ACIW - Earnings call transcript Q4 2024

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Operator

Good morning. My name is John, and I will be your conference operator today. At this time, I would like to welcome everyone to the ACI Worldwide Inc. reports financial results for the quarter and full year ended December 31, 2024. [Operator Instructions] I would now like to turn the call over to John Kraft, you may begin your conference.

John Kraft

morning, good and you, everyone. Thank we On Quarter financial the Fourth discuss full today's outlook year XXXX. our call, and as XXXX company's well will results for as

accompanying questions you deck at can to found under safe statements is after the and and end. earnings take the find can full tab SEC. harbor our aciworldwide.com forward-looking of at Relations remain both will and presentation webcast your The like We subject slides text on and will this both in release, Investor events, call. our available our call be and statements call the available press of are with the which website Today's the

and to CFO. that, On Tom call the this turn morning's is Tom. Behrens, CEO; I'd With Scott like Warsop, over and call to President our our

Thomas Warsop

it appreciate good hand as over comments our and our call. questions. discuss start XXXX for this I results open for expectations well Thanks, morning earnings year, financial then, year John, then year detailed everyone. as full we conference some you line the for as will the and XXXX the some to and I'll joining always, with morning, Scott full about to I'll

of this. I strong am our results Start was with delivered immensely the year. of team metrics. Performance proud last my across one every

of expectations upper revenue last the we and our ahead own at forecast guidance throughout our was results XX% up Analyst was Total provided were over the longer-term Day provided In year. fact, XXXX, March. XXXX single-digit our above we which

guidance. above and XX% grew year notably the for EBITDA adjusted our Our also

generation previous And more software activities the of year, over inherent highlights adjusted operating leverage in more with million in from flow year. net flow which expanded model. than basis XXXX, XXX points EBITDA remains cash last Our of $XXX double margin the than our cash strong, XX%

new the made renewal signing As conscious year. complete to we effort and of earlier we've discussed in throughout contracts, a the the year,

revenue time-consuming the wins, from can when cannot signed. a recognized on allowed be getting than which contract out these recognized the renewals focus renewal way earlier date customer be to While of new often the renewal us

allowed seasonality pipeline us year on As current pipeline. confidence it's was full on ahead clearly also do to we're in working high our quarterly with in we've provide continuing forecast deals results seen. year, our traditionally our momentum of in start this It the successful delivering I in and our me This throughout reflect heavy something helps the it XXXX. effort XXXX, XXXX outlook. XXXX and large to reduce Further,

Before an I give starting segment number to of the reasons. segment, this color year. discuss on you X organizational want business one segment makes into for payment called improvement Merchant the new more little I This software. January and of the on We've combined we made sense bank a a

First, simply, the to code serve and that quite merchants we and large very the is banks similar. fundamental software, use

the targets, merchant differently R&D in coding simplifies the and it and is expertise Well, of is for and the software The configured synergistic, much customer functionality ways. and the is shared. combination bank many the operations

we're the for structure addition, a In unit. general to business moving manager

We're as business. new progress in with year, well. accelerate Payment we to segment to will this this lead and found this segment Litch success. biller did Eric We I've the change us asked last significant confident allow the highly Software

which, largest we is enterprise abilities. His at software, known I confident experience of in do last As perfect I've I'm will years mentioned many course, role servicing call, our for to including ACI. and the banks, global and this for involved mission-critical his years, the selling he on highly continue was Eric

this this year. new to us our for quarter results in of report starting first financial Look structure in

and in you're Turning our segment, of strength from in acquiring terms will We saw with issuing payment of with, and be grew to the last now particular revenue solutions XX% revenues EBITDA XXXX. bank X XX% in to software up terms familiar segment, majority segments the XX% which the of the compared year.

