ACI Worldwide, Inc. Reports Financial Results for the Quarter and Full Year Ended December 31, 2023
ACI Worldwide (ACIW) reports strong Q4 2023 results with total revenue reaching $477 million, a 5% growth. The company also saw a 7% increase in total recurring revenue and a 36% growth in net income. Total EBITDA reached $210 million, an 8% increase, while cash flow from operating activities grew by 107%. ACIW repurchased 1 million shares for $28 million and expects 7-9% revenue growth in 2024.
Positive
Strong Q4 2023 results for ACI Worldwide with total revenue growing by 5% to $477 million.
7% increase in total recurring revenue and 36% growth in net income for ACIW.
Total EBITDA increased by 8% to $210 million, and cash flow from operating activities grew by 107%.
ACIW repurchased 1 million shares for $28 million and anticipates 7-9% revenue growth in 2024.
ACI Worldwide's reported total revenue growth of 5% is a modest increase, reflecting a stable demand for their products and services. However, the more significant net income growth of 36% suggests improved operational efficiency or cost management. The substantial 107% increase in cash flow from operating activities is particularly noteworthy, indicating robust cash generation capabilities, which is crucial for funding investments and shareholder returns, such as the share repurchase program mentioned.
The projected 7-9% revenue growth for the following year is an optimistic outlook that may reflect the company's confidence in its market position and growth strategy. This forecast could positively influence investor sentiment, as it suggests a trajectory of continued growth. However, it is essential to benchmark this against sector performance to gauge its competitiveness.
The increase in total recurring revenue by 7% is a strong indicator of the company's sustainable business model. Recurring revenue streams are highly valued for their predictability and can lead to higher valuation multiples. This metric is particularly relevant for investors looking for stability and long-term growth.
Additionally, the share repurchase indicates management's belief that the stock is undervalued. It is also a signal to the market that the company is confident in its financial health and future prospects. However, investors should consider the opportunity cost of these buybacks, such as potential alternative investments in growth or innovation.
The EBITDA growth of 8% suggests that ACI Worldwide is maintaining profitability margins while expanding its revenue base, which is encouraging in the context of economic cycles. It reflects financial resilience and may point to a competitive advantage in its sector. When considering the broader economic environment, such as interest rates and inflation, the company's financial performance could be an indicator of its pricing power and cost management strategies.
The company's financial health, as evidenced by its strong cash flow and income growth, may also provide it with a buffer against potential economic downturns, allowing it to invest in strategic initiatives or weather adverse market conditions better than its peers.
02/29/2024 - 06:01 AM
Q4 2023 HIGHLIGHTS
Total revenue of $477 million grew 5% 1
Total recurring revenue grew 7% 1
Net income of $123 million grew 36%
Total EBITDA of $210 million grew 8%
Cash flow from operating activities of $86 million grew 107%
Repurchased 1 million shares for $28 million
Expect 7-9% revenue growth in 2024
OMAHA, Neb. --(BUSINESS WIRE)--
ACI Worldwide (NASDAQ: ACIW), a global leader in mission-critical, real-time payments software , announced financial results today for the quarter and full year ended December 31, 2023.
"2023 was another year of progress for ACI, with steady revenue growth and improving margins,” said Thomas Warsop, president and CEO of ACI Worldwide. “In the Bank segment, we saw particular strength in our real-time payments and anti-fraud product lines, and our Bank recurring revenue continues to accelerate, which positions us very well for 2024 and beyond. Our Biller business is also performing well as we benefit from new customer onboarding and interchange improvement efforts put in place last year.”
“We are also pleased to welcome two new members to our already-strong board of directors: Katrinka McCallum, who spent many years at SaaS software company Red Hat; and Juan Benitez, the former President of GoFundMe and GM of Braintree Payments,” Warsop added. “Katrinka and Juan will provide great support as we expand our SaaS businesses and use of artificial intelligence, things both of them have overseen before. Looking forward, our pipeline is strong, and we are focused and optimistic about our growth acceleration.”
FINANCIAL SUMMARY
In Q4 2023, revenue was $477 million , up 5% from Q4 2022. Recurring revenue of $275 million in Q4 was up 7% from Q4 20221 . Net income was $123 million versus $90 million in Q4 2022. Adjusted EBITDA in Q4 2023 was $210 million , up 8% from Q4 2022. Cash flow from operating activities in Q4 2023 was $86 million , up 107% compared to Q4 2022.
