Q1 HIGHLIGHTS

  • Recurring revenue of $248 million, up 1% from Q1 2020
  • Revenue of $285 million, down 2% from Q1 2020
  • Adjusted EBITDA of $45 million, up 19% from Q1 2020
  • Net adjusted EBITDA margin increased to 23% from 19% in Q1 2020
  • Cash flow from operations of $70 million, up 22% from Q1 2020
  • Net loss of $2 million compared to a net loss of $24 million in Q1 2020

ACI Worldwide (NASDAQ: ACIW), a leading global provider of real-time digital payment software and solutions, today announced financial results for the quarter ended March 31, 2021.

“ACI’s focus on execution continues to pay off, as demonstrated by our first quarter results. Despite significant and expected pandemic-related headwinds, new contract signings, revenue and adjusted EBITDA were above our expectations in the quarter,” said Odilon Almeida, president and CEO of ACI Worldwide. “As we progress on our strategy amid an improving economic outlook, we anticipate strong second half 2021 performance which will enable us to achieve the Rule of 40 for the first year ever. We are pleased by the positive feedback we have received on our strategic initiatives from new and existing customers and are excited about our pipeline of mission-critical real-time payment solutions we are delivering globally. The implementation of our three-pillar strategy is taking hold and we remain committed to maximizing shareholder value.”

Q1 2021 FINANCIAL SUMMARY Annual recurring revenue “ARR”’ from new sales, defined as the annual revenue expected to be generated from new accounts, new applications, and add-on sales contracts signed in the quarter was $10 million, down from $14 million in Q1 2020 as last year’s bookings had minimal impact from COVID-19 delays.

Recurring revenue was $248 million, up 1% from Q1 2020. Total revenue in the quarter was $285 million, down 2% compared to Q1 2020 primarily due to headwinds from the COVID-19 pandemic.

Adjusted EBITDA in the quarter increased 19% to $45 million compared to $38 million in Q1 2020. Net adjusted EBITDA margin increased to 23% in the quarter, compared to 19% in Q1 2020. Net loss in the quarter of $2 million improved compared to a net loss of $24 million in Q1 2020.

Merchant segment revenue grew 22% to $39 million and Merchant segment EBITDA increased 129% compared to Q1 2020. Biller segment revenue declined 2% to $151 million, while Biller segment EBITDA increased 13%. Bank segment revenue decreased 9% to $96 million primarily due to COVID-19-related delays in purchasing decisions by bank customers, and Bank segment EBITDA decreased 12%.

Cash flows from operating activities in the quarter were $70 million, up 22% from $58 million in Q1 2020. ACI ended the quarter with $185 million in cash on hand and $459 million available on our credit facility. The company paid down $25 million in debt in the quarter.

REAFFIRMING 2021 GUIDANCE

We expect COVID-19-related headwinds to persist through the first half of 2021, and for growth to accelerate to the mid-single digits in the second half of the year. For the full year 2021, we continue to expect adjusted EBITDA to be in the range of $375 million to $385 million with net adjusted EBITDA margin expansion. We expect revenue to be between $295 million and $305 million and adjusted EBITDA of $50 million to $60 million in Q2 2021.

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 2224449. There will be a replay of the call available for two weeks at (855) 859-2056 for US/Canada callers and +1 (404) 537-3406 for international participants.

About ACI Worldwide ACI Worldwide is a global software company that provides mission-critical real-time payment solutions to corporations. Customers use our proven, scalable and secure solutions to process and manage digital payments, enable omni-commerce payments, present and process bill payments, and manage fraud and risk. We combine our global footprint with local presence to drive the real-time digital transformation of payments and commerce.

© Copyright ACI Worldwide, Inc. 2021.

