Q1 HIGHLIGHTS
- Revenue of $291 million, up 42% from Q1 last year
- Recurring revenue was 84% of total revenue, up from 80% in Q1
last year
- Adjusted EBITDA of $38 million with net adjusted margin
increasing to 19% from 5% in Q1 last year
- Cash flow from operations of $58 million, up 36% from Q1 last
year
- Net loss of $24 million was consistent with Q1 last year
ACI Worldwide (NASDAQ: ACIW), a leading global provider of
real-time electronic payment solutions and software, today
announced financial results for the quarter ended March 31,
2020.
“I am pleased to report a solid start to the year. While the
COVID-19 pandemic had limited impact on our first quarter results,
we continue to assess the ongoing impact. Our top priorities are
ensuring the health and safety of our employees as well as
providing continuous customer support during this challenging
time,” commented Odilon Almeida, President and CEO, ACI Worldwide.
“While there are challenges and uncertainties around the duration
and severity of the outbreak, digital payments are more critical
than ever, and the long-term growth drivers in our business and
industry remain strong. We are fortunate to have ample liquidity
and a resilient business model with a large contractual backlog,
substantial recurring revenue and a very stable customer base of
large banks, financial intermediaries, billers and merchants with a
strong presence in eCommerce payments. During this period, we are
focused on maximizing profitability and cash while positioning the
company to emerge even stronger. Despite any near-term headwinds, I
am confident in ACI’s ability to serve our customers and the
opportunity to create significant shareholder value through growth
acceleration in the medium and long-term. We are building a nimble,
agile, fit-for-growth structure and a customer-centric global sales
process to better position the company for continuous profitable
growth. R&D-focused investment on differentiating innovation
coupled with strategic M&A will further accelerate the
company’s growth and value creation for our shareholders.”
Q1 2020 FINANCIAL SUMMARY
New bookings in the quarter were $120 million, up 72% compared
to Q1 last year.
Revenue in the quarter was $291 million, up 42% compared to Q1
2019 driven primarily by the acquisition of Speedpay. Recurring
revenue was 84% of total revenue in Q1 2020 compared to 80% of
total revenue in Q1 last year.
Net loss in the quarter of $24 million was consistent with Q1
last year. Adjusted EBITDA in the quarter was $38 million, up 371%
compared to Q1 last year.
Revenue from ACI’s On Demand segment was $193 million, up 76%
from Q1 last year. On Demand segment net adjusted EBITDA margin
improved to 22% compared to 0% last year. On Demand segment net
adjusted EBITDA margins are adjusted for pass through interchange
revenue of $89 million and $45 million, for Q1 2020 and Q1 2019,
respectively.
Revenue from ACI’s On Premise segment was $99 million, up 3%
from Q1 last year. On Premise segment adjusted EBITDA margin was
31% in Q1 2020 versus 29% in Q1 2019.
ACI ended Q1 2020 with a 12-month backlog of $1.1 billion and a
60-month backlog of $5.7 billion.
Cash flows from operating activities in the quarter were $58
million, up 36% from Q1 2019. ACI ended the quarter with $119
million in cash on hand and $270 million available on our credit
facility. The company paid down $19 million in debt and repurchased
one million shares in the quarter.
GUIDANCE
While a significant portion of our revenues are recurring and we
are optimistic about our pipeline of deals, the duration and
severity of the outbreak of COVID-19 has caused uncertainty
regarding the timing of signing and realizing revenue from new
business. As previously announced, we have suspended guidance
regarding our financial outlook for the full year 2020. We have
taken actions and continue to evaluate additional options to reduce
expenses and minimize the impact of COVID-19.
