Q4 2023 ACI Worldwide Inc Earnings Call
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Operator: ?? Ladies and gentlemen, thank you for standing by. My name is Cass, and I will be your conference operator today. At this time, I would like to welcome everyone to the ACI Worldwide Inc. first quarter and full year ended 2023 financial results. All lines have been placed on mute to prevent any background noise.
Cast: Ladies and gentlemen, thank you for getting by my name is cast and that will be your conference operator duty at this time I would like to walk in every one to the E. C. I worldwide, Inc. First quarter and full year ended 2023 financial results all lines have been.
Speaker Change: <unk> need to prevent any background noise.
Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question again, press star one. I would now like to turn the conference over to John Kraft. Please do so. Thank you, and good morning, everyone.
Speaker Change: After the speaker's remarks to will be a question and answer session. If you go back to ask a question. During this time template press Tar followed by the number one on your telephone keypad. If you would like to withdraw your question again press Star one.
Speaker Change: I would now like to turn the conference over did Sean craft. Please go ahead.
John Kraft: Thank you.
John Kraft: Morning, everyone.
John Kraft: On today's call, we will discuss the company's fourth quarter and full year 2023 results. We will also discuss our financial outlook for the rest of 2024, and we'll take your questions at the end. The slides accompanying this call and webcast can be found at aciworldwide.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, You can find the full text of both statements in our presentation deck and earnings press release, both of which are available on our website and with the SEC.
John Kraft: Today's call, we will discuss the company's fourth quarter and full year 2023 results. We will also discuss our financial outlook for the rest of the 2024, then we'll take your questions appeared.
Speaker Change: The slides accompanying this call and webcast can be found at ACI worldwide Dot com under the industrial relations tab and will remain available after the call.
Speaker Change: Today's call is subject to safe Harbor and forward looking statements like all of our events.
Speaker Change: You can find the full text of those statements and our presentation deck and earnings press release, both of which are available on our website and with the SEC.
Speaker Change: On this morning's call as Tom worse off our president and CEO.
John Kraft: On this morning's call is Tom Warsop, our President and CEO, and Scott Behrens, our CFO. Before we begin, we wanted to make sure that everyone was aware of our upcoming Analyst Day, which will be held in New York City on March 12th. Please reach out if you haven't received an invitation.
Speaker Change: <unk>.
Tom: Before we begin we wanted to make sure that everyone was aware of our upcoming analyst day, which will be held in New York City on March 12th please.
Tom: Please reach out if you haven't received an invitation.
Tom: With that I'll turn the call over to talk.
Thomas Woodrow Warsop: With that, I'll turn the call over to Tom. Good morning, and thank you for joining our call. I'm going to start with some high-level thoughts on my first year as CEO, and I'll provide some comments about our 2023 performance. I'll finish by reiterating my confidence in our ability to take advantage of strong market opportunities in 2024 and beyond. And then, as usual, I'll hand it over to Scott, and he'll discuss the financial results in more detail and our outlook for 2024. And we'll open the line for questions after that. As you probably know, I've been the CEO first on an interim basis and then since June of last year on a longer-term basis. And during that time, I've made it a point to personally visit as many customers, partners, and fellow ACI team members as possible. In that year, I've met in person more than 70% of our employees and all of our top 10 customers in more than 15 countries across five continents.
Tom: Good morning, and thank you for joining a call.
Talk: Okay, let's start with some high level thoughts on my first year at C E O and I'll provide comments about our 2023 performance.
Talk: Oh finished by reiterating my confidence in our ability to take advantage of strong market opportunities in 2024 and beyond.
Talk: And then as usual are handed over to Scott and he'll discuss financial results in more detail.
Look for 2024.
Open the line for questions after that.
Talk: As you probably know I've been the CEO first on an interim basis and then since June of last year on a longer term basis and during that time.
Scott: The point to personally visit as many customers partners and fellow ACI team members as possible.
Scott: Ear I've met in person.
Scott: And 70% of our employees and all of our top 10 customers and more than 15 countries across five continents.
Thomas Woodrow Warsop: And following those visits, I'm even more convinced that ACI is a company with world-class solutions, talented employees, and a customer base unmatched in the industry. Our market position, combined with the substantial opportunities for expansion and growth in an industry with near continual change, puts us in a position to accelerate our growth and help customers achieve and exceed their strategic objectives. More on the future in a moment. I'm going to start with 2023.
Scott: Following those visits I'm, even more convinced that a T. I is a company with world class solutions.
Scott: Employees and a.
Scott: Customer base.
Scott: <unk> in the industry are.
Scott: Market position combined with the substantial opportunities for expansion and growth and industry with near continual change put us in a position to accelerate our growth and help customers achieve and exceed their strategic objectives.
Scott: In the future in a moment I'm gonna start with 2023, we had a solid performance we exited the you're strong and that has set us up to accelerate our growth this year.
Thomas Woodrow Warsop: We had a solid performance. We exited the year strong, and that has set us up to accelerate our growth this year. We delivered results in line with or above our expectations and with the guidance we provided you this time last year. We saw strength in our billers segment, with revenue growth of 9% and EBITDA growth of 32% in 2023. We went live with the first two of several phases of the implementation of a large new filler customer that we signed in 2022. More phases of that program go live in 2024, and they're on track.
Scott: We delivered results in line with or above our expectations and with the guidance. We provided to you. This time last year.
Scott: We saw strength that are biller segment revenue growth of 9% in EBITDA growth of 32% in 2023.
Scott: Live with the first two of several phases of the implementation of a large new.
Scott: Customer that we sided 2022 more phases of that program go live in 2024 and they are on track.
Thomas Woodrow Warsop: We also signed a large new utility customer that is on track to go live and begin ramping up in the middle of 2024. And we continue to make incremental progress with our interchange improvement program. Our banking segment saw notable strength in cross-sales of our anti-fraud and real-time payment solutions, and those saw revenue growth of 35% and 24%, respectively, in 2023. Our anti-fraud solution utilizes artificial intelligence and proprietary access to ACI-generated big data to truly lead in the category.
Scott: We also signed a large new utility customer is on track to go live in begin ramping in the middle of 2024, and we continue to make incremental progress with our interchange improvement program.
Scott: Our banking segment saw notable strength and cross sales of our anti fraud in real time payment solutions.
Scott: Revenue growth of 35 per cent and 24% respectively of 2023.
Might have fraud solution utilizes artificial intelligence and proprietary access to a C I generated big data.
Scott: To truly lead in the category.
Thomas Woodrow Warsop: And we continue to be excited about our opportunities in real-time payments. To illustrate our continued success in this area around the world, we signed up three new central infrastructures in the quarter, including El Banco de la Repblica de Colombia and the Nepal Clearing House. We're now supporting nine central infrastructures globally, along with more than 25 national and regional real-time payment schemes.
Scott: So we continue to be excited about our opportunities in real time payments to.
Scott: Illustrate our continued success in this area around the World, We signed up three new central infrastructures in the quarter, including <unk> Columbia.
Scott: And the Nepal clearinghouse.
Scott: We're now supporting nine central infrastructures globally, along with more than 25 national and regional real time payments Scapes.
Thomas Woodrow Warsop: And lastly, in our merchant segment, although we had a bit of a slow start to 2023, we exited the year with a strong Q4 rate of growth, and we expect growth to accelerate in 2024. We remain excited about leveraging our best-in-class payments expertise to help our clients offer the optimal payment choices to their consumers while providing a safe, secure payment processing environment. Our proprietary AI-driven fraud management tools are helping to protect our billers and merchants from fraudulent transactions.
Scott: And lastly in our merchants segment that we had a bit of a slow start to 2023, we exited the year with a strong Q4 rate of growth and we expect growth to accelerate in 2024.
Scott: We remain excited about leveraging our best in class payments expertise to help our clients offer the optimal payment choices to their consumers, while providing a safe secure payment processing environment.
