[PART I – FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents the unaudited condensed consolidated financial statements for ACI Worldwide, Inc. as of June 30, 2021, and for the three and six-month periods then ended, including Balance Sheets, Statements of Operations, Comprehensive Income, Stockholders' Equity, and Cash Flows, with detailed notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to $3.18 billion from $3.39 billion, primarily due to lower cash and receivables, while total liabilities decreased to $2.00 billion from $2.18 billion, mainly from reduced long-term debt Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Total Assets** | **$3,175,180** | **$3,386,903** | | Cash and cash equivalents | $146,213 | $165,374 | | Goodwill | $1,280,226 | $1,280,226 | | **Total Liabilities** | **$1,996,620** | **$2,180,306** | | Long-term debt | $1,071,822 | $1,120,742 | | **Total Stockholders' Equity** | **$1,178,560** | **$1,206,597** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q2 2021 revenues slightly increased to $301.7 million, but net income decreased to $6.5 million, while H1 2021 revenues slightly decreased to $586.9 million, resulting in a net income of $4.6 million, a significant improvement from a prior-year net loss Three Months Ended June 30, (in thousands, except per share data) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Total Revenues | $301,669 | $299,910 | | Operating Income | $15,424 | $29,138 | | Net Income | $6,501 | $14,075 | | Diluted EPS | $0.05 | $0.12 | Six Months Ended June 30, (in thousands, except per share data) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Total Revenues | $586,855 | $591,395 | | Operating Income | $19,114 | $17,855 | | Net Income (Loss) | $4,556 | $(10,352) | | Diluted EPS (Loss) | $0.04 | $(0.09) | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Q2 2021 comprehensive income was $8.0 million, down from $13.5 million, while H1 2021 comprehensive income was $2.9 million, recovering from a $17.1 million loss, driven by net income and foreign currency adjustments Comprehensive Income (Loss) (in thousands) | Period | 2021 | 2020 | | :--- | :--- | :--- | | **Three Months Ended June 30** | | | | Net income (loss) | $6,501 | $14,075 | | Other comprehensive income (loss) | $1,466 | $(582) | | Comprehensive income (loss) | $7,967 | $13,493 | | **Six Months Ended June 30** | | | | Net income (loss) | $4,556 | $(10,352) | | Other comprehensive income (loss) | $(1,650) | $(6,751) | | Comprehensive income (loss) | $2,906 | $(17,103) | [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Total stockholders' equity decreased to $1.18 billion from $1.21 billion, primarily due to **$39.4 million** in stock repurchases and tax withholdings, partially offset by net income and stock-based compensation - For the six months ended June 30, 2021, the company repurchased **1,000,000 shares** of common stock for **$39.4 million**[21](index=21&type=chunk) - Net income of **$4.6 million** and stock-based compensation of **$14.4 million** increased equity, while stock repurchases and other items led to an overall decrease[21](index=21&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities decreased to $108.2 million, investing activities used $23.7 million, and financing activities used $103.3 million, resulting in a net cash decrease of $19.2 million for the six months ended June 30, 2021 Six Months Ended June 30, Cash Flow Summary (in thousands) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash from operating activities | $108,216 | $125,529 | | Net cash from investing activities | $(23,727) | $(25,672) | | Net cash from financing activities | $(103,262) | $(100,150) | | **Net increase (decrease) in cash** | **$(19,161)** | **$7,825** | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Detailed notes cover accounting policies, COVID-19 impact, revenue recognition, debt structure, segment reporting changes (Banks, Merchants, Billers), and stock-based compensation - The company highlights risks and uncertainties from the COVID-19 pandemic, noting its impact is highly uncertain and could adversely affect business through changes in customer transaction volumes and spending[30](index=30&type=chunk)[31](index=31&type=chunk) - In January 2021, the company changed its organizational and segment reporting structure to **Banks, Merchants, and Billers** to align with its strategic direction[80](index=80&type=chunk) - Total debt as of June 30, 2021, was approximately **$1.11 billion**, comprised of term loans, a revolving credit facility, and senior notes[58](index=58&type=chunk) - Revenue allocated to remaining performance obligations was **$804.2 million** as of June 30, 2021, with **53%** expected to be recognized in the next 12 months[48](index=48&type=chunk)[53](index=53&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance for Q2 and H1 2021, covering COVID-19 impact, business trends, 60-month backlog, detailed results by revenue and expense, segment performance (Banks, Merchants, Billers), and liquidity [COVID-19 Pandemic](index=24&type=section&id=COVID-19%20Pandemic) The ongoing COVID-19 pandemic creates uncertainty, impacting customer transaction volumes in Merchants and Billers segments, though management believes current liquidity of **$619.7 million** is sufficient - The company has seen changes in customer transaction volumes since March 2020, especially in the Merchants and Billers segments, and atypical fluctuations in Biller volumes due to changes in tax deadlines[105](index=105&type=chunk) - As of June 30, 2021, the company believes it has sufficient liquidity (**$619.7 million**) to continue operations during this period of uncertainty[104](index=104&type=chunk) [Overview and Key Trends](index=24&type=section&id=Overview%20and%20Key%20Trends) ACI Worldwide's strategy is shaped by key industry trends including accelerating digital payment volumes, global adoption of real-time payments and cloud technology, rising digital fraud, omni-commerce growth, and 'Request for Payment' services - Key market trends driving ACI's business include increasing digital payment volumes, adoption of real-time payments (like Zelle, FedNow), transition to cloud technology, rising digital fraud, and the need for omni-commerce solutions[110](index=110&type=chunk)[111](index=111&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk) [Backlog](index=26&type=section&id=Backlog) The 60-month backlog, including committed and assumed renewal revenues, increased to **$6.18 billion** as of June 30, 2021, up from **$6.04 billion**, with growth across all Banks, Merchants, and Billers segments 60-Month Backlog Estimate (in millions) | Segment | June 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Banks | $2,248 | $2,167 | | Merchants | $839 | $808 | | Billers | $3,094 | $3,064 | | **Total** | **$6,181** | **$6,039** | [Results of Operations - Three Months Ended June 30, 2021](index=28&type=section&id=Results%20of%20Operations%20-%20Three%20Months%20Ended%20June%2030,%202021) Q2 2021 total revenue increased 1% to **$301.7 million**, driven by a 9% rise in SaaS and PaaS revenue, offset by a 31% decline in License revenue, leading to a 47% decrease in operating income to **$15.4 million** - SaaS and PaaS revenue grew **$15.8 million (9%)**, primarily due to the timing of tax payments by customers in the Biller segment[129](index=129&type=chunk) - License revenue decreased **$15.4 million (31%)** due to the timing and relative size of license and capacity events compared to the prior year[132](index=132&type=chunk) - Cost of revenue increased by **$11.3 million (8%)**, mainly due to higher payment card interchange and processing fees[138](index=138&type=chunk) [Results of Operations - Six Months Ended June 30, 2021](index=33&type=section&id=Results%20of%20Operations%20-%20Six%20Months%20Ended%20June%2030,%202021) H1 2021 total revenue decreased 1% to **$586.9 million**, with SaaS and PaaS revenue up 5% offset by a 29% decline in License revenue, resulting in a 7% increase in operating income to **$19.1 million** and a net income of **$4.6 million** - SaaS and PaaS revenue increased **$18.6 million (5%)**, driven by changes in the timing of tax payments in the Biller segment[154](index=154&type=chunk) - License revenue decreased **$22.3 million (29%)** due to the timing and size of deals compared to H1 2020[155](index=155&type=chunk) - Operating income increased to **$19.1 million** from **$17.9 million**, and the company reported net income of **$4.6 million** compared to a net loss of **$10.4 million** in the prior-year period[151](index=151&type=chunk) [Segment Results](index=36&type=section&id=Segment%20Results) Q2 2021 saw decreased Banks segment revenue and Adjusted EBITDA, flat Merchants, and growth in Billers revenue and Adjusted EBITDA, while H1 2021 showed Banks EBITDA decline and Merchants and Billers EBITDA growth Segment Revenue (in thousands) | Segment | Q2 2021 | Q2 2020 | H1 2021 | H1 2020 | | :--- | :--- | :--- | :--- | :--- | | Banks | $114,051 | $125,386 | $209,968 | $231,207 | | Merchants | $37,424 | $37,314 | $76,094 | $69,109 | | Billers | $150,194 | $137,210 | $300,793 | $291,079 | Segment Adjusted EBITDA (in thousands) | Segment | Q2 2021 | Q2 2020 | H1 2021 | H1 2020 | | :--- | :--- | :--- | :--- | :--- | | Banks | $54,465 | $68,385 | $91,660 | $110,821 | | Merchants | $13,041 | $12,838 | $27,766 | $19,256 | | Billers | $34,603 | $34,305 | $68,624 | $64,539 | [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2021, total liquidity was **$619.7 million**, comprising **$146.2 million** in cash and **$473.5 million** from the revolving credit facility, with management deeming it sufficient for the foreseeable future Available Liquidity (in thousands) | Component | June 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $146,213 | $165,374 | | Availability under revolving credit facility | $473,500 | $443,500 | | **Total liquidity** | **$619,713** | **$608,874** | - During the first six months of 2021, the company repurchased **1,000,000 shares** for **$39.4 million**, with **$72.7 million** remaining authorized under the stock repurchase program[189](index=189&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from foreign currency fluctuations, with USD-denominated revenue and local currency expenses, and interest rate risk on its **$722.6 million** floating-rate debt - The company is exposed to foreign currency risk as it conducts business globally, with revenues primarily in USD and expenses in various local currencies[193](index=193&type=chunk) - The company has **$722.6 million** in floating-rate debt, where a hypothetical **10%** change in effective interest rates would impact annual interest expense by approximately **$1.5 million**[195](index=195&type=chunk) [Item 4. Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2021, with no material changes in internal control over financial reporting during the quarter - Based on an evaluation as of the end of the period, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[196](index=196&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[197](index=197&type=chunk) [PART II – OTHER INFORMATION](index=42&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any legal proceedings expected to have a material effect on its financial condition or results of operations - ACI is involved in various litigation matters in the ordinary course of business but does not believe any current proceedings would have a material adverse outcome[199](index=199&type=chunk) [Item 1A. Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) Updated risk factors include potential liability from software defects, specifically an April 2021 erroneous ACH file transmission incident leading to agency inquiries and potential fines, and challenges from transitioning to a new organizational structure - A new risk factor was added concerning an April 2021 incident where erroneous ACH files were transmitted during a system test, leading to inquiries from state and federal agencies that could result in material fines or penalties[202](index=202&type=chunk) - The company notes that recent changes to senior management and the realignment of its organizational structure under the 'Fit for Growth' strategy may pose operational challenges[203](index=203&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=43&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2021, the company repurchased **1,000,000 shares** of common stock for **$39.4 million**, with approximately **$72.7 million** remaining authorized for future repurchases Issuer Purchases of Equity Securities (Q2 2021) | Month | Total Shares Purchased | Average Price Paid | Shares Purchased as Part of Program | | :--- | :--- | :--- | :--- | | May 2021 | 1,000,000 | $39.41 | 1,000,000 | - As of June 30, 2021, the maximum remaining amount authorized for purchase under the stock repurchase program was approximately **$72.7 million**[208](index=208&type=chunk) [Item 6. Exhibits](index=44&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate governance documents, CEO and CFO certifications, and XBRL data files - The report includes standard exhibits such as the CEO and CFO certifications pursuant to Sarbanes-Oxley Sections 302 and 906, and XBRL interactive data files[213](index=213&type=chunk)

Part I [Business](index=6&type=section&id=Item%201.%20Business) ACI Worldwide, Inc. is a global software company developing and supporting real-time digital payment products and solutions - ACI develops, markets, installs, and supports software products and solutions for real-time digital payments, serving banks, intermediaries, merchants, and billers globally[19](index=19&type=chunk)[20](index=20&type=chunk) - The company serves over 6,000 organizations, including 19 of the top 20 banks worldwide and over 80,000 merchants, with no single customer accounting for more than 10% of consolidated revenues in 2020[57](index=57&type=chunk) - In May 2019, ACI acquired Speedpay, a bill pay solutions provider, to expand its reach in the U.S. market and increase the scale of its ACI On Demand (AOD) platform business[22](index=22&type=chunk) - As of December 31, 2020, ACI had 3,768 employees worldwide, with **35% being women globally** and **33% of the executive team being women**[69](index=69&type=chunk) Executive Officers (as of Feb 25, 2021) | Name | Age | Position | | :--- | :--- | :--- | | Odilon Almeida | 59 | President and Chief Executive Officer | | Scott W. Behrens | 49 | Executive Vice President, Chief Financial Officer | | Evanthia (Eve) C. Aretakis | 61 | Executive Vice President, Chief Revenue Officer | | Jeremy M. Wilmot | 52 | Executive Vice President, Chief Product Officer | | Dennis P. Byrnes | 57 | Executive Vice President, Chief Legal Officer, General Counsel, and Secretary | [Risk Factors](index=19&type=section&id=Item%201A.%20Risk%20Factors) The company identifies numerous risks, with significant uncertainty surrounding the ongoing impact of the COVID-19 pandemic on operations and financial performance - The effects of the COVID-19 pandemic have materially affected operations, and the duration and extent of its impact on future results remain uncertain, including risks to remote work productivity, cybersecurity, liquidity, and demand[82](index=82&type=chunk)[83](index=83&type=chunk) - The digital payments market is highly competitive, with many competitors being significantly larger and having greater financial, technical, and marketing resources[85](index=85&type=chunk) - The business is dependent on the uninterrupted operation of its data centers and IT systems, where failures could lead to loss of customers, damage to reputation, and reduced revenues[87](index=87&type=chunk)[88](index=88&type=chunk) - Security breaches or computer viruses could disrupt service delivery, damage the company's reputation, and lead to the loss of customers[89](index=89&type=chunk)[90](index=90&type=chunk) - The company faces challenges in integrating the Speedpay acquisition and implementing its new 'Three Pillar' strategy, which focuses on real-time payments, large global merchants, and emerging markets[100](index=100&type=chunk)[102](index=102&type=chunk) - Outstanding debt contains restrictive covenants that limit operational flexibility, and a failure to comply could result in an event of default and demand for immediate repayment[141](index=141&type=chunk)[142](index=142&type=chunk) [Unresolved Staff Comments](index=30&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that it has no unresolved staff comments from the SEC - None[149](index=149&type=chunk) [Properties](index=30&type=section&id=Item%202.%20Properties) ACI leases its principal executive headquarters in Naples, Florida, and as of year-end 2020, owned and leased approximately 865,000 square feet globally - As of the end of 2020, the company owned and leased approximately **453,000 sq. ft.** in the United States and leased approximately **412,000 sq. ft.** internationally[149](index=149&type=chunk) [Legal Proceedings](index=30&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in various litigation matters but is not currently a party to any legal proceedings expected to have a material effect on its financial condition - The company is not currently a party to any legal proceedings that are expected to have a material adverse outcome[150](index=150&type=chunk) [Mine Safety Disclosures](index=30&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[150](index=150&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities](index=31&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters,%20and%20Issuer%20Purchases%20of%20Equity%20Securities) ACI's common stock trades on NASDAQ under ACIW, has never paid cash dividends, and had approximately **$112.1 million** remaining for stock repurchases as of December 31, 2020 - The company's common stock trades on The NASDAQ Global Select Market under the symbol ACIW[153](index=153&type=chunk) - ACI has never declared or paid cash dividends on its common stock and does not anticipate paying them in the future[154](index=154&type=chunk) - As of December 31, 2020, approximately **$112.1 million** remained authorized for purchase under the company's stock repurchase program[157](index=157&type=chunk) Issuer Purchases of Equity Securities (Q4 2020) | Period | Total Number of Shares Purchased | Average Price Paid per Share ($) | Total Number of Shares Purchased as Part of Publicly Announced Program | | :--- | :--- | :--- | :--- | | Oct 1 - Oct 31, 2020 | — | — | — | | Nov 1 - Nov 30, 2020 | — | — | — | | Dec 1 - Dec 31, 2020 | 10,875 | 38.43 | — | | **Total** | **10,875** | **38.43** | **—** | [Selected Financial Data](index=32&type=section&id=Item%206.%20Selected%20Financial%20Data) This section provides a five-year summary of key financial data, with 2020 total revenues at **$1.294 billion** and net income at **$72.7 million** Selected Income Statement Data (in thousands, except per share data) | | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Total revenues** | $1,294,322 | $1,258,294 | $1,009,780 | $1,024,191 | $1,005,701 | | **Net income** | $72,660 | $67,062 | $68,921 | $5,135 | $129,535 | | **Diluted EPS** | $0.62 | $0.57 | $0.59 | $0.04 | $1.09 | Selected Balance Sheet Data (in thousands) | | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Total assets** | $3,386,903 | $3,257,534 | $2,122,455 | $1,861,639 | $1,902,295 | | **Total Debt (Current + Long-term)** | $1,163,071 | $1,384,740 | $679,369 | $686,142 | $746,386 | | **Stockholders' equity** | $1,206,597 | $1,129,968 | $1,048,231 | $764,597 | $754,917 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, key business trends, and liquidity, noting a **3%** revenue increase to **$1.29 billion** in 2020 and a **$6.04 billion** backlog [Overview and Key Trends](index=33&type=section&id=Overview%20and%20Key%20Trends) ACI's strategy is shaped by accelerating digital payment volumes, real-time payment adoption, cloud technology, fraud, omni-commerce, and Request for Payment technology - Key trends impacting ACI's strategy include: * **Increasing digital payment volumes**: Accelerated by digitization of cash and COVID-19 * **Adoption of real-time payments**: Driven by consumer/business expectations and new standards like ISO 20022 * **Adoption of cloud technology**: Banks and merchants are moving to the cloud for cost, speed, and scalability * **Digital payments fraud and compliance**: Rising transaction volumes lead to increased fraud, creating demand for advanced detection solutions * **Omni-commerce**: Growth in contactless, click-and-collect, and other cross-channel payment experiences * **Request for Payment (RfP)**: An emerging technology for secure messaging and payment requests between consumers and billers/merchants[168](index=168&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk) [Backlog](index=35&type=section&id=Backlog) The company's 60-month