CONFERENCE CALL TO DISCUSS FINANCIAL RESULTS Management
will host a conference call at 8:30 am ET today to discuss these
results. Interested persons may access a real-time audio broadcast
of the teleconference at http://investor.aciworldwide.com/ or use
the following numbers for dial-in participation: US/Canada: (866)
914-7436, international: +1 (817) 385-9117. Please provide your
name, the conference name ACI Worldwide, Inc. and conference code
4462434. There will be a replay of the call available for two weeks
on (855) 859-2056 for US/Canada callers and +1 (404) 537-3406 for
international participants
About ACI Worldwide ACI Worldwide, the Universal
Payments (UP) company, powers electronic
payments for more than 6,000 organizations around the world.
More than 1,000 of the largest financial institutions and
intermediaries, as well as thousands of global
merchants, rely on ACI to execute $14 trillion each day in
payments and securities. In addition, myriad organizations utilize
our electronic bill presentment and payment services.
Through our comprehensive suite of software solutions delivered on
customers’ premises or through ACI’s private cloud, we provide
real-time, immediate payments capabilities and enable the
industry’s most complete omni-channel
payments experience. To learn more about ACI, please
visit www.aciworldwide.com. You can also find us on
Twitter @ACI_Worldwide.
© Copyright ACI Worldwide, Inc. 2020.
ACI, ACI Worldwide, ACI Payment Systems, the ACI logo and all
ACI product names are trademarks or registered trademarks of ACI
Worldwide, Inc., or one of its subsidiaries, in the United States,
other countries or both. Other parties’ trademarks referenced are
the property of their respective owners.
To supplement our financial results presented on a GAAP basis,
we use the non-GAAP measures indicated in the tables, which exclude
significant transaction-related expenses, as well as other
significant non-cash expenses such as depreciation, amortization
and stock-based compensation, that we believe are helpful in
understanding our past financial performance and our future
results. The presentation of these non-GAAP financial measures
should be considered in addition to our GAAP results and are not
intended to be considered in isolation or as a substitute for the
financial information prepared and presented in accordance with
GAAP. Management generally compensates for limitations in the use
of non-GAAP financial measures by relying on comparable GAAP
financial measures and providing investors with a reconciliation of
non-GAAP financial measures only in addition to and in conjunction
with results presented in accordance with GAAP.
We believe that these non-GAAP financial measures reflect an
additional way to view aspects of our operations that, when viewed
with our GAAP results, provide a more complete understanding of
factors and trends affecting our business. Certain non-GAAP
measures include:
- Adjusted EBITDA: net income (loss) plus income tax expense
(benefit), net interest income (expense), net other income
(expense), depreciation, amortization and stock-based compensation,
as well as significant transaction-related expenses. Adjusted
EBITDA should be considered in addition to, rather than as a
substitute for, net income (loss).
- Net Adjusted EBITDA Margin: Adjusted EBITDA divided by revenue
net of pass through interchange revenue. Net Adjusted EBITDA Margin
should be considered in addition to, rather than as a substitute
for, net income (loss).
ACI is also presenting adjusted operating free cash flow, which
is defined as net cash provided by operating activities and net
after-tax payments associated with significant transaction-related
expenses, less capital expenditures. Adjusted operating free cash
flow is considered a non-GAAP financial measure as defined by SEC
Regulation G. We utilize this non-GAAP financial measure, and
believe it is useful to investors, as an indicator of cash flow
available for debt repayment and other investing activities, such
as capital investments and acquisitions. We utilize adjusted
operating free cash flow as a further indicator of operating
performance and for planning investment activities. Adjusted
operating free cash flow should be considered in addition to,
rather than as a substitute for, net cash provided by operating
activities. A limitation of adjusted operating free cash flow is
that it does not represent the total increase or decrease in the
cash balance for the period. This measure also does not exclude
mandatory debt service obligations and, therefore, does not
represent the residual cash flow available for discretionary
expenditures. We believe that adjusted operating free cash flow is
useful to investors to provide disclosures of our operating results
on the same basis as that used by our management.
ACI backlog includes estimates for SaaS and PaaS, license,
maintenance, and services revenue specified in executed contracts
but excluded from contracted revenue that will be recognized in
future periods, as well as revenue from assumed contract renewals
to the extent that we believe recognition of the related revenue
will occur within the corresponding backlog period. We have
historically included assumed renewals in backlog estimates based
upon automatic renewal provisions in the executed contract and our
historic experience with customer renewal rates.
