Financial Data and Key Metrics Changes - Revenue for Q2 2025 increased by 7% year over year and 15% compared to 2024, leading to an upward revision of full-year guidance for revenue and adjusted EBITDA [4][18] - Adjusted EBITDA for Q2 was $181 million, down 13% year over year, primarily due to the timing of license-based contracts [18] - Cash balance at the end of Q2 was $190 million, with a net leverage ratio of 1.4 times adjusted EBITDA, significantly below the previously discussed target of two times [7][21] Business Segment Data and Key Metrics Changes - The biller segment revenue grew by 16% in Q2 and 13% for the first half of 2025, driven by strong performance in government, consumer finance, and utility markets [5][19] - Payment software segment revenue was roughly flat in Q2 but grew by 18% for the first half of 2025, with recurring revenue accelerating to 8% growth in Q2 [5][19] - Annual recurring revenue (ARR) bookings in Q2 were up 86%, bringing first half 2025 new ARR bookings growth to 71% [5][20] Market Data and Key Metrics Changes - The company is experiencing strong demand for its Kinetic platform, which is cloud-native and offers enhanced capabilities for real-time payments and wire transfers [6][12] - The backlog has exceeded $7 billion for the first time, indicating strong future revenue potential [10][70] Company Strategy and Development Direction - The company is focused on enhancing shareholder returns through share repurchases and investments in technology leadership [6][21] - ACI Worldwide is well-positioned to benefit from the adoption of stablecoins, which could drive more cross-border real-time payments [11][13] - The company aims to continue its strategy of signing new contracts and renewals earlier in the year to improve sales efficiency [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving upper single-digit revenue growth targets for 2025, supported by a strong pipeline and positive customer feedback on new products [8][24] - The leadership team emphasized the importance of modernization and the ability to bring new products to market faster, which is critical for maintaining competitive advantage [66][68] Other Important Information - ACI Worldwide was recognized as one of CNBC's World's Top Fintech Companies for 2025 and one of Time's America's Best Midsize Companies in 2025 [14] - The company plans to host an event called "Payments Unleashed" in October 2023 to celebrate its 50th anniversary and discuss emerging trends in payments [25] Q&A Session Summary Question: Update on stablecoins and bank customer conversations - Management indicated that ACI is ready for stablecoin transactions and is positioned in the middle of the payments infrastructure for banks, facilitating these transactions as demand increases [30][31] Question: Acceleration in the Biller segment - Management noted strong performance in the Biller segment, particularly from government contracts, and expects continued progress, though not at Q2 levels [38][39] Question: Areas of strength in ARR bookings - The company reported a diverse mix of deals contributing to ARR growth, with no single deal dominating the performance [44][45] Question: Trends in investment from governments and banks - Management stated that there hasn't been a fundamental change in investment trends, but ACI is better positioned to capitalize on existing demand for payment modernization [65][68] Question: Capital allocation strategy and buybacks - The company remains flexible in its capital allocation strategy, focusing on buybacks and potential M&A opportunities to enhance growth [73][76] Question: Unit economics of stablecoin transactions - Management explained that real-time payments generate significantly more revenue than debit transactions, with stablecoin transactions expected to follow a similar trend as adoption increases [84][86]

Financial Performance - ACI's Payment Software segment revenue grew by 18% and Biller segment grew by 13% in the first half of 2025 compared to the same period last year[12] - Adjusted EBITDA for the first half of 2025 increased by 24% compared to the first half of 2024[13] - The company repurchased 2.4 million shares in Q2 2025, representing 2.4% of shares outstanding[13,24] - ACI's net adjusted EBITDA margin was 34% in the first half of 2025, up from 31% in the first half of 2024[18,24,28] - ACI had $175 million in adjusted EBITDA in the first half of 2025[18,24] - Cash flow from operating activities was $128 million in the first half of 2025[18] Financial Position - ACI's cash balance was $190 million as of June 30, 2025[18,24] - The net debt leverage ratio was 1.4x[18,24] - The company retired $400 million senior unsecured notes maturing in 2026[24] Guidance - ACI is raising its full-year outlook for both revenue and adjusted EBITDA for 2025[13,24,36] - Updated full year 2025 revenue guidance is $1710 million to $1740 million, compared to the prior guidance of $1690 million to $1720 million[23] - Updated full year 2025 adjusted EBITDA guidance is $490 million to $505 million, compared to the prior guidance of $480 million to $495 million[23]

