EX-99.1 2 d743311dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO   

 

News Release            

ACI Worldwide, Inc. Reports Financial Results for the

Quarter Ended March 31, 2019

HIGHLIGHTS

 

   

ACI On Demand segment revenue grew 5%

 

   

ACI On Demand net adjusted EBITDA margin improved 600 bps

 

   

Completion of Speedpay acquisition

 

   

Updating full year 2019 and 2020 guidance

NAPLES, FLA — May 9, 2019 — ACI Worldwide (NASDAQ: ACIW), a leading global provider of real-time electronic payment and banking solutions, today announced financial results for the quarter ended March 31, 2019.

“We are pleased to announce that the acquisition of Speedpay will close today and we are updating our full year 2019 outlook,” commented Phil Heasley, President and CEO, ACI Worldwide. “The addition of Speedpay is strategically compelling and is expected to provide notable financial benefits, including increases in recurring revenue and net adjusted EBITDA margin in our On Demand business. We welcome the talented Speedpay employees and valuable customers. Looking to the rest of 2019 and beyond, with a strong new bookings pipeline, our improving AOD operations, and the addition of Speedpay, ACI is poised to capitalize even more quickly on the growing global payment transaction opportunity.”

Q1 2019 FINANCIAL SUMMARY

In Q1 2019, new bookings were $70 million, which was down when compared to our record bookings quarter in Q1 last year.


In Q1 2019, revenue was $206 million, versus $209 million in Q1 2018. Net loss in the quarter was $26 million, versus a net loss of $19 million last year. Adjusted EBITDA was $8 million, versus $19 million in Q1 2018.

In Q1 2019, revenue from ACI’s On Demand segment was $110 million, up 5% from $104 million last year. On Demand segment net adjusted EBITDA margin improved 600 basis points from last year. On Demand segment net adjusted EBITDA margins are adjusted for pass through interchange revenue of $45 million and $40 million, for Q1 2019 and Q1 2018, respectively. ACI’s On Premise segment revenue was $96 million, versus $105 million last year due to timing of nonrecurring license fees. On Premise segment adjusted EBITDA margin was 29% in Q1 2019 versus 37% in Q1 2018.

ACI ended Q1 2019 with a 12-month backlog of $813 million and a 60-month backlog of $4.2 billion. After adjusting for foreign currency fluctuations, our 12-month backlog increased $3 million and our 60-month backlog decreased $22 million from Q4 2018.

Cash flows from operating activities in Q1 2019 were $42 million, versus $45 million in Q1 2018. Adjusted operating free cash flow in Q1 2019 was $35 million, versus $36 million in Q1 2018. ACI ended Q1 2019 with $176 million in cash on hand, up from $149 million in Q4 2018, and a debt balance of $679 million. The company has $176 million remaining on its share repurchase authorization.

GUIDANCE

We are updating our outlook for the full year 2019 and 2020 given the contribution from Speedpay. We expect Speedpay to contribute between $215 million and $220 million in revenue and between $50 million and $55 million in adjusted EBITDA to the remainder of 2019. We expect Speedpay to contribute $90 million to $95 million in adjusted EBITDA in 2020. We now expect 2019 total revenue to be between $1.315 billion and $1.345 billion and adjusted EBITDA to be in a range of $360 million to $380 million, which excludes between $30 million and $35 million in significant transaction related expenses. This is up from our prior guidance of $1.1 billion to $1.125 billion and $310 million to $325 million for


revenue and adjusted EBITDA, respectively. We expect Q2 2019 revenue to be between $280 and $290 million. We continue to expect full year 2019 new bookings growth to be in the upper single digits to low double digits.

We now expect our 2020 adjusted EBITDA to be in a range of $425 million to $445 million, up from the prior outlook of $335 million to $350 million.