Backlog is considered a non-GAAP financial measure as defined by
SEC Regulation G. Our 60-month backlog estimates are derived using
the following key assumptions:
- License arrangements are assumed to renew at the end of their
committed term or under the renewal option stated in the contract
at a rate consistent with historical experience. If the license
arrangement includes extended payment terms, the renewal estimate
is adjusted for the effects of a significant financing
component.
- Maintenance fees are assumed to exist for the duration of the
license term for those contracts in which the committed maintenance
term is less than the committed license term.
- SaaS and PaaS arrangements are assumed to renew at the end of
their committed term at a rate consistent with our historical
experiences.
- Foreign currency exchange rates are assumed to remain constant
over the 60-month backlog period for those contracts stated in
currencies other than the U.S. dollar.
- Our pricing policies and practices are assumed to remain
constant over the 60-month backlog period.
Estimates of future financial results require substantial
judgment and are based on several assumptions, as described above.
These assumptions may turn out to be inaccurate or wrong for
reasons outside of management’s control. For example, our customers
may attempt to renegotiate or terminate their contracts for many
reasons, including mergers, changes in their financial condition,
or general changes in economic conditions (e.g. economic declines
resulting from COVID-19) in the customer’s industry or geographic
location. We may also experience delays in the development or
delivery of products or services specified in customer contracts,
which may cause the actual renewal rates and amounts to differ from
historical experiences. Changes in foreign currency exchange rates
may also impact the amount of revenue recognized in future periods.
Accordingly, there can be no assurance that amounts included in
backlog estimates will generate the specified revenues or that the
actual revenues will be generated within the corresponding 60-month
period. Additionally, because certain components of Committed
Backlog and all of Renewal Backlog estimates are operating metrics,
the estimates are not required to be subject to the same level of
internal review or controls as contracted but not recognized
Committed Backlog.
Backlog estimates should be considered in addition to, rather
than as a substitute for, reported revenue and contracted but not
recognized revenue (including deferred revenue).
FORWARD LOOKING STATEMENTS
This press release contains forward-looking statements based on
current expectations that involve a number of risks and
uncertainties. Generally, forward-looking statements do not relate
strictly to historical or current facts and may include words or
phrases such as “believes,” “will,” “expects,” “anticipates,”
“intends,” and words and phrases of similar impact. The
forward-looking statements are made pursuant to safe harbor
provisions of the Private Securities Litigation Reform Act of
1995.
Forward-looking statements in this press release include, but
are not limited to, statements regarding: (i) the impact of
COVID-19 on our results, (ii) the long-term growth drivers in our
business and industry, (iii) our liquidity and resilient business
model with a large contractual backlog, substantial recurring
revenue and a very stable customer base of large banks, financial
intermediaries, billers and merchants, (iv) our confidence in ACI’s
ability to serve our customers and the opportunity to create
significant shareholder value through growth acceleration in the
medium and long-term, (v) our R&D-focused investment on
differentiating innovation coupled with strategic M&A to
further accelerate the company’s growth, and (vi) our optimism
about our pipeline of deals.