backlog, including committed and estimated renewal revenues, increased to **$6.039 billion** as of December 31, 2020 60-Month Backlog Trend (in millions) | | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | :--- | :--- | :--- | | **ACI On Demand** | $3,965 | $3,868 | $3,863 | $3,781 | $3,855 | | **ACI On Premise** | $2,074 | $2,041 | $1,976 | $1,933 | $1,977 | | **Total** | **$6,039** | **$5,909** | **$5,839** | **$5,714** | **$5,832** | [Results of Operations (2020 vs. 2019)](index=37&type=section&id=Results%20of%20Operations) Total revenue increased **3%** to **$1.294 billion** in 2020, driven by SaaS and PaaS growth, while operating income rose **17%** to **$144.7 million** Consolidated Statement of Operations (in thousands) | | 2020 | 2019 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Total revenues** | **$1,294,322** | **$1,258,294** | **$36,028** | **3%** | | *SaaS and PaaS* | $769,180 | $677,669 | $91,511 | 14% | | *License* | $246,896 | $288,261 | ($41,365) | (14)% | | **Total operating expenses** | **$1,149,578** | **$1,134,538** | **$15,040** | **1%** | | **Operating income** | **$144,744** | **$123,756** | **$20,988** | **17%** | | **Net income** | **$72,660** | **$67,062** | **$5,598** | **8%** | - The Speedpay acquisition contributed an incremental **$123.3 million** in total revenue in 2020 compared to 2019[186](index=186&type=chunk) - Adjusted for Speedpay and foreign currency impacts, total revenue decreased by **$85.2 million (7%)**, primarily due to a decline in license revenue and lower transaction volumes in the Biller customer base from COVID-19's economic impact[186](index=186&type=chunk)[188](index=188&type=chunk) [Segment Results](index=41&type=section&id=Segment%20Results) ACI On Demand revenue grew to **$769.2 million** with doubled EBITDA, while ACI On Premise revenue declined to **$525.1 million** due to lower license revenue Segment Revenues (in thousands) | Segment | 2020 | 2019 | | :--- | :--- | :--- | | ACI On Demand | $769,180 | $678,960 | | ACI On Premise | $525,142 | $579,334 | | **Total revenue** | **$1,294,322** | **$1,258,294** | Segment Adjusted EBITDA (in thousands) | Segment | 2020 | 2019 | | :--- | :--- | :--- | | ACI On Demand | $149,610 | $66,501 | | ACI On Premise | $290,310 | $321,305 | - ACI On Demand Segment Adjusted EBITDA increased by **$83.1 million**, with **$30.0 million** attributed to the Speedpay acquisition and the remainder from decreased cash operating expenses[213](index=213&type=chunk) - ACI On Premise Segment Adjusted EBITDA decreased by **$31.0 million**, primarily due to a **$54.2 million** decrease in revenue, which was partially offset by a **$23.2 million** decrease in cash operating expenses[215](index=215&type=chunk) [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources) Total liquidity was **$608.9 million** as of December 31, 2020, supported by strong operating cash flow of **$336.3 million** and **$1.155 billion** in total debt Available Liquidity (in thousands) | | Dec 31, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | Cash and cash equivalents | $165,374 | $121,398 | | Availability under revolving credit facility | 443,500 | 261,000 | | **Total liquidity** | **$608,874** | **$382,398** | Summary Cash Flow Data (in thousands) | | Year Ended Dec 31, 2020 | Year Ended Dec 31, 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | $336,302 | $137,649 | | Net cash used in investing activities | ($30,699) | ($830,481) | | Net cash (used in) provided by financing activities | ($261,570) | $667,223 | Contractual Obligations as of Dec 31, 2020 (in thousands) | Obligation | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | | :--- | :--- | :--- | :--- | :--- | :--- | | Operating lease obligations | $59,677 | $15,116 | $23,427 | $9,561 | $11,573 | | Term loans | $717,110 | $38,950 | $120,337 | $557,823 | $— | | Revolving credit facility | $55,000 | $— | $— | $55,000 | $— | | Senior notes | $400,000 | $— | $— | $— | $400,000 | | **Total (excluding interest)** | **$1,231,787** | **$54,066** | **$143,764** | **$622,384** | **$411,573** | [Critical Accounting Policies and Estimates](index=47&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Management identifies critical accounting policies including Revenue Recognition, Intangible Assets and Goodwill, Business Combinations, Stock-Based Compensation, and Income Taxes, all requiring significant judgment - **Revenue Recognition**: Significant judgment is required to determine the stand-alone selling price (SSP) for performance obligations, using the residual approach for software licenses and a range of amounts for maintenance and services[241](index=241&type=chunk) - **Intangible Assets and Goodwill**: Goodwill of **$1.3 billion** is tested for impairment annually at the reporting unit level (ACI On Demand and ACI On Premise) using a discounted cash flow model, with no impairment recorded in 2020[248](index=248&type=chunk)[250](index=250&type=chunk) - **Business Combinations**: Accounting for acquisitions requires estimating the fair value of assets acquired and liabilities assumed, which is inherently uncertain and subject to refinement during the measurement period[251](index=251&type=chunk) - **Stock-Based Compensation**: Expense is estimated using models like Black-Scholes and Monte Carlo, which require judgmental assumptions about volatility, expected life, and performance outcomes[255](index=255&type=chunk)[256](index=256&type=chunk) - **Income Taxes**: Significant judgments are made regarding the realizability of deferred tax assets, the adequacy of valuation allowances, and the resolution of uncertain tax positions[258](index=258&type=chunk)[259](index=259&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=50&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to foreign currency and interest rate risks, with a hypothetical **10%** interest rate change impacting annual interest expense by approximately **$1.7 million** - The company is exposed to foreign currency exchange rate risk as it conducts business globally, but does not currently use hedging instruments[262](index=262&type=chunk) - The company has **$1.2 billion** of debt outstanding, with **$772.1 million** being floating-rate, where a hypothetical **10%** increase or decrease in effective interest rates would change annual interest expense by approximately **$1.7 million**[264](index=264&type=chunk) [Financial Statements and Supplementary Data](index=51&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for 2020, with an unqualified opinion from Deloitte & Touche LLP - The independent auditor, Deloitte & Touche LLP, issued an unqualified opinion on the consolidated financial statements and on the effectiveness of internal control over financial reporting as of December 31, 2020[272](index=272&type=chunk)[288](index=288&type=chunk) - The auditor's report identifies Revenue Recognition as a Critical Audit Matter due to the significant judgments involved in determining contract term, performance obligations, financing components, variable consideration, and standalone selling prices for software license arrangements[294](index=294&type=chunk)[295](index=295&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=51&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[265](index=265&type=chunk) [Controls and Procedures](index=51&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2020 - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2020[266](index=266&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2020, an assessment audited by Deloitte & Touche, LLP[267](index=267&type=chunk)[268](index=268&type=chunk) [Other Information](index=53&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[278](index=278&type=chunk) Part III [Directors, Executive Officers, and Corporate Governance](index=53&type=section&id=Item%2010.%20Directors,%20Executive%20Officers,%20and%20Corporate%20Governance) Information regarding executive officers, directors, and corporate governance is incorporated by reference from the company's 2021 Proxy Statement - Information required by this item is incorporated by reference from the company's definitive Proxy Statement for the Annual Meeting of Shareholders to be held on June 2, 2021[278](index=278&type=chunk) [Executive Compensation](index=53&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding director and executive compensation is incorporated by reference from the company's 2021 Proxy Statement - Information required by this item is incorporated by reference from the company's 2021 Proxy Statement[279](index=279&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=53&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership and equity compensation plans is incorporated by reference from the company's 2021 Proxy Statement - Information required by this item is incorporated by reference from the company's 2021 Proxy Statement[280](index=280&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=53&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) Information regarding certain relationships, related party transactions, and director independence is incorporated by reference from the company's 2021 Proxy Statement - Information required by this item is incorporated by reference from the company's 2021 Proxy Statement[280](index=280&type=chunk) [Principal Accounting Fees and Services](index=53&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information regarding principal accounting fees and services is incorporated by reference from the company's 2021 Proxy Statement - Information required by this item is incorporated by reference from the company's 2021 Proxy Statement[281](index=281&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=54&type=section&id=Item%2015.%20Exhibits,%20Financial%20Statement%20Schedules) This section lists the financial statements, schedules, and exhibits filed as part of the Form 10-K, including an index of all exhibits - This section contains the index to the consolidated financial statements and notes, which are filed as part of the annual report[283](index=283&type=chunk)[284](index=284&type=chunk) - A list of all exhibits filed or furnished with the Form 10-K, or incorporated by reference, is provided in the Exhibit Index[285](index=285&type=chunk)

Table of contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________ FORM 10-Q ___________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 0-25346 ___________________________ ACI WORLDWIDE, INC ...

