Q1 2022 ACI Worldwide Inc Earnings Call

May 5, 2022

[music].

Okay.

Good day, and thank you for standing by.

Welcome to the ACI Q1 earnings announcement call.

At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.

I'll ask a question during the session you will need to press star one telephone.

Please note that today's conference is being recorded.

If you require any further assistance please press star zero.

It is now my pleasure to turn the call over to Mr. John Kraft Senior Vice President of strategy and Finance. Please go ahead.

Slides that accompany this call and webcast can be found at ACI worldwide Dot com under the Investor Relations tab and will remain available after the call.

Today's call is subject to safe Harbor and forward looking statements like all of our events.

You can find the full text of both statements on the first and final pages of our presentation deck, a copy of which is available on our website and with the SEC.

On this morning's call is <unk> Almeida, our president and CEO and Scott Behrens our CFO .

With that I'd like to turn the call over to Ochoa.

Thank you John .

Hello, everyone and thank you for joining our first quarter two wanted to on this conference call.

I am pleased with the direction and focus of the business execution of our strategy and our progress in driving growth and strengthening profitability.

Once again, we delivered results within our guidance and above consensus.

Continue to execute on the rigorous and disciplined management processes implemented in the last two years, it is making our business more predictable and our growth momentum.

We recorded organic revenue growth of 13% or 14% on a constant currency basis, EBITDA growth of 50% or 49% when a constant currency basis, and new <unk> bookings growth of 117% compared to the first quarter of <unk>.

221.

We expect $2 22 to be an inflection point for ACI.

We have cement the foundation for accelerating growth towards the range of 7% to 9% by 224 with gradual margin improvement.

I am pleased with our operational progress and our significant financial flexibility, which support short and long term profitable growth.

We have continued buying back shares and ended the first quarter with $178 million remaining on our share repurchase authorization.

Now, let me turn to some recent wins.

Our boots on the ground strategy continues to deliver we had wins from across Asia Pacific and Middle East Africa, Europe , Latin America, and closer to home in North America.

Some examples include made that is the largest financial services group in Malaysia with strong regional footprint in Asia.

Bank partners with ACI worldwide to drive and transformed the banks, increasing real time transactions for its digital channels.

We will modernize buy once and CCC national suites, representing 23 members came at Kuwait, leading payments gateway for online transactions will modernize its electronic banking services using ACI.

Read the Bang Columbia's leading Payment's network, we use ACI issuing to expand services to local and regional banks.

A leading global clothing motion will use our newly launched chargeback indemnification service.

Our partnership with dilution the industry leader in student information systems has resulted in the signing of 22 schools.

Helps bring them into NASA compliance, while enhancing their payment offerings.

In summary, we had a strong first quarter with results within your guidance and above consensus we continue to make our business more predictable and deliver on our commitments.

This quarter's strong organic revenue growth and significant new business wins demonstrate the continued execution of our fit for growth and focus on growth and strategy.

Regarding our third pillar step change value creation through M&A, we have no announcements at this time.

But I can assure you that we are making progress.

I will turn it over to Scott to discuss financials and forward guidance, Scott, Thanks, Social Juan and good morning, everyone.

I first plan to go through our financial results for Q1, and then provide our outlook for the rest of 2022.

We will then open the line for questions.

First quarter revenue totaled $323 million up 13% or 14% on a constant currency basis from Q1 last year.

Adjusted EBITDA for the quarter was $68 million up 50% or 49% on a constant currency basis Q1 2021.

Net new bookings in Q1 were $21 million more than double what we signed in Q1 last year.

These results continue a string of quarters, which we've achieved or exceeded our financial guidance.

Turning to our segment results Bank segment revenue grew 38% or 40% on a constant currency basis to $132 million.

Segment, adjusted EBITDA increased 74% on both a reported and a constant currency basis versus Q1 2021.

Merchant segment revenue increased 6% or 8% on a constant currency basis, while merchant segment, adjusted EBITDA was flat or down 3% on a constant currency basis versus Q1 last year.

<unk> segment revenue was flat with last year on a reported and a constant currency basis in the builder segment, adjusted EBITDA decreased 23% or 22% on a constant currency basis versus Q1 2021.

We ended the quarter with $115 million in cash on hand of.