Bank segment revenue increased 3% in Q4 2023, while Bank segment recurring revenue, consisting of maintenance and SaaS revenue, grew 8% , and Bank segment adjusted EBITDA grew 1% versus Q4 20221 .
Merchant segment revenue improved throughout the year, as expected, growing 4% in Q4 20231 . Merchant segment adjusted EBITDA increased 2% versus Q4 20221 .
Biller segment revenue increased 9% in Q4 2023. Biller segment adjusted EBITDA increased 60% versus Q4 2022, driven by new customer onboarding and progress with our interchange improvement program.
Full-year 2023 total revenue was $1.45 billion , up 5% from 2022 adjusted for FX and the divestiture1 . Recurring revenue of $1.1 billion in 2023 was up 8% from 20221 . Net income was $122 million in 2023. After adjusting for the gain on the divestiture of our Corporate Online Banking business, this was a 7% increase from 2022. Total adjusted EBITDA in 2023 was $395 million compared to $373 million in 2022, up 10% 1 . Cash flow from operating activities in 2023 was $169 million , up 18% compared to 2022.
ACI ended 2023 with $164 million in cash on hand and a debt balance of $1 billion , which represents a net debt leverage ratio of 2.2x, down from 2.4x last quarter. For 2023, the company repurchased approximately 1 million shares for $28 million in capital and repurchased an additional 2 million shares for $62 million in capital year-to-date in 2024. The company has $110 million remaining available on the share repurchase authorization.
2024 GUIDANCE
For the full year of 2024, we expect revenue growth to be in the 7% to 9% range on a constant currency basis, or in the range of $1.54 7 billion to $1.57 6 billion . We expect adjusted EBITDA to be in the range of $418 million to $428 million with net adjusted EBITDA margin expansion. For Q1 2024, we expect revenue to be between $300 million and $310 million and adjusted EBITDA of $25 million to $30 million . This excludes one-time costs to implement certain efficiency strategies.
1 Adjusted for foreign currency fluctuations and the divestiture of Corporate Online Banking in September 2022
CONFERENCE CALL TO DISCUSS FINANCIAL RESULTS
Today, management will host a conference call at 8:30 a.m. ET 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 number for dial-in participation: toll-free 1 (800) 715-9871 and conference code 3153574.
About ACI Worldwide
ACI Worldwide is a global leader in mission-critical, real-time payments software. Our proven, secure and scalable software solutions enable leading corporations, fintechs, and financial disruptors to process and manage digital payments, power omni-commerce payments, present and process bill payments, and manage fraud and risk. We combine our global footprint with a local presence to drive the real-time digital transformation of payments and commerce.
© Copyright ACI Worldwide, Inc. 2024.
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.
For more information contact:
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.
ARR: New annual recurring revenue expected to be generated from new accounts, new applications, and add-on sales bookings contracts signed in the period.
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: (i) our positioning for 2024 and beyond, (ii) benefits from new customer onboarding and interchange improvement efforts put in place last year, (iii) new board members providing great support as we expand our SaaS businesses and use of artificial intelligence, (iv) our pipeline strength and focus and optimism about our growth acceleration, and (v) statements regarding Q1 2024 and full year 2024 revenue and adjusted EBITDA financial guidance.