All of the foregoing forward-looking statements are expressly
qualified by the risk factors discussed in our filings with the
Securities and Exchange Commission. Such factors include, but are
not limited to, increased competition, the success of our Universal
Payments strategy, demand for our products, consolidations and
failures in the financial services industry, customer reluctance to
switch to a new vendor, failure to obtain renewals of customer
contracts or to obtain such renewals on favorable terms, delay or
cancellation of customer projects or inaccurate project completion
estimates, the complexity of our products and services and the risk
that they may contain hidden defects or be subjected to security
breaches or viruses, compliance of our products with applicable
legislation, governmental regulations and industry standards, our
compliance with privacy regulations, our ability to protect
customer information from security breaches or attacks, our ability
to adequately defend our intellectual property, exposure to credit
or operating risks arising from certain payment funding methods,
business interruptions or failure of our information technology and
communication systems, our offshore software development
activities, risks from operating internationally, including
fluctuations in currency exchange rates, exposure to unknown tax
liabilities, adverse changes in the global economy, worldwide
events outside of our control, failure to attract and retain key
personnel, litigation, future acquisitions, strategic partnerships
and investments, integration of and achieving benefits from the
Speedpay acquisition, impairment of our goodwill or intangible
assets, restrictions and other financial covenants in our debt
agreements, our existing levels of debt, replacement of LIBOR
benchmark interest rate, the accuracy of management’s backlog
estimates, exposure to unknown tax liabilities, the cyclical nature
of our revenue and earnings and the accuracy of forecasts due to
the concentration of revenue-generating activity during the final
weeks of each quarter, volatility in our stock price, and the
COVID-19 pandemic. For a detailed discussion of these risk factors,
parties that are relying on the forward-looking statements should
review our filings with the Securities and Exchange Commission,
including our most recently filed Annual Report on Form 10-K and
our Quarterly Reports on Form 10-Q.
ACI WORLDWIDE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited and in thousands,
except share and per share amounts)
March 31, 2020
December 31, 2019
ASSETS
Current assets
Cash and cash equivalents
$
119,124
$
121,398
Receivables, net of allowances
305,647
359,197
Settlement assets
317,156
391,039
Prepaid expenses
32,047
24,542
Other current assets
32,472
24,200
Total current assets
806,446
920,376
Noncurrent assets
Accrued receivables, net
198,554
213,041
Property and equipment, net
67,893
70,380
Operating lease right-of-use assets
53,490
57,382
Software, net
225,171
234,517
Goodwill
1,280,226
1,280,525
Intangible assets, net
344,156
356,969
Deferred income taxes, net
63,795
51,611
Other noncurrent assets
70,168
72,733
TOTAL ASSETS
$
3,109,899
$
3,257,534
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities
Accounts payable
$
32,166
$
37,010
Settlement liabilities
297,936
368,719
Employee compensation
35,035
29,318
Current portion of long-term debt
34,177
34,148
Deferred revenue
90,660
65,784
Other current liabilities
66,382
76,971
Total current liabilities
556,356
611,950
Noncurrent liabilities
Deferred revenue
46,104
53,155
Long-term debt
1,321,452
1,339,007
Deferred income taxes, net
31,959
32,053
Operating lease liabilities
43,053
46,766
Other noncurrent liabilities
43,177
44,635
Total liabilities
2,042,101
2,127,566
Commitments and contingencies
Stockholders’ equity
Preferred stock
—
—
Common stock
702
702
Additional paid-in capital
656,723
667,658
Retained earnings
906,403
930,830
Treasury stock
(398,278)
(377,639)
Accumulated other comprehensive loss
(97,752)
(91,583)
Total stockholders’ equity
1,067,798
1,129,968
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY
$
3,109,899
$
3,257,534
ACI WORLDWIDE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited and in
thousands, except per share amounts)
Three Months Ended March
31,
2020
2019
Revenues
Software as a service and platform as a
service
$
192,950
$
108,557
License
28,129
21,078
Maintenance
53,280
55,111
Services
17,126
21,109
Total revenues
291,485
205,855
Operating expenses
Cost of revenue (1)
165,837
114,941
Research and development
39,024
36,194
Selling and marketing
30,083
29,430
General and administrative
35,926
31,517
Depreciation and amortization
31,898
21,866
Total operating expenses
302,768
233,948
Operating loss
(11,283)
(28,093)
Other income (expense)
Interest expense
(17,171)
(11,614)
Interest income
2,900
3,033
Other, net
(9,758)
(1,912)
Total other income (expense)
(24,029)
(10,493)
Loss before income taxes
(35,312)
(38,586)
Income tax benefit
(10,885)
(12,623)
Net loss
$
(24,427)
$
(25,963)
Loss per common share
Basic
$
(0.21)
$
(0.22)
Diluted
$
(0.21)
$
(0.22)
Weighted average common shares
outstanding
Basic
116,006
116,090
Diluted
116,006
116,090
(1) The cost of revenue excludes charges
for depreciation but includes amortization of purchased and
developed software for resale.