Scott: Proprietary AI driven fraud management tools are helping to protect our beliefs and merchants from fraudulent transactions.
Thomas Woodrow Warsop: Perhaps most importantly, our sales pipeline is strong and growing, and we expect to see particularly strong demand in our banking segment. As I mentioned in our last call, the maturation of real-time payments around the world is driving an intense analysis of payments technology infrastructure by banks everywhere. When these institutions think about which firms to work with to address this critical need, ACI is virtually always on the list and near the top.
Scott: Perhaps most importantly, our sales pipeline is strong and growing.
Scott: And we expect to see particularly strong demand in our banking segment as I mentioned in our last call. The maturation of real time payments around the world is driving an intense analysis of payments technology infrastructures by banks everywhere.
Scott: When these institutions think about which firms to work with to address this critical need aci's virtually always on the list and near the top.
Scott: Because of our history market presence and proven expertise.
Thomas Woodrow Warsop: Because of our history, market presence, and proven expertise, we are a usual suspect. The fact that many of the largest financial institutions in the world already rely on our proven software means we're the only choice for a lower-risk, high-reliability modernization. ACI's reliability and scalability are unquestioned.
Scott: Usual suspect.
Fact that many of the largest financial institutions in the world.
Scott: Ready rely on our proven software maybe we're the only choice for a lower risk high reliability modernization.
Scott: AC is reliability and scalability are unquestioned and.
Thomas Woodrow Warsop: And we are seeing significant demand for our solutions, including our Payments Hub, across the globe. Speaking of our payments hub, we're engineering it to support on-premise, Cloud, and SaaS delivery models, making us a great choice for large and mid-tier financial institutions alike, mid-tier or super regional-sized customers in the past that often did not have the established infrastructure to take advantage of ACI's highly reliable and scalable software. Our newer solutions, cloud enablement, and SaaS offerings have made this possible.
Scott: We are seeing significant demand for our solutions, including our payments hub across the globe.
Scott: Speaking of our payments hardware engineering it to support on premise.
Scott: Loud and fast delivery models.
Scott: That's a great choice for large and mid tier financial institutions alike.
Scott: Mid tier or superregional sized customers in the past that often did not have the establish infrastructure to take advantage of ACI is highly reliable and scalable software are newer solutions cloud enablement and SAS offerings have made this possible you'll hear more about this an analyst day, but I want to read.
Thomas Woodrow Warsop: You'll hear more about this at analyst day, but I want to reiterate, this is a net new opportunity for us. It substantially increases the size of our historic addressable market, and it presents an opportunity to bolster our already accelerating growth rate. Our biller segment, which saw a significant turnaround in 2023, will see further growth in 2024 as we get a full year benefit from the customer go lives we saw in 2023, as well as the go lives of additional large customers sold during last year. This revenue growth, combined with continued success in our Interchange Improvement Program, will continue to deliver margin improvement and improve our merchant segment. Our investments are paying off. We saw Q4 deliver the strongest rate of quarterly growth of the year, and we expect that momentum to carry into 2024. In fact, we signed a significant new customer in the fuel source segment in the first week of the year, a great way to start.
Scott: <unk>. This is a net new opportunity for us.
Scott: <unk> increases the size of our historic addressable market and it presents an opportunity to bolster our already accelerating growth rate.
Scott: Our bill or segment, which saw a significant turn around 2023 will see further growth in 2024 as we get a full your benefit of customer go lives. We saw in 2023 as well as the go lives of additional large customer sold during last year.
Scott: Revenue growth combined with continued success in our interchange improvement program will continue to deliver margin improvement.
Scott: And then a merchant segment.
Scott: Our investments are paying off we saw Q4 deliver the strongest rate of quarterly growth of the year and we expect that momentum to carry into 2024. In fact, we signed a significant new customer in the fuel source segment and the first week of the year, a great way to start.
Thomas Woodrow Warsop: Overall, I'm pleased with where we are as a company. We have a strong balance sheet, we have leverage below our long-term target, and we're accelerating our top line as we've long promised. We're managing our expenses well. We have a strong team.
Scott: Overall, I'm pleased with where we are as a company we have a strong balance sheet, we have leveraged below or a longterm target and were accelerating our top line as we've long promised.
Scott: We're managing our expenses well we've.
Scott: We have a strong team.
Thomas Woodrow Warsop: We have a strategy in place that positions us well to accelerate growth in 2024 and beyond. I'm also happy to announce that today we've appointed two new members who are already strong board members. Katrinka McCallum, who spent many years at SaaS software company Red Hat, most recently as vice president of customer and product experience, and Juan Benitez, the former president of GoFundMe and general manager of Braintree, which is now part of PayPal.
Scott: We have a strategy in place that physicians as well to accelerate growth in 2024 and beyond I'm also happy to announce that today, we have appointed to new members, who are already strong board of directors.
Scott: Trinka Mccallum, who spent many years at SAS software company Red hat, most recently as vice president of customer and product experience.
Scott: One benitez, the former president of Gofundme in General manager brain tree, which is now part of Paypal.
Thomas Woodrow Warsop: Katrinka and Juan will provide great support as we expand our SAS businesses and drive accelerated productivity through more use of generative AI, large learning models, and machine learning, things both of them have overseen before. Before I turn it over to Scott, I want to remind you of our upcoming Analyst Day. As John mentioned, we're hosting an event in New York City on March 12th.
Scott: To drink in one will provide great support as we expand our staff businesses and drive accelerated productivity grew more use of generative AI large learning models and machine learning.
Things both of them have overseen before.
Speaker Change: Before I turn it over to Scott I want to remind you of our upcoming Animalist day.
Scott: John mentioned, we're hosting an event in New York City on March 12th we invite you to attend in person or online as we discuss our business segments and exciting global opportunities.
Thomas Woodrow Warsop: We invite you to attend in person or online as we discuss our business segments and exciting global opportunities. With that, I'm going to turn it over to Scott to discuss financials and guidance. Scott. Thanks, Tom, and good morning, everyone.
Scott: With that I'm Gonna turn it over to Scott to discuss financial and guidance Scott.
Scott: <unk> good morning, everyone.
Scott W. Behrens: I first plan to go over our financial results for 2023. I'll then provide our outlook for 2024, and then open the line. I'll be starting my comments on slide four with key takeaways from the fourth quarter.
My first time going over our financial results for 2023 and provide our outlook for 2024.
Scott: And the line questions.
Scott: I'll be starting my comments on five four with key takeaways from the fourth quarter Q4, 2023 revenue was 477 million up 5% from Q4 2022.
Scott W. Behrens: Q4 2023 revenue was $477 million, up 5% from Q4 2022. And we continue to see solid growth in our underlying recurring revenue, which was up 7% compared to Q4 2020. Adjusted EBITDA was $210 million, up 8% from Q4 2022.
Scott: We continue to see solid frozen or underline recurring revenue, which was about seven per cent compared to Q4 2022.
Scott: <unk> 210 million up 8% from Q4 2022.
Scott: R E. A darker all contributed a strong cast for growth in queue for 2023 with cash.
Scott W. Behrens: Our EBITDA growth contributed to strong cash flow growth in Q4 2023, with cash flow from operating activities of $86 million, more than double the amount of cash flow in Q4 2022. As we look at the segment results, our bank segment revenue increased 3% and bank segment adjusted EBIT dollars increased 1% compared to Q4 2022. Our merchant segment revenue increased 4% and segment adjusted EBITDA increased 2% versus Q4 2022.
Scott: Activity from 86 million.
Scott: Q for 2022.
As we looked at the sign up results our bank statement revenue increased 3% Bang segment adjusted EBITDA, one per cent compared to queue for 2022.
Scott: Segment revenue increased 4% segment adjusted EBITDA increased two per cent for skew for 2022.