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, business interruptions or failure of our information technology and communication systems, security breaches or viruses, our ability to attract and retain senior management personnel and skilled technical employees, future acquisitions, strategic partnerships and investments, divestitures and other restructuring activities, implementation and success of our strategy, impact if we convert some or all on-premise licenses from fixed-term to subscription model, anti-takeover provisions, exposure to credit or operating risks arising from certain payment funding methods, customer reluctance to switch to a new vendor, our ability to adequately defend our intellectual property, litigation, consent orders and other compliance agreements, our offshore software development activities, risks from operating internationally, including fluctuations in currency exchange rates, events in eastern Europe and the Middle East , adverse changes in the global economy, compliance of our products with applicable legislation, governmental regulations and industry standards, the complexity of our products and services and the risk that they may contain hidden defects, complex regulations applicable to our payments business, our compliance with privacy and cybersecurity regulations, exposure to unknown tax liabilities, changes in tax laws and regulations, consolidations and failures in the financial services industry, volatility in our stock price, demand for our 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, impairment of our goodwill or intangible assets, the accuracy of management’s backlog estimates, 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, restrictions and other financial covenants in our debt agreements, our existing levels of debt, events outside of our control including natural disasters, wars, and outbreaks of disease, and revenues or revenue mix. 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
CONSOLIDATED BALANCE SHEETS
(unaudited and in thousands)
December 31,
2023
2022
ASSETS
Current assets
Cash and cash equivalents
$
164,239
$
124,981
Receivables, net of allowances
452,337
403,781
Settlement assets
723,039
540,667
Prepaid expenses
31,479
28,010
Other current assets
35,551
17,366
Total current assets
1,406,645
1,114,805
Noncurrent assets
Accrued receivables, net
313,983
297,818
Property and equipment, net
37,856
52,499
Operating lease right-of-use assets
34,338
40,031
Software, net
108,418
129,109
Goodwill
1,226,026
1,226,026
Intangible assets, net
195,646
228,698
Deferred income taxes, net
58,499
53,738
Other noncurrent assets
63,328
67,171
TOTAL ASSETS
$
3,444,739
$
3,209,895
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable
$
45,964
$
47,997
Settlement liabilities
721,164
539,087
Employee compensation
53,892
45,289
Current portion of long-term debt
74,405
65,521
Deferred revenue
59,580
58,303
Other current liabilities
82,244
102,645
Total current liabilities
1,037,249
858,842
Noncurrent liabilities
Deferred revenue
24,780
23,233
Long-term debt
963,599
1,024,351
Deferred income taxes, net
40,735
40,371
Operating lease liabilities
29,074
33,910
Other noncurrent liabilities
25,005
36,001
Total liabilities
2,120,442
2,016,708
Stockholders’ equity
Preferred stock
—
—
Common stock
702
702
Additional paid-in capital
712,994
702,458
Retained earnings
1,394,967
1,273,458
Treasury stock
(674,896
)
(665,771
)
Accumulated other comprehensive loss
(109,470
)
(117,660
)
Total stockholders’ equity
1,324,297
1,193,187
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$
3,444,739
$
3,209,895
ACI WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited and in thousands, except per share amounts)
Three Months Ended
December 31,
Years Ended
December 31,
2023
2022
2023
2022
Revenues
Software as a service and platform as a service
$
223,172
$
205,800
$
849,147
$
802,880
License
178,543
179,874
321,224
348,134
Maintenance
51,632
48,902
205,068
200,045
Services
23,216
17,229
77,140
70,842
Total revenues
476,563
451,805
1,452,579
1,421,901
Operating expenses
Cost of revenue (1)
181,689
178,699
719,211
696,071
Research and development
34,636
31,963
140,758
146,311
Selling and marketing
34,473
32,019
132,639
134,812
General and administrative
24,515
29,441
117,190
114,194
Depreciation and amortization
28,934
31,460
122,373
126,678
Total operating expenses
304,247
303,582
1,232,171
1,218,066
Operating income
172,316
148,223
220,408
203,835
Other income (expense)
Interest expense
(19,845
)
(16,179
)
(78,486
)
(53,193
)
Interest income
3,757
3,342
14,215
12,547
Other, net
(2,107
)
(2,355
)
(8,510
)
43,446
Total other income (expense)
(18,195
)
(15,192
)
(72,781
)
2,800
Income before income taxes
154,121
133,031
147,627
206,635
Income tax expense
31,505
42,803
26,118
64,458
Net income
$
122,616
$
90,228
$
121,509
$
142,177
Income per common share
Basic
$
1.13
$
0.81
$
1.12
$
1.25
Diluted
$
1.12
$
0.81
$
1.12
$
1.24
Weighted average common shares outstanding
Basic
108,703
111,077
108,497
113,700
Diluted
109,147
111,354
108,857
114,238
(1) The cost of revenue excludes charges for depreciation but includes amortization of purchased and developed software for resale.
