Company Performance - ACI Worldwide reported quarterly earnings of $1.08 per share, exceeding the Zacks Consensus Estimate of $0.79 per share, but down from $1.27 per share a year ago, representing an earnings surprise of 36.71% [1] - The company posted revenues of $453.04 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 0.51%, but down from $476.56 million year-over-year [2] - ACI Worldwide has surpassed consensus EPS estimates for the last four quarters and has also topped consensus revenue estimates four times during the same period [2] Stock Performance and Outlook - ACI Worldwide shares have declined approximately 2.6% since the beginning of the year, while the S&P 500 has gained 1.3% [3] - The company's future stock performance will largely depend on management's commentary during the earnings call and the trends in earnings estimate revisions [3][4] - The current consensus EPS estimate for the upcoming quarter is $0.16 on revenues of $342.3 million, and for the current fiscal year, it is $2.61 on revenues of $1.72 billion [7] Industry Context - The Computer - Software industry, to which ACI Worldwide belongs, is currently ranked in the bottom 40% of over 250 Zacks industries, which may impact the stock's performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that investors should monitor these revisions closely [5][6]

Group 1 - In January, twenty-nine new analysts published their first articles on Seeking Alpha, showcasing fresh perspectives in the investment community [1] - Seeking Alpha Editors highlight the best ideas from these new analysts, providing insights into their interests and experiences [2] - The series aims to support the community in discovering new analysts to follow and new investment ideas [2]

Industry Overview - Financial technology (fintech) is a transformative investment space merging finance and technology, offering services like online banking, peer-to-peer payments, insurance, cryptocurrency, and cybersecurity [1] - The fintech space is expected to benefit from expanding transaction volumes due to the widespread adoption of digital means, accelerated by the pandemic [2] - Continuous innovation and disruption of traditional financial firms drive the industry's favorable growth trajectory, with advancements in mobile and broadband technology [5] Interest Rate Impact - The performance of fintech companies is inversely related to interest rates, with higher borrowing costs affecting technological improvements and product innovation [3] - The Federal Reserve reduced interest rates by 25 basis points to 4.5-4.75% in November, following a 50-basis-point reduction in September 2024, which is expected to benefit fintech companies [4] Consumer Behavior - There is a shift in consumer behavior towards digital platforms, driven by convenience and cost-effectiveness, which supports the robust future of the fintech industry [6] Recommended Stocks - Five fintech stocks with strong revenue and earnings growth potential for 2025 are recommended: ACI Worldwide Inc. (ACIW), Upstart Holdings Inc. (UPST), SoFi Technologies Inc. (SOFI), Paymentus Holdings Inc. (PAY), and Enova International Inc. (ENVA) [2][7] Company Profiles - **ACI Worldwide Inc. (ACIW)**: Develops software for digital payments, processing $14 trillion daily for over 5,000 organizations, with expected revenue and earnings growth rates of 8.1% and 12.8% for 2025 [9][10][11] - **Upstart Holdings Inc. (UPST)**: An AI-lending platform with expected revenue and earnings growth rates of 29% and over 100% for 2025 [12][13] - **SoFi Technologies Inc. (SOFI)**: Provides various financial services with expected revenue and earnings growth rates of 16.8% and over 100% for 2025 [14][15] - **Paymentus Holdings Inc. (PAY)**: Offers cloud-based bill payment technology with expected revenue and earnings growth rates of 19.2% and 15.3% for 2025 [16][17] - **Enova International Inc. (ENVA)**: Provides online financial services with expected revenue and earnings growth rates of 18.8% and 21.3% for 2025 [18][19]