The debt balance of $1 billion in it.

Net debt leverage ratio of two four times.

It is just under our two five times target.

We repurchased one 1 million shares during the quarter with $38 million and have $178 million remaining on our current repurchase authorization as of the end of March.

And finally, turning to our outlook for 2022.

We are reiterating our full year guidance and expect revenue growth to be in the mid single digits on a constant currency basis.

We're in the range of 14151 435 billion.

We continue to expect 2022, adjusted EBITDA of 400 $415 million and this excludes one time costs related to the move of our European data centers to the public cloud.

As we've previously said now that our debt balances are at our leverage targets, we have revised our capital allocation priorities in the near term increasing the expected cash flow used for repurchases to approximately 50% of our cash flow.

We announced a $250 million share repurchase authorization in December with plans to use a significant portion of this in the near term.

For Q2, 2022, we expect revenue to be in a range of $325 million to $345 million.

And adjusted EBITDA to be in a range of 55% to $75 million.

So overall, we had a strong start to the year delivering another quarter at or above the guidance. We provided and we are on track to deliver our full year outlook.

With that I will pass it back to <unk> for some closing comments.

Sean.

Thank you Scott.

We're off to a strong start in 2022.

This year, we're cementing our mid single digit organic growth and positioning the company to deliver upper single digits by 224.

Our three pillar strategy is working we.

We are making our business more predictable and delivering on our financial promises.

I want to thank the ACI family for all the efforts and outcomes in Q1.

We look forward to reporting on our continued progress in the next quarters.

Thank you.

And now we conduct the Q&A session.

As a reminder, you'll ask a question. Please press star one on your telephone keypad.

Joey question Prescott banking, we also ask you to limit yourselves to one question and one follow up.

Your first question comes from George Sutton from Craig Hallum. Your line is open.

Thank you.

Who has argued for a double digit organic growth for over a decade. The fact, you've done it two quarters in a row I have to give you credit.

I wanted to.

If we could O July go more into detail on some of the segments banks, obviously drove the results builders was down year over year would have anticipated bill or to be a little stronger with the modernized interface. So just wanted to get some picture there is good.

Sure George and thank you for that we're also very very happy about is that two quarters with double digit and I think that is that's what the <unk> Jordan is about.

The Bank segment continues to come out later or both what we expect.

I think all the inputs.

Focus on the international areas.

Our payback, we see our international business growing much faster than our business meeting United States and in Europe at this point and that should continue going forward. So I think it is more of a network on.

Sales effort than anything else, but by a parallel we have all the modernization of our of our offering where we are building. This next generation of payments cloud native.

That to me.

Youre going to have like the minimal viable product already in the beginning of next year, So very very.

Positive about the trends with banks when you talk about Moshe as you can see that the merchants, we are going back to 8% constant currency basis. We believe that the segment can give double digit growth around 10% low low teens I would say and I think if you look at the performance last year, you can see that that's an improve.

And I would expect and we are well.

Well positioned this year to continue to get closer to the double digit growth.

So it is performing as expected.

When we got two pillars.

Pillar three.

Spent a lot of time and effort on migrating from the data center.

The Union last year, a lot of consolidation happening so consolidation is still going on.

We have a very strong pipeline and pillars, we continue to invest as the segments. You can expect that theyre going to continue to invest in this segment. This year and I believe that this segment is up 7% to 9% growth segment.

<unk> 24 this year as we said last five we are projecting a rod mid digit growth.

Q1 didn't come different than what we were expecting came close to what we were expecting thats why we are in the guidance. So everything under plan at this point.

As a follow up.

No Scott you gave real time.

In your Q, but we haven't seen that yet can you just give us an update on the real time piece of the business.

Yes, I mean, that's an area. If you look at banks banks had pretty broad based.

Growth it wasn't just in kind of our traditional issuing acquiring where the base 24 product is.

Real time payments had over 60% revenue growth in the quarter and our fraud detection product was in the mid <unk>. So.

Real time, very strong just really broad based in the bank's strength in the first quarter.

Great. So we also have about 60% so you're buried the lead again.

Alright, Thanks, guys I appreciate it.

Thanks, George Thank you George.

Your next question comes from Peter Heckmann from D. A Davidson.

Good morning, everyone. Thanks for taking the question.