ACI WORLDWIDE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited and in
thousands)
Three Months Ended March
31,
2020
2019
Cash flows from operating activities:
Net loss
$
(24,427)
$
(25,963)
Adjustments to reconcile net loss to net
cash flows from operating activities:
Depreciation
5,825
5,901
Amortization
27,997
18,951
Amortization of operating lease
right-of-use assets
3,556
3,383
Amortization of deferred debt issuance
costs
1,212
753
Deferred income taxes
(10,413)
(17,414)
Stock-based compensation expense
6,950
6,585
Other
650
574
Changes in operating assets and
liabilities, net of impact of acquisitions:
Receivables
48,699
94,549
Accounts payable
(6,087)
(10,297)
Accrued employee compensation
6,985
(8,598)
Current income taxes
(5,361)
(1,041)
Deferred revenue
22,495
(4,127)
Other current and noncurrent assets and
liabilities
(20,581)
(20,829)
Net cash flows from operating
activities
57,500
42,427
Cash flows from investing activities:
Purchases of property and equipment
(3,597)
(5,250)
Purchases of software and distribution
rights
(6,541)
(4,578)
Net cash flows from investing
activities
(10,138)
(9,828)
Cash flows from financing activities:
Proceeds from issuance of common stock
947
831
Proceeds from exercises of stock
options
400
4,857
Repurchase of stock-based compensation
awards for tax withholdings
(10,973)
(2,624)
Repurchases of common stock
(28,881)
(631)
Proceeds from revolving credit
facility
30,000
—
Repayment of revolving credit facility
(39,000)
—
Repayment of term portion of credit
agreement
(9,737)
(5,937)
Payments on or proceeds from other debt,
net
(3,593)
(1,857)
Net cash flows from financing
activities
(60,837)
(5,361)
Effect of exchange rate fluctuations on
cash
11,201
433
Net increase (decrease) in cash and cash
equivalents
(2,274)
27,671
Cash and cash equivalents, beginning of
period
121,398
148,502
Cash and cash equivalents, end of
period
$
119,124
$
176,173
Adjusted EBITDA (millions)
Three Months Ended March
31,
2020
2019
Net loss
$
(24.4)
$
(26.0)
Plus:
Income tax benefit
(10.9)
(12.6)
Net interest expense
14.3
8.6
Net other expense
9.8
1.9
Depreciation expense
5.8
5.9
Amortization expense
28.0
19.0
Non-cash stock-based compensation
expense
7.0
6.6
Adjusted EBITDA before significant
transaction-related expenses
$
29.6
$
3.4
Significant transaction-related
expenses
8.5
4.7
Adjusted EBITDA
$
38.1
$
8.1
Segment Information (millions)
Three Months Ended March
31,
2020
2019
Revenue
ACI On Demand
$
193.0
$
109.9
ACI On Premise
98.5
96.0
Total
$
291.5
$
205.9
Segment Adjusted EBITDA
ACI On Demand
$
23.1
$
(0.3)
ACI On Premise
$
30.9
$
28.3
Reconciliation of Adjusted Operating
Free Cash Flow (millions)
Three Months Ended March
31,
2020
2019
Net cash flows from operating
activities
$
57.5
$
42.4
Net after-tax payments associated with
significant transaction-related expenses
4.0
2.8
Less: capital expenditures
(10.1)
(9.8)
Adjusted Operating Free Cash
Flow
$
51.4
$
35.4
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200507005108/en/
John Kraft, Vice President, Investor Relations & Strategic
Analysis ACI Worldwide 239-403-4627 john.kraft@aciworldwide.com
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