ACI Worldwide(ACIW) - 2023 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue for Q3 2023 was $363 million, representing a 21$263 million, up 10% after adjusting for foreign exchange and divestiture impacts [4][11] - New ARR bookings for the quarter were $21 million, with trailing 12-month bookings at$85 million, and total bookings increased by 20% [6] - Adjusted EBITDA for Q3 was $103 million, more than double the amount generated in Q3 last year [12] Business Line Data and Key Metrics Changes - Bank segment revenue reached$156 million, up 42%, with adjusted EBITDA of $91 million, also up 100$171 million, with adjusted EBITDA increasing by 48% [13] - Merchant segment revenue and EBITDA were flat compared to Q3 last year, but growth is expected in Q4 and into 2024 [8][13] Market Data and Key Metrics Changes - The banking sector showed strong demand, with recurring revenue growth of 13% year-over-year [6][12] - The anti-fraud solutions segment experienced 12% growth, driven by AI-enhanced fraud prevention solutions [9] Company Strategy and Development Direction - The company is focusing on modernizing core solutions and expanding public cloud delivery options, targeting mid-tier financial institutions [7][27] - Investments are being made in intelligent payments orchestration and real-time payments, with a new CTO appointed to lead these initiatives [10][27] - The company aims to balance capital allocation between debt reduction and share repurchases, with $200 million remaining on its share repurchase authorization [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 7$140 million in cash and a net debt leverage ratio of 2.4 times, down from 2.9 times at the end of Q2 [13][14] - The company is focused on delivering shareholder value and plans to share more insights during the next Analyst Day in March 2024 [16] Q&A Session Summary Question: Dynamics supporting revenue growth in 2024 - Management highlighted that the underlying recurring revenue business is up 8% year-to-date, with stronger growth in the second half, providing a stable base for next year's revenue [19][20] Question: Sustainability of Biller's revenue growth - Management indicated that the recent growth in the Biller segment is sustainable due to ongoing initiatives and improvements in interchange pricing [22] Question: Immediate opportunities in the bank segment - Management discussed targeting mid-tier financial institutions, which are increasingly interested in SaaS and cloud delivery models [27] Question: Performance of real-time payment business - Management noted growth in real-time payments across regions, with a significant pipeline of financial institutions preparing for FedNow transactions [30] Question: Biller's growth drivers and future performance - Management clarified that while recent growth was strong, future growth is expected to be in the upper single digits, driven by existing contracts and new customer ramp-ups [34] Question: Investment focus across segments - Management confirmed continued investment in all segments, with a short-term focus on banking due to its growth potential, while still supporting Biller and Merchant segments [42]