Wanted to follow up a little bit on your second quarter Guide.

Certainly the revenue range is strong indicating another.

Good quarter.

Margin range is a little bit lower than what I would've expected.

So I wanted to follow up and just see if I'm misinterpreting the mix I guess I look at your guidance.

I assume that.

To get to those numbers license would have to have licensees to have to have another good quarter, maybe up 50% year over year.

Given that I would I would have expected EBITDA margins to be more.

More in line with that with the first quarter.

Anything else going on that I should be thinking about in terms of margins in the second quarter.

No nothing in particular I wouldn't look at Q2 kind of Standalone as any anything I would.

If you look at it it's a pretty wide range.

On revenue and in particular on EBITDA. We did the same thing here with Q1 that really gets into kind of the mix of what license deals get done.

Before the end of the quarter, and which ones don't and so that's kind of why we put that range in there and a lot of that license fee would drop to EBITDA as well so.

But I think if you look at <unk>.

Combined Q1, Q2 first half year over year that would imply at the low end of the range would imply.

Up 10% revenue growth and EBITDA growth in the mid teens so I.

I wouldn't look at anything structural with Q2 in particular.

We're tracking to our expectations through mid year.

Okay, Great and then anything changing that.

A number of quarters in a row.

Very good to see but certainly the last two quarters. It just been very very strong software license fee perspective anything changing there in terms of the average term or or or.

Anything that could be pulling some revenue forward.

No no no nothing new I would say that we really saw a lot of their worth pent up demand. If you look at in particular on the bank side on license.

The early part of last year that really.

That really picked up in the second half.

When we went out to our Q4 earnings we said, we're continuing to see that here in the first half of this year.

But no nothing that would change.

The structural change in our licenses and remember.

Under the new rules and if you have a example for an example renewal.

Recognize that until the start of the new term so.

So no changes structurally in how we're doing business.

Just to complement I described is saying is.

There is an important change here, which is cultural.

And it's not extrinsic to.

Eisai is intrinsic to ACI, which is our culture of accountability and operational discipline, and I think thats why youre seeing quarter after quarter Youre seeing us predicting numbers.

Within the range of bulk consists was up 38 quarters during the same thing.

And accelerating growth I think that is really the change that youre seeing the company related to the culture of accountability and a culture of operational discipline.

Alright, good to hear thank you.

Your next question comes from Miami Tandon from Needham and company. Your line is open.

Hey, Good morning. This is actually stay on sell this on for months today, Thanks for taking the questions.

I wanted to hit on one of the previous questions asked just dive a little deeper there into some of the trends you guys are seeing in real time payments and then if you could also touch on some of the investments you guys are making here.

For future growth that'd be great. Thanks.

Sure Sam I think.

Real time payments as the star right.

Part of the payments payments around the globe. It continues to grow above 40% around the globe you have.

Brazil, China.

Hi, one UK, leading the pace as you know we are in the board. The fed now we are expecting a good year in <unk> 'twenty three with the pilots.

You can expect that real time payments will continue to.

Drive growth in the payments industry has going for it and Thats why we associate realizing in real time payments.

We will continue to invest behind that we are.

Winnie all around the globe, sometimes with the local hubs, sometimes with the connections of the banks the local hub.

Also we are moving fast and merchants are for real time payments.

Every place that we can.

That's kind of service so I think the investments for growth and real time payments, it's showing how you can see the above 60% growth this quarter and the other.

Main believes that we have as I said before one of the four pillars of growth in international markets and that those international markets continue to over deliver for US. It's all about market share it's all about.

Sales efficiency.

And about again, the culture of accountability the culture of growth that we are establishing.

And I would just I would really emphasize the other pillar of growth so as international markets.

Global merchants around the globe.

Global merchant the around the globe sorry.

Margin in international markets and you'll have the next generation.

Of of.

Payments, what we are building in the cloud with.

Now we are going to have the minimal viable product for the United States by the beginning of next year and that this is going quite well we are already talking to the banks about that they are excited about this new technology that we're building and that's all about the future.

Awesome. Thanks, that's great to hear.

And then I just had a quick follow up I know you guys touched on it earlier in the call, but just wanted to ask about the M&A pipeline.

What the appetite is today, there and what some potential areas of interest might be.