Scott W. Behrens: And during the year, we saw improvement in the segment as expected, with revenue growth accelerating as we exited the year. Our Builder segment saw the biggest improvement year-over-year, with revenue increasing 9% and segment adjusted EBITDA increasing 60% versus Q4 2020. The growth in revenue and profitability in this segment is driven by both new customer goal lives as well as notable progress with our interchange improvement. Turning next to slide five with key takeaways for the full year 2023. Revenue for the full year was $1.45 billion, up 5% from 2022. Adjusted EBITDA was $395 million, up 10% from 2022. And cash flow from operating activities was $169 million, up 19% from 2022. We ended 2023 with $164 million in cash on hand and total debt outstanding of approximately $1 billion. Our net debt leverage ratio was 2.2 times, and that is down from 2.6 times at the beginning of the year and is below our long-term target of 2.5 times.
Scott: During the year, we saw improvement in a segment ethics.
Scott: Revenue growth accelerating as we exited as a year.
Scott: Our bill or segment solid biggest improvement year over year revenue briefing, 9% and segment adjusted EBITDA, increasing 60 per cent nurses queue for 2022.
Scott: Broken revenue and profitability in this segment is driven by both new customer <unk> as well as normal progress with our interchange improvement program.
Scott: Turning next slide five with key takeaways for the full year 2023.
Scott: All year with 1.45 billion up 5% from 2022.
Scott: EBITDA was $395 million 10 per cent from 2022 and cash flow from operating activities with 169 90 up 19%.
Scott: We ended 2023 with $164 million in cash on hand, and told me that outstanding approximately $1 billion.
Scott: Our leverage ratio was 2.2 times.
Scott: From 2.6 times at the beginning of the year and it's below our longterm apartment 2.5 times.
Scott: Also a note here in February we completed the refinancing of our credit facility that was set to expire in April 2025, with a new five year credit facility on substantially the same economic terms as our existing facility.
Scott W. Behrens: Also of note, here in February, we completed the refinancing of our credit facility that was set to expire in April 2025 with a new five-year credit facility on substantially the same economic terms as our existing one. We repurchased approximately 1 million shares for $28 million in Q4 2023 and have further purchased an additional 2 million shares for 62 million so far here in 2024, which in total represents approximately 2.8% of our shares outstanding. And we currently have $110 million remaining on our repurchase offers.
Scott: We repurchased approximately 1 million shares for $28 million Q4 2023.
Scott: <unk> are purchased an additional 2 million shares for $62 million. So far here in 2024, which in total represents approximately 2.8% of our shares outstanding.
Scott: And we currently have 110 nine remaining on a repurchase authorization.
Scott: During 2024, we expect to continue to deploy a significant portion of our cash for a share buybacks.
Scott: And finally, turning to five six with our outlook for 2024, we expect to accelerate revenue to.
Scott W. Behrens: During 2024, we expect to continue to deploy a significant portion of our cash flow to share buybacks. And finally, turning to slide six, with our outlook for 2024, we expect to accelerate revenue growth to 7 to 9% in 2024, with revenue in a range of $1.547 to $1.576 billion. We expect 2024 adjusted EBITDA to be in a range of $418 million to $428 million, and to help with your modeling, you'll find a few additional guidance assumptions on slide 7. Net interest expense is expected to approximate $60 million to $65 million, appreciation and amortization is expected to approximate $115 to $120 million, and non-cash, share-based compensation expenses is expected to approximate $30 to $35 million.
Scott: 7% to 9% 2024 with revenue in a range of 1.547 to 1.576 billion.
Scott: We expect 2024, Justin EBITA being a range of $118 million to $28 million in it.
Scott: Help with your modeling you'll find a few additional guidance assumptions on five sir.
Scott: Interest expense is expected to approximately 60 to 65 nine.
Scott: <unk>, an amortization is expected to approximately $115 and $20 million.
Scott: Non-cash compensation expense expected to approximate 30 to 35 million.
Scott: Are effective tax rate should approximately 25 per cent and lastly are gonna reach your account should be around 180 million, which excludes future share buyback.
Scott: We expect our revenue facing by word of fall or historical seasonality with Q1 2024 revenue to be in a range of 300 to 310 million.
Scott: EBITDA being a range of 25 to 35 million.
Scott: So in summary, we're very pleased with the 2023 resolved, which delivered rather than when you put that in the mid to high end of our guidance ranges that we provide it to you at this time last year.
Scott W. Behrens: Our effective tax rate should approximate 25%, and lastly, our diluted share count should be around $108 million, which excludes future share by debt. We expect our revenue phasing by quarter to follow our historical seasonality, with Q1 2024 revenue to be in a range of $300 to $310 million, and EBITDA being a range of 25 to 35 million. So in summary, we're very pleased with the 2023 results, which delivered revenue in EBITDA at the mid to high end of our guidance ranges that we provided to you at this time last year. That strong EBITDA growth and the resulting strong cash flow generation were used in part to pay down debt, resulting in our lowest leverage ratio in five years.
Scott: EBITDA growth and the resulting strong cashflow generation was Houston part to pay down debt, resulting in our lowest leverage ratio in five years.
Scott: And finally, we acted as a you're strong and see that momentum carrying into 2024.
Scott: Particular, the shrink we're seeing in the underlying recurring revenue base, the business, which was about seven per cent and 2023.
Scott: Combined with the visibility and predictability with the license renewal next year and the maturity of the sale of imitation pipeline.
Scott: What was that one of our 79 per cent broken 2020.
Scott: We're pleased that this growth rate is in line with a long range outlook, we provided at our last name and what state of 2021, and then the streets are and what you do.
Scott: Recalls and look forward to hearing more about our new longterm outlook at our Investor day in a couple of weeks.
Speaker Change: With that will now open up the line questions.
Scott: Here.
Speaker Change: Alright, well. Thank you for your questions to ask the question. This time peace <unk>, followed by the number one on your telephone keypad.
Operator: And finally, we exited the year strong and see that momentum carrying into 2024. In particular, the strength we're seeing in the underlying recurring revenue base of the business, which was up 7% in 2023, combined with the visibility and predictability of the license renewals next year and the maturity of the sales and implementation pipeline, set us up well to deliver our 7 to 9% growth in 2023. We are pleased that this growth rate is in line with the long-range outlook we provided at our last Analyst Day in 2021 and demonstrates our ability to deliver results. We look forward to sharing more about our new long-term outlook at our Investor Day in a couple weeks. With that, we'll now open up the line for questions. Operator. The floor is now open for your questions. To ask a question this time, please press the star followed by the number one on your telephone key.
Speaker Change: Will be provided to preach anything to ask one question and one fries or a follow up question.
Speaker Change: <unk> at the moment to compile the queue any faster.
Lioness: And your first question comes from the Lioness.
Lioness: Pier Heckman with T. A T V <unk>.
Peter James Heckmann: Go ahead your line or something.
Peter James Heckmann: Thank you good morning, everyone I wanted to see if you can give a little bit more color or interpretation.
Peter James Heckmann: [noise] your bookings numbers.
Speaker Change: So you're getting both a R R and licenses and services bookings.
Speaker Change: And and when we look at those.
Speaker Change: Okay.
Speaker Change: Certainly down year over year on the on the air our side you know following relatively stronger here than in 2022.
Speaker Change: How should we interpret.
Speaker Change: The air bookings and now the license and service bookings in terms of.
Speaker Change: Cooperating and that that and the model I mean, historically with with this.
Speaker Change: That in total bookings.
Speaker Change: Directionally that had some value to air bookings I've been having a harder time.
Speaker Change: Grappling that into.
Speaker Change: When did those start to have an impact and and and and how concerned should we be with her with.
Peter James Heckmann: You'll be provided with the opportunity to ask one question and one further follow-up question. We will pause for just a moment to compile the Q&A roster, and your first question comes from the line of Peter Heckmann with D.A.
