Overview of ACI Worldwide’s Financial Performance

ACI Worldwide, a leading global payments technology company, reported strong financial results for the year ended December 31, 2024. Total revenue increased 10% to $1.59 billion, driven by growth across all key business segments. The company saw particular strength in software license revenue, which grew 28% year-over-year.

Profitability also improved, with operating income increasing 40% to $308.1 million. Net income rose 67% to $203.1 million. These gains were fueled by higher revenues, disciplined cost management, and operational efficiencies.

Segment Performance

ACI Worldwide operates in three key segments: Banks, Merchants, and Billers.

The Banks segment, which accounts for 44% of total revenue, saw a 14% increase in revenue to $701.9 million. Segment adjusted EBITDA grew 20% to $425.5 million, driven by strong license sales and ongoing cost controls.

The Merchants segment revenue increased 10% to $165.9 million, while segment adjusted EBITDA rose 56% to $69.5 million. This was due to higher transaction volumes and lower operating expenses.

The Billers segment revenue grew 6% to $726.5 million. However, segment adjusted EBITDA declined 8% to $131.2 million, primarily due to increased payment processing costs.

Key Trends Impacting the Business

Several industry trends are shaping ACI Worldwide’s strategy and operations:

1. Increasing Digital Payment Volumes: The continued shift to digital payments is driving demand for ACI’s software and cloud-based solutions that can handle growing transaction volumes.

2. Adoption of Real-Time Payments: The global acceleration of real-time payment systems is a major opportunity for ACI, as it provides solutions to help banks, merchants, and billers modernize their payment infrastructures.

3. Cloud Migration: ACI is supporting customers’ transitions to private and public cloud environments, enabling them to benefit from improved scalability, resilience, and operating economics.

4. Payments Intelligence and Fraud Prevention: With the rise of sophisticated fraud, ACI is enhancing its advanced machine learning and network intelligence capabilities to help customers mitigate risks while improving the customer experience.

5. Omni-Commerce: As shopping behaviors evolve, ACI is providing merchants with tools to deliver seamless, secure, and personalized omni-channel payment experiences.

6. Open Banking: The growth of open banking and alternative payment methods, such as Request to Pay, present opportunities for ACI to leverage its real-time payments expertise and customer relationships.

Backlog and Liquidity

ACI Worldwide’s 60-month backlog, which provides visibility into future revenue, increased 4% year-over-year to $6.71 billion as of December 31, 2024. This included a 10% increase in committed backlog to $2.41 billion and a 1% increase in renewal backlog to $4.29 billion.

The company’s liquidity position remains strong, with $216.4 million in cash and cash equivalents and $528.1 million in available borrowing capacity under its revolving credit facility as of December 31, 2024. This represents a total liquidity of $744.5 million, up from $538.1 million a year earlier.

Analysis of Strengths and Weaknesses

Strengths:

• Diversified business model with exposure to high-growth segments like real-time payments and cloud-based solutions
• Strong market position and long-standing customer relationships in the financial services industry
• Robust product portfolio that addresses evolving customer needs around payments modernization and fraud prevention
• Improving profitability through disciplined cost management and operational efficiencies

Weaknesses:

• Reliance on license revenue, which can be lumpy and subject to timing of customer purchases
• Exposure to foreign currency fluctuations, which can impact reported financial results
• Potential integration challenges and execution risks associated with future acquisitions

Outlook and Future Prospects

Looking ahead, ACI Worldwide is well-positioned to capitalize on the continued digitization of payments and the growing demand for real-time, cloud-based, and intelligent payment solutions. The company’s strong backlog, liquidity, and strategic initiatives position it for sustained growth and profitability.

Key focus areas for the future include:

• Accelerating the adoption of ACI’s cloud-native solutions and expanding its market reach to smaller institutions
• Leveraging its real-time payments expertise and partnerships to drive further global expansion
• Enhancing its payments intelligence and fraud prevention capabilities to meet the evolving needs of customers
• Pursuing strategic acquisitions that can strengthen its product portfolio and market presence

Overall, ACI Worldwide’s solid financial performance, industry-leading solutions, and favorable market trends suggest a positive outlook for the company’s future growth and shareholder value creation.