Segment Information

6 Months Ended

Jun. 30, 2020

Segment Reporting [Abstract]

Segment Information

Segment Information

The Company reports financial performance based on its segments, ACI On Demand and ACI On Premise, and analyzes Segment Adjusted EBITDA as a measure of segment profitability.

The Company’s Chief Executive Officer is also the chief operating decision maker (“CODM”). The CODM, together with other senior management personnel, focus their review on consolidated financial information and the allocation of resources based on operating results, including revenues and Segment Adjusted EBITDA, for each segment, separate from Corporate operations.

ACI On Demand serves the needs of banks, merchants, and billers who use payments to facilitate their core business. These on-demand solutions are maintained and delivered through the cloud via our global data centers and are available in either a single-tenant environment for SaaS offerings, or in a multi-tenant environment for PaaS offerings.

ACI On Premise serves customers who manage their software on site or through a third-party public cloud environment. These on-premise customers use the Company’s software to develop sophisticated solutions, which are often part of a larger system located and managed at the customer specified site. These customers require a level of control and flexibility that ACI On Premise solutions can offer, and they have the resources and expertise to take a lead role in managing these solutions.

Revenue is attributed to the reportable segments based upon the product sold and mechanism for delivery to the customer. Expenses are attributed to the reportable segments in one of three methods: (1) direct costs of the segment, (2) labor costs that can be attributed based upon time tracking for individual products, or (3) costs that are allocated. Allocated costs are generally marketing and sales related activities as well as information technology and facilities related expense for which multiple segments benefit. The Company also allocates certain depreciation costs to the segments.

Segment Adjusted EBITDA is the measure reported to the CODM for purposes of making decisions on allocating resources and assessing the performance of the Company’s segments, and, therefore, Segment Adjusted EBITDA is presented in conformity with ASC 280, Segment Reporting. Segment Adjusted EBITDA is defined as earnings (loss) from operations before interest, income tax expense (benefit), depreciation and amortization (“EBITDA”) adjusted to exclude stock-based compensation, and net other income (expense).

Corporate and unallocated expenses consist of the corporate overhead costs that are not allocated to reportable segments. These overhead costs relate to human resources, finance, legal, accounting, merger and acquisition activity, and other costs that are not considered when management evaluates segment performance.

The following is selected financial data for the Company’s reportable segments for the periods indicated (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Revenue
ACI On Demand	$	180,573	$	172,499	$	373,523	$	282,347
ACI On Premise	119,337		125,119		217,872		221,126
Total revenue	$	299,910	$	297,618	$	591,395	$	503,473
Segment Adjusted EBITDA
ACI On Demand	$	33,071	$	17,340	$	56,192	$	17,078
ACI On Premise	59,093		57,069		90,002		85,337
Depreciation and amortization	(35,692)		(29,778)		(69,514)		(54,630)
Stock-based compensation expense	(7,932)		(14,372)		(14,882)		(20,957)
Corporate and unallocated expenses	(19,402)		(36,141)		(43,943)		(60,803)
Interest, net	(11,188)		(12,326)		(25,459)		(20,907)
Other, net	2,041		1,402		(7,717)		(510)
Income (loss) before income taxes	$	19,991	$	(16,806)	$	(15,321)	$	(55,392)
Depreciation and amortization
ACI On Demand	$	10,852	$	8,489	$	20,184	$	16,051
ACI On Premise	3,431		3,019		6,537		6,049
Corporate	21,409		18,270		42,793		32,530
Total depreciation and amortization	$	35,692	$	29,778	$	69,514	$	54,630
Stock-based compensation expense
ACI On Demand	$	2,273	$	2,214	$	4,299	$	4,165
ACI On Premise	2,279		2,051		4,309		4,007
Corporate	3,380		10,107		6,274		12,785
Total stock-based compensation expense	$	7,932	$	14,372	$	14,882	$	20,957

Assets are not allocated to segments, and the Company’s CODM does not evaluate operating segments using discrete asset information.

The following is revenue by primary geographic market and primary solution category for the Company’s reportable segments for the periods indicated (in thousands):

	Three Months Ended June 30, 2020						Three Months Ended June 30, 2019
	ACI On Demand		ACI On Premise		Total		ACI On Demand		ACI On Premise		Total
Primary Geographic Markets
Americas - United States	$	158,720	$	48,661	$	207,381	$	155,825	$	35,696	$	191,521
Americas - Other	2,419		1,250		3,669		2,107		12,413		14,520
EMEA	16,524		54,426		70,950		12,492		52,155		64,647
Asia Pacific	2,910		15,000		17,910		2,075		24,855		26,930
Total	$	180,573	$	119,337	$	299,910	$	172,499	$	125,119	$	297,618
Primary Solution Categories
Bill Payments	$	137,122	$	—	$	137,122	$	125,339	$	—	$	125,339
Digital Channels	7,328		7,771		15,099		18,011		9,444		27,455
Merchant Payments	21,413		5,596		27,009		17,942		7,637		25,579
Payments Intelligence	11,852		3,942		15,794		8,874		6,504		15,378
Real-Time Payments	1,004		24,952		25,956		907		21,809		22,716
Retail Payments	1,854		77,076		78,930		1,426		79,725		81,151
Total	$	180,573	$	119,337	$	299,910	$	172,499	$	125,119	$	297,618
	Six Months Ended June 30, 2020						Six Months Ended June 30, 2019
	ACI On Demand		ACI On Premise		Total		ACI On Demand		ACI On Premise		Total
Primary Geographic Markets
Americas - United States	$	334,374	$	77,800	$	412,174	$	248,861	$	62,118	$	310,979
Americas - Other	5,652		19,191		24,843		4,850		23,358		28,208
EMEA	27,442		83,381		110,823		24,560		94,606		119,166
Asia Pacific	6,055		37,500		43,555		4,076		41,044		45,120
Total	$	373,523	$	217,872	$	591,395	$	282,347	$	221,126	$	503,473
Primary Solution Categories
Bill Payments	$	290,808	$	—	$	290,808	$	194,306	$	—	$	194,306
Digital Channels	15,721		15,334		31,055		27,799		18,169		45,968
Merchant Payments	40,427		9,702		50,129		37,281		12,659		49,940
Payments Intelligence	20,865		8,055		28,920		17,855		13,541		31,396
Real-Time Payments	2,001		42,251		44,252		1,525		36,524		38,049
Retail Payments	3,701		142,530		146,231		3,581		140,233		143,814
Total	$	373,523	$	217,872	$	591,395	$	282,347	$	221,126	$	503,473

The following is the Company’s long-lived assets by geographic location for the periods indicated (in thousands):

	June 30, 2020		December 31, 2019
Long-lived Assets
United States	$	1,494,545	$	1,526,046
Other	731,324		759,501
Total	$	2,225,869	$	2,285,547

No single customer accounted for more than 10% of the Company’s consolidated revenues during the three and six months ended June 30, 2020 and 2019. No other country outside the United States accounted for more than 10% of the Company's consolidated revenues during the three and six months ended June 30, 2020 and 2019.