HIGHLIGHTS
- ACI On Demand segment revenue grew
5%
- ACI On Demand net adjusted EBITDA
margin improved 600 bps
- Completion of Speedpay acquisition
- Updating full year 2019 and 2020
guidance
ACI Worldwide (NASDAQ: ACIW), a leading global provider
of real-time electronic payment and
banking solutions, today announced financial results for the
quarter ended March 31, 2019.
“We are pleased to announce that the acquisition of Speedpay
will close today and we are updating our full year 2019 outlook,”
commented Phil Heasley, President and CEO, ACI Worldwide. “The
addition of Speedpay is strategically compelling and is expected to
provide notable financial benefits, including increases in
recurring revenue and net adjusted EBITDA margin in our On Demand
business. We welcome the talented Speedpay employees and valuable
customers. Looking to the rest of 2019 and beyond, with a strong
new bookings pipeline, our improving AOD operations, and the
addition of Speedpay, ACI is poised to capitalize even more quickly
on the growing global payment transaction opportunity.”
Q1 2019 FINANCIAL SUMMARY
In Q1 2019, new bookings were $70 million, which was down when
compared to our record bookings quarter in Q1 last year.
In Q1 2019, revenue was $206 million, versus $209 million in Q1
2018. Net loss in the quarter was $26 million, versus a net loss of
$19 million last year. Adjusted EBITDA was $8 million, versus $19
million in Q1 2018.
In Q1 2019, revenue from ACI’s On Demand segment was $110
million, up 5% from $104 million last year. On Demand segment net
adjusted EBITDA margin improved 600 basis points from last year. On
Demand segment net adjusted EBITDA margins are adjusted for pass
through interchange revenue of $45 million and $40 million, for Q1
2019 and Q1 2018, respectively. ACI’s On Premise segment revenue
was $96 million, versus $105 million last year due to timing of
nonrecurring license fees. On Premise segment adjusted EBITDA
margin was 29% in Q1 2019 versus 37% in Q1 2018.
ACI ended Q1 2019 with a 12-month backlog of $813 million and a
60-month backlog of $4.2 billion. After adjusting for foreign
currency fluctuations, our 12-month backlog increased $3 million
and our 60-month backlog decreased $22 million from Q4 2018.
Cash flows from operating activities in Q1 2019 were $42
million, versus $45 million in Q1 2018. Adjusted operating free
cash flow in Q1 2019 was $35 million, versus $36 million in Q1
2018. ACI ended Q1 2019 with $176 million in cash on hand, up from
$149 million in Q4 2018, and a debt balance of $679 million. The
company has $176 million remaining on its share repurchase
authorization.
GUIDANCE
We are updating our outlook for the full year 2019 and 2020
given the contribution from Speedpay. We expect Speedpay to
contribute between $215 million and $220 million in revenue and
between $50 million and $55 million in adjusted EBITDA to the
remainder of 2019. We expect Speedpay to contribute $90 million to
$95 million in adjusted EBITDA in 2020. We now expect 2019 total
revenue to be between $1.315 billion and $1.345 billion and
adjusted EBITDA to be in a range of $360 million to $380 million,
which excludes between $30 million and $35 million in significant
transaction related expenses. This is up from our prior guidance of
$1.1 billion to $1.125 billion and $310 million to $325 million for
revenue and adjusted EBITDA, respectively. We expect Q2 2019
revenue to be between $280 and $290 million. We continue to expect
full year 2019 new bookings growth to be in the upper single digits
to low double digits.
We now expect our 2020 adjusted EBITDA to be in a range of $425
million to $445 million, up from the prior outlook of $335 million
to $350 million.
CONFERENCE CALL TO DISCUSS FINANCIAL RESULTS AND
OUTLOOK
Management will host a conference call at 8:30 am ET today to
discuss these results, the Speedpay acquisition, as well as 2019
and 2020 guidance. 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 1270429. 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 WorldwideACI Worldwide, the Universal
Payments (UP) company, powers electronic
payments for more than 5,100 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. 2019.
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 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.
- 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.
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 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 are inherently unreliable.