In the near term.

But yeah, we have nothing to announce today, but what I can tell you is I've been spending.

A good amount of my time on many opportunities that we have some other divestitures or acquisitions all of them are accurate shift to the company.

And again, we have nothing to announce but there is a lot of work on that and a lot of progress.

Got it okay. Thank you congrats on the results.

Thank you.

Again, just a reminder to ask a question. Please press star one on your telephone keypad.

Your next question comes from Joe <unk> Canaccord Genuity.

Good morning. This is Danny on for Joel Thanks for taking our questions.

<unk> how would you characterize your your pipeline today from from a geographic segment perspective, we're saying, let's say three months ago, given given the macro environment and and where do you see the most opportunity to add to our pipes as we look at.

The rest of the year and I have a follow up.

Thank you for that question, Joe That's a great question because the pipeline is all about the future.

We are following the pipeline very close.

I can tell you that our pipeline today for banks and damage areas is significant significant.

A bigger then the pipeline that we have.

Two quarters ago.

Significant are bigger than that and very skewed to international markets overall.

Flat as expected also we have a very strong pipeline of art.

In banks, which is new for us with a lot of new logos that are really looking to our cloud offering.

And we are winning rate in our cloud offering Tuesday.

Four new logos is significant higher than our winning rate.

On premise today, which also shows the trend that shows how are we investing in the future of banks and intermediaries. So far back to intermediaries. The answer is that much more significant pipeline than three or six months ago when to talk about margins. That's the same case our pipeline is.

Better than it was three months ago six months ago that is a combination of all.

The market's reacting but it was also the combination of our international expansion of margins. So we can see again the popularity of international markets getting stronger month after month and ready to go to dealers I can tell you is that we have never had a strong pipeline.

Yes.

We have today, so I'm very confident about the pipeline of dealers I'm very confident about the signing of dealers this year.

<unk> that we are well positioned to have a record year in signing.

Of dealers this year.

Great.

Thank you.

And any update on the crypto part of your business.

Or what are maybe some of the opportunities there for you in the near to medium term. Thank you.

Yes. This is Scott I Wouldnt say, we have any particular update.

Last year, we announced our partnership with rocket fuel.

As a as a partner in providing the crypto as a payment option.

So we're in the I would call. It we're in the early months of that partnership, but nothing in particular update on that.

Okay. Thanks, good luck.

Thank you.

No. There is no further question at this time you may continue.

Well, thanks, everybody for joining us today, we look forward to catching up in the coming weeks have a great day.

And this concludes today's conference call. Thank you all for joining you may now disconnect.

Okay.

[music].

Yes.

[music].

Yes.

Okay.

Yes.

Okay.

Sure.

Yes.

Okay.

Yes.

Okay.

Yes.

Okay.

[music].

Okay.

Yes.

Okay.

[music].

Yes.

[music].

Okay.

Yes.

Okay.

Sure.

[music].

Sure.

Thanks.

Yes.

[music].

Thank you.

Okay.

Thank you.

Yes.

Okay.

Great.

Okay.

Yes.

Okay.

Sure.

Okay.

Yes.

Sure.

Okay.

[music].

<unk>.

Yes.

Okay.

Yes.

Okay.

Yes.

Okay.

[music].

Okay.

Yes.

Okay.

Yes.

[music].

Yes.

[music].

Okay.

[music].

Okay.

Yes.

Okay.

Yes.

Okay.

Thanks.

Yes.

Sure.

Okay.

[music].

Yes.

Okay.

Sure.

Yes.

[music].

Okay.

Yes.

Okay.

Yes.

Sure.

Yes.

Okay.

Yes.

Okay.

[music].

Okay.

Yes.

Okay.

Yes.

[music].

Yes.

Okay.

Yes.

[music].

Yes.

Okay.

[music].

Yes.

Sure.

Okay.

Yes.

Okay.

Thank you.

Okay.

Right.

Okay.

Yes.

Okay.

Yes.

Sure.

Yes.

Okay.

Yes.

Okay.

Yes.

Okay.

[music].

Okay.

Yes.

[music].

Okay.

Yes.

Okay.

Sure.

Great.

Yes.

Okay.

Thanks.

Thank you.

Okay.

Yes.

Sure.

Thanks.