Core Insights - ACI Worldwide reported quarterly earnings of $0.35 per share, exceeding the Zacks Consensus Estimate of $0.27 per share, but down from $0.47 per share a year ago, resulting in an earnings surprise of +29.63% [1] - The company achieved revenues of $401.26 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 5.44% and up from $373.48 million year-over-year [2] - ACI Worldwide has consistently surpassed consensus EPS estimates over the last four quarters [2] Financial Performance - The earnings surprise for the previous quarter was +54.55%, with actual earnings of $0.51 per share against an expected $0.33 [1] - The current consensus EPS estimate for the upcoming quarter is $0.91, with projected revenues of $446.9 million, and for the current fiscal year, the EPS estimate is $2.84 on revenues of $1.71 billion [7] Market Position - ACI Worldwide shares have declined approximately 18.8% since the beginning of the year, contrasting with the S&P 500's gain of 7.9% [3] - The Zacks Industry Rank places the Computer - Software sector in the top 35% of over 250 Zacks industries, indicating a favorable outlook for stocks in this sector [8] Future Outlook - The company's earnings outlook will be influenced by management's commentary during the earnings call and the trends in earnings estimate revisions [4][5] - ACI Worldwide currently holds a Zacks Rank 2 (Buy), suggesting that the shares are expected to outperform the market in the near future [6]

Core Viewpoint - ACI Worldwide (ACIW) shares have increased by 2.1% recently, with a mean price target of $64.6 suggesting a potential upside of 41.4% from the current price of $45.7 [1] Price Targets and Analyst Consensus - The average price target for ACIW ranges from a low of $60.00 to a high of $77.00, with a standard deviation of $7.4, indicating a relatively tight clustering of estimates [2] - The lowest estimate suggests a 31.3% increase, while the highest indicates a 68.5% upside [2] - Analysts' price targets can be misleading, as they often set overly optimistic targets due to business incentives [8][10] Earnings Estimates and Potential Upside - There is strong agreement among analysts regarding ACIW's ability to report better earnings, which supports the expectation of an upside [4][11] - The Zacks Consensus Estimate for the current year has increased by 0.1% over the past month, with no negative revisions [12] - ACIW holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates [13] Conclusion on Price Movement - While consensus price targets may not be reliable for predicting the extent of ACIW's gains, they can provide a useful guide for the direction of price movement [14]

Core Insights - ACI Worldwide is a global payments technology provider that facilitates a wide range of transactions, including card payments and account-to-account transfers, operating in 95 countries for over five decades [2][4]. Group 1: Company Overview - ACI Worldwide supports various industries such as utilities, government, insurance, healthcare, higher education, mortgages, subscriptions, and telecommunications [3]. - The company is headquartered in the US and has a business presence across the Americas, the Middle East, Asia-Pacific, Europe, and Africa [3]. Group 2: Product and Service Offerings - ACI provides software solutions for credit, debit, and prepaid card payments, as well as account-to-account payments for banks, billers, and merchants [2]. - Recent product launches include ACI Instant Pay for real-time payments in January 2023, ACI Wallets for accepting over 200 digital wallets in 70+ countries, and a digital central infrastructure for central banks and financial institutions introduced in September 2023 [6]. Group 3: Partnerships and Collaborations - In February 2025, ACI partnered with UK-based fintech Banfico to offer payment verification services to banks and payment providers in the UK and Europe [6]. Group 4: Performance and Competitive Analysis - The report includes insights into ACI's operational and financial performance, benchmarking against competitors, and a detailed overview of its revenue model [6][8]. - ACI's significant events and milestones, including partnerships and product launches, are highlighted to assess its competitive dynamics in the alternative payments industry [6].