Financial Data and Key Metrics Changes - Total revenue for Q3 2024 was $452 million, representing a 24% increase year-over-year, while adjusted EBITDA was $167 million, up 61% from Q3 2023 [22][29] - The company has raised its guidance for full-year 2024 revenue to a range of $1.567 billion to $1.601 billion and adjusted EBITDA to a range of $433 million to $448 million [28][29] Business Line Data and Key Metrics Changes - In the Bank segment, revenue increased by 43% to $222 million, and adjusted EBITDA rose by 69% to $154 million, with real-time payments revenue growing by 72% [10][22][23] - The Merchant segment saw revenue grow by 38% to $50 million, with adjusted EBITDA increasing by 159% to $27 million [18][24] - The Biller segment's revenue was up 5% to $180 million, but adjusted EBITDA decreased due to a strong comparison from the previous year [17][25] Market Data and Key Metrics Changes - The company reported strong cash flow generation with cash flow from operations of $54 million, more than double that of Q3 last year [25] - The company ended the quarter with $178 million in cash and a net debt leverage ratio of 1.6x, allowing for a reduction in long-term leverage target from 2.5x to 2x [26][27] Company Strategy and Development Direction - The company is focused on accelerating contract signings and reducing seasonality in revenue recognition, which has allowed for a stronger pipeline heading into 2025 [6][8][9] - Investments in next-generation payment hub technology are on track, with expectations for a tangible solution by year-end [14][39] - The company is leveraging AI to enhance productivity across various functions, including software development and customer service [16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the medium-term outlook for banks, citing increased customer investment in technology and a shift towards being perceived as a partner rather than just a vendor [33][36] - The company is cautiously optimistic about potential regulatory changes in the U.S. that could positively impact transaction growth, although it has not built these expectations into its forecasts [50][51] Other Important Information - The company repurchased approximately 200,000 shares for $8 million during the quarter, with a total of approximately 4 million shares repurchased year-to-date for $128 million [27] - A significant contract was signed with QuikTrip, enhancing the company's position in the merchant space [20] Q&A Session Summary Question: Medium-term growth outlook for banks - Management highlighted that banks are investing heavily in new products and seeking partnerships to enhance efficiency, which supports confidence in medium-term growth [33][34] Question: Impact of early renewals on strategic focus - Early renewals allow the company to concentrate on new business opportunities for 2025 and beyond, freeing up resources from renewal discussions [38][39] Question: 2025 outlook and pipeline strength - The company is well-positioned for continued strength in 2025, with a robust pipeline exiting 2024 [44][45] Question: Competitive environment in real-time payments - Most new business in real-time payments is net new, with the company securing central infrastructure deals in various countries [62][64] Question: Impact of U.S. administration change on business - Management is cautiously optimistic about potential regulatory changes that could benefit the banking sector, although the company remains focused on its global operations [50][51]

Financial Performance - Total revenues for the three months ended September 30, 2024, increased to $451.8 million, up 24.4% from $363.0 million in the same period of 2023[9] - Net income for the three months ended September 30, 2024, was $81.4 million, compared to $37.9 million for the same period in 2023, representing a 115.5% increase[9] - Operating income for the nine months ended September 30, 2024, was $185.8 million, significantly higher than $48.1 million for the same period in 2023[9] - Comprehensive income for the three months ended September 30, 2024, was $90.5 million, compared to $31.6 million for the same period in 2023[12] - For the nine months ended September 30, 2024, the net income was $104,563,000, compared to a net loss of $1,107,000 for the same period in 2023[21] - The Company reported income before income taxes of $107,278 thousand, significantly up from $46,663 thousand in the same quarter of the previous year[86] - The Company’s total revenue for the nine months ended September 30, 2024, was $1,141,250 thousand, compared to $976,016 thousand for the same period in 2023, marking a 16.9% increase[86] Cash and Liquidity - Cash and cash equivalents as of September 30, 2024, were $177.9 million, an increase from $164.2 million as of December 31, 2023[8] - Cash and cash equivalents, including settlement deposits, increased to $268,670,000 as of September 30, 2024, up from $223,534,000 in 2023[21] - Total liquidity increased to $644.96 million as of September 30, 2024, primarily due to a $100.0 million increase in the maximum amount available under the revolving credit facility[182] - The company utilized $127.7 million for stock repurchases during the first nine months of 2024, compared to $4.2 million in the same period of 2023, indicating a substantial increase in capital return to shareholders[193] Assets and Liabilities - Total assets decreased to $3.1 billion as of September 30, 2024, down from $3.4 billion as of December 31, 2023[8] - Total liabilities decreased to $1.8 billion as of September 30, 2024, compared to $2.1 billion as of December 31, 2023[8] - The company had total other current liabilities of $75,036,000 as of September 30, 2024, down from $82,244,000 at the end of 2023[25] - The company experienced a decrease in accrued interest liabilities from $9,172,000 to $3,124,000 as of September 30, 2024[25] Revenue Segmentation - Revenue from the Banks segment reached $222,031 thousand, up 42.4% from $155,684 thousand year-over-year[86] - The Merchants segment generated $50,120 thousand in revenue, a 38.2% increase compared to $36,267 thousand in the prior year[86] - Billers segment revenue was $179,601 thousand, a 5.3% increase from $171,064 thousand year-over-year[86] - SaaS and PaaS revenue increased by $12.0 million, or 6%, during the three months ended September 30, 2024, driven by new customer go-lives and higher transaction volumes[134] - License revenue increased by $77.8 million, or 98%, during the three months ended September 30, 2024, due to license renewal timing and new license events[137] - Maintenance revenue decreased by $4.4 million, or 8%, during the three months ended September 30, 2024, primarily due to customers reducing premium support on non-strategic products[139] Expenses and Investments - Research and development expenses for the three months ended September 30, 2024, were $37.7 million, up from $33.7 million in the same period of 2023[9] - Stock-based compensation expense increased to $30,165,000 for the nine months ended September 30, 2024, compared to $17,537,000 in 2023[21] - Total operating expenses for the three months ended September 30, 2024, increased by $28.1 million, or 9%, compared to the same period in 2023[142] - General and administrative expenses increased by $4.1 million, or 14%, during the three months ended September 30, 2024, compared to the same period in 2023[151] Shareholder Returns - The company repurchased 3,946,537 shares of common stock, totaling $128,669,000, during the nine months ended September 30, 2024[21] - The company repurchased 203,317 shares of common stock, totaling $7,976 thousand, as part of its capital management strategy[14] - The company reported a total intrinsic value of stock options exercised of $2.4 million during the nine months ended September 30, 2024, compared to $0.9 million in the same period of 2023[63] Market Presence and Strategy - ACI Worldwide processes $14 trillion in payments daily for over 6,000 organizations, highlighting its significant market presence[111] - The Company is focusing on expanding its international market presence while maintaining growth in the U.S. market[113] - ACI is investing in cloud technology to support customers' transitions, enhancing scalability and operational efficiency[116] - The adoption of real-time payments is accelerating, with ACI positioned as a leader in this space through strategic partnerships[115] - The Company is actively seeking acquisitions to enhance its solution offerings and access new markets, aiming for strategic and financially accretive candidates[122]

