ACI WORLDWIDE INC

Previous wording

The following discussion should be read together with our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and with our financial statements and related notes contained in this Form 10-Q. Results for the three months ended March 31, 2024, are not necessarily indicative of results that may be attained in the future.

Current wording

The following discussion should be read together with our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and with our financial statements and related notes contained in this Form 10-Q. Results for the three and six months ended June 30, 2024, are not necessarily indicative of results that may be attained in the future.

Previous wording

•The impact of foreign currencies strengthening against the U.S. dollar resulted in a $0.2 million increase in total revenue during the three months ended March 31, 2024, as compared to the same period in 2023.

Current wording

•The impact of foreign currencies weakening against the U.S. dollar resulted in a $0.7 million decrease in total revenue during the three months ended June 30, 2024, as compared to the same period in 2023.

Previous wording

Included in license revenue are license and capacity fees that are payable at the inception of the agreement or annually (initial license fees). License revenue also includes license and capacity fees payable quarterly or monthly due to negotiated customer payment terms (monthly license fees). The Company recognizes revenue in advance of billings for software license arrangements with extended payment terms and adjusts for the effects of the financing component, if significant.

Current wording

Included in license revenue are license and capacity fees that are payable at the inception of the agreement. License revenue also includes license and capacity fees payable annually, quarterly, or monthly due to negotiated customer payment terms. The Company recognizes revenue in advance of billings for software license arrangements with extended payment terms and adjusts for the effects of the financing component, if significant.

Previous wording

Maintenance revenue decreased $2.3 million, or 5%, during the three months ended March 31, 2024, as compared to the same period in 2023.

Current wording

Maintenance revenue decreased $2.7 million, or 5%, during the three months ended June 30, 2024, as compared to the same period in 2023.

Previous wording

Services revenue increased $6.2 million, or 38%, during the three months ended March 31, 2024, as compared to the same period in 2023.

Current wording

Services revenue increased $6.2 million, or 35%, during the three months ended June 30, 2024, as compared to the same period in 2023.

Previous wording

Total operating expenses for the three months ended March 31, 2024, decreased $7.6 million, or 2%, as compared to the same period in 2023.

Current wording

Total operating expenses for the three months ended June 30, 2024, increased $7.0 million, or 2%, as compared to the same period in 2023.

Previous wording

•The impact of foreign currencies strengthening against the U.S. dollar resulted in a $0.4 million increase in total operating expenses during the three months ended March 31, 2024, compared to the same period in 2023.

Current wording

•The impact of foreign currencies weakening against the U.S. dollar resulted in a $0.7 million decrease in total operating expenses during the three months ended June 30, 2024, as compared to the same period in 2023.

Previous wording

•The increase was primarily due to higher payment card interchange and processing fees and cloud computing fees of $6.2 million and $4.0 million, respectively. The remaining increase was due to higher personnel and related expenses of $2.4 million, including a $0.9 million increase in stock-based compensation expense.

Current wording

•The increase was primarily due to higher payment card interchange and processing fees and cloud computing fees of $18.1 million and $0.7 million, respectively. The remaining increase was due to higher personnel and related expenses of $3.4 million, including a $1.0 million increase in stock-based compensation expense.

Previous wording

•The decrease was primarily due to lower personnel and related expenses and advertising and professional fees of $7.4 million and $1.5 million, respectively.

Current wording

•The decrease was primarily due to lower personnel and related expenses and advertising and professional fees of $4.0 million and $0.7 million, respectively.

Previous wording

•The impact of foreign currencies strengthening against the U.S. dollar resulted in a $0.2 million increase in general and administrative expense during the three months ended March 31, 2024, as compared to the same period in 2023.

Current wording

•The impact of foreign currencies weakening against the U.S. dollar resulted in a $0.2 million decrease in general and administrative expense during the three months ended June 30, 2024, as compared to the same period in 2023.

Previous wording

•Adjusted for the impact of significant transaction-related expenses and foreign currency, general and administrative expense increased $4.0 million, or 21%, for the three months ended March 31, 2024, as compared to the same period in 2023.

Current wording

•Adjusted for the impact of significant transaction-related expenses and foreign currency, general and administrative expense increased $2.9 million, or 14%, for the three months ended June 30, 2024, as compared to the same period in 2023.

Previous wording

•The decrease was primarily due to a $2.5 million decrease in depreciation due to prior facilities cost reduction activities and $1.4 million decrease in amortization for fully amortized software acquired through acquisitions.

Current wording

•The decrease was primarily due to a $3.4 million decrease in depreciation due to prior facilities cost reduction activities, and a $0.5 million decrease in amortization for fully amortized software acquired through acquisitions.

Previous wording

Other, net is primarily comprised of foreign currency transaction gains and losses. Other, net was $2.0 million and $3.4 million of expense for the three months ended March 31, 2024 and 2023, respectively.

Current wording

Other, net is primarily comprised of foreign currency transaction gains and losses. Other, net was $1.2 million of income and $4.1 million of expense for the three months ended June 30, 2024 and 2023, respectively.

Previous wording

•The impact of foreign currencies strengthening against the U.S. dollar resulted in a $0.3 million increase in SaaS and PaaS revenue during the three months ended March 31, 2024, as compared to the same period in 2023.

Current wording

•The impact of certain foreign currencies strengthening against the U.S. dollar resulted in $0.3 million increase in SaaS and PaaS revenue during the six months ended June 30, 2024, as compared to the same period in 2023.

Previous wording

•Adjusted for the impact of foreign currency, SaaS and PaaS revenue for the three months ended March 31, 2024, increased $10.5 million, or 5%, as compared to the same period in 2023.