ACI WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in thousands)
Three Months Ended
December 31,
Years Ended
December 31,
2023
2022
2023
2022
Cash flows from operating activities:
Net income
$
122,616
$
90,228
$
121,509
$
142,177
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation
5,017
6,129
23,739
23,181
Amortization
23,918
25,330
98,634
104,147
Amortization of operating lease right-of-use assets
2,430
2,740
11,620
11,036
Amortization of deferred debt issuance costs
908
1,126
4,323
4,561
Deferred income taxes
21,122
10,662
(4,085
)
1,603
Stock-based compensation expense
7,010
7,869
24,547
29,753
Gain on divestiture
—
—
—
(38,452
)
Other
(247
)
545
1,921
3,028
Changes in operating assets and liabilities, net of impact of divestiture:
Receivables
(105,010
)
(137,961
)
(62,998
)
(132,194
)
Accounts payable
3,423
10,777
(3,775
)
7,730
Accrued employee compensation
11,025
711
8,146
(3,161
)
Deferred revenue
(1,699
)
3,390
2,705
(2,977
)
Other current and noncurrent assets and liabilities
(4,770
)
19,869
(57,769
)
(7,051
)
Net cash flows from operating activities
85,743
41,415
168,517
143,381
Cash flows from investing activities:
Purchases of property and equipment
(968
)
(4,980
)
(8,924
)
(13,103
)
Purchases of software and distribution rights
(6,282
)
(8,396
)
(28,853
)
(26,790
)
Proceeds from divestiture
—
—
—
100,139
Net cash flows from investing activities
(7,250
)
(13,376
)
(37,777
)
60,246
Cash flows from financing activities:
Proceeds from issuance of common stock
697
780
2,819
3,581
Proceeds from exercises of stock options
3,594
2,792
6,726
4,584
Repurchase of stock-based compensation awards for tax withholdings
(946
)
(1,163
)
(5,149
)
(6,983
)
Repurchases of common stock
(27,587
)
(115,603
)
(27,587
)
(206,537
)
Proceeds from revolving credit facility
59,000
95,000
134,000
180,000
Repayment of revolving credit facility
(64,000
)
—
(115,000
)
(75,000
)
Repayment of term portion of credit agreement
(19,475
)
(14,606
)
(73,031
)
(85,431
)
Payments on or proceeds from other debt, net
(4,293
)
(2,017
)
(16,766
)
(12,123
)
Payments for debt issuance costs
—
—
(2,160
)
—
Net increase (decrease) in settlement assets and liabilities
(10,769
)
6,765
(15,404
)
26,849
Net cash flows from financing activities
(63,779
)
(28,052
)
(111,552
)
(171,060
)
Effect of exchange rate fluctuations on cash
573
(1,977
)
4,961
(2,037
)
Net increase (decrease) in cash and cash equivalents
15,287
(1,990
)
24,149
30,530
Cash and cash equivalents, including settlement deposits, beginning of period
223,534
216,662
214,672
184,142
Cash and cash equivalents, including settlement deposits, end of period
$
238,821
$
214,672
$
238,821
$
214,672
Reconciliation of cash and cash equivalents to the Consolidated Balance Sheets
Cash and cash equivalents
$
164,239
$
124,981
$
164,239
$
124,981
Settlement deposits
74,582
89,691
74,582
89,691
Total cash and cash equivalents
$
238,821
$
214,672
$
238,821
$
214,672
Adjusted EBITDA (millions)
Three Months Ended
December 31,
Years Ended
December 31,
2023
2022
2023
2022
Net income
$
122.6
$
90.2
$
121.5
$
142.2
Plus:
Income tax expense (benefit)
31.5
42.8
26.1
64.5
Net interest expense
16.1
12.8
64.3
40.6
Net other (income) expense
2.1
2.4
8.5
(43.4
)
Depreciation expense
5.0
6.1
23.7
23.2
Amortization expense
23.9
25.3
98.6
104.1
Non-cash stock-based compensation expense
7.0
7.9
24.5
29.8
Adjusted EBITDA before significant transaction-related expenses
$
208.2
$
187.5
$
367.2
$
361.0
Significant transaction-related expenses:
CEO transition
—
3.6
