ACI Worldwide(ACIW) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In 2025, ACI Worldwide reported total revenue of $1.76 billion, a 10% increase from 2024, marking the second consecutive year of double-digit revenue growth [4][18] - Adjusted EBITDA rose by 9% to $507 million, with an adjusted net EBITDA margin expanding to 42% [4][19] - Cash flow from operating activities was $323 million, down from $359 million in 2024, reflecting normal timing differences in working capital [22] Business Line Data and Key Metrics Changes - The Payment Software segment generated $942 million in revenue, a 9% increase, with adjusted EBITDA growing 10% to $544 million [20] - The Biller segment saw revenue increase by 13% to $818 million, with adjusted EBITDA growing 7% to $141 million [20][21] - SaaS revenue within Payment Software grew by 15% in Q4 and 11% for the full year, indicating strong demand for cloud-based offerings [20] Market Data and Key Metrics Changes - ACI's real-time payments business grew by 8% in 2025, with significant customer wins in various regions, including a strategic win in Colombia [49] - The company signed a large European bank to its Kinetic platform, further validating its modernization strategy [6][8] - The adoption of FedNow and RTP in the U.S. is gradually increasing, with expectations for material growth in transaction volumes [9] Company Strategy and Development Direction - ACI's strategy emphasizes growth within core vertical markets, disciplined operational execution, and a return-driven approach to capital allocation [5] - The company is focusing on an AI-first approach to enhance engineering productivity, operational efficiency, and customer value [10][14] - ACI is committed to investing in its Kinetic platform and expanding its capabilities, particularly in real-time payments and digital currency connectivity [17][59] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to achieve revenue growth of 7%-9% in 2026, driven by new customer wins and increasing adoption of cloud-native capabilities [24][27] - The company highlighted strong visibility into its pipelines and renewals, which supports its revenue guidance for 2026 [34][36] - Management acknowledged the ongoing challenges in the software industry but views generative AI as an opportunity rather than a threat [10][11] Other Important Information - ACI repurchased 4.2 million shares for $203 million in 2025, representing about 4% of outstanding shares [5][23] - The company appointed Kim deBeers to its board of directors as part of its ongoing board refreshment process [16] Q&A Session Summary Question: Revenue guidance for 2026 and its building blocks - Management indicated that both the Payment Software and Biller segments are expected to contribute to revenue growth, with strong visibility into renewals and new bookings [32][34] Question: Adjusted EBITDA margin expectations for 2026 - Management noted that while revenue growth is expected to be 7%-9%, adjusted EBITDA growth is projected to be slightly lower due to ongoing investments in new platforms [37][39] Question: Kinetic pipeline and growth - Management confirmed that Kinetic is the fastest-growing part of their pipeline, with significant interest from mid-tier financial institutions [45][47] Question: Tailwinds from renewals and pricing - Management reported strong performance in renewal uplifts, with opportunities for price increases and value-added services contributing to growth [52][56] Question: Strategic M&A interests - Management expressed interest in acquiring technology that could accelerate Kinetic's development or expand geographically, while maintaining a focus on shareholder returns [59][62]