Table of contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________ FORM 10-Q ___________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 0-25346 ___________________________ ACI WORLDWIDE, INC. (Ex ...

Table of contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________ FORM 10-Q ___________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 0-25346 ___________________________ ACI WORLDWIDE, INC. (E ...

Table of Contents Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, $0.005 par value ACIW Nasdaq Global Select Market UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _________________________________ FORM 10-K _________________________________ ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURIT ...

[PART I – FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis for ACI Worldwide, Inc [Item 1 Financial Statements (unaudited)](index=3&type=section&id=Item%201%20Financial%20Statements%20(unaudited)) This section presents ACI Worldwide's unaudited condensed consolidated financial statements and detailed notes for Q3 2019 and FY 2018 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This table presents the Company's financial position, detailing assets, liabilities, and stockholders' equity as of September 30, 2019, and December 31, 2018 | ASSETS (in thousands) | Sep 30, 2019 | Dec 31, 2018 | |:----------------------|:-------------|:-------------| | Cash and cash equivalents | $121,581 | $148,502 | | Receivables, net | $325,333 | $348,182 | | Settlement assets | $498,101 | $32,256 | | Total current assets | $1,004,890 | $566,477 | | Goodwill | $1,278,265 | $909,691 | | Intangible assets, net | $363,346 | $168,127 | | TOTAL ASSETS | $3,340,756 | $2,122,455 | | | | | | LIABILITIES AND STOCKHOLDERS' EQUITY (in thousands) | Sep 30, 2019 | Dec 31, 2018 | |:----------------------------------------------------|:-------------|:-------------| | Settlement liabilities | $477,064 | $31,605 | | Deferred revenue (current) | $76,731 | $104,843 | | Total current liabilities | $734,880 | $296,620 | | Long-term debt | $1,373,555 | $650,989 | | Total liabilities | $2,281,819 | $1,074,224 | | Total stockholders' equity | $1,058,937 | $1,048,231 | | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $3,340,756 | $2,122,455 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This table presents the Company's revenues, operating income, and net income (loss) for the three and nine months ended September 30, 2019 and 2018 | (in thousands, except per share amounts) | Three Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2018 | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | |:-----------------------------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | **Revenues** | | | | | | SaaS and PaaS | $192,952 | $104,519 | $474,008 | $322,399 | | License | $92,058 | $68,964 | $165,677 | $142,565 | | Maintenance | $52,638 | $54,373 | $159,671 | $166,080 | | Services | $17,253 | $17,669 | $59,018 | $58,786 | | **Total revenues** | **$354,901** | **$245,525** | **$858,374** | **$689,830** | | **Operating income** | **$55,318** | **$28,359** | **$21,343** | **$9,497** | | **Net income (loss)** | **$31,814** | **$15,233** | **$11,576** | **($18,769)** | | Basic EPS | $0.27 | $0.13 | $0.10 | ($0.16) | | Diluted EPS | $0.27 | $0.13 | $0.10 | ($0.16) | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) This table presents the Company's net income (loss) and other comprehensive loss components for the three and nine months ended September 30, 2019 and 2018 | (in thousands) | Three Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2018 | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | |:---------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | Net income (loss) | $31,814 | $15,233 | $11,576 | ($18,769) | | Other comprehensive loss: | | | | | | Foreign currency translation adjustments | ($1,610) | ($3,862) | ($2,019) | ($11,110) | | Total other comprehensive loss | ($1,610) | ($3,862) | ($2,019) | ($11,110) | | Comprehensive income (loss) | $30,204 | $11,371 | $9,557 | ($29,879) | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This table details changes in stockholders' equity, including net income, stock-based compensation, and share repurchases, from December 31, 2018, to September 30, 2019 | (in thousands) | Balance as of Dec 31, 2018 | Net Income | Other Comprehensive Loss | Stock-based Compensation | Shares Issued/Forfeited, net | Repurchase of Common Stock | Repurchase of Restricted Share Awards for Tax Withholdings | Balance as of Sep 30, 2019 | |:---------------|:---------------------------|:-----------|:-------------------------|:-------------------------|:-----------------------------|:---------------------------|:-----------------------------------------------------------|:---------------------------| | Common Stock | $702 | — | — | — | — | — | — | $702 | | Additional Paid-in Capital | $632,235 | — | — | $30,328 | ($1,910) | — | — | $660,653 | | Retained Earnings | $863,768 | $11,576 | — | — | — | — | — | $875,344 | | Treasury Stock | ($355,857) | — | — | — | $11,170 | ($35,617) | ($2,822) | ($383,126) | | Accumulated Other Comprehensive Loss | ($92,617) | — | ($2,019) | — | — | — | — | ($94,636) | | **Total** | **$1,048,231** | **$11,576**| **($2,019)** | **$30,328** | **$9,260** | **($35,617)** | **($2,822)** | **$1,058,937** | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This table summarizes cash flows from operating, investing, and financing activities for the nine months ended September 30, 2019 and 2018 | (in thousands) | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | |:---------------|:-------------------------------|:-------------------------------| | Net cash flows from operating activities | $88,938 | $100,462 | | Net cash flows from investing activities | ($813,046) | ($39,777) | | Net cash flows from financing activities | $695,699 | ($53,301) | | Net increase (decrease) in cash and cash equivalents | ($26,921) | $6,632 | | Cash and cash equivalents, beginning of period | $148,502 | $69,710 | | Cash and cash equivalents, end of period | $121,581 | $76,342 | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [1. Condensed Consolidated Financial Statements](index=11&type=section&id=1.%20Condensed%20Consolidated%20Financial%20Statements) This note details the basis of financial statement presentation, reclassifications, settlement accounts, goodwill, and the adoption of new accounting standards - The Company reclassified **$32.3 million** from other current assets to settlement assets and **$31.6 million** from other current liabilities to settlement liabilities as of December 31, 2018[12](index=12&type=chunk) Other Current Liabilities (in thousands) | Other Current Liabilities (in thousands) | Sep 30, 2019 | Dec 31, 2018 | |:-----------------------------------------|:-------------|:-------------| | Operating lease liabilities | $15,112 | — | | Vendor financed licenses | $8,217 | $3,551 | | Royalties payable | $6,643 | $11,318 | | Accrued interest | $3,606 | $8,407 | | Other | $36,101 | $38,412 | | **Total other current liabilities** | **$69,679** | **$61,688** | - Off-balance sheet settlement funds amounted to **$326.1 million** as of September 30, 2019, up from **$256.5 million** as of December 31, 2018[18](index=18&type=chunk) Goodwill (in thousands) | Goodwill (in thousands) | ACI On Demand | ACI On Premise | Total | |:------------------------|:--------------|:---------------|:------| | Balance, Dec 31, 2018 | $183,783 | $725,908 | $909,691 | | Goodwill from acquisitions | $368,574 | — | $368,574 | | Balance, Sep 30, 2019 | $552,357 | $725,908 | $1,278,265 | - The Company invested **$18.3 million** for a **30%** non-controlling financial interest in a payment technology and services company in India on July 23, 2019, accounted for using the equity method[24](index=24&type=chunk) - The Company adopted ASC 842 (Leases) on January 1, 2019, recognizing ROU assets of **$63.3 million** and operating lease liabilities of **$68.6 million**[27](index=27&type=chunk) [2. Revenue](index=14&type=section&id=2.%20Revenue) This note outlines revenue recognition policies, details total and deferred revenue, and reports on remaining performance obligations Total Receivables, net (in thousands) | Total Receivables, net (in thousands) | Sep 30, 2019 | Dec 31, 2018 | |:--------------------------------------|:-------------|:-------------| | Billed receivables, net | $183,290 | $235,363 | | Accrued receivables, net | $332,369 | $301,829 | | **Total receivables, net** | **$515,659** | **$537,192** | Deferred Revenue (in thousands) | Deferred Revenue (in thousands) | Amount | |:--------------------------------|:-------| | Balance, Dec 31, 2018 | $156,135 | | Deferral of revenue | $121,310 | | Recognition of deferred revenue | ($139,070) | | Foreign currency translation | ($1,154) | | **Balance, Sep 30, 2019** | **$137,221** | - Revenue allocated to remaining performance obligations was **$618.5 million** as of September 30, 2019, with approximately **46%** expected to be recognized over the next 12 months[36](index=36&type=chunk) [3. Acquisition](index=16&type=section&id=3.