overall new side, then for just renewal be

about maturity Bank a on it's business, ARR So the bookings and sales. in services side, less of merchant license part the more So the really about the the and of pipeline? the what's

really but the gives in seeing next us revenue installed year. it's the again, confidence base, us So and that recurring we're -- growth that carries

Thomas Warsop

good just one pattern is I'll what XX very bookings months going Alli, And we for XX it, and but is Yes. ramp and to to and to had ARR the those. the thing, alluded in add to visibility the those increase we've year the drive the have next over Scott implementations revenue last that

Allison Heckmann

up net of then you future? view onetime? in Were there that saw Or a growth level And revenue, We in might period the one of dynamics you near-term Biller quarter. any this the this big Great. follow-up. do step interchange in as sustainable consider

Scott Behrens

segment utility cost the you some year, I year XX-plus comp, interchange issues really in saw get we where especially months jumped down. quarter repricing through whether with we've of programs, overall this last No, the impacted to if Yes. the of initiatives, gone about look inflation was think the it's the by the interchange at QX or various improvement the to and

you're So in seeing had. I those faster in that initiatives think Biller of net -- revenue we've what function is a gross revenue the that all than growing

continue we last success we have But monitor I that's to is initiatives, the results so of over showing the what what in we've And the more to XX think months. actual continue that. here done

Operator

question Your Joseph the from Canaccord of comes Genuity. next from Vafi line

Pallav Saini

This is Saini for on Joe. Pallav

impact expect off, that of incremental I the are after. to investment? What more the areas the the the of Maybe follow-up. the And some on there? First you we of on going a Bank opportunities market have see you're touched Tom, P&L? immediate And some when in touch on can segment

Thomas Warsop

sure. Yes,

and about So And financial has over XXX a call institutions, very, right strong the continue enjoy to because billion to that. world. have assets I we around mega the the mid-tier very the had banks, quite large banks, historically, -- USD we not terminology it and ACI the in talking market success, tend probably presence that's in tremendous we was the

grow smaller. continue to talking was there. just what We about slightly But I is

from billion. So $XX $XXX by small talking the I'm I'm billion to means. institutions about tier any roughly not goes financial that talking about

a can equally the interested those are scale. tend institutions institutions. model. But to in proven massive and/or their They those to what delivery capabilities, interested that we institutions -- provide. high that. the want They seeing very in reliability. want these model be a They are we're want ability a more So cloud what is still all open But or SaaS to delivery

over even more where we an we seeing of And so believe fulfilling better we're demand years. do that's can even coming that job the

yielding technologies of And so them and going -- make work the make talked was We And modernization investments continue better not the today. types those to same investments better seeing even for that investments, do long that places we're to results and it's just can virtually it's our is tier because part infrastructures already next that and products the little down. that. using made that performing. them they're We've one we're all already recurring offerings. that sold lot it's But there. tools coming from. to a we've that journey continue But of business, and deliver to It's make a a it's of strength already up, trying about the tier we've the cloud we revenue is work point time. make of Is to -- to for bit ramping I of was

Pallav Saini

there? year in comment And any performance anything And QX? on to helpful. very That's the outlook payment real-time your next business add the on for of

Thomas Warsop

real-time see strong. -- and people in at obviously, -- been recent conference FedNow done we're Sure. I'm frankly, a because, in continuing volumes a payments. in interested, know lot Sure. interested I I It's lot that region Toronto. growth of in the are every marketing volumes of are mean there's to Sibos

There excellent this of job on was to shortly one marketing. in the the But is of that think that low. No after of not launch very was I surprise. and expected, as done last FedNow. tons a I them volumes quickly. call, has are said Fed FedNow expected, expected ramp real an as And discussion

all. board transactions. is pipeline But financial ready are at significant a handle institutions surprise be we no So FedNow what are seeing coming to that on to of

and that use technology. that in already that partners able that pipeline are institutions have tools, through are with are through the us in So -- over financial FedNow participate our to XXX there we hundreds using our and directly have with more the

that's volumes So on low. side, U.S. FedNow relatively the

because relatively and the small to RTP more We world we And to drawn have real-time other volumes growth, the I that's that's in great, due U.S., been that the and seen in generally Fed the much think the of continue. parts an that's still of expect marketing increase largely seeing utilizations. to clearinghouse but attention payments are significant but

Operator

question from line next of the Stephens. from Nabhan Your Charles comes

Charles Nabhan

outperformance which X% X% the As accelerated comps pace to Biller, target about the we you recurring onboarding target degree think run to higher layering the for talk was the by relative X% easier versus could go-forward this about to outperformance driven rate quarter revenue and that maybe if to to deals or the on of could new incremental going of lead and end of an forward? either performance towards X% the

Scott Behrens

the -- more I on wasn't don't when really earlier the it about in in think line the interchange I the came top improvement. It business around XX% that question, at to the quarter. was Biller of referred comps growth the

higher off at a tough look we accelerated, you if of last year a comp that net interchange, was a of because had lot So it impact. and interchange

in going the forward. business is more it would -- I So at I XX% single to would upper it's to the not going rate. continue at look grow say digits

but have customer fully did should ramped. XXXX. here early fully not customer go-live XXXX, ramp is we a in that large in That So

at So X% of X% part relatively go that's really total, XXXX, we when that's and the already to our business it's either and is sold in look order. in short comfort live we've ramping that or live will a in

sold that's business that's or look it's ramping. -- and it's and business the we at across a whole already when really business, So live in not just the Biller, sold that's

sold year So converted has very year be that little on kind reliance the in year. next to business in and of

to X% in comfort getting that's next So where year. the for our we're X%

Charles Nabhan

as that revenue little you a pursue some just on areas some as new order some bit where provide potential are the maybe follow-up, you on in as initiatives. you're the specifics on to a Could you impact investing And it. double-click and investments Got to alluded had making any well P&L?