Yes.

Okay.

Yes.

Okay.

Yes.

Okay.

Alright.

Yes.

Sure.

<unk>.

Thank you.

Thanks.

Okay.

Great.

Okay.

Thank you.

Okay.

Right.

Yes.

Okay.

Thanks.

Okay.

Yes.

Sure.

Okay.

Sure.

Okay.

Yes.

Thank you.

Okay.

Yes.

Sure.

Yes.

Okay.

Sure.

Yes.

Sure.

Okay.

Sure.

Okay.

[music].

Okay.

Thank you.

Yes.

Okay.

Thank you.

Thanks.

Okay.

Yes.

Okay.

Yes.

Sure.

Thank you.

Okay.

Sure.

Okay.

Yes.

Okay.

Yes.

[music].

Yes.

Okay.

Yes.

Okay.

Sure.

Okay.

Yes.

Sure.

Yes.

Okay.

Yes.

Okay.

Yeah.

Yes.

Okay.

Yes.

Okay.

Yes.

Okay.

[music].

Okay.

<unk>.

Okay.

Sure.

Yes.

Okay.

Yes.

Right.

Sure.

Yes.

[music].

Yes.

Okay.

Sure.

Yes.

Okay.

Great.

Okay.

Sure.

Okay.

Yes.

Okay.

Yes.

Okay.

Thanks.

Yes.

Okay.

[music].

Yes.

Okay.

Yes.

Sure.

Okay.

Yes.

Okay.

Yes.

Okay.

Yes.

Okay.

Alright.

Okay.

Yes.

Okay.

Sure.

Okay.

Yes.

Hi.

Yes.

Sure.

Thanks.

Okay.

Yes.

Sure.

Okay.

Sure.

Okay.

Yes.

<unk>.

Sure.

Yes.

Good day, and thank you for standing by.

Welcome to the ACI Q1 earnings announcement call.

At this time all participants are in a listen only mode.

After the speaker's presentation, there will be a question and answer session to ask a question. During the session you will need to press star one again telephone.

Please note that today's conference is being recorded.

If you require any further assistance please press star zero.

It is now my pleasure to turn the call over to Mr. John Kraft Senior Vice President of strategy and Finance. Please go ahead.

Thank you and good morning, everyone on today's call, we will discuss the company's first quarter 2022 results and our financial outlook for the rest of the year, we will take your questions at the end of the slides that accompany this call and webcast can be found at ACI worldwide Dot com under the Investor Relations tab and will remain.

<unk> after the call.

Today's call is subject to safe Harbor and forward looking statements like all of our events.

You can find the full text of both statements on the first and final pages of our presentation deck, a copy of which is available on our website and with the SEC.

On this morning's call is <unk> Almeida, our president and CEO and Scott Behrens our CFO .

With that I'd like to turn the call over to Ochoa.

Thank you John .

Hello, everyone and thank you for joining our first quarter two wanted to on this conference call.

I am pleased with the direction and focus of the business does it Houston of our strategy and our progress in driving growth and strengthening profitability.

Once again, we delivered results within our guidance and above consensus.

Continue to execute on the rigorous and disciplined management processes implemented in the last two years, it is making our business more predictable and our growth momentum clear.

We recorded organic revenue growth of 13% or 14% on a constant currency basis, EBITDA growth of 50% or 49% on a constant currency basis, and new <unk> bookings growth of 117% compared to the first quarter of 220.

One.

We expect 222 to be an inflection point for ACI.

We have cement the foundation for accelerating growth toward the range of 7% to 9% by 224 with gradual margin improvement.

I am pleased with our operational progress and our significant financial flexibility, which support short and long term profitable growth.

We have continued buying back shares and ended the first quarter with $178 million remaining on our share repurchase authorization.

Now, let me turn to some recent wins.

Our boots on the ground strategy continues to deliver we had wins from across Asia.

<unk> the middle East.

Europe , Latin America, and closer to home in North America.

Some examples include May that is the largest financial services group in Malaysia with strong regional footprint in Asia.

Bank partners with ACI worldwide to drive and transformed the banks, increasing real time transactions to digital channels.

We will modernize by ones and CCC national suites, representing 23 members.

Matt Kuwait, leading payment gateway for online transactions, we will modernize its electronic banking services using ACI.