CONFERENCE CALL TO DISCUSS FINANCIAL RESULTS AND OUTLOOK

Management will host a conference call at 8:30 am ET today to discuss these results, the Speedpay acquisition, as well as 2019 and 2020 guidance. Interested persons may access a real-time audio broadcast of the teleconference at http://investor.aciworldwide.com/ or use the following numbers for dial-in participation: US/Canada: (866) 914-7436, international: +1 (817) 385-9117.    Please provide your name, the conference name ACI Worldwide, Inc. and conference code 1270429. There will be a replay of the call available for two weeks on (855) 859-2056 for US/Canada callers and +1 (404) 537-3406 for international participants.

About ACI Worldwide

ACI Worldwide, the Universal Payments (UP) company, powers electronic payments for more than 5,100 organizations around the world. More than 1,000 of the largest financial institutions and intermediaries, as well as thousands of global merchants, rely on ACI to execute $14 trillion each day in payments and securities. In addition, myriad organizations utilize our electronic bill presentment and payment services. Through our comprehensive suite of software solutions delivered on customers’ premises or through ACI’s private cloud, we provide real-time, immediate payments capabilities and enable the industry’s most complete omni-channel payments experience. To learn more about ACI, please visit www.aciworldwide.com. You can also find us on Twitter @ACI_Worldwide.

© Copyright ACI Worldwide, Inc. 2019.

ACI, ACI Worldwide, ACI Payment Systems, the ACI logo and all ACI product names are trademarks or registered trademarks of ACI Worldwide, Inc., or one of its subsidiaries, in the United States, other countries or both. Other parties’ trademarks referenced are the property of their respective owners.

For more information contact:

John Kraft, Vice President, Investor Relations & Strategic Analysis

ACI Worldwide

239-403-4627

john.kraft@aciworldwide.com


To supplement our financial results presented on a GAAP basis, we use the non-GAAP measures indicated in the tables, which exclude significant transaction-related expenses, as well as other significant non-cash expenses such as depreciation, amortization and stock-based compensation, that we believe are helpful in understanding our past financial performance and our future results. The presentation of these non-GAAP financial measures should be considered in addition to our GAAP results and are not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Management generally compensates for limitations in the use of non-GAAP financial measures by relying on comparable GAAP financial measures and providing investors with a reconciliation of non-GAAP financial measures only in addition to and in conjunction with results presented in accordance with GAAP. We believe that these non-GAAP financial measures reflect an additional way to view aspects of our operations that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business. Certain non-GAAP measures include:

 

   

Adjusted EBITDA: net income plus income tax expense (benefit), net interest income (expense), net other income (expense), depreciation, amortization and stock-based compensation, as well as significant transaction-related expenses. Adjusted EBITDA should be considered in addition to, rather than as a substitute for, net income.

 

   

Net Adjusted EBITDA Margin: Adjusted EBITDA divided by revenue net of pass through interchange revenue. Net Adjusted EBITDA Margin should be considered in addition to, rather than as a substitute for, net income.

ACI is also presenting adjusted operating free cash flow, which is defined as net cash provided by operating activities and net after-tax payments associated with significant transaction-related expenses, less capital expenditures. Adjusted operating free cash flow is considered a non-GAAP financial measure as defined by SEC Regulation G. We utilize this non-GAAP financial measure, and believe it is useful to investors, as an indicator of cash flow available for debt repayment and other investing activities, such as capital investments and acquisitions. We utilize adjusted operating free cash flow as a further indicator of operating performance and for planning investment activities. Adjusted operating free cash flow should be considered in addition to, rather than as a substitute for, net cash provided by operating activities. A limitation of adjusted operating free cash flow is that it does not


represent the total increase or decrease in the cash balance for the period. This measure also does not exclude mandatory debt service obligations and, therefore, does not represent the residual cash flow available for discretionary expenditures. We believe that adjusted operating free cash flow is useful to investors to provide disclosures of our operating results on the same basis as that used by our management.

ACI backlog includes estimates for SaaS and PaaS, license, maintenance, and services specified in executed contracts but excluded from contracted revenue that will be recognized in future periods, as well as revenue from assumed contract renewals to the extent that we believe recognition of the related revenue will occur within the corresponding backlog period. We have historically included assumed renewals in backlog estimates based upon automatic renewal provisions in the executed contract and our historic experience with customer renewal rates.