ACI, ACI Worldwide, ACI Payments, Inc., ACI Pay, Speedpay and all ACI product/solution 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).
  • Diluted EPS adjusted for non-cash and significant transaction related items: diluted EPS plus tax effected significant transaction related items, amortization of acquired intangibles and software, and non-cash stock-based compensation. Diluted EPS adjusted for non-cash and significant transaction related items should be considered in addition to, rather than as a substitute for, diluted EPS.
  • Recurring revenue: revenue from software as a service and platform as a service fees and maintenance fees. Recurring revenue should be considered in addition to, rather than as a substitute for, total 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, expectations regarding: (i) our expected strong second half 2021 performance which will enable us to achieve the rule of 40 for the first year ever; (ii) our excitement about our pipeline of mission-critical real-time payment solutions we are delivering globally and our commitment to maximizing shareholder value; (iii) our expectations for COVID-19-related headwinds to persist through the first half of 2021, and for growth to accelerate to the mid-single digits in the second half of the year; (iv) our expectations for full year adjusted EBITDA; and (v) our expectations for Q2 2021 revenue and adjusted EBITDA.

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, 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, 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, events outside of our control including natural disasters, wars, and outbreaks of disease, our ability to attract and retain senior management personnel and skilled technical employees, our existing levels of debt, potential adverse effects from the impending replacement of LIBOR, impairment of our goodwill or intangible assets, litigation, future acquisitions, strategic partnerships and investments, integration of and achieving benefits from the Speedpay acquisition, 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, and volatility in our stock price. 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)

 

 

March 31, 2021

 

December 31, 2020

ASSETS

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

184,364

 

 

$

165,374

 

Receivables, net of allowances

 

280,386

 

 

 

342,879

 

Settlement assets

 

435,066

 

 

 

605,008

 

Prepaid expenses

 

32,181

 

 

 

24,288

 

Other current assets

 

24,255

 

 

 

17,365

 

Total current assets

 

956,252

 

 

 

1,154,914

 

Noncurrent assets

 

 

 

Accrued receivables, net

 

199,590

 

 

 

215,772

 

Property and equipment, net

 

62,742

 

 

 

64,734

 

Operating lease right-of-use assets

 

40,548

 

 

 

41,243

 

Software, net

 

190,940

 

 

 

196,456

 

Goodwill

 

1,280,226

 

 

 

1,280,226

 

Intangible assets, net

 

311,975

 

 

 

321,983

 

Deferred income taxes, net

 

63,766

 

 

 

57,476

 

Other noncurrent assets

 

54,158

 

 

 

54,099

 

TOTAL ASSETS

$

3,160,197

 

 

$

3,386,903

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities

 

 

 

Accounts payable

$

37,276

 

 

$

41,223

 

Settlement liabilities

 

434,520

 

 

 

604,096

 

Employee compensation

 

35,486

 

 

 

48,560

 

Current portion of long-term debt

 

34,294

 

 

 

34,265

 

Deferred revenue

 

105,822

 

 

 

95,849

 

Other current liabilities

 

68,721

 

 

 

81,612

 

Total current liabilities

 

716,119

 

 

 

905,605

 

Noncurrent liabilities

 

 

 

Deferred revenue

 

31,378

 

 

 

33,564

 

Long-term debt

 

1,097,158

 

 

 

1,120,742

 

Deferred income taxes, net

 

37,956

 

 

 

40,504

 

Operating lease liabilities

 

37,670

 

 

 

39,958

 

Other noncurrent liabilities

 

42,199

 

 

 

39,933

 

Total liabilities

 

1,962,480

 

 

 

2,180,306

 

Commitments and contingencies

 

 

 

Stockholders’ equity

 

 

 

Preferred stock

 

 

 

 

 

Common stock

 

702

 

 

 

702

 

Additional paid-in capital

 

670,018

 

 

 

682,431

 

Retained earnings

 

1,001,545

 

 

 

1,003,490

 

Treasury stock

 

(378,987

)

 

 

(387,581

)

Accumulated other comprehensive loss

 

(95,561

)

 

 

(92,445

)

Total stockholders’ equity

 

1,197,717

 

 

 

1,206,597

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

3,160,197

 

 

$

3,386,903

 