Speaker Change: [noise] bookings for the year.
Speaker Change: Yeah. Thanks, Pete Scott Yeah, we've talked about this now for a number of quarters the one.
Scott: Aspect of the a R. R metric is it doesn't really capture the booking success that we have in the bank business, which is predominantly on premise.
Peter James Heckmann: Davidson. Please go ahead. Your line is: Thank you. Good morning, everyone.
Scott: And so we've been talking about our licensed in service sale, we put that we put that under the bookings table this quarter.
Scott W. Behrens: I wanted to see if you could give a little bit more color or interpretation on your booking numbers. We see you're getting both ARR and. And, and when we look at those, And then certainly down year over year on the ARR side, you know, following a relatively stronger year. How should we interpret that? ARR bookings, and now the license, that and total bookings. You know, directionally, that had some value; the AR bookings, having a harder time, of extrapolating that into, you know, when do those start to have an impact, and how concerned should we be? down.
Scott: That is up whether you're looking at the quarter over quarter year over year is up in the 16% to 17% range.
Scott: And that's really where we we've been seeing our success. So it's more of a function of which segment. We're seeing success in bookings in 2023, and that's coming from banks you know really if you look at banks over the last three years in terms of revenue growth, it's been coming out of coming out of Covid. If you if you exclude dragon.
Our digital banking sail revenue in the banks has been really our strongest segment, it's been up 8% to 9% on a constant currency basis. So we're continuing to see that strong bookings growth and in the bank segment in license and services in 23, the only other thing I'd point out as if you were <unk>.
Scott W. Behrens: Yeah, thanks, Peter, and Scott. Yeah, you know, we've talked about this now for a number of quarters, the one aspect of the ARR method is that it doesn't really capture the booking success that we have in the bank, which is predominantly on print. And so we've been talking about our license and service sales; we put that into the bookings table this quarter. That is up, whether you're looking at the quarter over quarter or year over year, is up in the 16 to 17.
Scott: All in 2022 on the air our side, we did have our largest.
Scott: Bill or deal that we've ever sold within the 2022 pumps, so it's and that that sort of deal size did not recurring 2023.
Yeah, I think that that was the only point I would've.
Speaker Change: I'll just reiterate the point scratches made so 2022 is a little bit of an anomaly in that way and you you mentioned that you know when your side two of the largest deals we've ever had in the history of that business and those showed up in the 2022 are are numbers, we did not expect to repeat that.
Scott W. Behrens: And that's really where we've been seeing our success. So it's more of a function of which segment we're seeing success in bookings in 2023, and that's coming from the bank. Unknown Speaker You know, really, if you look at banks over the last three years in terms of revenue growth, it's been, you know, coming out of COVID, if you exclude Dragonfly, our digital banking sale, revenue from banks has been really our strongest segment, it's been up eight to 9% on a current basis. So we're continuing to see that strong bookings growth in the bank segment. The only other thing I'd point out is, if you recall, in 2022, on the ARR side, we did have our larger... a biller deal that we've ever sold was in the 2022 comps. So it's in that that sort of deal size did not recur. Yeah, I think that was the only point I would have made. I'll just reiterate the point Scott just made. So 2022 is a little bit of an anomaly in that way. And you mentioned that, Pete.
Speaker Change: 2023 and of course, we didn't but total bookings were very strong and we we were very confident in the the guidance. It's got just presented to you.
Speaker Change: [noise] great.
Speaker Change: I appreciate that and then in terms of interchange you would set it in the press release that you do expect that adjusted EBITDA margins.
Speaker Change: The year to expand a bit so would that imply that interchange is maybe get to grow it about the same rate or maybe even a little bit faster than total revenue.
Speaker Change: I wouldn't necessary I would say generally in line with I think we still have some room for improvement. There. Obviously, we had a big big improvement between 22 and 23 in terms of all the initiatives that we've put in place, but there's still there's still more to go. So you know I would say it's in line with a word.
Speaker Change: Or less than the total rate of.
Revenue growth in that in that door second yeah, I mean, I I think it's fair to say, though we we Scott said, we had a big improvement in 2023.
Scott W. Behrens: You know, when you signed two of the largest deals we've ever had in the history of that business, and those showed up in the 2022 ARR. We did not expect to repeat that in 2023, and, of course, we didn't, but total bookings were very strong. Very confident. Guidance is God.
Speaker Change: We don't have enough room to repeat that but but we do expect to see continued improvement and expansion margin.
Speaker Change: Okay. Okay, that's fair I'll get back in the queue. Thank.
Speaker Change: Thanks.
Speaker Change: Thank you Alright next question comes from the line is Jas Cantor.
Scott W. Behrens: Great, that's good to hear, I appreciate that. And then, in terms of interchange, you had said in the press release that you do expect net adjusted EBITDA margins. ACI Worldwide Inc. for the year to expand a bit. So would that imply that interchange is maybe going to grow at about the same rate, or maybe even a little bit faster than total revenue? I would say, generally, in line with, I think we still have some room for improvement there. You know, obviously, we had a big, big improvement between 22 and 23 in terms of all the initiatives that we put in place. But there's still there's still more to go.
Jas Cantor: <unk> <unk> <unk>.
Jas Cantor: Go ahead.
Jas Cantor: Hey, Thanks, guys can you talk about the guidance you gave between 24 and your revenue growth of 79%.
Jas Cantor: Pretty good maybe screen How're you thinking about revenue gripped by segment can you break it down for US and then specifically on your banking segment.
Jas Cantor: Opportunities are you seeing their right now the clients maybe give us some flavor for what we should expect to see there in 2020 boy, maybe tell us about your <unk>. Thanks.
Jas Cantor: Thanks.
Speaker Change: Yeah on the 2024 girls I think if you look at relative to 2023.
Speaker Change: The the bill or segment grew 9% in 2023, but that growth really was a function call. Three things. One is just your same store sales growth second is the go live in ramping of net new client business in the third piece was that some of the repricing elements of deals.
Scott W. Behrens: So you know, I would say it's in line with or less than the total rate of revenue growth in that. Yeah, I mean, I think it's fair to say that we, as Scott said, we had a big improvement in 2023. We don't have enough room to repeat that, but we do expect to see continued improvement and expansion. Okay, okay. That's fair.
Speaker Change: <unk> with the interchanges we had 2022. So you go to 2000 2004 two of those three elements are still gonna be there. There there may be some repricing along with left but biller should fall back into call. It that you know.
Jeffrey Brian Cantwell: I'll get back in the, Thanks. Thank you. Our next question comes from the line of Jeff Cantwell with Seaport Research. Please go ahead.
Speaker Change: Within the 7% to 9% growth rate that we're talking about in terms of total company.
Jeffrey Brian Cantwell: Hey, thanks, guys. Can you talk about the guidance you gave for 2024 on revenue growth of 79%, which looks pretty good? And maybe explain how you're thinking about revenue growth by segment. Can you break that out for us?
Speaker Change: The bank business.
Speaker Change: Which is in the last three years <unk>. It's been about eight plus percent 2024 will will kind of look like you'd be back to kind of mean reversion. This year was only a couple of two or three per cent, but next year will will be back within that kind of three year average and then merchant which was.
Thomas Woodrow Warsop: And then specifically in your banking segment, what opportunities are you seeing there right now with clients? Maybe give us some flavor for what we should expect to see there in 2024, and maybe tell us about your pipeline. Thanks, on the 2024 growth, I think if you look at it relative to 2023. The biller segment grew 9% in 2023, but that growth really was a function of, I've called it, three things. One is just your same store sales growth. Second is the go live and ramping of net new client business. And the third piece was some of the repricing elements of dealing with the interchanges we had. So if you go to 2024, two of those three elements are still going to be there.