Backlog is considered a non-GAAP financial measure as defined by SEC Regulation G. Our 60-month backlog estimates are derived using the following key assumptions:

 

   

License arrangements are assumed to renew at the end of their committed term or under the renewal option stated in the contract at a rate consistent with historical experience. If the license arrangement includes extended payment terms, the renewal estimate is adjusted for the effects of a significant financing component.

 

   

Maintenance fees are assumed to exist for the duration of the license term for those contracts in which the committed maintenance term is less than the committed license term.

 

   

SaaS and PaaS arrangements are assumed to renew at the end of their committed term at a rate consistent with our historical experiences.

 

   

Foreign currency exchange rates are assumed to remain constant over the 60-month backlog period for those contracts stated in currencies other than the U.S. dollar.

 

   

Our pricing policies and practices are assumed to remain constant over the 60-month backlog period.

Estimates of future financial results are inherently unreliable. Our backlog estimates require substantial judgment and are based on a number of assumptions as described above. These assumptions may turn out to be inaccurate or wrong, including, but not limited to, reasons outside of management’s control. For example, our customers may attempt to renegotiate


or terminate their contracts for a number of reasons, including mergers, changes in their financial condition, or general changes in economic conditions in the customer’s industry or geographic location, or we may experience delays in the development or delivery of products or services specified in customer contracts which may cause the actual renewal rates and amounts to differ from historical experiences. Changes in foreign currency exchange rates may also impact the amount of revenue actually recognized in future periods. Accordingly, there can be no assurance that contracts included in backlog estimates will actually generate the specified revenue or that the actual revenue will be generated within the corresponding 60-month period.

Backlog estimates should be considered in addition to, rather than as a substitute for, reported revenue and contracted but not recognized revenue (including deferred revenue).


Forward-Looking Statements

This press release contains forward-looking statements based on current expectations that involve a number of risks and uncertainties. Generally, forward-looking statements do not relate strictly to historical or current facts and may include words or phrases such as “believes,” “will,” “expects,” “anticipates,” “intends,” and words and phrases of similar impact. The forward-looking statements are made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements in this press release include, but are not limited to, statements regarding: (i) expectations that the addition of Speedpay is strategically compelling and is expected to provide notable financial benefits, including increases in recurring revenue and net adjusted EBITDA margin in our On Demand business; (ii) expectations regarding a strong new bookings pipeline, improving AOD operations, the addition of Speedpay and the positioning to capitalize even more quickly on the growing global payment transaction opportunity; (iii) expectations regarding revenue, adjusted EBITDA, and new bookings growth in 2019; (iv) expectations regarding revenue in Q2 2019; (v) and expectations regarding our 2020 EBITDA target.

All of the foregoing forward-looking statements are expressly qualified by the risk factors discussed in our filings with the Securities and Exchange Commission. Such factors include, but are not limited to, increased competition, the success of our Universal Payments strategy, demand for our products, restrictions and other financial covenants in our debt agreements, consolidations and failures in the financial services industry, customer reluctance to switch to a new vendor, the accuracy of management’s backlog estimates, the maturity of certain products, failure to obtain renewals of customer contracts or to obtain such renewals on favorable terms, delay or cancellation of customer projects or inaccurate project completion estimates, volatility and disruption of the capital and credit markets and adverse changes in the global economy, our existing levels of debt, impairment of our goodwill or intangible assets, litigation, future acquisitions, strategic partnerships and investments, the complexity of our products and services and the risk that they may contain hidden defects or be subjected to security breaches or viruses, compliance of our products with applicable legislation, governmental regulations and industry standards, our ability to


protect customer information from security breaches or attacks, our compliance with privacy regulations, our ability to adequately defend our intellectual property, exposure to credit or operating risks arising from certain payment funding methods, the cyclical nature of our revenue and earnings and the accuracy of forecasts due to the concentration of revenue-generating activity during the final weeks of each quarter, business interruptions or failure of our information technology and communication systems, our offshore software development activities, risks from operating internationally, including fluctuations in currency exchange rates, exposure to unknown tax liabilities, volatility in our stock price, and potential claims associated with our sale and transition of our CFS assets and liabilities. For a detailed discussion of these risk factors, parties that are relying on the forward-looking statements should review our filings with the Securities and Exchange Commission, including our most recently filed Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q.


