• Total Revenue: $1.6 billion, up 10% from 2023.
• Adjusted EBITDA: $466 million, up 18% from 2023.
• Adjusted EBITDA Margin: 41%, expanded over 300 basis points from last year.
• Cash Flow from Operating Activities: $359 million, more than double the previous year.
• Bank Segment Revenue Growth: 14% increase from 2023.
• Merchant Segment Revenue Growth: 10% increase from 2023.
• Biller Segment Revenue Growth: 6% increase from 2023.
• Cash on Hand: $216 million at year-end.
• Total Debt Outstanding: Decreased by more than $100 million to $932 million.
• Net Debt Leverage Ratio: Declined to 1.5 times.
• Share Repurchase: Nearly 4 million shares repurchased, approximately 4% of shares outstanding.
• 2025 Revenue Guidance: $1.685 billion to $1.715 billion, representing 7% to 9% growth over 2024.
• 2025 Adjusted EBITDA Guidance: $480 million to $495 million.
• Q1 2025 Revenue Guidance: $360 million to $370 million, representing 17% to 21% growth over last year.
• Q1 2025 Adjusted EBITDA Guidance: $70 million to $80 million, representing 43% to 63% growth over last year.

• Warning! GuruFocus has detected 3 Warning Sign with ACIW.

Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• ACI Worldwide Inc (NASDAQ:ACIW) reported a 10% increase in total revenue for 2024, surpassing their own expectations and guidance.
• Adjusted EBITDA grew by 18% with a margin expansion of over 300 basis points, highlighting the leverage in their software model.
• Cash flow from operating activities more than doubled to $359 million in 2024, indicating strong cash flow generation.
• The company successfully signed contracts earlier in the year, reducing seasonality and allowing focus on new customer wins.
• ACI Worldwide Inc (NASDAQ:ACIW) has a strong start to 2025 with significant new sales bookings, including a large competitive takeaway in the Asia Pacific region.

Negative Points

• The Biller segment experienced a decline in EBITDA due to the absence of one-time non-recurring margin benefits from the previous year.
• Despite overall growth, the merchant segment has struggled to achieve the desired size and impact.
• There is a reliance on signing new business deals to maintain growth, which can introduce variability in financial performance.
• The company is still working on balancing revenue recognition throughout the year to reduce reliance on Q4 results.
• Incremental functionality for the new payment hub is still under development, which may delay full market rollout and impact short-term growth.

Q & A Highlights

Q: Could you comment on the Net Revenue dynamics within the Biller segment and the factors contributing to the year-over-year EBITDA decline? A: The decline is primarily due to certain one-time margin benefits in 2023 that did not recur in 2024. However, we expect Net Revenue and EBITDA to increase in 2025 as we move past these non-recurring benefits. Despite this, we achieved a 300 basis point margin expansion at the consolidated level.

Q: Can you provide details about the significant win in the first quarter and the solutions involved? A: The win involves our flagship issuing and acquiring solutions with a very large bank that was not previously using our solutions. This competitive takeaway is part of a targeted program to capture remaining large banks, and we have a strong pipeline of similar opportunities.

Q: What was the impetus for the reorganization of the merchant and bank segments and the shift to a General Manager model? A: The reorganization aims to create leadership teams fully accountable for business results. By combining sales, account management, and product marketing under one leader, we expect improved customer satisfaction and operational efficiency. This change simplifies accountability and reduces duplicative efforts.

Q: What factors could drive ACI Worldwide towards the higher end of its 2025 guidance range? A: Achieving the higher end of our guidance would likely result from exceeding expectations in new license deals, similar to the large deal signed in Q1. Our scalable model allows for significant leverage, particularly with license fee services.

Q: Can you elaborate on the competitive takeaway in Asia Pacific and the sales environment with banks? A: The win involved a large Asia Pacific-based financial institution. Our competitor's service issues and our future-focused payment hub strategy were key factors. The sales environment is positive, with our payment hub strategy offering a low-risk modernization path that resonates well with banks.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.