PART I – FINANCIAL INFORMATION The first part presents the unaudited financial statements, management's discussion and analysis, market risk disclosures, and internal controls [Item 1. Financial Statements (unaudited)](index=2&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) The unaudited condensed consolidated financial statements for Q1 2019 show a net loss of $26.0 million, increased from $19.4 million in the prior year, with total assets slightly decreasing to $2.11 billion [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2019, total assets were $2.11 billion, slightly down from $2.12 billion at year-end 2018, reflecting the adoption of ASC 842 and a decrease in stockholders' equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | **Total Assets** | **$2,114,142** | **$2,122,455** | | Cash and cash equivalents | $176,173 | $148,502 | | Goodwill | $909,691 | $909,691 | | Operating lease right-of-use assets | $60,978 | $— | | **Total Liabilities** | **$1,081,558** | **$1,074,224** | | Long-term debt | $645,784 | $650,989 | | Operating lease liabilities | $50,636 | $— | | **Total Stockholders' Equity** | **$1,032,584** | **$1,048,231** | - The company adopted the new lease accounting standard ASC 842 on January 1, 2019, recognizing **$63.3 million** in Right-of-Use (ROU) assets and **$68.6 million** in operating lease liabilities upon adoption[22](index=22&type=chunk) [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q1 2019, total revenues decreased 2% to $205.9 million, leading to a wider operating loss of $28.1 million and a net loss of $26.0 million Q1 2019 vs Q1 2018 Statement of Operations (in thousands, except per share amounts) | Metric | Q1 2019 | Q1 2018 | | :--- | :--- | :--- | | Total Revenues | $205,855 | $209,310 | | Operating Loss | $(28,093) | $(16,704) | | Net Loss | $(25,963) | $(19,428) | | Diluted Loss Per Share | $(0.22) | $(0.17) | - Revenue from Software as a service (SaaS) and platform as a service (PaaS) grew to **$108.6 million** from **$104.3 million** year-over-year, while License revenue declined significantly to **$21.1 million** from **$28.0 million**[8](index=8&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities was $42.4 million in Q1 2019, a slight decrease from the prior year, with investing and financing activities using $9.8 million and $5.4 million respectively Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :--- | :--- | :--- | | Net cash flows from operating activities | $42,427 | $45,136 | | Net cash flows from investing activities | $(9,828) | $(12,589) | | Net cash flows from financing activities | $(5,361) | $(29,695) | | **Net increase in cash** | **$27,671** | **$4,571** | - Financing activities in Q1 2019 included **$5.9 million** in term loan repayments and **$0.6 million** in common stock repurchases, compared to **$5.2 million** in term loan repayments and **$31.1 million** in stock repurchases in Q1 2018[12](index=12&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the $750 million Speedpay acquisition post-quarter, revenue allocated to remaining performance obligations, total debt, segment performance, and ASC 842 adoption - On May 9, 2019, the company acquired Speedpay from Western Union for **$750.0 million** in cash to increase the scale of its On Demand platform business[30](index=30&type=chunk) - To fund the Speedpay acquisition, the company amended its credit agreement to borrow up to **$500.0 million** in a new term loan and drew **$250.0 million** on its Revolving Credit Facility[32](index=32&type=chunk) - As of March 31, 2019, revenue allocated to remaining performance obligations was **$628.3 million**, with approximately **46%** expected to be recognized over the next 12 months[29](index=29&type=chunk) Segment Revenue and Adjusted EBITDA (in thousands) | Metric | Q1 2019 | Q1 2018 | | :--- | :--- | :--- | | **Revenue** | | | | ACI On Premise | $96,007 | $105,030 | | ACI On Demand | $109,848 | $104,280 | | **Segment Adjusted EBITDA** | | | | ACI On Premise | $28,268 | $38,898 | | ACI On Demand | $(262) | $(4,233) | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a 2% revenue decrease in Q1 2019, driven by a license revenue decline offset by SaaS/PaaS growth, increased operating expenses including Speedpay transaction costs, and strong liquidity - Total revenue decreased by **$3.5 million (2%)** in Q1 2019 vs Q1 2018. Excluding a **$3.7 million** negative impact from foreign currency, revenue was flat year-over-year[126](index=126&type=chunk) - The company acquired Speedpay for **$750 million** on May 9, 2019, to increase the scale of its On Demand platform business and accelerate innovation[117](index=117&type=chunk) 60-Month Backlog Estimate (in millions) | Category | March 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | ACI On Premise | $1,861 | $1,875 | | ACI On Demand | $2,290 | $2,299 | | **Total** | **$4,151** | **$4,174** | - Total liquidity as of March 31, 2019 was **$676.2 million**, consisting of **$176.2 million** in cash and **$500.0 million** available under the revolving credit facility[164](index=164&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) Q1 2019 saw 4% growth in SaaS and PaaS revenue, a 25% decline in license revenue due to deal timing, and a 4% increase in operating expenses, including $4.7 million for Speedpay acquisition costs - SaaS and PaaS revenue increased **$4.3 million (4%)** due to new customers and increased transaction volumes from existing customers[128](index=128&type=chunk) - License revenue decreased **$7.0 million (25%)**, primarily driven by the timing and relative size of license and capacity events compared to the prior year[132](index=132&type=chunk)[133](index=133&type=chunk) - Cost