increased Our saw The EBITDA Software the modernization grew especially segment, be grow hub and our adjusted in forward next-generation revenue on going which focus driving product is included the and in really payments also pipeline. software, XXXX XX% Payment merchant XX%. will segment

want on on is I our hub Development update our moving payments remain from to extremely track. in XXXX. provide next-generation focused launch are continuing. payment on Before softer solutions. biller, Investments on an We

offering which in and in breadth how customers we of target. can increases be utilize Our usability cloud segments terms of the tools of terms will native, the customer

for just we're excited One join not hired time, to a targeting saw bank and our with for segment. our the hope efforts. current I worked Phil we're Chief very hub and payments large long I've known addition that important Phil and team. Officer. as Strategy him very the our I you And to Bruno Growth announcement

in capacity, They will assistance sales strategy In we their instrumental partnering with by providing efforts be helping in Bill customers will our be XXXX. with launched in and broader utilized ACI execute on the efforts. helping valuable particular, modernization ACI a customer-facing

go-to-market a be of We expect part his large hub efforts strategy. very to our

biller. to turning Now

very strong, the year XXXX up some momentum was year over out significant with year, our we're and happy contracts XXXX and full XXXX our in bookings than ARR closing results, Our we're and QX. more bookings signed Overall, up during in very XX% X%. revenue with financial We our is strong. the confident We year the started QX, outlook.

reward We and new created year. to this encourage business a execution Start early Smart program

early this had and have logo in we takeaway this Asia of largest program, competitive new signed we ever region. part month, the As Pacific our

opportunities is contract relationship the for itself, the While additional by us an excellent in the region. has opened win

million will first details half, more QX I'm first win, Inclusive contracts of more as benefits has, in can $XX in very appreciate the signing revenue revenue. of segment our the sure the signed early deals than Scott new of but large banking year. this about net team today, you logo in the quarter in yielding give

and over to Scott our Scott? it financials discuss to turn I'll Now guidance.

Scott Behrens

morning, $XXX basis Thanks, I'll Tom, outlook growth, In of the our our then position. from margin XXXX XX% up XXXX. questions. we margin cash EBITDA provide flow of Full XXXX and for up expansion. total off liquidity everyone. from XXX representing then billion, adjusted a significant million, adjusted XX% and EBITDA XXXX strong results points and line a was financial for revenue for $X.X review XX% was over capped year margin and first I of expansion, and revenue XXXX, open to plan We'll XXXX, good improved strong year and

revenue EBITDA results XX% Bank X% versus XX% of XXXX last did with And margin from with and at onetime adjusted adjusted of segment in XX%, Looking were reminder our the as segment. by to margin margin recur Merchant revenue not segment EBITDA revenue due XXXX. call, compared XX%. with versus to down of XXXX adjusted increased XX%. benefits certain EBITDA a EBITDA and increased biller XXXX Biller increased earnings dollars that here nonrecurring versus margin last year segment

the with more cash flow from than flow We cash ended growth $XXX which strong our year activities million, decreased declined million XXXX to a position, and with we continue liquidity $XXX we $XXX recently lowered of below X.Xx, double of operating see more quarter. target net cash debt in Xx that last on million including outstanding year. than last to debt strong total XXXX, by discussed ratio leverage to In million our is stated hand. in $XXX

we shares of million X nearly on repurchased shares we $XXX had our our of X% our authorization. at year, year-end, the And repurchase During representing remaining approximately million stock, outstanding.

the we year, are are and momentum we seeing strong in what we in had With the here growth in bookings exiting confident saw the we XXXX XXXX.

we including and year. bookings year our with starting Pacific mentioned, here in as strong, start are takeaway Tom up to the in Asia our logo our new particular region, a show As which in we segment, expect large in QX results bank competitive we the in sales new

representing of the is points where coming again strong our Day in adjusted over XXXX a long-term is of to the FX-adjusted in be which XXXX. on to last to we is in expansion. encouraging particularly to X% top of we For to on and year basis expected discussed year, million at growth strong range range growth X% back targets in revenue of on over year XXXX, EBITDA XXXX, basis, XXX the is billion the margin XXXX of with $XXX line our full had the $X.XXX $XXX we expect $X.XXX million in Analyst billion growth be which an we achieved

in investment market. less of a as Notably, increase incremental payment as fully build were had at functionality product expected, we'll that but to finished MVP architecture. to able the XXXX, demonstratable roll new we our for top cost deliver we on we than a we out new and the XXXX