Speaker Change: As a drag essentially on growth in 2023, as we talked about exited the year stronger than that that exit radar carry in the next year would expect the merchant business really to be at the high end of our consolidated gross right. So they're all white.
Speaker Change: Pretty much within that 79% growth, but a little bit different dynamics by each of the segments.
Speaker Change: Yeah, and then on the I think your question was about banks, the bank segment and opportunities and pipeline. So we're seeing a number of different types of opportunities and it it depends on which region of the world urine, but I'll give you a give you kind of a flavor for it.
Speaker Change: So in a week, we continue to see price increases as we renew with our existing customers. So and those are based on primarily on two things volumes. So they need to buy more capacity from us than they did the last time and then price increases related to.
Thomas Woodrow Warsop: There may be some repricing element left, but billers should fall back into, call it that, within the seven tonight, growth rate that we're talking about in terms of total, The Bank Business, which has in the last three years Kager has been about eight plus, 2024 will kind of look like you'd be back to kind of mean reversion. This year it was only a couple, 2 or 3%, but next year we'll be back within that kind of three-year average.
Speaker Change: The inflation that has happened between the last renewal and this one so that's one driver, but and that's that's in our more developed markets and then we look at places like Latin America, and Asia, and we see we see new opportunities with with financial institutions and those are.
Thomas Woodrow Warsop: And then merchant, which was a drag essentially on growth in 2023, as we talked about, exited the year stronger, and that exit rate will carry into next year. I think the next year I would expect the merchant business really to be at the high end of our consolidation. So they all line up pretty much within that 7% to 9% growth, but a little bit different. Bye.
Speaker Change: Are many of those are driven by.
Speaker Change: When I mentioned in my comments earlier, the the the understanding that real time payments volumes are humming.
Speaker Change: And it depends on which country are you in whether <unk>, whether these financial institutions have seen those volumes ramp yet or not but everyone knows they're coming and they're thinking about how do I make sure that my payments infrastructure can handle that increase the volume because these are to a large extent those real time payments are.
Thomas Woodrow Warsop: Yeah, and then on that, I think your question was about banks, the bank segment, and opportunities and pipelines. So we're seeing a number of different types of opportunities, and it depends on which region of the world you're in, but I'll give you kind of a flavor for it. So we continue to see price increases as we renew with our existing customers, and those are based primarily on two things: volumes, so they need to buy more capacity from us than they did the last time, and then price increases related to inflation that has happened between the last renewal and this one.
Speaker Change: R cannibalizing cash transactions and so those are bank in a bank in Latin America doesn't.
Speaker Change: What they have to do with the cash transaction, but yet, but as it moves to real time payments that changes and they need to make sure they're ready for the for the volume and they're they're making sure that they are they're trying to make sure. They are and that's when that opportunity comes for us to talk to them. They want to continue to take advantage of our proven scalability reliability.
Speaker Change: And then so if they don't have it there they're looking to talk to us about it if they do already have some of our soccer, they're they're asking for our help to make sure. The rest of their infrastructure can handle that increased volume. So those are some flavors of it the pipeline is very strong it's it's growing in that dynamic about.
Thomas Woodrow Warsop: So that's one driver, and that's in our more developed markets. And then we look at places like Latin America and Asia, and we see new opportunities with, as I mentioned in my comments earlier, the understanding that real-time payments volumes are coming. And it depends on which country you're in, whether these financial institutions have seen those volumes ramp up yet or not. But everyone knows they're coming, and they're thinking about, "How do I make sure that my payments infrastructure can handle that increase in volume?" Because, to a large extent, those real-time payments are cannibalizing cash transactions. And so a bank in Latin America, not a lot they have to do with cash transactions, but as it moves to real-time payments, that changes. And they need to make sure they're ready for the volume, and they're making sure that they are. They're trying to make sure they are.
Speaker Change: Being ready for the the rampant volume that that they know is coming eventually that's that's one of the key drivers.
Speaker Change: Okay, that's great Uhm my follow up on that.
Speaker Change: Real time payments is one of the biggest questions we'd be getting inbound about your opportunity is there's so much focus I'm just said now but my understanding he goes for your footprint is much broader than that globally. So would you mind I don't Wanna Preempt your your analysts day too much here, but today, but would you mind.
Speaker Change: Mapping out what do you see the you know the most significant opportunities for real time payments, which would be very happy to Asia, <unk> am et cetera, how how would you characterize that.
Speaker Change: Well I I don't I'm I'm not trying to be flipping on this but it's it's all of the above because and where I think you probably know this but just so we're all on the same page largest real time payment market today in the world or India, that's the largest by far Brazil and China those are the three.
Thomas Woodrow Warsop: And that's when that opportunity comes for us to talk to them. They want to continue to take advantage of our proven scalability and reliability. So if they don't have it, they're looking to talk to us about it. If they do already have some of our software, they're asking for our help to make sure the rest of their infrastructure can handle that increased volume. So those are some flavors of it.
Speaker Change: The largest real time payment markets in the world and the rest of the world is to some extent playing catch up but the European Central Bank has mandated the the the availability in support of real time payments are crossed the Euro zone.
Thomas Woodrow Warsop: The pipeline is very strong. It's growing, and that dynamic about being ready for the ramp and volume that they know is coming eventually is one of the key drivers. Okay, that's great.
Jeffrey Brian Cantwell: And my follow-up on that, on real-time payments, one of the biggest questions we've been getting, you know, inbound about your opportunity is that there's so much focus on FedNow, but my understanding is, for your footprint, it's much broader than that globally. So would you mind if I don't want to preempt your analyst day? Yeah, too much here. But today, but would you mind mapping out where you see the, you know, the most significant opportunities for real-time payments? Is it Europe? Is it Asia, Latin, etc.?
Speaker Change: So you've got you have real time payments in Europe of course, but that it's getting a lot more attention and then.
Speaker Change: Latin America is is an up and comer outside of Brazil, It's still a relatively small volumes with real time payments, but that's changing and I mentioned, we signed the central bank of Columbia in terms of supporting the they're they're real time payments Central infrastructure. That's just one example in Latin America.
Thomas Woodrow Warsop: How are you characterized? Well, I don't, I'm not trying to be flippant on this, but it's all of the above, and where I think you probably know this, but just so we're all on the same page, the largest real-time payment markets today in the world are India, that's the largest by far, Brazil, and China. Those are the three largest real-time payment markets in the world, and the rest of the world is, to some extent, playing catch up.
Speaker Change: But I think that you you will continue to see significant growth in in the focus on and volumes of real time payments in Latin America also in Asia.
Speaker Change: And and certainly in Europe. So lots of opportunity you you mentioned fed now I mean fat now still a new thing it's only a few months in and the fed has not published specific volumes yet, but we.
Thomas Woodrow Warsop: But the European Central Bank has mandated the availability and support of real-time payments across the eurozone. So you've got and you have real-time payments in Europe, of course, but that is getting a lot more attention, and then Latin America is an up-and-comer. Outside of Brazil, there are still relatively small volumes of real-time payments, but that's changing. And I mentioned we signed a contract with the Central Bank of Colombia in terms of supporting their real-time payments central infrastructure. That's just one example in Latin America, but I think that you will continue to see significant growth in the focus on and volumes of real-time payments in Latin America, also in Asia, and certainly in Europe. So lots of opportunity. You mentioned FedNow. I mean, FedNow is still a new thing.
Speaker Change: We expected them to be pretty small at the beginning and and they are.
Speaker Change: But we're getting new institution signing on at at an increasing rate and I I don't have the exact number from the fed in front of me, but you know the number of institutions has grown a lot since since that started and what's what's really interesting too is the clearinghouse is real time paint.
Speaker Change: It's transactions have benefited from the all the marketing with the feds done around fed now. So we are starting to see increased volumes I think it's gonna take continue to take awhile before the the volumes are are extremely large but again to me. The most interesting thing is the.