ACI WORLDWIDE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited and in thousands, except per share amounts)

 

 

Three Months Ended March 31,

 

 

2021

 

2020

Revenues

 

 

 

Software as a service and platform as a service

$

195,746

 

 

$

192,950

 

License

 

21,202

 

 

 

28,129

 

Maintenance

 

52,363

 

 

 

53,280

 

Services

 

15,875

 

 

 

17,126

 

Total revenues

 

285,186

 

 

 

291,485

 

Operating expenses

 

 

 

Cost of revenue (1)

 

159,485

 

 

 

165,837

 

Research and development

 

34,514

 

 

 

39,024

 

Selling and marketing

 

28,138

 

 

 

30,083

 

General and administrative

 

27,775

 

 

 

35,926

 

Depreciation and amortization

 

31,584

 

 

 

31,898

 

Total operating expenses

 

281,496

 

 

 

302,768

 

Operating income (loss)

 

3,690

 

 

 

(11,283

)

Other income (expense)

 

 

 

Interest expense

 

(11,475

)

 

 

(17,171

)

Interest income

 

2,854

 

 

 

2,900

 

Other, net

 

(1,382

)

 

 

(9,758

)

Total other income (expense)

 

(10,003

)

 

 

(24,029

)

Loss before income taxes

 

(6,313

)

 

 

(35,312

)

Income tax benefit

 

(4,368

)

 

 

(10,885

)

Net loss

$

(1,945

)

 

$

(24,427

)

Loss per common share

 

 

 

Basic

$

(0.02

)

 

$

(0.21

)

Diluted

$

(0.02

)

 

$

(0.21

)

Weighted average common shares outstanding

 

 

 

Basic

 

117,491

 

 

 

116,006

 

Diluted

 

117,491

 

 

 

116,006

 

(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,

 

2021

 

2020

Cash flows from operating activities:

 

 

 

Net loss

$

(1,945

)

 

$

(24,427

)

Adjustments to reconcile net loss to net cash flows from operating activities:

 

 

 

Depreciation

 

5,416

 

 

 

5,825

 

Amortization

 

28,167

 

 

 

27,997

 

Amortization of operating lease right-of-use assets

 

2,345

 

 

 

3,556

 

Amortization of deferred debt issuance costs

 

1,182

 

 

 

1,212

 

Deferred income taxes

 

(6,078

)

 

 

(10,413

)

Stock-based compensation expense

 

6,703

 

 

 

6,950

 

Other

 

(106

)

 

 

650

 

Changes in operating assets and liabilities:

 

 

 

Receivables

 

76,135

 

 

 

48,699

 

Accounts payable

 

(2,808

)

 

 

(6,087

)

Accrued employee compensation

 

(12,725

)

 

 

6,985

 

Deferred revenue

 

8,152

 

 

 

22,495

 

Other current and noncurrent assets and liabilities

 

(34,315

)

 

 

(25,942

)

Net cash flows from operating activities

 

70,123

 

 

 

57,500

 

Cash flows from investing activities:

 

 

 

Purchases of property and equipment

 

(4,346

)

 

 

(3,597

)

Purchases of software and distribution rights

 

(8,053

)

 

 

(6,541

)

Net cash flows from investing activities

 

(12,399

)

 

 

(10,138

)

Cash flows from financing activities:

 

 

 

Proceeds from issuance of common stock

 

1,052

 

 

 

947

 

Proceeds from exercises of stock options

 

2,799

 

 

 

400

 

Repurchase of stock-based compensation awards for tax withholdings

 

(14,206

)

 

 

(10,973

)

Repurchases of common stock

 

 

 

 

(28,881

)

Proceeds from revolving credit facility

 

 

 

 

30,000

 

Repayment of revolving credit facility

 

(15,000

)

 

 

(39,000

)

Repayment of term portion of credit agreement

 

(9,738

)

 

 

(9,737

)

Payments on or proceeds from other debt, net

 

(3,600

)

 