revenue we the For million, in expect QX $XXX to year. million $XXX to last growth representing XX% XXXX, over XX% to range be of

the representing as is little half We of Tom our revenue million XXXX. growth full the year we expect of versus half due over the of our year. contracts for XXXX first expect sequential range to year account XX% of earlier for the first weight be the revenue million, XX% to the mentioned, to EBITDA and our in adjusted XX% more looking a of $XX sign year. continued new year to the in revenue a of to total approximately This the to XX% we in efforts, last $XX year, the for And or to of rest our saw phasing

rest of additional here guidance And you'll your find a to modeling, X. financial the with on help sessions Slide few

to double strong We and in cash healthy year. saw expansion with summary, growth revenue and we flow a in XXXX more pipeline XXXX, EBITDA and strong momentum. significant than margin contributing growth exited growth last So

remarks. new As back long, XXXX. that, us confidence Tom for closing we giving Tom I'll it sales pass for year the With particular wins, with Tom? mentioned, to some in high started

Thomas Warsop

Thanks, Scott.

next-generation So pleased in with our [indiscernible] progress we of on sales execution our hub XXXX. strong in summary, rollout remain and our payment results the and development extremely and We're focused

large. XXXX, is pipeline our Looking to

see have year start as you can quarter our full a financial our guidance, from first confident We we're in had and outlook. great

Overall, we ability take we shareholder both Thank questions. value. deliver growth significant joining Operator, much profitable are for now our long-term very can regarding to optimistic our call. and you our

Operator

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

Peter Heckmann

you dynamics kind saw that a year-over-year Biller? contributing the kind of number of from Could to Or like seems revenue strong relatively reversal EBITDA of little X a within down overlapping dynamics? quarters of a within net It Biller. Is there comment bit trends. are the we a about what's

Scott Behrens

in recur talked certain and a margin had a primarily we it's No, in where contracts XXXX certain did after about Pete. not onetime margin call contracts we it QX XXXX. this Yes, benefit our call benefit

EBITDA basis from see An you'll once expansion that we able of year-over-year headwind. to the at kind level, were net our year-over-year of So points get margin revenue by obviously, increase. XXX away in increase increase we kind consolidated that of but with even XXXX --

Thomas Warsop

net benefits through Those referring growth. those that fall straight from Scott's to to

that impact an So on. occur, when had those didn't

Peter Heckmann

Okay.

in Okay. talk can terms in And that the what quarter, solution what or area first about then about this of was you in? solutions thinking win

Thomas Warsop

of solutions using It's solution. world very were one Yes. is previously that in our our not the banks extremely don't acquiring few that large flagship issuing -- and flagship the

excited So mean super we're that. super about -- obviously I

is takeaway. reinforce, As to I a want just this competitive we've very mentioned,

solutions competitors started -- that program to And those and which was This very obviously, successful. we remaining our from is specific this. that ones, like the one looks pipeline it's try a banks it's we a great largest some after start going but come really that just we're to is it's have encouraging very there's program. of of some with last to to more and whole on successful, of start one this one the grab few to obviously year, largest that targeting And ones,

Peter Heckmann

they their be Okay. data but in quick own to That's going an They'll running a in-house run to, and great center? And to on follow-on hear. just it basis are that

Scott Behrens

That's correct.

Operator

question comes Trevor of with next the Your Williams line from Jefferies.

Trevor Williams

the those the the just then kind impetus model? Tom, to about year. And start we shift go see kind year, through? the this from expand might tangible and on as banks we Congrats what to to reorg we back benefits what the on was work of of with Great. you could think merchant to and for just just both If those? of GM as

Thomas Warsop

Yes, sure. Sure.