Read the Bang Columbia's leading Payment's network, we use ACI issuing to expand services to local and regional banks.

A leading global CRO the motion will use our newly launched Chargeback indemnification service.

Our partnership with dilution the industry leader in student information systems has resulted in the signing of 22 schools. It helps bring stem into NASA compliance, while enhancing their payment offerings.

In summary, we had a strong first quarter with results within your guidance and above consensus we continue to make our business more predictable and deliver on our commitments.

This quarter's strong organic revenue growth and significant new business wins demonstrate the continued execution of our fit for growth and focus on growth strategy.

Regarding our third pillar step change value creation through M&A, we have no announcements at this time.

But I can assure you that we are making progress.

I will turn it over to Scott to discuss financials and forward guidance, Scott Thanks, social on and good morning, everyone.

I first plan to go through our financial results for Q1, and then provide our outlook for the rest of 2022.

We will then open the line for questions.

First quarter revenue totaled $323 million up 13% or 14% on a constant currency basis Q1 last year.

Adjusted EBITDA for the quarter was $68 million up 50% or 49% on a constant currency basis Q1 2021.

And net new bookings in Q1 were $21 million more than double what we signed in Q1 last year.

These results continue a string of quarters, which we've achieved or exceeded our financial guidance.

Turning to our segment results.

Segment revenue grew 38% or 40% on a constant currency basis to $132 million.

Segment, adjusted EBITDA increased 74% on both a reported and a constant currency basis versus Q1 2021.

Merchant segment revenue increased 6% or 8% on a constant currency basis, while merchant segment, adjusted EBITDA was flat or down 3% constant currency basis versus Q1 last year.

<unk> segment revenue was flat with last year on a reported and a constant currency basis in the builder segment, adjusted EBITDA decreased 23% or 22% on a constant currency basis versus Q1 2021.

We ended the quarter with $115 million in cash on hand.

<unk> balance of 1 billion and a net.

Net debt leverage ratio of two four times, which is just under our two five times target.

We repurchased one 1 million shares during the quarter were $38 million and $178 million remaining on our current repurchase authorization as of the end.

March.

And finally, turning to our outlook for 2022.

We are reiterating our full year guidance and expect revenue growth to be in the mid single digits on a constant currency basis we.

We are in the range of 14151 435 billion.

We continue to expect 2022, adjusted EBITDA of 400 $415 million and this excludes one time costs related to the move of our European data centers to the public cloud.

We announced a $250 million share repurchase authorization in December with plans to use a significant portion of this in the near term.

For Q2, 2022, we expect revenue to be in a range of $325 million to $345 million and.

And adjusted EBITDA to be in a range of 55% to $75 million.

So overall, we had a strong start to the year delivering another quarter at or above the guidance. We provided and we are on track to deliver our full year outlook.

With that I will pass it back to <unk> for some closing comments.

Sean.

Thank you Scott we are off to a strong start in 2022.

This year, we're cementing our mid single digit organic growth and positioning the company to deliver upper single digits by 224.

Our three pillar strategy is working we.

We are making our business more predictable and delivering on our financial promises.

I want to thank the ACI family for all the efforts and outcomes in Q1.

We look forward to reporting on our continued progress in the next quarters.

Thank you.

And now we conduct the Q&A session.

As a reminder, you'll ask a question. Please press star one on your telephone keypad.

I'll ask a question press the <unk>.

So ask you to limit yourselves to one question and one follow up.

Your first question comes from George Sutton from Craig Hallum. Your line is open.

Thank you as someone who has argued for a double digit organic growth for over a decade. The fact, you've done it two quarters in a row I have to give you credit.

So I wanted to.

We could O July would go more into detail on some of the segments. Obviously drove the results builders was down year over year would've anticipated bill or to be a little stronger with the modernized interface. So just wanted to get some picture there.

Sure Jonathan Thanks for that we're also very very happy about is that two quarters with double digit and I think that is that's what the Oh Jordan is about.

The Bank segment continues to come out later or both what we expect.

I think all the input.

Focus on the international areas.

Our payback, we see our international business growing much faster than our business mineralized states and in Europe at this point and that should continue going forward. So I think it is more of a network on sales effort than anything else, but by a parallel we have all the modernization.