| --- | --- | --- | --- | |-------------------------------|-------|-------|-------| | | | | | | | | | | | | | | | | Q3 2024 Earnings Presentation | | | | | November 7, 2024 | | | | /\CI Worldwide® Private Securities Litigation Reform Act of 1995 Safe Harbor for Forward-Looking Statements This presentation contains forward-looking statements based on current expectations that involve a number of risks and uncertainties. The forward-looking statements are made pursuant to safe harbor provisions of the Private ...

Core Insights - ACI Worldwide reported a revenue of $451.75 million for the quarter ended September 2024, reflecting a year-over-year increase of 24.4% [1] - The earnings per share (EPS) for the quarter was $0.97, significantly higher than the $0.52 reported in the same quarter last year [1] - The revenue exceeded the Zacks Consensus Estimate of $404.8 million by 11.60%, while the EPS also surpassed the consensus estimate of $0.60 by 61.67% [1] Revenue Breakdown - Revenue from Banks was $222 million, exceeding the average estimate of $175.50 million from two analysts [3] - Revenue from Billers was $179.60 million, slightly below the estimated $192 million from two analysts [3] - Revenue from Merchants reached $50.20 million, surpassing the average estimate of $38.40 million from two analysts [3] Stock Performance - ACI Worldwide's shares have returned +5.3% over the past month, outperforming the Zacks S&P 500 composite's +3.2% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Core Insights - ACI Worldwide reported quarterly earnings of $0.97 per share, exceeding the Zacks Consensus Estimate of $0.60 per share, and showing a significant increase from $0.52 per share a year ago, resulting in an earnings surprise of 61.67% [1] - The company achieved revenues of $451.75 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 11.60% and up from $363.02 million year-over-year [2] - ACI Worldwide's stock has increased approximately 77.8% year-to-date, significantly outperforming the S&P 500's gain of 24.3% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $1.10 on revenues of $482.05 million, and for the current fiscal year, it is $2.27 on revenues of $1.58 billion [7] - The estimate revisions trend for ACI Worldwide is mixed, leading to a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Computer - Software industry, to which ACI Worldwide belongs, is currently ranked in the top 22% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]

