ACI WORLDWIDE, INC. Q3 FY2024 earnings call

Quarter Performance

• Q3 2024 results were ahead of expectations with total revenue up 24% year-over-year. Team exceeded expectations in accelerating contract signings, reducing seasonality.

Segments Detail

• Bank segment: Saw strength in real-time payments (72% growth), issuing/acquiring solutions growth (40%), and progress on payments hub technology. Bank SaaS grew 15% in the quarter.
• Biller segment: Had 5% revenue growth, with strong renewals and expansions, including with one of the largest utilities in the US.
• Merchant segment: Had 38% revenue growth and 159% EBITDA growth, with improving recurring revenue.

AI Usage

• Using AI in multiple ways for productivity, software development, testing, customer service, and fraud detection, with a co-work approach pairing team members with AI.

Future Focus

• Turning attention to 2025 and beyond, with strong pipeline momentum setting up for continued growth in revenue and EBITDA, and reducing long-term stated leverage target from 2.5x to 2x.

Bank segment: Revenue was $222 million, up 43% year-over-year, with EBITDA of $154 million, up 69% year-over-year. Real-time payments revenue grew 72%, and Bank SaaS grew 15% in the quarter. Merchant segment: Revenue was $50 million, up 38% year-over-year, with adjusted EBITDA of $27 million, up 159% year-over-year. Recurring revenue in the segment continued to improve. Biller segment: Revenue was $180 million, up 5% year-over-year. Adjusted EBITDA was down compared to Q3 last year due to one-time non-recurring margin benefits not recurring.

• Raised full-year 2024 revenue guidance to $1.567 billion to $1.601 billion and adjusted EBITDA to $433 million to $448 million.
• Reduced long-term stated leverage target from 2.5x to 2x.
• Focus on accelerating 2025 pipeline with a strong pipeline exiting 2024, with plans to provide further 2025 guidance in February 2025.

Q: Bigger picture question on medium-term outlook for banks A: Customers are investing in new products and seeing ACI as a partner. Pipeline for 2025 is strong, allowing focus on accelerating next year's business.

Q: Repeat comments on 2025 A: Pipeline for 2025 is strong, even with outperformance in 2024, it keeps the growth trajectory.

Q: Impact of U.S. administration change on business A: Cautiously optimistic, but no quantitative impact built into forecast. Banks have tailwinds for technology spending.

Q: Competitive environment in real-time payment space A: Most new business is net new, with ACI winning central infrastructure deals. Cross-sell with existing customers also occurs.