Summary of ACI's Earnings Call Company Overview - ACI is a $1.7 billion software and SaaS company that has been a key player in the global payments ecosystem for over 50 years, serving 19 of the top 20 global banks and providing mission-critical payment software for banks, merchants, and billers worldwide [1][4][5] Key Financial Metrics - ACI generates approximately $500 million in EBITDA, with about two-thirds realized in cash [4] - The company has posted a 12% growth in its bill pay segment through nine months, with a strong backlog indicating continued double-digit growth [15][18] - ACI has a revenue growth target of 7%-9%, with actual growth exceeding this target [14][15] Strategic Focus and Innovation - ACI is focusing on high single-digit growth and investing in innovation to meet customer demands [8][56] - The company is developing a new platform called Kinetic, which is a cloud-native payments hub aimed at providing intelligent payment orchestration, enhancing the capabilities of banks [11][42] - ACI is also enhancing its SpeedPay platform, consolidating legacy systems into a new cloud-native solution to improve customer experience and operational efficiency [51][52] Market Trends and Opportunities - The shift towards real-time payments and cross-border modernization is seen as a significant growth opportunity for ACI, with real-time payments being the fastest-growing new payment type [27][30] - ACI is positioned to capitalize on the increasing complexity in payment systems, which is driving demand for its solutions [14][24] - The company is exploring the potential of stablecoin, viewing it as an opportunity to add complexity to existing banking systems rather than a threat to its revenue [36][39] Customer Relationships and Retention - ACI has a high customer retention rate in the upper 90s, indicating strong customer loyalty and satisfaction [24][70] - The company emphasizes the importance of its mission-critical software, which is essential for customers to avoid negative impacts on their credit scores due to missed payments [15][16] Capital Allocation and Financial Strategy - ACI has been active in share buybacks, repurchasing 3 million shares for about $150 million in the first nine months of the year, with an increased authorization for $500 million [60][61] - The company has reduced its leverage from a target of 2.5x to 1.3x, prioritizing debt repayment before returning capital to shareholders [60][61] Conclusion - ACI is positioned for sustained growth through innovation, strategic partnerships, and a focus on customer needs, with a clear roadmap for the future that includes the rollout of new platforms and enhancements to existing services [56][58][59]

Financial Data and Key Metrics Changes - Total revenue for Q3 2025 was $482 million, reflecting a 7% year-over-year increase and a 6% increase when adjusted for foreign exchange [13] - Recurring revenue reached $298 million, up 10%, representing 62% of total revenue [13] - Adjusted EBITDA was $171 million, a 2% increase year-over-year [13] - Year-to-date total revenue and adjusted EBITDA both increased by 12% compared to the previous year [14] Business Line Data and Key Metrics Changes - The biller business generated $198 million in revenue, up 10% year-over-year, with segment-adjusted EBITDA increasing by 4% to $32 million [13] - Payment software revenue grew by 4% to $284 million, with adjusted EBITDA at $182 million, up 1% [13] - Year-to-date payment software revenue increased by 12%, while adjusted EBITDA grew by 13% [14] Market Data and Key Metrics Changes - Strong demand was noted from traditional banks, established payment processors, and emerging fintechs [6] - The company reported a healthy growth in its $7.1 billion, 60-month backlog, with double-digit growth across both payment software and biller business [26] Company Strategy and Development Direction - The company is focused on reducing variability in its historic term license software business model by closing deals earlier and moving towards more ratable pricing structures [5] - ACI Kinetic platform is a key focus, with the signing of its first customer, Solaris, indicating a commitment to modernizing payment infrastructure [6][34] - The company made a strategic acquisition of a European-based fintech payment component to enhance its AI-first initiatives and accelerate the ACI Kinetic development roadmap [9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the remainder of 2025, highlighting a robust pipeline and consistent execution across the business [12] - The company raised its full-year guidance for total revenue to a range of $1.73 billion to $1.754 billion and adjusted EBITDA to $495 million to $510 million [17] - Management emphasized the importance of transparency and proactive dialogue with the investment community [19] Other Important Information - The company repurchased 3.1 million shares for $150 million year-to-date and increased its share repurchase authorization to $500 million [9][16] - ACI Worldwide is committed to returning capital to shareholders while maintaining operational excellence and technology leadership [12] Q&A Session All Questions and Answers Question: Pricing as a lever for long-term growth - Management indicated that pricing remains an important lever for growth, with expectations to continue adding value through new software versions and features [22][24] Question: Renewal cadence for payment software - Management noted a healthy backlog and expects balanced renewals throughout 2026, maintaining a high single-digit growth model [25][26] Question: Progression and pipeline for ACI Kinetic - Management expressed excitement about the growing pipeline for ACI Kinetic, with revenue conversion expected to occur after implementation is completed [34][35] Question: Payments components acquisition and BitPay partnership - The acquisition was aimed at enhancing capabilities for ACI Kinetic, while the BitPay partnership is expected to improve service offerings in the crypto and stablecoin space [39][40] Question: Growth drivers in the biller segment - Management highlighted new customer acquisition and retention as key drivers of growth in the biller segment, with a focus on the SpeedPay One platform [50][52]