Financial Performance - Revenue for Q3 2024 was $452 million, representing a 24% increase compared to Q3 2023[4] - Net income for Q3 2024 was $81 million, up 115% from $38 million in Q3 2023[4] - Adjusted EBITDA for Q3 2024 was $167 million, a 61% increase from Q3 2023[4] - Cash flow from operating activities increased 114% to $54 million in Q3 2024, compared to $25 million in Q3 2023[4] - Total revenues for the three months ended September 30, 2024, reached $451,752 million, a 24.5% increase from $363,015 million in the same period of 2023[20] - Net income for the three months ended September 30, 2024, was $81,427 million, compared to $37,911 million in the same period of 2023, representing a 114.3% increase[20] - Operating income for the three months ended September 30, 2024, was $122,586 million, up from $61,924 million in the same period of 2023, reflecting a 97.5% increase[20] - Cash flows from operating activities for the three months ended September 30, 2024, were $54,008 million, compared to $25,266 million in the same period of 2023, indicating a 113.0% increase[21] - Net income for the nine months ended September 30, 2024, was $104.6 million, a significant recovery from a net loss of $1.1 million in the same period of 2023[22] Segment Performance - Bank segment revenue increased 43% in Q3 2024, with adjusted EBITDA up 69%[5] - Merchant segment revenue rose 38% in Q3 2024, with adjusted EBITDA increasing 159%[5] - Revenue from the Banks segment for Q3 2024 was $222.0 million, up from $155.7 million in Q3 2023, a 42% increase[23] Guidance and Expectations - Full-year 2024 revenue guidance raised to a range of $1.567 billion to $1.601 billion, up from $1.557 billion to $1.591 billion[7] - Adjusted EBITDA guidance for 2024 increased to a range of $433 million to $448 million, up from $423 million to $438 million[7] - The company expects continued growth in revenue and profitability for the upcoming quarters, driven by strategic market expansions and new product developments[22] Shareholder Actions - Year-to-date 2024, the company repurchased approximately 4 million shares for $128 million[6] Cash and Liquidity - The company ended Q3 2024 with a net debt leverage ratio of 1.6x adjusted EBITDA and approximately $650 million in liquidity[3] - Cash and cash equivalents at the end of the period were $177,860 million, compared to $139,520 million at the end of the same period in 2023, representing a 27.5% increase[21] - Total cash and cash equivalents, including settlement deposits, at the end of the period were $268,670 million, up from $223,534 million in the same period of 2023, indicating a 20.2% increase[21] Expenses and Margins - Research and development expenses for the three months ended September 30, 2024, were $37,660 million, an increase from $33,739 million in the same period of 2023, showing an 8.6% rise[20] - Total operating expenses for the three months ended September 30, 2024, were $329,166 million, up from $301,091 million in the same period of 2023, reflecting a 9.3% increase[20] - The Adjusted EBITDA margin improved to 37% in Q3 2024 from 28% in Q3 2023[22] Other Key Metrics - The company reported a basic income per share of $0.78 for the three months ended September 30, 2024, compared to $0.35 in the same period of 2023, marking a 122.9% increase[20] - Recurring revenue for Q3 2024 was $270.9 million, slightly up from $263.3 million in Q3 2023, indicating a 2% increase[24] - Annual recurring revenue (ARR) bookings for Q3 2024 were $11.1 million, down from $20.5 million in Q3 2023, reflecting a 46% decline[25] - Total bookings for License and services in Q3 2024 were $67.0 million, an increase from $54.1 million in Q3 2023, representing a 24% growth[25] - Significant transaction-related expenses for Q3 2024 amounted to $4.5 million, compared to $3.3 million in Q3 2023[24]

Core Viewpoint - ACI Worldwide (ACIW) has shown significant stock performance, gaining 15% over the past three months, outperforming both the Zacks Computer and Technology Sector and the S&P 500 index [1] Group 1: Company Performance - ACIW's revenues have been consistently growing, particularly in the biller segment, which saw a 13% year-over-year increase in the second quarter of 2024 [3] - The bank segment revenues grew by 22% year-over-year during the same period [3] - ACIW has secured major contracts internationally, enhancing its payment solutions and infrastructure [2] Group 2: Market Position and Competition - ACIW is benefiting from international expansion, especially in the Asia-Pacific market, where competitors are withdrawing support, creating opportunities for ACIW [2] - The company faces intense competition in the electronic payments software space from various players, including Fiserv, NCR Voyix, and Jack Henry & Associates [5][6] - Ongoing macroeconomic challenges, such as inflation and high interest rates, may impact ACIW's growth prospects, although the company is currently navigating these issues with its innovative product portfolio [6] Group 3: Financial Outlook - ACIW expects its 2024 revenues to be between $1.557 billion and $1.591 billion, with a Zacks Consensus Estimate of $1.58 billion, indicating an 8.6% year-over-year growth [6] - The recent increase in share price has led to elevated valuation levels, with a Zacks Value score of C, suggesting that the stock may be overvalued at present [7]