Thomas Woodrow Warsop: It's only a few months in, and the Fed has not published specific volumes yet, but we expected them to be pretty small at the beginning, and they are. But we're getting new institutions signing on at an increasing rate. And I don't have the exact number from the Fed in front of me, but the number of institutions has grown a lot since that started.
Speaker Change: The discussions that the the anticipation of real time payment volume increase is generating for us and that's that's really good for us it's puts us in a position to help our customers deal with one of the biggest issues there wrestling with right now.
Speaker Change: Yeah. The only other thing I would add to that is it just in terms of a metric are real time payments solution revenue growth of 2023, 23% over 2022 and very little of it I mean very little of that if any right. Now is is coming from fat now. So there's really no there's not a real contingency on our 2024 outlook.
Thomas Woodrow Warsop: And what's really interesting, too, is the clearinghouse's real-time payments. Transactions have benefited from all the marketing that the Fed has done around FedNow, so we are starting to see increased volumes. But I think it's going to continue to take a while before the volumes are extremely large.
Speaker Change: Or even our longer term outlook.
Thomas Woodrow Warsop: But again, to me, the most interesting thing is the discussions that the anticipation of real-time payment volume increase is generating. That's really good for us; it puts us in a position to help our customers deal with one of the biggest issues they're wrestling with. Yeah, the only other thing I'd add to that is it just in terms of a metric, our real-time solution revenue growth in 20, 2020. And very little, I mean, very little of that, if any, right now is coming from FedNow.
Speaker Change: On you know a or or where were predicting at a tipping point on staff now specifically really a lot of our growth historically and in the near term is coming from international arms.
Speaker Change: Okay, Great I appreciate all the color. Thank you.
Speaker Change: Okay.
Speaker Change: And our next question comes from the minors, Charles Eaton, which Stevens.
Charles Joseph Nabhan: Please go ahead, you by any chance.
Charles Joseph Nabhan: Hi, Good morning, guys and thank you for taking my question as we think through the model for banking and 24 I was hoping you could comment on the renewal schedule. I think you said in the past that it was it would be a little more evenly distributed relative to 23, and I know third quarter was a bit <unk>.
Scott W. Behrens: So there's really no, there's not a real contingency in our 2024 outlook or even our longer-term outlook on, you know, a tipping point on FedNow specifically, really a lot of our growth historically and in the near term. I. Okay, great. Appreciate all the callers. Thank you. And our next question comes from the line of Charles Adam with Stevens Inc. Please go ahead, your line is open.
Charles Joseph Nabhan: You had the big renewal there, but anything you could say around the the cable because we think through the model for banking would be helpful.
Speaker Change: Yeah check I would look at just I would face the bank revenue in in your modeling for 2004 pretty consistent with 2023.
Speaker Change: We're always going to have kind of that second half in predominantly fourth quarter renewal timing. So if your model is consistent with 2023 that should set you up well for 2024 times.
Charles Joseph Nabhan: Hi, good morning, guys. And thank you for taking my question. As we think through the model for banking in 24, I was hoping you could comment on the renewal schedule. I think you said in the past that it would be a little more evenly distributed relative to 23.
Speaker Change: Got it and.
Speaker Change: Follow up I wanted to drill into the bill or segment, and a little bit and get a sense for what vertical specifically are driving the growth from both a new bookings and the same store standpoint.
Scott W. Behrens: And I know the third quarter was a big quarter for you because of the big renewal there. But anything you could say around the cadence as we think through the model for banking would be helpful. Yeah, Chuck, I would look at just, I would phase the bank revenue in, your modeling for 24 pretty quickly. We're always going to have kind of that second half and predominantly fourth quarter renewal time. So if you model it consistent with 2023, that should set you up well. Got it. And as a follow-up, I wanted to drill into the biller segment a little bit and get a sense for what verticals specifically are driving the growth from both the new bookings and the same store standpoint. Yeah, I don't know that there's a single vertical that drives it.
Speaker Change: Yeah, I I don't know that there's a single vertical that that drove it I think the biggest growth because of the new sales that we've mentioned, where the utilities and telecommunications segments, but we've seen we've seen good growth.
Speaker Change: Across the the vertical set that we support but those would be the two largest.
Speaker Change: Got it and if I could sneak one morin on capital allocation you have a pretty good spot from a balance sheet standpoint, you had mentioned that your the priority is buybacks. However, you do have that flexibility. So I was wondering if you could comment on M&A and.
Thomas Woodrow Warsop: I think the biggest growth because of the new sales that we've mentioned was in the utilities and telecommunications segments, but we've seen good growth across the verticals that we support, but those would be the two largest. And if I could sneak one more in on capital allocation, you're in a pretty good spot from a balance sheet standpoint. You had mentioned that your priority is buybacks. However, you do have that flexibility.
Speaker Change: Your appetite towards potential targets that would potentially accelerate you'll go to market certain areas across your businesses anything you could say that would be helpful.
Speaker Change: Well I mean, I I think we would always be opportunistic, but obviously in the it it's been a number of years since we have done an acquisition, we didn't make the divestiture of our our digital banking business in 2022.
Scott W. Behrens: So I was wondering if you could comment on M&A and your appetite for potential targets that would potentially accelerate your go-to-market in certain areas across your businesses. Anything you could say there would be helpful. Well, I mean, I think we would always be opportunistic. But obviously, in the it's been a number of years since we did made an acquisition. I would say just now, I would look at 2024 at this point, very similar to 2023 in that it is the balanced approach of both share buybacks and delevering, really.
Speaker Change: I would say just <unk> I I would look look at 2000 2004 at this point very similar to 23 and that the balanced approach of Apple share buybacks and Delevering is really the the target capital allocation I would just say I think we'd always be opportunistic if there was something accretive but but.
Speaker Change: The balance this year is targeted to share buy back in and delivery.
Speaker Change: Got it I appreciate it all the color.
Speaker Change: Thank you. Our next question comes from the line is two vahid <unk> can you repeat please.
Scott W. Behrens: Target Capital Outreach. I would just say I think we'd always be opportunistic if there was something accretive, but the balance this year is targeted to be 5%. Got it.
Vahid: Go ahead, you're lying or something.
Vahid: Good morning. This is <unk>. Thanks for taking our questions first off Tommy touched on January I, and large language models and.
Joseph Anthony Vafi: I appreciate all the callers. Thank you. Our next question comes from the line of Joe Vafi with Canaccord Genuity. Please go ahead. Your line is open. Good morning. This is Pallav Saini on for Joe.
Vahid: And your remarks can you give us some examples of how you're using January I currently and what are some near term opportunities for you there.
Thomas Woodrow Warsop: Thanks for taking our questions. First off, Tom, you touched on Gen-AI and large language models in your remarks. Can you give us some examples of how you're using Gen-AI currently and what are some near-term opportunities for you there? And I will follow up.
Speaker Change: <unk> sure.
Sure three three primary use cases for us with with Jenny I'm in L. O M. So first of all it's a fraud detection and prevention, which I've I've mentioned before I'm sure you've you've heard a lot about it we've been using a I for over a decade in.
Thomas Woodrow Warsop: Sure. Sure, three primary use cases for us with Gen-AI and LLMs. So first of all, it's fraud detection and prevention, which I've mentioned before. I'm sure you've heard a lot about it.
Thomas Woodrow Warsop: We've been using AI for over a decade in our fraud detection and prevention solutions. And we have proprietary methods of creating algorithms and training models. And we have excellent products there, and part of the reason is the use of AI and the continued use of AI. So that's use case number one.
Speaker Change: R and our fraud detection prevention solutions, and we we we have patents and proprietary methods of creating algorithms and training models and we we have excellent products there and part of the reason is is the use of AI and the continued use of a guy so that's.
Speaker Change: That's use case number one.