ACI WORLDWIDE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited and in thousands, except share and per share amounts)

 

     March 31,     December 31,  
     2019     2018  

ASSETS

    

Current assets

    

Cash and cash equivalents

   $ 176,173     $ 148,502  

Receivables, net of allowances

     265,750       348,182  

Prepaid expenses

     31,464       23,277  

Other current assets

     40,830       46,516  
  

 

 

   

 

 

 

Total current assets

     514,217       566,477  
  

 

 

   

 

 

 

Noncurrent assets

    

Accrued receivables, net

     177,407       189,010  

Property and equipment, net

     70,909       72,729  

Operating lease right-of-use assets

     60,978       —    

Software, net

     130,812       137,228  

Goodwill

     909,691       909,691  

Intangible assets, net

     162,845       168,127  

Deferred income taxes, net

     38,408       27,048  

Other noncurrent assets

     48,875       52,145  
  

 

 

   

 

 

 

TOTAL ASSETS

   $  2,114,142     $  2,122,455  
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

    

Current liabilities

    

Accounts payable

   $ 28,046     $ 39,602  

Employee compensation

     29,570       38,115  

Current portion of long-term debt

     20,788       20,767  

Deferred revenue

     91,369       104,843  

Other current liabilities

     90,604       93,293  
  

 

 

   

 

 

 

Total current liabilities

     260,377       296,620  
  

 

 

   

 

 

 

Noncurrent liabilities

    

Deferred revenue

     60,853       51,292  

Long-term debt

     645,784       650,989  

Deferred income taxes, net

     24,705       31,715  

Operating lease liabilities

     50,636       —    

Other noncurrent liabilities

     39,203       43,608  
  

 

 

   

 

 

 

Total liabilities

     1,081,558       1,074,224  
  

 

 

   

 

 

 

Commitments and contingencies

    

Stockholders’ equity

    

Preferred stock

     —         —    

Common stock

     702       702  

Additional paid-in capital

     636,960       632,235  

Retained earnings

     837,805       863,768  

Treasury stock

     (351,587     (355,857

Accumulated other comprehensive loss

     (91,296     (92,617
  

 

 

   

 

 

 

Total stockholders’ equity

     1,032,584       1,048,231  
  

 

 

   

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

   $ 2,114,142     $ 2,122,455  
  

 

 

   

 

 

 


ACI WORLDWIDE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited and in thousands, except per share amounts)

 

     For the Three Months Ended
March 31,
 
     2019     2018  

Revenues

    

Software as a service and platform as a service

   $  108,557     $  104,280  

License

     21,078       28,046  

Maintenance

     55,111       56,659  

Services

     21,109       20,325  
  

 

 

   

 

 

 

Total revenues

     205,855       209,310  
  

 

 

   

 

 

 

Operating expenses

    

Cost of revenue (1)

     114,941       107,336  

Research and development

     36,194       36,791  

Selling and marketing

     29,430       31,893  

General and administrative

     31,517       28,649  

Depreciation and amortization

     21,866       21,345  
  

 

 

   

 

 

 

Total operating expenses

     233,948       226,014  
  

 

 

   

 

 

 

Operating loss

     (28,093     (16,704
  

 

 

   

 

 

 

Other income (expense)

    

Interest expense

     (11,614     (9,365

Interest income

     3,033       2,744  

Other, net

     (1,912     (55
  

 

 

   

 

 

 

Total other income (expense)

     (10,493     (6,676
  

 

 

   

 

 

 

Loss before income taxes

     (38,586     (23,380

Income tax benefit

     (12,623     (3,952
  

 

 

   

 

 

 

Net loss

   $  (25,963   $  (19,428
  

 

 

   

 

 

 

Loss per common share

    

Basic

   $ (0.22   $ (0.17

Diluted

   $ (0.22   $ (0.17

Weighted average common shares outstanding

    

Basic

     116,090       115,642  

Diluted

     116,090       115,642  

 

(1)

The cost of revenue excludes charges for depreciation but includes amortization of purchased and developed software for resale.


