ACI Worldwide(US:ACIW)2024-02-28 16:00Financial Performance - Total revenue for the year ended December 31, 2023, was $1,452.6 million, an increase from $1,421.9 million in 2022[212]. - Total revenue for the year ended December 31, 2023, increased by $30.7 million, or 2%, compared to 2022, with adjusted revenue growth of 5% after accounting for divestiture and foreign currency impacts[177]. - SaaS and PaaS revenue increased by $46.3 million, or 6%, during the year ended December 31, 2023, with an adjusted increase of 8% after considering divestiture and foreign currency effects[180]. - License revenue decreased by $26.9 million, or 8%, during the year ended December 31, 2023, with an adjusted decrease of 8% after accounting for foreign currency impacts[182]. - Maintenance revenue increased by $5.0 million, or 3%, during the year ended December 31, 2023, with an adjusted increase of 7% after considering divestiture and foreign currency effects[186]. - Services revenue increased by $6.3 million, or 9%, during the year ended December 31, 2023, with an adjusted increase of 21% after accounting for divestiture and foreign currency impacts[187]. - Operating income for the year ended December 31, 2023, was $220.4 million, representing 15% of total revenue, an increase of 8% compared to the previous year[1]. - Net income for the year ended December 31, 2023, was $121.5 million, or 8% of total revenue, a decrease of 15% compared to 2022[1]. Backlog and Growth Opportunities - The company's 60-month backlog as of December 31, 2023, totals $6.52 billion, an increase from $6.43 billion as of September 30, 2023[173]. - Committed backlog is $2.18 billion as of December 31, 2023, compared to $2.15 billion on September 30, 2023[173]. - Renewal backlog stands at $4.34 billion as of December 31, 2023, up from $4.29 billion as of September 30, 2023[173]. - The adoption of digital payments continues to grow, driven by eCommerce and real-time payment systems, with significant opportunities for ACI in both domestic and international markets[158]. - ACI's strategic partnerships with Mastercard, Microsoft, and Mindgate Solutions enhance its position in the real-time payments sector[159]. Expenses and Cost Management - Total operating expenses for the year ended December 31, 2023, increased by $14.1 million, or 1%, with a significant reduction of $18.2 million related to divestiture[189]. - Cost of revenue increased by $23.1 million, or 3%, during the year ended December 31, 2023, with an adjusted increase of 6% after accounting for divestiture and foreign currency impacts[192]. - R&D expenses decreased by $5.6 million, or 4%, during the year ended December 31, 2023, with an adjusted decrease of 2% after considering divestiture and foreign currency effects[194]. - Selling and marketing expenses decreased by $2.2 million, or 2%, for the year ended December 31, 2023, compared to 2022, primarily due to lower personnel and travel expenses[196]. - General and administrative expenses increased by $3.0 million, or 3%, for the year ended December 31, 2023, including $21.0 million for cost reduction strategies and $2.6 million for significant transaction-related expenses[199]. - Interest expense increased by $25.3 million, or 48%, for the year ended December 31, 2023, primarily due to higher interest rates[201]. Cash Flow and Financial Position - Cash flows from operating activities increased by $25.1 million in 2023, totaling $168.5 million compared to $143.4 million in 2022[224]. - Cash collections from customers rose by $69.2 million, driven by higher prior year-end receivable balances, despite $25.0 million more in interest payments and $21.9 million in income tax payments[225]. - Cash used in investing activities was $37.8 million in 2023, slightly down from $39.9 million in 2022, with no significant divestiture proceeds in 2023[227]. - Cash flows from financing activities included $73.0 million in Term Loan repayments and $27.6 million for common stock repurchases in 2023[228]. - As of December 31, 2023, cash and cash equivalents were $164.2 million, an increase from $124.98 million as of December 31, 2022[219]. - The company has a stock repurchase program with a maximum remaining amount authorized for purchase of approximately $172.4 million as of December 31, 2023[221]. - The company entered into a Refinance Amendment providing a senior secured term loan facility of $500 million and a revolving credit facility of $600 million, extending the maturity date to February 26, 2029[220]. Debt and Risk Management - The company had approximately $1.0 billion of debt outstanding as of December 31, 2023, including $643.7 million under a Credit Facility with a floating rate of 7.21% and $400.0 million in fixed-rate 2026 Notes at 5.750%[255]. - A hypothetical 10% increase or decrease in effective interest rates would impact interest income from cash investments by $0.1 million annually[254]. - The company has not entered into any foreign currency hedging transactions, exposing it to risks from fluctuations in foreign currency exchange rates[253]. - The company has not reported any material changes to its market risk for the year ended December 31, 2023, excluding interest rate and inflation impacts[253]. Strategic Initiatives - ACI is focusing on cloud technology to improve scalability and operational efficiency, aligning with industry trends[160]. - The company is actively seeking acquisitions to enhance its solution offerings and expand into new markets[165]. - ACI's advanced machine learning capabilities are being leveraged to combat fraud in the growing real-time payments landscape[161]. Shareholder and Tax Considerations - Performance awards for 2023 are based on net revenue growth and net adjusted EBITDA margin, with a total shareholder return multiplier of up to ±20% and potential earnings of up to 200% of performance shares[247]. - The company recognizes compensation expense for restricted share unit awards (RSUs) on a straight-line basis over a three-year service period[248]. - The company estimates unrecognized tax benefits for probable assessments by taxing authorities, which could lead to tax liabilities exceeding current records[250]. - The company assesses the need for a valuation allowance on deferred tax assets based on future taxable income and tax planning strategies[251].