Thomas Woodrow Warsop: Use case number two is customer search. And so, as an example, we have. We haven't completed this for all products, but for some of our products, we have loaded into.
Use case number two is customer service and so as an example, we have we have we haven't completed this for all products, but for some of our products. We have loaded into co pilot, where we we use Microsoft co pilot for a secure environment, but we've loaded.
Thomas Woodrow Warsop: Co-pilot, where we use Microsoft's Co-pilot for a secure environment, but we've loaded every piece of documentation we have for several of our products, our solutions. And that includes FAQs, wikis, inquiries from customers, and the answers, all of it. And we've then trained the model. And we are now able to get
Speaker Change: Every piece of documentation, we have for for several of our of our products are solutions <unk>.
Speaker Change: And that includes F. A q's wiki's.
Speaker Change: Inquiries from customers and the answers all of it and we've been trained trained the model and we are now we are now able to get very good productivity from our customer service representatives of the people that handle inquiries about our software products people that deal without.
Thomas Woodrow Warsop: Very good productivity from our customer service representatives, the people that handle inquiries about our software products, people that deal with outages or issues that We're able to get them productive in a fraction of the time that it used to take us with longer-term training. And ultimately, we're going to make that same kind of knowledge base with the AI, on top of it, available directly to our team so that they can get answers to questions faster, and it improves the productivity of our team. So that's number two; customer service. Number three, probably predictably for a software company, is software development.
<unk> or or issues that our customers rabbit were able to get them productive in a fraction of the time that it used to take us with longer term training and ultimately we're going to make that same kind of knowledge base with the the a I on top of it available.
Speaker Change: Directly to our customers so that they can get answers to questions faster and it improves the productivity of our team. So that's number two customer service number three probably predictably for a software company is software development.
And we have we have employed a generative AI with our developers and what we've been able to do so I can just give you. One example, we have several but here here's the one that I find the most interesting is we we have created a way to extract.
Thomas Woodrow Warsop: And we have employed generative AI with our developers. And what we've been able to do, so I'll just give you one example. We have several, but here's the one that I find the most interesting, is we have created a way to extract logic from proven software. So some people call that legacy.
Speaker Change: Logic from proven software. So some people call that legacy I've banned the use of the word legacy instead of as yet but are proven software we've taken functionality out of it and created micro services in in a matter of minutes, we create a microservice in a matter of minutes.
Thomas Woodrow Warsop: I've banned these inside of ACI. But our proven software, we've taken functionality out of it and created microservices in a matter of minutes. We create a microservice in a matter of minutes. And we do that by using generative AI. And then we include a human in the loop, of course, because AI, you can't just trust the output of a bot.
Speaker Change: And we we do that by using generative AI and then we we <unk>.
Speaker Change: Include a human in the loop of course, because a I you can't just trust the output of of of a bot and so we create these microservices and then we have we have our team tweak them and check validity. So we we were getting about 80% roughly accuracy and these microservices.
Thomas Woodrow Warsop: And so we create these microservices, and then we have our team tweak them and check for validity. So we're getting about 80% accuracy in these microservices, and then we're taking that to 100% or as close as possible with our team members. And so, overall, we're probably getting at least 30% productivity improvement by using AI. And in the case of these microservices, we're seeing 10x or more, 10x, not 10% more productivity from our team. So I don't know that we'll get that every time on every application, but it's pretty exciting stuff. And it's allowing us to move very rapidly. So those are the three primary use cases. That's great. Thanks, Tom.
Speaker Change: And that we're taking that to 100 per cent or as close as possible with with our team members. So that we're getting probably over all we're getting at least 30% productivity improvement by using a I and in the case of these microservices, we're seeing 10 X or more 10 X 10 person.
Speaker Change: Sent more productivity from our team. So I don't know if it will get that every time on every every application, but it's pretty exciting stuff, it's allowing us to move very rapidly. So those are the three primary use cases.
Speaker Change: That's great. Thanks, and my follow up is on digital assets are you, providing any products and services on the crypto side right now and how are you thinking about this space. If you you know and if you see any opportunities given some of the recent developments like the spot bitcoin.
Pallav Saini: And my follow-up question is on digital assets. Are you providing any products and services on the crypto side right now? And how are you thinking about this space, if you know, and if you see any opportunities, given some of the recent developments like the Bitcoin ETF? Thank you. Yeah, thanks.
Speaker Change: Yes. Thank you.
Speaker Change: Yeah. Thanks, I was just just before I walked in here I was watching the the the the founder of one of those Z T. S talking about the explosion that we've seen but but to answer. Your question. So many of our products are are perfectly happy to facilitate that transaction and bitcoin it doesn't really.
Thomas Woodrow Warsop: Just before I walked in here, I was watching the founder of one of those ETFs talking about the explosion that we've seen. But to answer your question, so many of our products are perfectly happy to facilitate a transaction in Bitcoin. It doesn't really matter very much to us.
Speaker Change: Really matter very much to us what the what the the medium is whether it's whether it's dollars or pounds or bitcoin or central bank digital currency and it doesn't really matter to our applications and we have absolutely built in the ability to use.
Thomas Woodrow Warsop: What the medium is, whether it's dollars or pounds or Bitcoin or Central Bank Digital Currency, it doesn't really matter to our applications. And we have absolutely built in the ability to use crypto where it makes sense. So we're fine with all of that. I don't, you know, I wish I was smart enough to tell you what all the impacts of the Bitcoin ETFs are. I might not be here right now. You know, I might be on the beach somewhere, but I don't know.
Use crypto, where where it makes sense. So we're fine with all of that I don't you know I I wish I was smart enough to tell you what all the impacts of the bitcoin a T S or I might not be here right. Now you know I might be on the beach somewhere, but but I don't know, but we're we're gonna obviously continue we're a very important player in.
Thomas Woodrow Warsop: But we're obviously going to continue. We're a very important player in the payments ecosystem. Digital commerce, to a large extent, relies on ACI. We're going to make sure that our products can support whatever medium and mechanism, consumers and businesses. Great, thank you. Again, if you would like to ask a question, press star, followed by the number 1 on your telephone keypad. Our next question comes from the line of George Sutton with Craig Halden. Please go ahead, your line is open. Hey guys, this is James on behalf of George.
In the payments ecosystem digital commerce to a large extent relies on ACI, we're gonna make sure that our products can support whatever medium and mechanisms consumers and and commercial customers 20th.
Speaker Change: Great. Thank you.
Speaker Change: Again, if you would like to ask a question <unk>.
Speaker Change: Hello, Thank the number one on your telephone keypad.
Next question comes from the line of <unk>, <unk> <unk> <unk> <unk> <unk>.
Speaker Change: Oh, Yes. This is James on for George Nice results.
James: Nice results. So the recurring revenue growth in the bank segment over the last couple of quarters has been pretty encouraging. Could you talk about what's driving the strength there?
James: So there are occurring revenue growth in the bank segment over the last couple of quarters have been pretty encouraging could you talk about what's driving the strength. There and then last quarter. You also mentioned moving down market could be sorta get an update on those efforts and then lastly would you be able to sort of quantify what did you think of the sustainable growth rate for the real time payment.
Scott W. Behrens: And then last quarter, you also mentioned moving down the market. Could we sort of get an update on those efforts? And then lastly, would you be able to sort of quantify what you think is a sustainable growth rate for the real-time payment solutions? Yeah, I think on the bank side of recurring revenue is it's really just maintenance on the license software. And so that is, you know, that's both a function of price; it's a, you know, those have built-in CPI.
James: Installations over the next couple of years.
James: Yeah, I think on the what's driving on the bank side recurring revenue is it's really just it's the maintenance on the license software and so that is you know that's both a function of prices of those have built in C. P I inflationary mechanisms.