%20Acquisition) This note details the Speedpay acquisition, including its funding, financial contributions, preliminary purchase price allocation, and pro forma financial impacts - On May 9, 2019, the Company acquired Speedpay for **$754.1 million** in cash, expanding its On Demand platform business and market segments[38](index=38&type=chunk) - The acquisition was funded by an additional **$500.0 million** senior secured term loan and a **$250.0 million** draw on the Revolving Credit Facility, plus cash on hand[39](index=39&type=chunk) Speedpay Contribution (in thousands) | Speedpay Contribution (in thousands) | Three Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2019 | |:-------------------------------------|:--------------------------------|:-------------------------------| | Revenue | $87,700 | $137,100 | | Operating Income | $7,500 | $15,200 | Preliminary Purchase Price Allocation (in thousands) | Preliminary Purchase Price Allocation (in thousands) | Amount | Average Useful Lives | |:-----------------------------------------------------|:------------|:---------------------| | Total assets acquired | $980,672 | | | Total liabilities acquired | $226,615 | | | Net assets acquired | $754,057 | | | Goodwill | $365,928 | | | Software | $113,600 | 7 years | | Customer relationships | $208,500 | 15 years | | Trademarks | $10,900 | 5 years | Unaudited Pro Forma Financial Information (in thousands, except per share data) | Unaudited Pro Forma Financial Information (in thousands, except per share data) | Three Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2018 | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | |:--------------------------------------------------------------------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | Pro forma revenue | $354,901 | $330,983 | $983,037 | $957,673 | | Pro forma net income | $32,513 | $20,379 | $26,517 | $3,418 | | Pro forma income per share (Basic) | $0.28 | $0.18 | $0.23 | $0.03 | | Pro forma income per share (Diluted) | $0.27 | $0.17 | $0.22 | $0.03 | [4. Debt](index=18&type=section&id=4.%20Debt) This note details the Company's debt structure, including term loans, revolving credit, senior notes, interest rates, and compliance with covenants - As of September 30, 2019, the Company had **$265.0 million** outstanding under its Revolving Credit Facility, **$765.8 million** under Term Loans, and **$400.0 million** in Senior Notes[50](index=50&type=chunk) - The Credit Agreement was amended on April 5, 2019, to allow for an additional **$500.0 million** senior secured term loan, extend maturity dates to April 5, 2024, and adjust leverage ratio covenants[51](index=51&type=chunk) - The interest rate for the Credit Facility was **4.29%** as of September 30, 2019, with applicable margins ranging from **1.25% to 2.25%** for LIBOR rate borrowings[53](index=53&type=chunk) - The Company issued **$400.0 million** of **5.750%** Senior Notes due 2026 on August 21, 2018[60](index=60&type=chunk) Total Debt (in thousands) | Total Debt (in thousands) | Sep 30, 2019 | Dec 31, 2018 | |:--------------------------|:-------------|:-------------| | Term loans | $765,798 | $284,959 | | Revolving credit facility | $265,000 | — | | 5.750% Senior notes, due August 2026 | $400,000 | $400,000 | | Debt issuance costs | ($23,124) | ($13,203) | | **Total debt** | **$1,407,674** | **$671,756** | | Less: current portion | $38,950 | $23,747 | | Less: current portion of debt issuance costs | ($4,831) | ($2,980) | | **Total long-term debt** | **$1,373,555** | **$650,989** | - The Company was in compliance with all financial debt covenants as of September 30, 2019[63](index=63&type=chunk) [5. Stock-Based Compensation Plans](index=21&type=section&id=5.%20Stock-Based%20Compensation%20Plans) This note details the Company's stock-based compensation plans, including activity, fair value assumptions, and unrecognized costs for various award types - Shares issued under the 2017 Employee Stock Purchase Plan totaled **92,765** for the nine months ended September 30, 2019, compared to **112,549** in the same period of 2018[68](index=68&type=chunk) Stock Option Activity | Stock Option Activity | Number of Shares | Weighted Average Exercise Price ($) | |:----------------------|:-----------------|:------------------------------------| | Outstanding as of Dec 31, 2018 | 4,864,836 | $17.76 | | Exercised | (419,928) | $15.90 | | Forfeited | (3,496) | $17.89 | | Outstanding as of Sep 30, 2019 | 4,441,412 | $17.93 | | Exercisable as of Sep 30, 2019 | 3,897,260 | $17.61 | - The total intrinsic value of stock options exercised was **$6.9 million** for the nine months ended September 30, 2019, down from **$13.6 million** in 2018[68](index=68&type=chunk) - Unrecognized compensation costs as of September 30, 2019, include **$23.9 million** for RSUs, **$23.2 million** for TSRs, **$2.4 million** for LTIP performance shares, **$0.8 million** for RSAs, and **$0.5 million** for stock options[77](index=77&type=chunk) Stock-Based Compensation Expense (in thousands) | Stock-Based Compensation Expense (in thousands) | Three Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2018 | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | |:------------------------------------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | Expense | $9,300 | $6,500 | $30,300 | $20,600 | | Corresponding tax benefits | $1,500 | $1,500 | $5,500 | $3,600 | [6. Software and Other Intangible Assets](index=24&type=section&id=6.%20Software%20and%20Other%20Intangible%20Assets) This note details the Company's software and other intangible assets, including net book values, accumulated amortization, and related expenses Software Net Book Value (in thousands) | Software Net Book Value (in thousands) | Sep 30, 2019 | Dec 31, 2018 | |:---------------------------------------|:-------------|:-------------| | Total software net book value | $235,900 | $137,200 | | Software for resale | $18,500 | $27,500 | | Software acquired or developed for internal use | $217,400 | $109,700 | Software Amortization Expense (in thousands) | Software Amortization Expense (in thousands) | Three Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2018 | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | |:---------------------------------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | Software for resale | $2,800 | $2,600 | $8,800 | $9,600 | | Software for internal use | $15,700 | $10,200 | $39,400 | $31,000 | Other Intangible Assets (in thousands) | Other Intangible Assets (in thousands) | Gross Carrying Amount (Sep 30, 2019) | Accumulated Amortization (Sep 30, 2019) | Net Balance (Sep 30, 2019) | Gross Carrying Amount (Dec 31, 2018) | Accumulated Amortization (Dec 31, 2018) | Net Balance (Dec 31, 2018) | |:---------------------------------------|:-------------------------------------|:----------------------------------------|:---------------------------|:-------------------------------------|:----------------------------------------|:---------------------------| | Customer relationships | $502,682 | ($149,946) | $352,736 | $297,991 | ($131,187) | $166,804 | | Trademarks and tradenames | $27,052 | ($16,442) | $10,610 | $16,348 | ($15,025) | $1,323 | | **Total other intangible assets** | **$529,734** | **($166,388)** | **$363,346** | **$314,339** | **($146,212)** | **$168,127** | Other Intangible Assets Amortization Expense (in thousands) | Other Intangible Assets Amortization Expense (in thousands) | Three Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2018 | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | |:------------------------------------------------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | Expense | $9,400 | $4,700 | $22,500 | $14,400 | [7. Corporate Restructuring and Other Organizational Changes](index=25&type=section&id=7.%20Corporate%20Restructuring%20and%20Other%20Organizational%20Changes) This note provides a summary of the Company's facility closures liability, indicating the balance at the beginning and end of the period, amounts paid, and foreign currency adjustments - The restructuring liability for facility closures was **$2.9 million** as of September 30, 2019, with **$1.4 million** in other current liabilities and **$1.5 million** in operating lease liabilities[86](index=86&type=chunk) [8. Common Stock and Treasury Stock](index=25&type=section&id=8.%20Common%20Stock%20and%20Treasury%20Stock) This note details the Company's stock repurchase program, including the number of shares repurchased, the total amount spent, and the remaining authorization. It highlights the board's approval for repurchases and the use of a Rule 10b5-1 plan - The Company repurchased **1,228,102 shares** for **$35.6 million** during the nine months ended September 30, 2019[88](index=88&type=chunk) - As of September 30, 2019, **$141.0 million** remained authorized for purchase under the stock repurchase program[88](index=88&type=chunk) [9. Earnings (Loss) Per Share](index=26&type=section&id=9.%20Earnings%20(Loss)%20Per%20Share) This note reconciles the weighted average share amounts used to compute basic and diluted earnings (loss) per share, detailing the dilutive effect of stock options and RSUs Weighted Average Common Shares Outstanding (in thousands) | Weighted Average Common Shares Outstanding (in thousands) | Three Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2018 | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | |:----------------------------------------------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | Basic weighted average shares outstanding | 116,169 | 115,889 | 116,337 | 115,615 | | Add: Dilutive effect of stock options and RSUs | 2,138 | 1,603 | 2,123 | — | | Diluted weighted average shares outstanding | 118,307 | 117,492 | 118,460 | 115,615 | - The diluted EPS computation excluded **2.1 million** and **1.2 million** anti-dilutive options/shares for the three months ended September 30, 2019 and 2018, respectively[90](index=90&type=chunk) [10. Other, Net](index=26&type=section&id=10.