ACI WORLDWIDE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited and in thousands)

 

     For the Three Months Ended
March 31,
 
     2019     2018  

Cash flows from operating activities:

    

Net loss

   $  (25,963   $  (19,428

Adjustments to reconcile net income to net cash flows from operating activities:

    

Depreciation

     5,901       5,926  

Amortization

     18,951       19,067  

Amortization of operating lease right-of-use assets

     3,383       —    

Amortization of deferred debt issuance costs

     753       699  

Deferred income taxes

     (17,414     (4,827

Stock-based compensation expense

     6,585       6,362  

Other

     574       (663

Changes in operating assets and liabilities:

    

Receivables

     94,549       68,741  

Accounts payable

     (10,297     (2,611

Accrued employee compensation

     (8,598     (14,743

Current income taxes

     (1,041     (3,569

Deferred revenue

     (4,127     11,326  

Other current and noncurrent assets and liabilities

     (20,829     (21,144
  

 

 

   

 

 

 

Net cash flows from operating activities

     42,427       45,136  
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Purchases of property and equipment

     (5,250     (5,937

Purchases of software and distribution rights

     (4,578     (6,652
  

 

 

   

 

 

 

Net cash flows from investing activities

     (9,828     (12,589
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Proceeds from issuance of common stock

     831       753  

Proceeds from exercises of stock options

     4,857       9,118  

Repurchase of restricted share awards and restricted stock units for tax withholdings

     (2,624     (914

Repurchases of common stock

     (631     (31,113

Proceeds from revolving credit facility

     —         48,000  

Repayments of revolving credit facility

     —         (50,000

Repayment of term portion of credit agreement

     (5,937     (5,187

Payments on other debt

     (1,857     (352
  

 

 

   

 

 

 

Net cash flows from financing activities

     (5,361     (29,695
  

 

 

   

 

 

 

Effect of exchange rate fluctuations on cash

     433       1,719  
  

 

 

   

 

 

 

Net increase in cash and cash equivalents

     27,671       4,571  

Cash and cash equivalents, beginning of period

     148,502       69,710  
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $
 
 
176,173
 
 
  $ 74,281  
  

 

 

   

 

 

 


ACI Worldwide, Inc.

Reconciliation of Selected GAAP Measures to Non-GAAP Measures

(unaudited and in millions, except per share data)

 

Adjusted EBITDA (millions)    Quarter Ended March 31,  
     2019      2018  

Net Loss

   $ (26.0    $ (19.4

Plus:

     

Income tax benefit

     (12.6      (4.0

Net interest expense

     8.6        6.6  

Net other expense

     1.9        0.1  

Depreciation expense

     5.9        5.9  

Amortization expense

     19.0        19.1  

Non-cash compensation expense

     6.6        6.4  
  

 

 

    

 

 

 

Adjusted EBITDA before significant transaction-related expenses

   $ 3.4      $ 14.7  

Significant transaction-related expenses

     4.7        4.3  
  

 

 

    

 

 

 

Adjusted EBITDA

   $ 8.1      $ 19.0  
  

 

 

    

 

 

 
Segment Information (millions)    Quarter Ended March 31,  
     2019      2018  

Revenue

     

ACI On Premise

   $ 96.0      $ 105.0  

ACI On Demand

     109.9        104.3  
  

 

 

    

 

 

 

Total

   $ 205.9      $ 209.3  
  

 

 

    

 

 

 

Segment Adjusted EBITDA

     

ACI On Premise

   $ 28.3      $ 38.9  

ACI On Demand

     (0.3      (4.2
Reconciliation of Adjusted Operating Free Cash Flow (millions)    Quarter Ended March 31,  
     2019      2018  

Net cash flows from operating activities

   $ 42.4      $ 45.1  

Net after-tax payments associated with significant transaction-related expenses

     2.8        3.6  

Less: capital expenditures

     (9.8      (12.6
  

 

 

    

 

 

 

Adjusted Operating Free Cash Flow

   $ 35.4      $ 36.1