to just back in it possible. challenge nothing XXXX, an My -- door it. of go I better when teams works that accountable the and out organization. if as November was So for prefer, in as efficiencies functional first with structure walked entire was, of results organizational had business I some wrong you and got functional I I that and in an are to the We think so there's leadership have fully

that so I've operate way. And preferred always to

make became it very after arms and seeing the the that wanted out ups we've downs, on negatives I we respect to positives around sure with to and I across that I of my the rolled comfortable successful got how company. last now year were the ACI, and biller,

it business, they the Manager all on he our And implementation the team. is, resources, the software General management product means Eric, so the the the account teams, what marketing now of working are same resources, has payment team, sales

is direction working no from to across benefits And so at how from started consistency we've of matrix. already good see the -- everybody matter

you're have If if -- challenging. bosses, it's you different

they supporting team, customers, all leader. they what just And their everybody our on it company the they're trying to in are person very board actually merchant same and the objectives and to we've they're bank every -- now thrilled so do. clear we're with done that same helps on are, what because report this that's the And directly get

really So it's to and that results. think going we're updated confident going customers that's to and we'll our now going. it's this. keep what And we'll We're see we're first probably them. you positive think highly very is going the because this for to I did But happier why are going be on it's how -- we have impact have to easier see I

to our James. thing call would for twice who -- think times it's it a sales James, we None their that I is implementation customer a anymore. well, In had for new to customers. need made inside easier if call opportunity, business ACI. of accountable about a need past, have There's if I the say, don't that of we've to it's much where They

is some be then But I we're mentioned, starting had similar. as it to about because certain organizations, absolutely effort, Hopefully, see wasted away we we're the eliminating it. very, benefits going duplicative really some on happy going I'm to that don't And software They're because, but efficiency internally, Trevor. that's see X, separate in efforts day they we're -- we helpful, to there. had go already and those very

Trevor Williams

now No, we're the -- Yes. are what new to and all the X we 'XX expecting contribution I merchant, think and relative 'XX of -- segment more and And Scott, I any know from with specific if banks and segments, on that. great. the wrapped then mindful I guess guys are there's for about of? cadence now payment on expectations that's at to appreciate think to volume, just from sales renewal between biller. have software but also any in down impact anything you to new just just then but level. be growth And as

Scott Behrens

Yes.

that it, Ultimately, rise each banks growth. year, targets the the opportunity That last we and, there bank won't the double by all payment push do time item -- over banks call think X-year of long-term of was segments. that Tier First on laid get single-digit high the digit. X in They we were to kind revenue hub with X I could the traction change. upside opportunity up out

all in But pretty numbers. the relatively mind. of it's software not those going They the because business. of It's much merchants part change a trajectory small, to were really payment a

numbers. So those I growth would stick with

forward, segments starting combination the I of when think in one. and of if externally, those historic would we've been modeling a kind combining QX you X his bank you're into so guys merchant see it's what is really business bank go really

business that call year's to than it as any XX% is relates be book renewal or It's And this it's, that. total I renewal business, of year, new more again, minus the to -- every really going think and complicated not book. plus it,

it full significant quarter. so there new The making call, really of conscious I on don't of kind effort nothing year, So business, rely the derisk much said the to make sizing. we have terms in we're to in that a fourth so as

the said as first And to in hopefully, we that out the balance revenue remarks year trend see in in be XXXX. more a going And that my begin you're why year. going to of will we full that's I than forward saw half the prepared

XXXX see. again, XX% of seem and So balance half year, But of first year of big that it's like going the in had take doesn't year last shift. time we variability to this the a get rid to that out some

Thomas Warsop

Yes.

time on them these that so takes it still is doesn't all the really these reason this recognized the some Team's they're good make think impact a whether sign signing I a doing good really And an it deals, doing the time, earlier. obvious, renewals there but of we we renewal we're matter really job job. as to [indiscernible] say

the That What seeing -- needle. great QX a leverage is shareholders. where for have the to this the company. to and doesn't on for frankly, the so that's to the about don't it a we our they It's move have because you're QX done. business, don't about getting new thing is worry And very strong much have QX. They -- don't all have why so worry great I much

But push news it's going continue good progress way it's to think we're -- already, So that. going to but I great to the all around.

between the closer So we [indiscernible] to magic and get closer that XX-XX

Operator

Your comes Partners. Research Cantwell line next question the of from Seaport Jeff with

Jeffrey Cantwell

you the lower what for full end year. the talk end On your you what of full factors EBITDA commercially, range at that And adjusted higher of year? range the would for the that the are can million about guidance, $XXX drive put will