%20Other,%20Net) This note clarifies that 'Other, net' primarily consists of foreign currency transaction losses for both the three and nine months ended September 30, 2019 and 2018 Foreign Currency Transaction Losses (in thousands) | Foreign Currency Transaction Losses (in thousands) | Three Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2018 | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | |:---------------------------------------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | Other, net | ($2,369) | ($1,304) | ($2,879) | ($3,036) | [11. Segment Information](index=26&type=section&id=11.%20Segment%20Information) This note provides financial performance data for ACI On Premise and ACI On Demand segments, including revenue and Adjusted EBITDA, and disaggregates revenue by solution category - ACI On Premise serves customers managing software on-site, offering control and flexibility[95](index=95&type=chunk) - ACI On Demand provides cloud-based solutions (SaaS/PaaS) for banks, merchants, and corporates[96](index=96&type=chunk) Segment Revenue (in thousands) | Segment Revenue (in thousands) | Three Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2018 | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | |:-------------------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | ACI On Premise | $161,949 | $141,006 | $383,075 | $367,431 | | ACI On Demand | $192,952 | $104,519 | $475,299 | $322,399 | | **Total revenue** | **$354,901** | **$245,525** | **$858,374** | **$689,830** | Segment Adjusted EBITDA (in thousands) | Segment Adjusted EBITDA (in thousands) | Three Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2018 | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | |:---------------------------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | ACI On Premise | $99,553 | $77,819 | $184,890 | $171,477 | | ACI On Demand | $18,561 | $3,270 | $35,639 | ($4,327) | - ACI On Premise Segment Adjusted EBITDA increased by **$21.7 million** (three months) and **$13.4 million** (nine months) primarily due to revenue increases[217](index=217&type=chunk)[218](index=218&type=chunk) - ACI On Demand Segment Adjusted EBITDA increased by **$15.3 million** (three months) and **$40.0 million** (nine months), with Speedpay acquisition contributing **$16.2 million** and **$28.2 million**, respectively[219](index=219&type=chunk)[220](index=220&type=chunk) Revenue by Primary Solution Categories (in thousands) | Revenue by Primary Solution Categories (in thousands) | Three Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2018 | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | |:------------------------------------------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | Bill Payments | $154,285 | $64,134 | $348,592 | $204,673 | | Digital Channels | $15,271 | $16,826 | $61,240 | $58,060 | | Merchant Payments | $23,273 | $25,753 | $73,213 | $65,094 | | Payments Intelligence | $22,382 | $16,842 | $53,778 | $56,040 | | Real-Time Payments | $20,223 | $24,244 | $58,271 | $54,560 | | Retail Payments | $119,467 | $97,726 | $263,280 | $251,403 | | **Total** | **$354,901** | **$245,525** | **$858,374** | **$689,830** | [12. Income Taxes](index=30&type=section&id=12.%20Income%20Taxes) This note details effective tax rates, factors influencing them, including foreign earnings, uncertain tax positions, and the impact of the Speedpay acquisition Effective Tax Rate | Effective Tax Rate | Three Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2018 | Nine Months Ended Sep 30, 2018 | |:-------------------|:--------------------------------|:-------------------------------|:--------------------------------|:-------------------------------| | Rate | 14% | 163% | 12% | (11)% | - The effective tax rate for the nine months ended September 30, 2019, was positively impacted by state income tax benefits on a domestic loss and the release of an **$18.5 million** valuation allowance against U.S. foreign tax credit deferred tax assets, following the Speedpay acquisition[108](index=108&type=chunk) - Unrecognized tax benefits for uncertain tax positions were **$24.4 million** as of September 30, 2019, with a potential decrease of **$0.3 million** within the next 12 months[111](index=111&type=chunk)[112](index=112&type=chunk) [13. Leases](index=30&type=section&id=13.%20Leases) This note outlines the Company's accounting for operating leases under ASC 842, detailing lease costs, ROU assets, liabilities, and maturity schedules Lease Cost (in thousands) | Lease Cost (in thousands) | Three Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2019 | |:--------------------------|:--------------------------------|:-------------------------------| | Operating lease cost | $4,491 | $12,814 | | Variable lease cost | $966 | $2,712 | | Sublease income | ($105) | ($385) | | **Total lease cost** | **$5,352** | **$15,141** | Supplemental Balance Sheet Information (in thousands) | Supplemental Balance Sheet Information (in thousands) | Sep 30, 2019 | |:------------------------------------------------------|:-------------| | Operating lease right-of-use assets | $60,280 | | Other current liabilities (operating lease liabilities) | $15,112 | | Operating lease liabilities | $48,281 | | **Total operating lease liabilities** | **$63,393** | | Weighted average remaining operating lease term (years) | 6.59 | | Weighted average operating lease discount rate | 4.03% | Maturities on Lease Liabilities (in thousands) | Maturities on Lease Liabilities (in thousands) | Total Lease Payments | |:-----------------------------------------------|:---------------------| | Remainder of 2019 | $4,060 | | 2020 | $17,153 | | 2021 | $12,565 | | 2022 | $9,649 | | 2023 | $7,455 | | Thereafter | $21,351 | | **Total lease payments** | **$72,233** | | Less: imputed interest | $8,840 | | **Total lease liability** | **$63,393** | [Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%202%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the Company's financial condition, operational results, key trends, Speedpay acquisition impact, liquidity, and critical accounting estimates [Forward-Looking Statements](index=32&type=section&id=Forward-Looking%20Statements) This section highlights that the report contains forward-looking statements subject to various risks and uncertainties - The report contains forward-looking statements subject to risks and uncertainties, including increased competition, performance of strategic products, demand for products, financial services industry consolidations, customer retention, project delays, product defects, compliance, security breaches, intellectual property litigation, future acquisitions, debt restrictions, and stock price volatility[122](index=122&type=chunk)[124](index=124&type=chunk)[125](index=125&type=chunk) [Overview](index=33&type=section&id=Overview) This overview describes ACI Worldwide's global electronic payments business and key trends influencing its strategies and operations - ACI Worldwide, Inc. powers electronic payments for over **5,100** organizations globally, processing approximately **$14 trillion** daily[129](index=129&type=chunk) - Key trends impacting strategies and operations include increasing electronic payment transaction volumes, adoption of real-time payments, increasing competition, adoption of cloud technology, electronic payments fraud and compliance, adoption of smartcard technology, SEPA, PSD2, financial institution consolidation, global vendor sourcing, electronic payments convergence, mobile banking and payments, and electronic bill payment and presentment (EBPP)[133](index=133&type=chunk)[134](index=134&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk)[137](index=137&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk)[145](index=145&type=chunk)[146](index=146&type=chunk) [Acquisition](index=36&type=section&id=Acquisition) This section details the May 2019 acquisition of Speedpay for $754.1 million, expanding ACI's On Demand platform and market reach - On May 9, 2019, ACI acquired Speedpay for **$754.1 million** in cash, expanding its On Demand platform business and market reach across various sectors[150](index=150&type=chunk) - The acquisition was financed by an additional **$500.0 million** senior secured term loan and a **$250.0 million** draw on the Revolving Credit Facility[151](index=151&type=chunk) [Backlog](index=36&type=section&id=Backlog) This section defines backlog components and provides a 60-month estimate, including the impact of the Speedpay acquisition - Backlog is comprised of Committed Backlog (contracted but unrecognized revenue) and Renewal Backlog (estimated future revenues from assumed contract renewals)[152](index=152&type=chunk) 60-Month Backlog Estimate (in millions) | 60-Month Backlog Estimate (in millions) | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | |:----------------------------------------|:-------------|:-------------|:-------------|:-------------| | ACI On Premise | $1,925 | $1,880 | $1,861 | $1,875 | | ACI On Demand | $3,756 | $3,813 | $2,290 | $2,299 | | **Total** | **$5,681** | **$5,693** | **$4,151** | **$4,174** | - The September 30, 2019, backlog estimate includes approximately **$1.5 billion** from the Speedpay acquisition[157](index=157&type=chunk) Backlog Components (in