Scott Behrens

what a a maybe be -- the global capabilities. looking demand, hub is, Yes, of tier next I incremental say spend. just the our -- I we're payment banks that our And not of installed run but about would reprioritization second also first it's lot seeing to It's what in targeted we capabilities towards rate is not of Bank the talking developing where hub spending. it's segment, base of question predominantly is tier Tom call going kind and answer are to we of are that for

to It's going a be the going versus predominantly spending what -- it's hub we're to Bank increase in current see so be of and reprioritization segment, And not a it's rate. not significant going run expense our on R&D. capabilities, today to you're in

Thomas Warsop

And intelligent Yes. Charles, that we -- we call orchestration. that payments call

to a it's of efficiently, with those route that the very we manage say me they correctly, a do payments tends all talk and help they And that offer couple services. -- of reliability ensure as how hub words clients are ability scalability, about heard process the probably to industry You to have handled it our payments new times. varieties them them

course, of the the base is, because positioned and extremely we across reputation of the that software advantage absolutely of to ACI have, our product. of industry that And the we installed nature take well proven have

but -- banking So fastest-growing is, our the clearly -- we're of we're payment business that banking positioned by estimation, business worldwide. well software portion the

the is tier true perspective. in opportunity that across you size And with that's then geographies. the what market layer so down size on the next segments banks, segment of But when all fastest-growing you find from that's of all a

about focus the that's we're and there. excited So why opportunity so

net just the -- there we're not ripest, the And as for not speak. so where said, we're talking sure mean, I but making to investing Scott sure, new are We're about making opportunities it we is investments are investment.

any Mark, are there other questions?

Operator

Craig-Hallum. from line comes Your from from Sutton next George question the

George Sutton

we the curious Where has these look at allocation curious well. relatively When you're Biller the that you of perspective. you across think improved. Merchant done had of peek a really how something agree, I'm thinking Banking tent, putting from incremental focus under an has I'm more segments, you've on? growth is has segments? I point you're capital all opportunities merchant just struggled. now Tom, detailed think the one do not across more

Thomas Warsop

Sure.

X great We -- in all continue this Merchants we the laggard in bit opportunity obviously a year, little perspective from segments. to a believe a still but performance been of business. a

quarter said, growth fourth in Scott that quarter. the in the expect beginning to to we As flip --

intend portion I higher focus invest in it's but continuing there. and of to to take advantage was And Merchant very well. anything that resources we're just invest I saying run. a large -- opportunity significant opportunity as a performing will in we're -- growth continue talking Biller the taking So and Biller, no which important, we But there the to banking space, our there's don't we not is It's continue to that invest about. of on is obviously very and and will investment short think

it So change weighted heavily more investment and the little in I be will a don't there's but banking. allocation -- towards in fundamental no strategy, short medium our term,

also Now our We changed. with the that, what I cost a higher that given don't from that changed. we market do -- for capital strategy the you saying last bit the cash. little was focused do hasn't wondered have delevering and about is quarters where allocation of debt. couple Scott of relative hasn't And on may the

about in our the below and investment our now we'll We feel and we're long-standing capital So business. allocation strategy buybacks, that, delevering with share of target. continue great

George Sutton

Biller. on Just one follow-up

do payments that start the are a side, platform. continued we newer the pipeline us there of the I'm And benefits has Our sense if the to of real-time that business? then on takeaways real-time you competitive see And payment seeing third-party Biller curious you've also just to when in is can done seeing? you give you're work growing what suggest a with with

Thomas Warsop

very, pipeline pleased the that we're to pipeline takes new it continues question, mature, it to as the on with a ramp a while Yes, very sale.

and improve. the before, already some an Biller really was continue driving look the is really, and we into and So pipeline to impact pipeline more as most positive saying as Scott made are are that next We've in that us, changes, leadership for also which having business is business, year, we seeing but of performance. sold

many a started it's we've see side, about of On the aren't I of quickly happen painted we've doing transactions, viable we expect point. a there we of real-time use the for expected for But but very that do be impact at because to been pictures to as just and number And to -- because this for more we they're that [indiscernible] partly never before option a transactions this -- said case Billers. while, what payment them. that Billers. -- And we've it's

working equation, to option out give We're the to into bring to real-time Biller the figure their way use best with the payments. customers that the

Biller talked is very So adoption. but lot the a It I a it's it's ecosystem, a And -- there's meaningful. big going be to exactly, -- participants opportunity. benefits bit to it that about for that don't little that before. take to pieces. in It's We journey going of really know has get does all require multiyear the but a

Operator

There this questions to further at Kraft, you. are time. back no the I over turn John Mr. call

John Kraft

this call forward weeks. the great the joining following for in everybody, up thanks, catching day. to and up a morning. We coming Well, Have look

Operator

call. This concludes today's conference

You may disconnect. now

ACI Worldwide (ACIW) 2 Nov 232023 Q3 Earnings call transcript