Scott Behrens

very a scalable. model, a leverageable a yes, Again, software that SaaS or are high we the it's highly whether the I factors have the model. -- model both have Well, were mean, end. we [indiscernible]

call that really services what comes a or fees, to it it's license mix that up ends whether And being on of SaaS mix down and year. so

range, year. comfortable delivering similar We're this this high very with would be to but end

areas that license, EBITDA. really and per You in like falls overachieved down to dollar

comfortable with range, lot that we're end. of to I think, high So a that hands,

wouldn't X path it to highly model. particular I scalable limit So that

be XXXX, very It'd reach in that similar saw ability You or mechanics 'XX. to in that

Thomas Warsop

And of I to guidance high little just we're among say Scott or more it high differently. most said the -- end likely would be, than end mean, even The EBITDA deals, path this, those Yes. such these the a could a over signed successful we X we chance above. a license he's QX. this year, during expect new of very margin very real to be as the signed another We or on buy be in the we

Jeffrey Cantwell

it. change Pacific. Got Asia about year that then you. with over was? And but a sales Maybe think the And Great. competitive bags. can the I Got more well? it. It as talk aware expectation your more coming And year? who big I'm sounds be store. you maybe able to about talk to of renewals be for that should you little a mean, drivers we were curious to just what I'm going make share in to the there takeaway that are that like environment the is your little any

Scott Behrens

can Yes, can't you have region again, for X to would before, what said, is Asia said few to our somebody the Pacific low very Jeff, least. But in on a institution, flagship say I financial tell use I products. repeat large is. -- Asia based under didn't that who it already it's the as which lot at you but -- how take of long a region, I in it is that I just institution, Pacific-based very what we ask

about excited win really are were reason we to would things there The about why that main say that X I that. I think this. -- we're So able

the a well. I made happy. not mistake. was, serve our They one, Number They competitor not were think, customer did

we try Of always look advantage course, those and to situations take for of those.

strategy. with one. whole the number payment But about where is number hub our was is that really reason we're the talking we started the future X So headed and because conversation

actually fantastic point, -- think never we mean, from bullet this word reason And use immediately. customers is they what word can technology. that because proof can with they myself. I the the But because X speedback they me. said they absolutely proven bought they used that's proven got is at they was I that use that use I said I other would that

fast, you're been for able And modernization and can us implement X us. comfortable has really we're You to help a demonstrate that. giving no totally to that with else that us path

I'll and So that's that. month we do thing. be in and celebration a a won, it's for why wonderful a We'll or there so.

So I'm excited about that.

sales how just this the conversations of for good terms are that a pretty of is the I overall I proxy going world. process around description gave think In you environment,

it. the far payments is modernization, it's that come our Kinetic to way, reason But This which the whole hub institutions. easier up strategy. We call that payment the did understand we is hub and risk embarked with on By lower we for now. path actually to an

proven then they're ready So they cloud pace can and already to until either or use to continue they can proven technology. software platforms to case, this over move move at like in new their

is this example works in obviously, think and I case. -- -- it's it's of our this sales strategy, a work really it So certainly good

Operator

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

George Sutton

Kinetic. more Tom, now on or payment just the hub

was more thought? functionality than might incremental what make prior You you also mentioned was, I it you functionality. sure be there. of sounds a I address if like market modestly and I there incremental just a a could little launch us the And it mention in the wondered specificity had wanted give to larger XXXX. understood would

Thomas Warsop

George. Sure, Sure.

actually already sell we've sales the our force loose to So led product.

slide sell earnings and I calls I've individual do force said set not sales cord. our before, a of power And think PowerPoint this. pedantic having And it. the was to that, This say, Well, can with up lines calls hey, do in about didn't actually at I I many our right? particularly personally do that do. from on we competitors want phase in then what and is that. can't look come will They they

so we waited. And

And it I It drove actually uses until test this functioning for I say year. We very that the running much a a financial same works. to And run on like was what sales will real did synthetic It's and we force demo, that systems on. institutions. looks Kinetic that servers not sell very, reason when mean, production the first demo. our very have large of the data transactions allow

than in We're throughput, has to ever much world. been needed bank higher in fact, able to demonstrate the demonstrate any extraordinarily high We've able that.