Core Viewpoint - ACI Worldwide (ACIW) has experienced a downtrend with a 7.8% decline over the past four weeks, but it is now in oversold territory, suggesting a potential turnaround due to improved earnings expectations from analysts [1]. Group 1: Technical Indicators - The Relative Strength Index (RSI) is a momentum oscillator that indicates whether a stock is oversold, with readings below 30 typically signaling this condition [2]. - ACIW's current RSI reading is 28.04, indicating that heavy selling may be exhausting itself, which could lead to a price rebound [5]. Group 2: Fundamental Analysis - Analysts have shown strong agreement in raising earnings estimates for ACIW, with a 0.1% increase in the consensus EPS estimate over the last 30 days, which often correlates with price appreciation [7]. - ACIW holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, further supporting the potential for a near-term turnaround [8].

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] - The innovative nature of fintech positions it favorably in the evolving financial landscape, with significant growth potential driven by mobile and broadband network expansion [3] Catalysts for Growth - Consumer behavior is shifting towards digital platforms, driven by convenience and cost-effectiveness, which supports fintech's adaptability to changing technological needs [3] - The rise of artificial intelligence (AI) and machine learning is revolutionizing banking, payments, and investments, providing efficient and secure financial solutions [4] Company Highlights BILL Holdings Inc. (BILL) - BILL primarily serves small and medium businesses (SMB) with its AI-enabled financial software platform, benefiting from an expanding clientele and diversified business model [7] - Expected revenue and earnings growth rates for BILL are 13.7% and 11.2%, respectively, for the next year, with a Zacks Consensus Estimate for next-year earnings improving by 5.6% in the last 60 days [10] ACI Worldwide Inc. (ACIW) - ACIW develops software products for facilitating digital payments, powering electronic payments for over 5,000 organizations globally, executing $14 trillion in payments daily [12][13] - Expected revenue and earnings growth rates for ACIW are 7.1% and 7.2%, respectively, for the current year, with a Zacks Consensus Estimate for current-year earnings improving by 1.1% in the last 60 days [13] Shift4 Payments Inc. (FOUR) - Shift4 Payments provides software and payment processing solutions, offering omni-channel card acceptance and processing across multiple payment types [14] - Expected revenue and earnings growth rates for FOUR are 26% and 43.4%, respectively, for the current year, with a Zacks Consensus Estimate for current-year earnings improving by 17.2% in the last 60 days [16] OppFi Inc. (OPFI) - OppFi operates as a specialty finance platform for community banks, providing access to credit for consumers turned away by mainstream options [17] - Expected revenue and earnings growth rates for OPFI are 10% and 29.5%, respectively, for the current year, with a Zacks Consensus Estimate for current-year earnings improving by 15% in the last 60 days [18] StoneCo Ltd. (STNE) - StoneCo is a leading provider of point-of-sale payment processing services, empowering businesses to accept various payment methods and manage accounts [20] - Expected revenue and earnings growth rates for STNE are 10.9% and 4.4%, respectively, for the current year, with a Zacks Consensus Estimate for current-year earnings improving by 11.9% in the last 60 days [21]

Core Viewpoint - ACI Worldwide (ACIW) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive trend in earnings estimates which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on the consensus measure of EPS estimates from sell-side analysts, reflecting the company's changing earnings picture [1][2]. - Changes in earnings estimates are strongly correlated with near-term stock price movements, influenced by institutional investors who adjust their valuations based on these estimates [4][5]. Recent Performance and Future Outlook - For the fiscal year ending December 2025, ACI Worldwide is expected to earn $2.83 per share, with a 4.6% increase in the Zacks Consensus Estimate over the past three months [8]. - The upgrade to Zacks Rank 2 places ACI Worldwide in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [10]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance of Zacks Rank 1 stocks generating an average annual return of +25% since 1988 [7]. - The system maintains a balanced distribution of ratings, ensuring that only the top 20% of stocks are positioned for superior earnings estimate revisions [9][10].

Group 1 - The analysis revisits ACI Worldwide (ACIW) after three quarters, highlighting a previous 'Buy' rating due to strong cash generation, expanding margins, and modest valuation despite significant price increases [1] - The company has shown consistent performance in cash generation and margin expansion, which are critical indicators for potential investment opportunities [1]