All of our of our offering where we are building. This next generation of payments cloud native.

We are going to have like the minimal viable product already in the beginning of next year, so very very well.

Positive about the trends with banks when you talk about Moshe as you can see that the merchants, we are going back to 8% constant currency basis. We believe that the segment can give double digit growth around 10% low teens I would say and I think if you look at the performance last year you can see that's an improvement.

And I would expect that yes, we.

We are well positioned this year to continue to get closer to the double digit growth.

So it is performing as expected when.

When you go out to dealers.

Neither do we.

Been a lot of time and effort on migrating from the data center of Western Union last year, a lot of consolidation happening so consolidation is still going on.

We have a very strong pipeline and pillars. We continue to invest in this segment you can expect that theyre going to continue to invest in this segment. This year and I believe that this segment is a 7% to 9% growth segment.

By 2024 this year as we said last five we are protecting our rod mid digit growth.

One didn't come in different than what we were expecting came close to what we were expecting thats why we are in the guidance. So everything under plan at this point.

As a follow up I know Scott you gave real time numbers in your Q, but we haven't seen that yet can you just give us an update on the real time piece of the business.

I mean, that's an area. If you look at banks banks had pretty broad based.

Growth it wasn't just in kind of our traditional issuing acquiring where the base 24 product is.

Real time payments had over 60% revenue growth in the quarter.

Our fraud detection product was in the mid <unk> So <unk>.

Real time, very strong just really broad based in the bank's strength in the first quarter.

Great. So real time up 60% buried the lead again.

Alright, Thanks, guys I appreciate it.

Thanks, George Thank you George.

Your next question comes from Peter Heckmann from D. A Davidson.

Good morning, everyone. Thanks for taking the question.

Wanted to follow up a little bit on your second quarter Guide.

Certainly the revenue range is strong indicating another.

Good quarter.

Margin range is a little bit lower than what I would've expected.

I wanted to follow up and just see if I'm misinterpreting the mix I guess I look at your guidance.

Assume that.

To get to those numbers license would have to have licensees that had another good quarter, maybe up 50% year over year.

Given that I would've expected EBITDA margins to be maybe more in line with with the first quarter.

Anything else going on that I should be thinking about in terms of margins in the second quarter.

No nothing in particular I wouldn't look at Q2 kind of Standalone as any anything I would.

If you look at it it's a pretty wide range.

On revenue and in particular on EBITDA. We did the same thing here with Q1 that really gets into kind of the mix of what license deals get done before the end of the quarter and which ones don't so that's kind of why we put that range in there and a lot of that license fee would drop to EBITDA as well so.

But I think if you look at combined Q1, Q2 first half year over year that would imply at the low end of the range would imply.

Up 10% revenue growth and EBITDA growth in the mid teens so I.

I wouldn't look at anything structural with Q2 in particular.

We're tracking to our expectations through mid year, Okay, great and then anything changing.

Yes.

A number of quarters in a row.

Very good to see but certainly the last two quarters. We've just been very very strong from a software license fee perspective.

Changing there in terms of the average term or or or.

Anything that could be pulling some revenue forward.

No no no nothing new I would say that we really saw a lot of their worth pent up demand. If you look at in particular on the bank side on license.

In the early part of last year that really.

That really picked up in the second half when we went out to our Q4 earnings. We said, we're continuing to see that here in the first half of this year.

But no nothing that would change.

The structural change in our licenses and remember under the new rules and if you have a example for an example renewal.

Recognize that until the start of the new term so.

So no changes structurally in how we're doing business.

Just to complement what Scott is saying is that.

There is an important change here, which is culture.

And it's not the extrinsic to IHS.

<unk> is intrinsic to ACI, which is our culture of accountability and operational discipline, and I think thats why youre seeing quarter after quarter Youre seeing us predicting numbers.

Within the range above consensus after eight quarters during the same thing.

And accelerating growth I think that is really the change that youre seeing the company related to the culture of accountability and a culture of operational discipline.

Alright, good to hear thank you.

Your next question comes from Liang Tandon from Needham <unk> Company. Your line is open.

Hey, good morning, this is actually <unk> on for Brian today.

Thanks for taking the questions.

For future growth that'd be great. Thanks.

Sure Sam I think.