—
3.6
Cost reduction strategies
1.3
—
21.0
—
European datacenter migration
0.2
2.4
2.8
5.8
Other
—
0.4
4.4
3.0
Adjusted EBITDA
$
209.7
$
193.9
$
395.4
$
373.4
Revenue, net of interchange:
Revenue
$
476.6
$
451.8
$
1,452.6
$
1,421.9
Interchange
106.1
111.2
421.1
406.6
Revenue, net of interchange
$
370.5
$
340.6
$
1,031.5
$
1,015.3
Net adjusted EBITDA Margin
57
%
57
%
38
%
37
%
Segment Information (millions)
Three Months Ended
December 31,
Years Ended
December 31,
2023
2022
2023
2022
Revenue
Banks
$
254.9
$
247.0
$
616.1
$
638.6
Merchants
43.0
40.8
150.6
153.9
Billers
178.7
164.0
685.9
629.4
Total
$
476.6
$
451.8
$
1,452.6
$
1,421.9
Recurring revenue
Banks
$
58.2
$
53.6
$
229.4
$
232.9
Merchants
37.9
37.1
138.9
140.6
Billers
178.7
164.0
685.9
629.4
Total
$
274.8
$
254.7
$
1,054.2
$
1,002.9
Segment adjusted EBITDA
Banks
$
188.2
$
186.3
$
355.5
$
371.0
Merchants
17.5
16.8
44.3
49.0
Billers
42.2
26.4
142.3
107.4
EPS Impact of Non-cash and Significant Transaction-related Items (millions)
Three Months Ended December 31,
2023
2022
EPS Impact
$ in Millions
(Net of Tax)
EPS Impact
$ in Millions
(Net of Tax)
GAAP net income
$
1.12
$
122.6
$
0.81
$
90.2
Adjusted for:
Significant transaction-related expenses
0.01
1.1
0.04
4.9
Amortization of acquisition-related intangibles
0.06
6.4
0.06
6.4
Amortization of acquisition-related software
0.03
3.5
0.04
4.5
Non-cash stock-based compensation
0.05
5.3
0.05
6.0
Total adjustments
$
0.15
$
16.3
$
0.19
$
21.8
Diluted EPS adjusted for non-cash and significant transaction-related items
$
1.27
$
138.9
$
1.00
$
112.0
EPS Impact of Non-cash and Significant Transaction-related Items (millions)
Years Ended Years Ended December 31,
2023
2022
EPS Impact
$ in Millions
(Net of Tax)
EPS Impact
$ in Millions
(Net of Tax)
GAAP net income
$
1.12
$
121.5
$
1.24
$
142.2
Adjusted for:
Gain on divestiture
—
—
(0.26
)
(29.2
)
Significant transaction-related expenses
0.19
21.1
0.08
9.6
Amortization of acquisition-related intangibles
0.24
25.7
0.24
27.0
Amortization of acquisition-related software
0.14
15.5
0.16
18.6
Non-cash stock-based compensation
0.17
18.7
0.20
22.6
Total adjustments
$
0.74
$
81.0
$
0.42
$
48.6
Diluted EPS adjusted for non-cash and significant transaction-related items
$
1.86
$
202.5
$
1.66
$
190.8
Recurring Revenue (millions)
Three Months Ended
December 31,
Years Ended
December 31,
2023
2022
2023
2022
SaaS and PaaS fees
$
223.2
$
205.8
$
849.1
$
802.9
Maintenance fees
51.6
48.9
205.1
200.0
Recurring revenue
$
274.8
$
254.7
$
1,054.2
$
1,002.9
New Bookings (millions)
Three Months Ended
December 31,
Years Ended
December 31,
2023
2022
2023
2022
Annual recurring revenue (ARR) bookings
$
28.8
$
40.2
$
73.5
$
109.7
License and services bookings
106.5
91.8
239.2
204.7
View source version on businesswire.com: https://www.businesswire.com/news/home/20240229357302/en/
Investor Relations
John Kraft
SVP, Head of Strategy and Finance
239-403-4627 / john.kraft@aciworldwide.com
Source: ACI Worldwide
What was ACI Worldwide's total revenue in Q4 2023?
ACI Worldwide's total revenue in Q4 2023 was $477 million, a 5% growth.
How much did ACIW's net income grow in Q4 2023?
ACI Worldwide's net income grew by 36% in Q4 2023.
What was the total EBITDA for ACI Worldwide in Q4 2023?
ACIW's total EBITDA in Q4 2023 was $210 million, an 8% increase.
How many shares did ACIW repurchase and for how much?
ACI Worldwide repurchased 1 million shares for $28 million in Q4 2023.
What revenue growth does ACIW expect in 2024?
ACI Worldwide anticipates 7-9% revenue growth in 2024.