Financial Performance - Total revenues for the three months ended March 31, 2025, increased to $394.6 million, up 25% from $316.0 million in the same period of 2024[15] - Net income for the first quarter of 2025 was $58.9 million, compared to a net loss of $7.8 million in the first quarter of 2024[15] - Operating income rose significantly to $58.5 million, compared to $9.6 million in the prior year, reflecting improved operational efficiency[15] - The company reported a comprehensive income of $66.7 million for the first quarter of 2025, compared to a comprehensive loss of $10.2 million in the prior year[17] - Basic earnings per share for the first quarter of 2025 were $0.56, compared to a loss of $0.07 per share in the same quarter of 2024[15] - Net income for the three months ended March 31, 2025, was $58.87 million, a significant improvement compared to a net loss of $7.75 million in the same period of 2024[23] - Segment Adjusted EBITDA for the Payment Software segment was $106.6 million, while the Biller segment reported $30.9 million for the three months ended March 31, 2025[83] - The company’s diluted earnings per share for the three months ended March 31, 2025, was calculated based on 106,827 thousand weighted average shares outstanding[72] Cash and Liquidity - Cash and cash equivalents increased to $230.1 million as of March 31, 2025, from $216.4 million at the end of 2024[12] - Total cash and cash equivalents, including settlement deposits, increased to $366.77 million as of March 31, 2025, compared to $238.10 million at the end of the same period in 2024, representing a growth of approximately 54%[23] - Net cash flows from operating activities decreased to $78.22 million from $123.24 million year-over-year, reflecting a decline of approximately 36.5%[23] - The company had $598.1 million of unused borrowings under the revolving credit facility as of March 31, 2025[47] Assets and Liabilities - Total assets grew to $3.20 billion as of March 31, 2025, up from $3.03 billion at December 31, 2024[12] - Total liabilities increased to $1.72 billion, compared to $1.60 billion at the end of 2024, primarily due to higher settlement liabilities[12] - The company’s stockholders' equity increased to $1.48 billion as of March 31, 2025, from $1.42 billion at the end of 2024, reflecting strong financial performance[12] - Total receivables, net, decreased to $739.85 million as of March 31, 2025, down from $774.48 million at the end of 2024, indicating a decline of about 4.4%[42] - Deferred revenue as of March 31, 2025, was $90.89 million, down from $94.72 million at the end of 2024, a decrease of approximately 4.4%[44] Research and Development - Research and development expenses for the first quarter of 2025 were $38.9 million, up from $35.0 million in the same quarter of 2024, indicating continued investment in innovation[15] Taxation - The effective tax rate for the three months ended March 31, 2025, was 18%, positively impacted by excess tax deductions on stock-based compensation[88] - The company paid $12.70 million in income taxes during the three months ended March 31, 2025, compared to $2.52 million in the same period of 2024[23] - Unrecognized tax benefits for uncertain tax positions were $21.1 million as of March 31, 2025, with a potential decrease of approximately $0.8 million expected within the next 12 months[91] Stock and Compensation - The Company granted 459,741 performance share awards during the three months ended March 31, 2025, with a grant date fair value of $59.78[65] - As of March 31, 2025, there were 2,180,947 nonvested restricted share units (RSUs) with a weighted average grant date fair value of $39.24[66] - The company reported stock-based compensation expense of $11.63 million for the three months ended March 31, 2025, compared to $8.10 million in 2024[23] - The unrecognized compensation expense related to RSUs was $80.3 million, expected to be recognized over 2.4 years, and $37.9 million related to TSRs over 1.9 years[67] Debt and Interest - As of March 31, 2025, total debt amounted to $845.9 million, a decrease from $924.6 million as of December 31, 2024[57] - The Company had $453.1 million in term loans and $400.0 million in senior notes outstanding, with no amounts drawn under the revolving credit facility[47] - The interest rate for the Credit Facility as of March 31, 2025, was 6.17%[50] Segment Performance - Revenue for the Payment Software segment was $200.7 million, while the Biller segment generated $193.8 million, totaling $394.6 million for the three months ended March 31, 2025[83] - Revenue from the United States was $236.754 million, up from $228.107 million, while revenue from other regions increased significantly to $157.811 million from $87.912 million[87] - The Company’s revenue from Bill Payments was $193.840 million for the three months ended March 31, 2025, up from $174.862 million in 2024[86] - The Company’s revenue from Merchant Payments increased to $37.659 million in Q1 2025 from $35.728 million in Q1 2024[86] - The Company’s revenue from Fraud Management decreased to $9.574 million in Q1 2025 from $11.507 million in Q1 2024[86]