Real time payments as the star right.

Part of the payments payments around the globe. It continues to grow above 40% around the globe you have.

And Brazil, China.

One UK, leading the pace.

We are in the board the fed now we are expecting a good <unk> 'twenty three with the pilots.

You can expect that real time payments will continue to.

Drive growth in the payments industry going forward and Thats, why we associate realizing real time payments.

We will continue to invest behind that we are winning.

Winning all around the globe, sometimes with the local hubs, sometimes with the connections of the back to the local hub.

Also we are moving fast and Marcia for real time payments.

The place that we can add that kind of service. So I think the investments for growth and real time payments, it's showing how you can see the above 60% growth this quarter and the other main believes that we have as I said before one of the four pillars of growth in international markets in those international markets continue.

Neutral over deliver for us it's all about market share it's all about.

Sales efficiency.

And about again, the culture of accountability the counter of growth that we are establishing.

And I would.

I would really emphasize the other pillar of growth so as international markets.

Global merchants around the globe global merchants around the globe sorry.

All margin.

<unk> markets and you'll have the next generation.

I'll.

<unk> payments, what we are building in the cloud with <unk>.

Now we are going to have the minimal viable product for United States by the beginning of next year and that this is going quite well, we already talking to the banks about that they are excited about this new technology that we're building and that's all about the future.

Awesome. Thanks, that's great to hear.

And then I just had a quick follow up I know you guys touched on it earlier in the call, but just wanted to ask about the M&A pipeline.

What the appetite is today, there and what some potential areas of interest might be.

In the near term.

Yes, we have nothing to announce today, but what I can tell you is I've been spending.

Good amount of my time on many opportunities that we have some other divestitures or acquisitions all of them are accurately to the company.

And again, we have nothing to announce but there is a lot of work on that and a lot of progress.

Got it okay. Thank you congrats on the results.

Thank you.

Again, just a reminder to ask a question. Please press star one on your telephone keypad.

Your next question comes from.

Jill Raffi can.

Accord Genuity.

Good morning. This is Danny on for Joel Thanks for taking our questions.

Well, John how would you characterize your pipeline.

Pipeline today from from a geographic segment perspective versus let's say three months ago, given given the macro environment.

And where do you see the most opportunity to add to your pipes as we look at the rest of the year and I have a follow up.

Thanks for that question, Joe That's a great question because the pipeline is all about the future.

We're following the pipeline very close.

I can tell you that our pipeline today for banks intermediaries is significant significant.

A bigger that the pipelines that we have.

Two quarters ago.

Significant are bigger than that and very skewed to international markets overall.

Flat as expected.

Also we have a very strong pipeline of <unk> in.

<unk>, which is new for us with a lot of new logos that are really looking to our cloud offering and we are winning rate in our cloud offering Tuesday.

Four new logos significant higher than our winning rate.

On premise today, which also shows the trend that shows how are we investing in the future of banks and intermediaries. So <unk>. The answer is a much more significant pipeline than three or six months ago. When you talk about margins. That's the same case our pipeline is.

Better than it was three months ago six months ago that is a combination of.

Of the market reacting, but it was also the combination of our international expansion of margins. So we can see again the pipeline at international markets getting stronger month after month and ready to go to pillars. I can tell you that we have never had this strong pipeline.

We have today, so I'm very confident.

The pipeline of dealers I'm very confident about the signing of dealers this year.

Think that we are well positioned to have a record year in signings.

Of dealers this year.

Great.

Alright, thank you.

And any update on the crypto part of your business.

What are what are maybe some of the opportunities there for you in the near to medium term. Thank you.

Yes. This is Scott I Wouldnt say, we have any particular updates.

Last year, we announced our partnership with rocket fuel.

As a as a partner in providing the <unk>.

Crypto as a payment option.

So we're in the I would call. It we're in the early months of that partnership, but nothing in particular update on that.

Okay. Thanks, good luck.

Thank you.

There is no further question at this time you may continue.

Well, thanks, everybody for joining us today, we look forward to catching up in the coming weeks have a great day.

And this concludes today's conference call. Thank you all for joining you may now disconnect.

Q1 2022 ACI Worldwide Inc Earnings Call

Request a DemoDemo

ACIW

ACI Worldwide

Earnings