Our backlog estimates require substantial judgment and are based on
a number of assumptions as described above. These assumptions may
turn out to be inaccurate or wrong, including, but not limited to,
reasons outside of management’s control. For example, our customers
may attempt to renegotiate or terminate their contracts for a
number of reasons, including mergers, changes in their financial
condition, or general changes in economic conditions in the
customer’s industry or geographic location, or we may 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 actually recognized in future periods. Accordingly, there
can be no assurance that contracts included in backlog estimates
will actually generate the specified revenue or that the actual
revenue will be generated within the corresponding 60-month
period.
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) expectations that the
addition of Speedpay is strategically compelling and is expected to
provide notable financial benefits, including increases in
recurring revenue and net adjusted EBITDA margin in our On Demand
business; (ii) expectations regarding a strong new bookings
pipeline, improving AOD operations, the addition of Speedpay and
the positioning to capitalize even more quickly on the growing
global payment transaction opportunity; (iii) expectations
regarding revenue, adjusted EBITDA, and new bookings growth in
2019; (iv) expectations regarding revenue in Q2 2019; (v) and
expectations regarding our 2020 EBITDA target.
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, restrictions and other
financial covenants in our debt agreements, consolidations and
failures in the financial services industry, customer reluctance to
switch to a new vendor, the accuracy of management’s backlog
estimates, the maturity of certain products, 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, volatility and disruption
of the capital and credit markets and adverse changes in the global
economy, our existing levels of debt, impairment of our goodwill or
intangible assets, litigation, future acquisitions, strategic
partnerships and investments, 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 ability to protect customer information
from security breaches or attacks, our compliance with privacy
regulations, our ability to adequately defend our intellectual
property, exposure to credit or operating risks arising from
certain payment funding methods, 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, 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, volatility in our stock price, and
potential claims associated with our sale and transition of our CFS
assets and liabilities. 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
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS(unaudited and in thousands, except share and per
share amounts)
March 31,
December 31,
2019
2018
ASSETS Current assets Cash and cash equivalents $
176,173 $ 148,502 Receivables, net of allowances 265,750 348,182
Prepaid expenses 31,464 23,277 Other current assets 40,830
46,516
Total current assets
514,217 566,477
Noncurrent
assets Accrued receivables, net 177,407 189,010 Property and
equipment, net 70,909 72,729 Operating lease right-of-use assets
60,978 - Software, net 130,812 137,228 Goodwill 909,691 909,691
Intangible assets, net 162,845 168,127 Deferred income taxes, net
38,408 27,048 Other noncurrent assets 48,875
52,145
TOTAL ASSETS $ 2,114,142 $ 2,122,455
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities Accounts payable $ 28,046 $ 39,602
Employee compensation 29,570 38,115 Current portion of long-term
debt 20,788 20,767 Deferred revenue 91,369 104,843 Other current
liabilities 90,604 93,293
Total
current liabilities 260,377 296,620
Noncurrent liabilities Deferred revenue 60,853 51,292
Long-term debt 645,784 650,989 Deferred income taxes, net 24,705
31,715 Operating lease liabilities 50,636 - Other noncurrent
liabilities 39,203 43,608
Total
liabilities 1,081,558 1,074,224
Commitments and contingencies
Stockholders'
equity Preferred stock - - Common stock 702 702 Additional
paid-in capital 636,960 632,235 Retained earnings 837,805 863,768
Treasury stock (351,587 ) (355,857 ) Accumulated other
comprehensive loss (91,296 ) (92,617 )
Total
stockholders' equity 1,032,584 1,048,231
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $
2,114,142 $ 2,122,455
ACI WORLDWIDE, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(unaudited and in thousands, except per share
amounts)
For the Three Months Ended
March 31,
2019 2018 Revenues Software as a
service and platform as a service $ 108,557 $ 104,280 License
21,078 28,046 Maintenance 55,111 56,659 Services 21,109
20,325
Total revenues 205,855
209,310
Operating expenses Cost
of revenue (1) 114,941 107,336 Research and development 36,194
36,791 Selling and marketing 29,430 31,893 General and
administrative 31,517 28,649 Depreciation and amortization
21,866 21,345
Total operating expenses
233,948 226,014
Operating
loss (28,093 ) (16,704 )
Other income
(expense) Interest expense (11,614 ) (9,365 ) Interest income
3,033 2,744 Other, net (1,912 ) (55 )
Total other
income (expense) (10,493 ) (6,676 )
Loss before income taxes (38,586 ) (23,380 ) Income tax
benefit (12,623 ) (3,952 )
Net loss $ (25,963
) $ (19,428 )
Loss per common share Basic $ (0.22 ) $
(0.17 ) Diluted $ (0.22 ) $ (0.17 )
Weighted average
common shares outstanding Basic 116,090 115,642 Diluted 116,090
115,642 (1) The cost of revenue excludes charges for depreciation
but includes amortization of purchased and developed software for
resale.