 

(3,593

)

Net cash flows from financing activities

 

(38,693

)

 

 

(60,837

)

Effect of exchange rate fluctuations on cash

 

(41

)

 

 

11,201

 

Net increase (decrease) in cash and cash equivalents

 

18,990

 

 

 

(2,274

)

Cash and cash equivalents, beginning of period

 

165,374

 

 

 

121,398

 

Cash and cash equivalents, end of period

$

184,364

 

 

$

119,124

 

Adjusted EBITDA (millions)

Three Months Ended March 31,

2021

 

2020

Net loss

$

(1.9

)

 

$

(24.4

)

Plus:

 

 

 

Income tax benefit

 

(4.4

)

 

 

(10.9

)

Net interest expense

 

8.6

 

 

 

14.3

 

Net other expense

 

1.4

 

 

 

9.8

 

Depreciation expense

 

5.4

 

 

 

5.8

 

Amortization expense

 

28.2

 

 

 

28.0

 

Non-cash stock-based compensation expense

 

6.7

 

 

 

7.0

 

Adjusted EBITDA before significant transaction-related expenses

$

44.0

 

 

$

29.6

 

Significant transaction-related expenses:

 

 

 

Employee related actions

$

0.8

 

 

$

8.2

 

Other

 

0.4

 

 

 

0.3

 

Adjusted EBITDA

$

45.2

 

 

$

38.1

 

Revenue, net of interchange:

 

 

 

Revenue

$

285.2

 

 

$

291.5

 

Interchange

 

87.3

 

 

 

88.8

 

Revenue, net of interchange

$

197.9

 

 

$

202.7

 

 

 

 

 

Net Adjusted EBITDA Margin

 

23

%

 

 

19

%

Segment Information (millions)

Three Months Ended March 31,

 

2021

 

2020

Revenue

 

 

 

Banks

$95.9

 

$105.8

Merchants

38.7

 

31.8

Billers

150.6

 

153.9

Total

$285.2

 

$291.5

Segment Adjusted EBITDA

 

 

 

Banks

$37.2

 

$42.4

Merchants

14.7

 

6.4

Billers

34.0

 

30.2

EPS Impact of Non-cash and Significant Transaction-related Items (millions)

Three Months Ended March 31,

 

2021

 

2020

 

EPS Impact

 

$ in Millions (Net of Tax)

 

EPS Impact

 

$ in Millions (Net of Tax)

GAAP net loss

$

(0.02

)

 

$

(1.9

)

 

$

(0.21

)

 

$

(24.4

)

Adjusted for:

 

 

 

 

 

 

 

Significant transaction-related expenses

 

0.01

 

 

 

0.9

 

 

 

0.06

 

 

 

6.8

 

Amortization of acquisition-related intangibles

 

0.06

 

 

 

7.0

 

 

 

0.06

 

 

 

7.1

 

Amortization of acquisition-related software

 

0.06

 

 

 

6.7

 

 

 

0.07

 

 

 

8.0

 

Non-cash stock-based compensation

 

0.04

 

 

 

5.1

 

 

 

0.05

 

 

 

5.3

 

Total adjustments

$

0.17

 

 

$

19.7

 

 

$

0.24

 

 

$

27.2

 

Diluted EPS adjusted for non-cash and significant transaction-related items

$

0.15

 

 

$

17.8

 

 

$

0.03

 

 

$

2.8

 

Recurring Revenue (millions)

Three Months Ended March 31,

 

2021

 

2020

SaaS and PaaS fees

$

195.7

 

$

193.0

Maintenance fees

 

52.4

 

 

53.3

Recurring Revenue

$

248.1

 

$

246.3

Annual Recurring Revenue (ARR) Bookings (millions)

Three Months Ended March 31,

 

2021

 

2020

ARR bookings

$

9.7

 

 

$

13.5

 

 

John Kraft SVP, Head of Strategy and Finance ACI Worldwide 239-403-4627 john.kraft@aciworldwide.com

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