millions) | Backlog Components (in millions) | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |:---------------------------------|:-------------|:-------------|:-------------| | Committed | $2,003 | $2,105 | $1,861 | | Renewal | $3,678 | $3,588 | $2,290 | | **Total** | **$5,681** | **$5,693** | **$4,151** | [Results of Operations](index=38&type=section&id=RESULTS%20OF%20OPERATIONS) [Three Month Period Ended September 30, 2019, Compared to the Three Month Period Ended September 30, 2018](index=38&type=section&id=Three%20Month%20Period%20Ended%20September%2030,%202019,%20Compared%20to%20the%20Three%20Month%20Period%20Ended%20September%2030,%202018) Total revenue increased by 45% to $354.9 million, largely driven by the Speedpay acquisition. Operating expenses also rose by 38%, primarily due to Speedpay and related integration costs. Net income saw a significant increase of 109% to $31.8 million | (in thousands) | Sep 30, 2019 | Sep 30, 2018 | Change vs 2018 | % Change vs 2018 | |:---------------|:-------------|:-------------|:---------------|:-----------------| | Total revenues | $354,901 | $245,525 | $109,376 | 45% | | Operating income | $55,318 | $28,359 | $26,959 | 95% | | Net income | $31,814 | $15,233 | $16,581 | 109% | - Total revenue increased by **$109.4 million (45%)**, with **$87.7 million (36%)** attributable to the Speedpay acquisition[162](index=162&type=chunk) - SaaS and PaaS revenue increased by **$88.4 million (85%)**, with **$87.7 million (84%)** from Speedpay[166](index=166&type=chunk) - License revenue increased by **$23.1 million (33%)**, primarily due to timing and size of license and capacity events[169](index=169&type=chunk)[170](index=170&type=chunk) - Total operating expenses increased by **$82.4 million (38%)**, with **$80.2 million (37%)** from Speedpay and **$0.9 million** from acquisition-related costs[176](index=176&type=chunk) - Cost of revenue increased by **$71.7 million (70%)**, with **$65.8 million (64%)** from Speedpay, and a **$5.5 million** increase in payment card interchange and processing fees[179](index=179&type=chunk) - Depreciation and amortization increased by **$10.3 million (49%)**, with **$8.3 million (40%)** from Speedpay[187](index=187&type=chunk) - Interest expense increased by **$6.4 million (51%)** due to higher comparative debt balances[188](index=188&type=chunk) [Nine Month Period Ended September 30, 2019, Compared to the Nine Month Period Ended September 30, 2018](index=43&type=section&id=Nine%20Month%20Period%20Ended%20September%2030,%202019,%20Compared%20to%20the%20Nine%20Month%20Period%20Ended%20September%2030,%202018) For the nine-month period, total revenue grew by 24% to $858.4 million, with Speedpay contributing significantly. Operating expenses increased by 23%, largely due to Speedpay and related transaction costs. The Company reported a net income of $11.6 million, a substantial improvement from a net loss in the prior year | (in thousands) | Sep 30, 2019 | Sep 30, 2018 | Change vs 2018 | % Change vs 2018 | |:---------------|:-------------|:-------------|:---------------|:-----------------| | Total revenues | $858,374 | $689,830 | $168,544 | 24% | | Operating income | $21,343 | $9,497 | $11,846 | 125% | | Net income (loss) | $11,576 | ($18,769) | $30,345 | (162)% | - Total revenue increased by **$168.5 million (24%)**, with **$137.1 million (20%)** from the Speedpay acquisition[193](index=193&type=chunk) - SaaS and PaaS revenue increased by **$151.6 million (47%)**, with **$137.1 million (43%)** from Speedpay, and **$16.8 million** from new customers/increased volumes[195](index=195&type=chunk) - License revenue increased by **$23.1 million (16%)**, driven by timing and size of license and capacity events[196](index=196&type=chunk)[197](index=197&type=chunk) - Total operating expenses increased by **$156.7 million (23%)**, with **$121.9 million (18%)** from Speedpay and **$22.2 million (3%)** from acquisition-related expenses[200](index=200&type=chunk) - Cost of revenue increased by **$118.3 million (36%)**, with **$99.7 million (31%)** from Speedpay, and a **$15.4 million** increase in payment card interchange and processing fees[202](index=202&type=chunk) - General and administrative expense increased by **$21.1 million (24%)**, with **$21.8 million** from Speedpay transaction and integration-related expenses[206](index=206&type=chunk) - Interest expense increased by **$14.3 million (45%)**, primarily due to higher comparative debt balances[208](index=208&type=chunk) [Segment Results](index=45&type=section&id=Segment%20Results) This section analyzes the financial performance of ACI On Premise and ACI On Demand segments, including revenue and Adjusted EBITDA contributions Segment Revenue (in thousands) | Segment Revenue (in thousands) | Three Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2018 | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | |:-------------------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | ACI On Premise | $161,949 | $141,006 | $383,075 | $367,431 | | ACI On Demand | $192,952 | $104,519 | $475,299 | $322,399 | | **Total revenue** | **$354,901** | **$245,525** | **$858,374** | **$689,830** | Segment Adjusted EBITDA (in thousands) | Segment Adjusted EBITDA (in thousands) | Three Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2018 | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | |:---------------------------------------|:--------------------------------|:--------------------------------|:-------------------------------|:-------------------------------| | ACI On Premise | $99,553 | $77,819 | $184,890 | $171,477 | | ACI On Demand | $18,561 | $3,270 | $35,639 | ($4,327) | - ACI On Premise Segment Adjusted EBITDA increased by **$21.7 million** (three months) and **$13.4 million** (nine months) primarily due to revenue increases[217](index=217&type=chunk)[218](index=218&type=chunk) - ACI On Demand Segment Adjusted EBITDA increased by **$15.3 million** (three months) and **$40.0 million** (nine months), with Speedpay acquisition contributing **$16.2 million** and **$28.2 million**, respectively[219](index=219&type=chunk)[220](index=220&type=chunk) [Liquidity and Capital Resources](index=47&type=section&id=Liquidity%20and%20Capital%20Resources) [General](index=47&type=section&id=General) The Company's primary liquidity needs are for operating expenses, debt service, acquisitions, capital expenditures, and lease payments, which are expected to be met by operating cash flow, cash and cash equivalents, and available revolving credit - Primary liquidity needs include funding operating expenses, debt service, acquisitions, capital expenditures, and lease payments[221](index=221&type=chunk) - These needs are expected to be satisfied by cash flow from operations, cash and cash equivalents, and available borrowings under the revolving credit facility[221](index=221&type=chunk) [Available Liquidity](index=47&type=section&id=Available%20Liquidity) The Company's total liquidity decreased from $648.5 million at December 31, 2018, to $356.6 million at September 30, 2019, primarily due to revolving credit facility borrowings, capital expenditures, and stock repurchases Available Liquidity (in thousands) | Available Liquidity (in thousands) | Sep 30, 2019 | Dec 31, 2018 | |:-----------------------------------|:-------------|:-------------| | Cash and cash equivalents | $121,581 | $148,502 | | Availability under revolving credit facility | $235,000 | $500,000 | | **Total liquidity** | **$356,581** | **$648,502** | - The decrease in total liquidity is primarily due to **$265.0 million** in revolving credit facility borrowings, **$37.3 million** in capital expenditures, and **$35.6 million** in stock repurchases[222](index=222&type=chunk) - As of September 30, 2019, **$44.0 million** of cash and cash equivalents were held by foreign subsidiaries, which may incur taxes upon repatriation[224](index=224&type=chunk) [Cash Flows](index=48&type=section&id=Cash%20Flows) Operating cash flows decreased by $11.5 million to $88.9 million for the nine months ended September 30, 2019, primarily due to working capital timing. Investing activities used significant cash, mainly for the Speedpay acquisition, while financing activities provided substantial cash through new debt to fund the acquisition Summarized Cash Flow Data (in thousands) | Summarized Cash Flow Data (in thousands) | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | |:-----------------------------------------|:-------------------------------|:-------------------------------| | Net cash provided by (used by): | | | | Operating activities | $88,938 | $100,462 | | Investing activities | ($813,046) | ($39,777) | | Financing activities | $695,699 | ($53,301) | - Net cash from operating activities decreased by **$11.5 million** to **$88.9 million** for the nine months ended September 30, 2019, due to working capital timing[227](index=227&type=chunk) - Investing activities used **$753.9 million** for the Speedpay acquisition and **$18.5 million** for an investment in an Indian payment technology company[228](index=228&type=chunk) - Financing activities provided **$695.7 million**, including **$500.0 million** from a Delayed Draw Term Loan and **$280.0 million** from the Revolving Credit Facility, primarily to fund the Speedpay acquisition and stock repurchases[229](index=229&type=chunk) [Debt](index=48&type=section&id=Debt) The Company's debt structure includes $265.0 million outstanding under its Revolving