ACI Worldwide(ACIW) - 2024 Q4 - Annual Report

Financial Performance - Total revenue for the year ended December 31, 2024, increased by $141.7 million, or 10$1,594.3 million, an increase of 9.8% compared to $1,452.6 million in 2023[238]. - The Banks segment revenue increased by$85.8 million, reaching $701.9 million in 2024, while the Merchants segment revenue rose by$15.3 million to $165.9 million[238][239]. - Adjusted EBITDA for the Banks segment increased by$70.0 million to $425.5 million, while the Merchants segment saw an increase of$25.2 million to $69.5 million[238][239]. - Net income for the year ended December 31, 2024, was$203.1 million, an increase of $81.6 million, or 67$48.8 million, or 6%, during the year ended December 31, 2024, compared to 2023[213]. - License revenue increased by $91.1 million, or 28$14.3 million, or 7%, during the year ended December 31, 2024, compared to 2023[219]. - Services revenue increased by $16.1 million, or 21$6.706 billion as of December 31, 2024, reflecting an increase from $6.520 billion as of December 31, 2023[207]. - Committed backlog increased to$2.413 billion as of December 31, 2024, up from $2.178 billion as of December 31, 2023[207]. Operating Expenses - Total operating expenses increased by$54.0 million, or 4%, during the year ended December 31, 2024, compared to 2023[222]. - Cost of revenue increased by $72.6 million, or 10$24.4 million, or 28%, for the year ended December 31, 2024, primarily due to higher personnel costs[236]. - R&D expense increased by $5.9 million, or 4$358.7 million for the year ended December 31, 2024, a 113% increase from $168.5 million in 2023[252]. - Total liquidity as of December 31, 2024, was$744.5 million, up from $538.1 million in 2023, driven by increased cash and availability under the revolving credit facility[243]. Share Repurchase and Debt - The company repurchased 3,946,537 shares for$128.5 million during the year ended December 31, 2024, with a total repurchase amount to date of approximately $1.1 billion[247]. - The company had approximately$0.9 billion of debt outstanding as of December 31, 2024, including $532.5 million under its Credit Facility and$400.0 million in 2026 Notes[285]. - The Credit Facility had a floating interest rate of 6.21% as of December 31, 2024, while the 2026 Notes carried a fixed interest rate of 5.750%[285]. Tax and Investment Activities - The effective tax rate for the year ended December 31, 2024, was approximately 19%, compared to 18% in 2023, influenced by operations in foreign jurisdictions[235]. - Cash used in investing activities was $45.1 million in 2024, compared to$37.8 million in 2023, reflecting increased investments in software and equipment[254]. Strategic Focus and Partnerships - ACI Worldwide is actively pursuing growth through acquisitions, seeking candidates that can enhance solution breadth and provide access to new markets[200]. - ACI Worldwide's omni-commerce strategy aims to provide seamless payment experiences across various channels, capitalizing on the trend of contactless payments and integrated shopping experiences[198]. - ACI Worldwide's strategic partnerships with major players like Mastercard and Microsoft position it as a leader in real-time payments and cloud solutions[194][195]. Technology and Innovation - The company is focusing on cloud technology to enhance scalability and reduce technical risks, enabling faster innovation and improved operating economics[195][196]. - The adoption of open banking and Request to Pay (RTP) in the U.S. is expected to drive innovation and improve customer experience in the payments landscape[199]. - ACI Worldwide's revenue growth is driven by increasing digital payment transaction volumes and the adoption of real-time payments, with Asia Pacific being the largest regional market for real-time payments[193][194]. Financial Reporting and Revenue Recognition - The company recognizes revenue from SaaS and PaaS arrangements over the term of the arrangement, with fixed consideration recognized over time and variable consideration recognized as usage occurs[266]. - The company assesses the significance of financing components in software license arrangements based on the ratio of license fees paid over time to total license fees[265]. - The company applies judgment in determining customers' ability and intention to pay, considering factors such as creditworthiness and economic conditions[267]. Other Financial Metrics - Interest expense decreased by $6.0 million, or 8$0.3 million annually based on cash investments[284]. - The company's intangible assets, excluding goodwill, were $165.4 million, down from$195.6 million in 2023[270]. - The company's goodwill remained stable at $1.2 billion as of December 31, 2024, with no reporting units deemed at risk of impairment[272]. - Performance share awards for 2024 and 2023 are based on adjusted EBITDA metrics and revenue growth rates, with a potential payout of up to 200%[275]. - The company has not entered into any foreign currency hedging transactions, relying instead on natural hedges through local currency revenue contracts[283].