of revenue increased **$7.6 million (7%)**, primarily due to a **$5.1 million** increase in payment card interchange and processing fees and a **$2.5 million** increase in third-party royalty expenses[142](index=142&type=chunk) - General and administrative expense increased **$2.9 million (10%)**, which included **$4.7 million** of transaction-related expenses for the planned acquisition of Speedpay[148](index=148&type=chunk) [Segment Results](index=30&type=section&id=Segment%20Results) ACI On Premise Adjusted EBITDA decreased by $10.6 million due to lower license revenue, while ACI On Demand Adjusted EBITDA improved by $4.0 million from increased revenue despite higher processing fees - ACI On Premise Segment Adjusted EBITDA decreased by **$10.6 million**, mainly due to a **$9.0 million** revenue decrease from the timing and size of license and capacity events[161](index=161&type=chunk) - ACI On Demand Segment Adjusted EBITDA increased by **$4.0 million**, driven by a **$5.6 million** revenue increase, partially offset by a **$5.1 million** increase in payment card interchange and processing fees[162](index=162&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) Total liquidity increased to $676.2 million as of March 31, 2019, driven by operating cash flow, with $679.0 million in total debt outstanding and $0.6 million in stock repurchases - Net cash from operating activities was **$42.4 million** for Q1 2019, compared to **$45.1 million** in Q1 2018[166](index=166&type=chunk)[167](index=167&type=chunk) - As of March 31, 2019, total debt outstanding was approximately **$679.0 million**, comprising **$279.0 million** under the Term Credit Facility and **$400.0 million** in Senior Notes[171](index=171&type=chunk)[179](index=179&type=chunk) - During Q1 2019, the company repurchased **23,802 shares** for **$0.6 million**. The remaining authorization under the stock repurchase program was approximately **$176.0 million**[172](index=172&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from foreign currency exchange rates and interest rates, with a hypothetical 10% interest rate change impacting annual interest expense by approximately $1.2 million - The company is exposed to foreign currency risk as it conducts business globally, with the U.S. dollar being the single largest currency for revenue contracts[178](index=178&type=chunk) - The company's Credit Facility has a floating interest rate. A hypothetical **10%** increase or decrease in effective interest rates would change annual interest expense by approximately **$1.2 million**[179](index=179&type=chunk) [Item 4. Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective as of March 31, 2019, with internal control changes made to accommodate the adoption of the new lease accounting standard, ASC 842 - The CEO and CFO concluded that the company's disclosure controls and procedures are effective as of March 31, 2019[180](index=180&type=chunk) - Changes were made to internal controls over financial reporting due to the adoption of ASC 842, Leases, on January 1, 2019, including modifications to contract review processes and implementation of a new lease accounting system[181](index=181&type=chunk) PART II – OTHER INFORMATION This section covers legal proceedings, risk factors, unregistered sales of equity securities, and a list of exhibits filed with the report [Item 1. Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any legal proceedings expected to materially affect its financial condition or results of operations - The company states it is not currently party to any legal proceedings that would likely have a material adverse effect on its financials[183](index=183&type=chunk) [Item 1A. Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) No material changes have been reported to the risk factors previously disclosed in the company's Form 10-K for the fiscal year ended December 31, 2018 - No material changes to the risk factors from the company's 2018 Form 10-K have been reported[184](index=184&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q1 2019, the company repurchased 23,802 shares for $0.6 million, with approximately $176.0 million remaining authorized under the stock repurchase program Issuer Purchases of Equity Securities (Q1 2019) | Period | Total Shares Purchased | Average Price Paid per Share | Approx. Dollar Value Remaining in Program | | :--- | :--- | :--- | :--- | | Jan 2019 | 23,802 | $26.50 | $175,956,000 | | Feb 2019 | 84,152 (1) | $31.18 | $175,956,000 | | Mar 2019 | — | — | $175,956,000 | | **Total** | **107,954** | **$30.15** | **$175,956,000** | - Note (1): **84,152 shares** were withheld to pay employee payroll taxes on vested RSAs and RSUs and were not part of the publicly announced repurchase program[185](index=185&type=chunk) - As of March 31, 2019, the maximum remaining amount authorized for purchase under the stock repurchase program was approximately **$176.0 million**[186](index=186&type=chunk) [Item 6. Exhibits](index=36&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the Stock Purchase Agreement for Speedpay, certifications by the CEO and CFO, and XBRL data files - Exhibits filed include the Stock Purchase Agreement dated February 28, 2019, an amendment to the Credit Agreement dated April 5, 2019, and Sarbanes-Oxley certifications[190](index=190&type=chunk)[191](index=191&type=chunk)

Table of Contents 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, 2018 Commission File Number 0-25346 ACI WORLDWIDE, INC. (Exact name of registrant as specified in its charter) Delaware 47-0772104 (State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.) 3520 Kraft Rd, Suite 300 Naples, FL 34105 (239) 403-4600 ( ...