Credit Facility and $765.8 million under Term Loans, with a floating interest rate of 4.29%. Additionally, $400.0 million in 5.750% Senior Notes due 2026 are outstanding - As of September 30, 2019, **$265.0 million** was outstanding under the Revolving Credit Facility and **$765.8 million** under Term Loans, with **$235.0 million** of unused borrowings available[234](index=234&type=chunk) - The Credit Facility's interest rate was **4.29%** as of September 30, 2019[234](index=234&type=chunk) - The Company also had **$400.0 million** outstanding of **5.750%** Senior Notes due 2026[234](index=234&type=chunk) [Stock Repurchase Program](index=49&type=section&id=Stock%20Repurchase%20Program) The Company repurchased 1,228,102 shares for $35.6 million during the nine months ended September 30, 2019, under its stock repurchase program. Approximately $141.0 million remained authorized for repurchase as of that date - The Company repurchased **1,228,102 shares** for **$35.6 million** during the nine months ended September 30, 2019[236](index=236&type=chunk) - As of September 30, 2019, approximately **$141.0 million** remained authorized for purchase under the stock repurchase program[236](index=236&type=chunk) [Contractual Obligations and Commercial Commitments](index=49&type=section&id=Contractual%20Obligations%20and%20Commercial%20Commitments) There were no material changes to contractual obligations and commercial commitments for the nine months ended September 30, 2019, other than those disclosed, which include term loan principal and interest, revolving credit facility principal and interest, and financed internal-use software Contractual Obligations (in thousands) | Contractual Obligations (in thousands) | Total | Less than 1 Year | 1-3 Years | 3-5 Years | More than 5 Years | |:---------------------------------------|:------------|:-----------------|:-----------|:-----------|:------------------| | Term loan | $765,798 | $38,950 | $84,513 | $642,335 | — | | Term loan interest | $132,451 | $32,252 | $59,469 | $40,730 | — | | Revolving credit facility | $265,000 | — | — | $265,000 | — | | Revolving credit facility interest | $51,133 | $11,363 | $22,726 | $17,044 | — | | Financed internal-use software | $13,822 | $5,973 | $7,849 | — | — | | **Total** | **$1,228,204** | **$88,538** | **$174,557** | **$965,109** | **—** | [Critical Accounting Estimates](index=50&type=section&id=Critical%20Accounting%20Estimates) This section identifies critical accounting policies and estimates, including revenue recognition, business combinations, intangible assets, goodwill, stock-based compensation, and income taxes - Critical accounting policies and estimates include Revenue Recognition, Business Combinations, Intangible Assets and Goodwill, Stock-Based Compensation, and Accounting for Income Taxes[243](index=243&type=chunk) - No significant changes to critical accounting policies and estimates occurred during the nine months ended September 30, 2019[243](index=243&type=chunk) [Item 3 Quantitative and Qualitative Disclosures About Market Risk](index=50&type=section&id=Item%203%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the Company's exposure to market risks, primarily related to foreign currency exchange rate fluctuations and interest rate changes on its debt. It notes that there have been no material changes to market risk, and the Company does not engage in speculative derivative financial instruments - The Company is exposed to market risks from foreign currency exchange rate fluctuations and interest rate changes[244](index=244&type=chunk) - A hypothetical **10%** increase or decrease in effective interest rates would impact interest income by less than **$0.1 million** annually and interest expense related to the Credit Facility by approximately **$4.4 million**[245](index=245&type=chunk)[246](index=246&type=chunk) - The Company does not use derivative financial instruments for speculation or arbitrage[244](index=244&type=chunk) [Item 4 Controls and Procedures](index=50&type=section&id=Item%204%20Controls%20and%20Procedures) Management concluded that the Company's disclosure controls and procedures were effective as of September 30, 2019. The acquisition of Speedpay was considered material, and the Company is in the process of integrating its operations and internal controls over financial reporting - Disclosure controls and procedures were deemed effective as of September 30, 2019[247](index=247&type=chunk) - The Speedpay acquisition is material to financial reporting, and its internal controls are being integrated[249](index=249&type=chunk)[250](index=250&type=chunk) - No other material changes to internal control over financial reporting occurred during the quarter ended September 30, 2019[251](index=251&type=chunk) [PART II – OTHER INFORMATION](index=51&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This section provides other information, including legal proceedings, risk factors, equity security sales, and exhibits [Item 1 Legal Proceedings](index=51&type=section&id=Item%201%20Legal%20Proceedings) The Company is not currently involved in any legal proceedings that are expected to have a material adverse effect on its financial condition or results of operations - The Company is not a party to any legal proceedings that are likely to have a material adverse effect on its financial condition or results of operations[252](index=252&type=chunk) [Item 1A Risk Factors](index=51&type=section&id=Item%201A%20Risk%20Factors) No material changes to previously disclosed risk factors were reported, except for the specific risk of difficulties integrating Speedpay, which could prevent the realization of anticipated acquisition benefits and disrupt business operations - No material changes to risk factors were disclosed, other than the potential difficulties in integrating Speedpay, which could hinder the realization of anticipated benefits and disrupt business[253](index=253&type=chunk)[254](index=254&type=chunk) [Item 2 Unregistered Sales of Equity Securities and Use of Proceeds](index=52&type=section&id=Item%202%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the Company's common stock repurchases during the three months ended September 30, 2019, under its authorized stock repurchase program. It also notes the withholding of shares for tax purposes related to vested restricted share awards and units Issuer Purchases of Equity Securities (Three Months Ended Sep 30, 2019) | Issuer Purchases of Equity Securities (Three Months Ended Sep 30, 2019) | Total Number of Shares Purchased | Average Price per Share ($) | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program ($) | |:------------------------------------------------------------------------|:---------------------------------|:----------------------------|:-----------------------------------------------------------------------------------| | July 1, 2019 through July 31, 2019 | — | — | 175,956,000 | | August 1, 2019 through August 31, 2019 | 1,204,300 | 29.05 | 140,969,000 | | September 1, 2019 through September 30, 2019 | 399 | 32.51 | 140,969,000 | | **Total** | **1,204,699** | **29.05** | | - The Company repurchased **1,204,699 shares** of common stock at an average price of **$29.05** during the three months ended September 30, 2019[256](index=256&type=chunk) - As of September 30, 2019, approximately **$141.0 million** remained authorized for purchase under the stock repurchase program[257](index=257&type=chunk) [Item 3 Defaults Upon Senior Securities](index=52&type=section&id=Item%203%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the Company for the reporting period [Item 4 Mine Safety Disclosures](index=52&type=section&id=Item%204%20Mine%20Safety%20Disclosures) This item is not applicable to the Company for the reporting period [Item 5 Other Information](index=52&type=section&id=Item%205%20Other%20Information) This item is not applicable to the Company for the reporting period [Item 6 Exhibits](index=53&type=section&id=Item%206%20Exhibits) This section lists all exhibits filed as part of the quarterly report on Form 10-Q, including agreements, certificates, and XBRL documents, with references to their previous filings where applicable - The exhibits include the Stock Purchase Agreement, Certificate of Incorporation, Bylaws, Common Stock Certificate, various stock award agreements, and an Amendment Agreement to the Credit Agreement[261](index=261&type=chunk) - Certifications from the Principal Executive Officer and Principal Financial Officer (pursuant to SEC Rule 13a-14 and 18 U.S.C. Section 1350) are also included[261](index=261&type=chunk) - XBRL Instance Document, Taxonomy Extension Schema, Calculation Linkbase, Label Linkbase, Presentation Linkbase, and Definition Linkbase are provided[261](index=261&type=chunk) [Signature](index=54&type=section&id=Signature) The report is signed by Scott W. Behrens, Senior Executive Vice President, Chief Financial Officer, and Chief Accounting Officer, on behalf of ACI Worldwide, Inc., dated November 7, 2019 - The report was signed by Scott W. Behrens, Senior Executive Vice President, Chief Financial Officer and Chief Accounting Officer, on November 7, 2019[263](index=263&type=chunk)

Table of contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________ FORM 10-Q ___________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2019 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 0-25346 ___________________________ ACI WORLDWIDE, INC. (Ex ...