Scott W. Behrens: Inflationary Mechanism, and then just the go-wives of new customers. So that's on the maintenance side, but probably the bigger growth year over year in bank recurring revenues coming from the SAC. So that's the go-wise and ramping of customers that we've sold. And bank sass is not a significant component. Yeah, and then you asked about the mid-tier, and we have, we've been primarily focused on pipeline development for the mid-tier. We've got a lot of conversations going on, but that hasn't really shown up yet.
James: And then just go wives of new customers. So that's on the maintenance side, we're probably the bigger growth year over year and bank recurring revenues coming from SaaS business.
James: So bad score wives and ramping of of customers that we've sold and and and banks as a bank says it's not it's not a significant component.
James: The overall bank business, but had nice growth and 2023.
James: Yeah, and then you you asked about mid tier and we we have we we've been primarily focused on pipeline development for the the mid tier we we've got a lot of conversations going but that that isn't.
James: It hasn't really shown up much yet that's that's a future opportunity and those conversations I was mentioning earlier about modernization. Many of those are with this mid tier and just just to reiterate and remind everybody when when we talk about mid tier we're talking about.
Thomas Woodrow Warsop: That's a future opportunity, and those conversations I was mentioning earlier about modernization, many of those are with this mid-tier. And just to reiterate and remind everybody, when we talk about the mid-tier, we're talking about 50 to 250 billion US dollars in assets. So these are still very large financial institutions. But historically, our sort of sweet spot has been 250 billion and up, the mega banks. And this, so we're, we call it the mid tier, not everybody might call that mid tier, but it's a little bit smaller.
James: 50 to 250 billion U S dollars in assets. So these are still very large financial institutions, but historically are sort of sweet spot has been 250 billion in up the the Mega banks and and this show where we call. It mid tier not everybody might call that mid tier, but it's a little little.
James: Bit smaller and that's where you know they are they they tend to be more interested in <unk> and or cloud models than the than the Mega banks and that's why that the development of those infrastructures and capabilities. It's got just referenced the growth that we've seen there. That's that's why that is.
Thomas Woodrow Warsop: And that's where, you know, they tend to be more interested in SaaS and or cloud models than the mega banks. And that's why the development of those infrastructures and capabilities. Scott just referenced the growth that we've seen there. That's why that is so important, and it's generating great conversation, great pipeline expansion, and we have signed several of those customers, and that's what's driving that growth, Scott mentioned. Yeah, and I would say if I look at our expectation going forward in terms of what real-time growth is going to be, it should be healthy double-digit growth, very similar to our fraud detection software capabilities. I mean, we have those are natural cross cells.
James: So important and it's it's generating great conversation great pipeline expansion and we we have signed several of those customers and that's what's driving that growth that Scott was just mentioning.
Scott: Yeah, and I would say if I look at the if our expectation going forward in terms of what real plant growth is going to be it should be a healthy double digit growth very similar to our fraud detection Ah software capabilities. I mean, we have those are natural cross cells to the existing customer base and as you know we have you know blue.
Scott W. Behrens: You know, we have a, you know, blue chip bank customer base that has been with us for a long time. The natural cross sell of new products to that same customer should have healthy double digit growth. Yeah, just just final point on that. Scott mentioned the natural cross sell absolutely right. And real-time payments and fraud are, I mean, those things go together extraordinarily well.
Scott: Chip bank customer base.
Scott: It has been with us for a long time and and the natural cross cell of new products to that same customer base is typically drink you're gonna be in real time payments abroad protection. So both of those areas should have healthy double digit growth in the future.
Scott: Just fine a point on that Scott mentioned, the natural crossover absolutely right in real time payments and fraud or I mean, those things go together extraordinarily well so we often package the two together.
Thomas Woodrow Warsop: So we often package the two together. So it's, it's a great, great offering, great couple. Okay. Um, last one for me, can you just touch on the competitive landscape and builder and merchant? And any changes you've seen there, sort of just given the momentum you've seen adding that new logo? Sure.
Scott: So it's a it's a it's a great great offering great couple of offerings.
Speaker Change: Alright last one for me can you just touch on the competitive landscape.
Speaker Change: <unk> and any changes you've seen there are just given the momentum you've seen it adding logos.
Speaker Change: Sure. So I I <unk> I wouldn't say that I've seen a lot of change in that we tend to see some of the same competitors I think we've so if I if I, let me start with bill or a very strong year, obviously last year and diller and some of the wins that.
Thomas Woodrow Warsop: So I wouldn't say that I've seen a lot of change in that. We tend to see some of the same competitors. I think we've, so if I, if I, let me start with Biller.
Thomas Woodrow Warsop: Very strong year, obviously, last year in Biller and some of the wins that we've talked about before. One of the reasons that I think we've seen the success is, Unknown Attendee, Pallav Saini, John Kraft, Allison Heckmann, William Johnston, Abe Kuruvilla, End of 21-ish. And so we were able to turn our full attention to running the business and growing it. And that definitely worked well. And we expect that to continue to work well. So, I think that's, that's the primary driver of Biller. On the merchant side, again, kind of the same thing. I wouldn't say there's been a big change.
Speaker Change: We've talked about before one of the reasons that I think we've we've seen the success is if you think back a couple of years. We were we were still digesting the speed pay acquisition from Western Union and we we finished that I don't know and a 21 ish.
And so we were able to turn our full attention to running the business and growing it and that's definitely worked well and we expect that to continue to work well. So that's why I think that that's the primary driver in biller on the merchant side.
Speaker Change: Again kind of the same thing I wouldn't say, there's a big change I think you know we did have a bit of a slow start as as we mentioned twenty-three finish the you're pretty strong and and we're seeing very good signs that that's gonna continue into 24, and so so we should see better growth this year and that has.
Thomas Woodrow Warsop: I think, you know, we did have a bit of a slow start, as we mentioned in 23, but we finished the year pretty strong, and we're seeing very good signs that that's going to continue into 24. And so we should see better growth this year, and that has primarily to do with the business that's already been sold and is ramping up. So very good visibility in that business. And, you know, our sweet spot there tends to be the really large, a little bit like the banking example I gave, they tend to be very large global retailers that are looking for a consistent experience, a very predictable, very positive experience for their consumers, whether it's in the store, online, whatever channel the consumer wants to use. And the reason it tends to be global is they don't want a bundled solution from an acquirer typically because they can't; there is no acquirer that can handle them everywhere.
Speaker Change: Primarily to do with the the business that's already been sold and is is ramping up so very good visibility in in that business and you know our sweet spot there tends to be the really large a little bit like the banking example, I gave they tend to be very large global retailers.
That are looking for consistent experience very predictable very positive experience for their consumer whether it's in the store online whatever channel the consumer wants to use and it. The reason it tends to be global is they don't want a bundled solution from.
Speaker Change: And acquire a typically because they can't there is no acquire that can handle them everywhere and so they want that consistent experiencing we can do that because we we are able to work with any acquire and make that experience at the at the till or or online very positive and consistent across the board. So that is our sweet spot <unk>.
Operator: And so they want that consistent experience, and we can do that because we are able to work with any acquirer and make that experience at the till or online very positive and consistent across the board. So that is our sweet spot target market. We're very good at it, and we're continuing to sell. And there are no further questions at this time. Mr. John Kraft, I turn the call over to you. Thank you, everyone, for joining us today. We appreciate your time and look forward to catching up in the coming weeks, as well as to meeting our analysts. Thanks, everybody. Thank you. This concludes today's conference. Thanks for watching!
Speaker Change: Get market, we're very good at it and and we're we're continuing to see success there.
Speaker Change: And there are no further questions at this time, Mister <unk> I turned to call <unk>.
Speaker Change: Well, thanks, everyone for joining us today, we appreciate your time and look forward to catching up in the company coming weeks as well is that our our analysts say you have a great day. Thanks everybody.
Speaker Change: Thank you just conclude Sydney conference you may now disconnect.
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