So we to that where customer. can show we feel got touch they we it, sales that's play They they could with when and set can the point it. the can it, it. force on

So production, we've as a far don't first exactly what the But as know when do that. I of know lot one order interest. I got is of

Our sales right to They're force thrilled is now. there let boost. be out

kind tons a In of we're actually don't I know. selling interest. product interest. lot win deal the progress -- We're of financial it. be the on of we've would in midsized second right probably institution do, we that We'll hope one, our that fact, at updated we on a proposing first of if a keep I but And terms there's you got it. very of focused the We'll

then And mentioned -- functionality. think, Scott, you incremental I

we -- And most we in was payment the or account this common to several working did we what demo, So common most actually, the chose one of in -- types. the account. chose

a for Swiss a could large that payment very or real-time be small payment, a So example, white, transaction. a or

is one to going in to we're now. be able the what Anything of that goes to functionality The cards. another. demonstrate set from like That's account next right

later. transactions and will bit little So debit come ACH a then cards, credit

customer but database, the will, in phased same middleware, functionality, the platform you the the the same it's So with systems. to same we've interfaces same if the

look way published that won't play showed have And something tell But the yet person let the demo, seen her we just So by we I a paper it person with the reaction demonstrating her had this -- this. never I this, just or reaction bunch you we've less analysts analysts. one love and the anything give quote the the because was, you study was yet. gave industry -- and I'll of had at analyst I we've hasn't

works. were No market in me one this her Those -- it the has exact blew away.

So we we the need Obviously, need and very to we're in sell, to about the proof to pool. continue to that. is We that footing. deliver implement, excited need

George Sutton

in the it software who's merge and at a bit merchant in we hope structure? you would has fair more one getting watched emphasized do which payment size see the Look this new necessarily to the deemphasized? Or segment, struggled say that Is achieve also group, the management. that

Thomas Warsop

which a the definitely of with merchants [indiscernible] [indiscernible] I bunch emphasize, to them real I we served bought of originally take world. large employees When of with passion everybody. a hired one a box company to Eric is and merchant, niche But early his on merchants merchants that was willing plant CheckFree, really. just No, asked don't It's the an take we Carillion, around worked had software a which to the George. reenergized banks I with refresh around online of build large banking I the to them company experience as and CEO

world knows at passion the executives large Eric's banks, the so in already. he And around banks

get to software itself really is couple which as banks long probably right haven't and or around leverage person both is And so that's Eric of enough I reenergize a together. by lot very now, we question, putting we mentioned Because that merchants, to the of energize a banking times and a way your merchant the very gotten is and of similar.

as Health, that But more with we exactly when efficient importantly, the it's want payments to when talk merchants much super the those It's doing how talk traceability, just we're large Kinetic, matter applied. And of institutions. what financial merchants banks, of when about and we routing just Kinetic. can than explain orchestration I because a part, then actually, that that all we things, about talk for most large if of have not payments, really

business. we started that bank but And largest will apply it least together. deeply equally our somewhere, and because reason We the we had start to merchants. at apply another it's brought to that's

don't miss So that opportunity. to want I

George Sutton

Helpful stuff.

Operator

management the to questions for I no further would team call this the time. at like are to over turn There closing remarks. back

Thomas Warsop

We're we our in and where we're look, and the very in as team we're confident can very much much XXXX, headed, you participating. thank tell, very we're performance for excited put about more importantly, in, you XXXX Well, -- but beyond.

I feel we're future. feel corner future, think we've we've great the about about -- we the talking and we and a turned internally,

about do. expansion want talking growth. is to We're We're you talking what which about

appreciate so your we're very We day. with on your get let's excited and And about it. support,

Scott Behrens

everyone. you, Thank

Operator

today's concludes Thank participation. your This for call. conference you

You may now disconnect.

ACI Worldwide (ACIW) 27 Feb 252024 Q4 Earnings call transcript