ACI WORLDWIDE, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS(unaudited and in thousands)
For the Three Months EndedMarch
31,
2019 2018 Cash flows from operating
activities: Net loss $ (25,963 ) $ (19,428 ) Adjustments to
reconcile net income to net cash flows from operating activities:
Depreciation 5,901 5,926 Amortization 18,951 19,067 Amortization of
operating lease right-of-use assets 3,383 - Amortization of
deferred debt issuance costs 753 699 Deferred income taxes (17,414
) (4,827 ) Stock-based compensation expense 6,585 6,362 Other 574
(663 ) Changes in operating assets and liabilities: Receivables
94,549 68,741 Accounts payable (10,297 ) (2,611 ) Accrued employee
compensation (8,598 ) (14,743 ) Current income taxes (1,041 )
(3,569 ) Deferred revenue (4,127 ) 11,326 Other current and
noncurrent assets and liabilities (20,829 ) (21,144 )
Net cash flows from operating activities 42,427
45,136 Cash flows from investing activities:
Purchases of property and equipment (5,250 ) (5,937 ) Purchases of
software and distribution rights (4,578 ) (6,652 )
Net cash flows from investing activities (9,828 )
(12,589 ) Cash flows from financing activities: Proceeds
from issuance of common stock 831 753 Proceeds from exercises of
stock options 4,857 9,118 Repurchase of restricted share awards and
restricted stock units for tax withholdings (2,624 ) (914 )
Repurchases of common stock (631 ) (31,113 ) Proceeds from
revolving credit facility - 48,000 Repayments of revolving credit
facility - (50,000 ) Repayment of term portion of credit agreement
(5,937 ) (5,187 ) Payments on other debt (1,857 )
(352 ) Net cash flows from financing activities (5,361 )
(29,695 ) Effect of exchange rate fluctuations on
cash 433 1,719 Net increase in cash and
cash equivalents 27,671 4,571 Cash and cash equivalents, beginning
of period 148,502 69,710 Cash and cash
equivalents, end of period $ 176,173 $ 74,281
ACI Worldwide,
Inc.Reconciliation of Selected GAAP Measures to Non-GAAP
Measures(unaudited and in millions, except per share
data)
Adjusted EBITDA (millions)
Quarter Ended March 31, 2019
2018 Net Loss $ (26.0 ) $ (19.4 ) Plus:
Income tax benefit (12.6 ) (4.0 ) Net interest expense 8.6 6.6 Net
other expense 1.9 0.1 Depreciation expense 5.9 5.9 Amortization
expense 19.0 19.1 Non-cash compensation expense 6.6
6.4
Adjusted EBITDA before
significant transaction-related expenses $ 3.4
$ 14.7 Significant transaction-related expenses
4.7 4.3
Adjusted
EBITDA $ 8.1 $
19.0
Segment Information (millions) Quarter
Ended March 31, 2019 2018 Revenue
ACI On Premise $ 96.0 $ 105.0 ACI On Demand 109.9
104.3
Total $
205.9 $ 209.3
Segment Adjusted EBITDA ACI On Premise $ 28.3 $ 38.9
ACI On Demand (0.3 ) (4.2 )
Reconciliation of
Adjusted Operating Free Cash Flow (millions)
Quarter Ended March 31, 2019
2018 Net cash flows from operating activities $ 42.4
$ 45.1 Net after-tax payments associated with significant
transaction-related expenses 2.8 3.6 Less: capital expenditures
(9.8 ) (12.6 )
Adjusted Operating
Free Cash Flow $ 35.4
$ 36.1
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190509005158/en/
John Kraft, Vice President, Investor Relations & Strategic
AnalysisACI Worldwide239-403-4627john.kraft@aciworldwide.com
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