Current wording

•Adjusted for the impact of foreign currency, SaaS and PaaS revenue for the six months ended June 30, 2024, increased $36.2 million, or 9%, as compared to the same period in 2023.

Previous wording

SaaS and PaaS revenue increased $10.8 million, or 5%, during the three months ended March 31, 2024, as compared to the same period in 2023.

Current wording

Maintenance revenue decreased $5.0 million, or 5%, during the six months ended June 30, 2024, as compared to the same period in 2023.

Previous wording

•The decrease was primarily due to lower professional fees and personnel and related expenses of $1.3 million and $0.8 million, respectively.

Current wording

•The decrease was primarily due to lower professional fees and personnel and related expenses of $1.4 million and $0.4 million, respectively.

Previous wording

Banks Segment Adjusted EBITDA increased $17.0 million for the three months ended March 31, 2024, compared to the same period in 2023, due to a $17.4 million increase in revenue primarily due to an increase in license and services revenues, partially offset by a $0.4 million increase in cash operating expense.

Current wording

Banks Segment Adjusted EBITDA increased $27.6 million for the three months ended June 30, 2024, compared to the same period in 2023, due to a $26.1 million increase in revenue primarily related to an increase in license revenues, and a $1.5 million decrease in cash operating expense.

Previous wording

Billers Segment Adjusted EBITDA increased $1.1 million for the three months ended March 31, 2024, compared to the same period in 2023, due to a $8.0 million increase in revenue, partially offset by a $6.9 million increase in cash operating expense, primarily payment card interchange and processing fees.

Current wording

Billers Segment Adjusted EBITDA increased $6.2 million for the three months ended June 30, 2024, compared to the same period in 2023, due to a $22.5 million increase in revenue, partially offset by a $16.3 million increase in cash operating expense, primarily for payment card interchange and other processing fees.

Previous wording

Cash and cash equivalents consist of highly liquid investments with original maturities of three months or less. As of March 31, 2024, we had $183.4 million of cash and cash equivalents, of which $69.2 million was held by our foreign subsidiaries. If these funds were needed for our operations in the United States, we may potentially be required to accrue and pay foreign and U.S. state income taxes to repatriate these funds. As of March 31, 2024, only the earnings in our Indian foreign subsidiaries are indefinitely reinvested. The earnings of all other foreign entities are no longer indefinitely reinvested. We are also permanently reinvested for outside book/tax basis difference related to foreign subsidiaries. These outside basis differences could reverse through sales of the foreign subsidiaries, as well as various other events, none of which are considered probable as of March 31, 2024.

Current wording

Cash and cash equivalents consist of highly liquid investments with original maturities of three months or less. As of June 30, 2024, we had $157.0 million of cash and cash equivalents, of which $61.0 million was held by our foreign subsidiaries. If these funds were needed for our operations in the United States, we may potentially be required to accrue and pay foreign and U.S. state income taxes to repatriate these funds. As of June 30, 2024, only the earnings in our Indian foreign subsidiaries are indefinitely reinvested. We are also permanently reinvested for outside book/tax basis difference related to foreign subsidiaries. These outside basis differences could reverse through sales of the foreign subsidiaries, as well as various other events, none of which are considered probable as of June 30, 2024.

Previous wording

Our board approved a stock repurchase program authorizing the Company, as market and business conditions warrant, to acquire its common stock and periodically authorizes additional funds for the program. In February 2023, the board approved the repurchase of the Company's common stock of up to $200.0 million in place of the remaining purchase amounts previously authorized.

Current wording

Our board approved a stock repurchase program authorizing the Company, as market and business conditions warrant, to acquire its common stock and periodically authorizes additional funds for the program. In June 2024, the board approved the repurchase of the Company's common stock of up to $400.0 million in place of the remaining purchase amounts previously authorized.

Previous wording

We repurchased 2,060,433 shares for $63.1 million under the program during the three months ended March 31, 2024. Under the program to date, we have repurchased 60,981,733 shares for approximately $1.0 billion. As of March 31, 2024, the maximum remaining amount authorized for purchase under the stock repurchase program was approximately $109.3 million. See Note 6, Common Stock and Treasury Stock, to our unaudited condensed consolidated financial statements in Part I of this Form 10-Q for additional information.

Current wording

We repurchased 3,743,220 shares for $120.7 million under the program during the six months ended June 30, 2024. Under the program to date, we have repurchased 62,664,520 shares for approximately $1.1 billion. As of June 30, 2024, the maximum remaining amount authorized for purchase under the stock repurchase program was approximately $380.3 million. See Note 6, Common Stock and Treasury Stock, to our unaudited condensed consolidated financial statements in Part I of this Form 10-Q for additional information.

Previous wording

Cash flows provided by operating activities of $123.2 million were $83.2 million higher for the three months ended March 31, 2024, compared to $40.1 million for the same period in 2023. Our operating cash flows for the current quarter increased primarily due to $38.3 million more in customer receipt collections on higher prior year-end receivable balances, $14.7 million less in income tax payments, as well as a $24.6 million lower net loss for the three months ended March 31, 2024, compared to the same period in 2023.

Current wording

Cash flows provided by operating activities were $120.8 million higher for the six months ended June 30, 2024, compared to the same period in 2023. Our operating cash flows for the current quarter increased primarily due to $17.7 million more in customer receipt collections on higher prior year-end receivable balances, $19.2 million less in income tax payments, as well as cash flows generated from $23.1 million in net income for the six months ended June 30, 2024, as compared to a $39.0 million net loss for the same period in 2023.

Previous wording

During the first three months of 2024, we used cash of $17.8 million to purchase software, property, and equipment, as compared to $8.7 million during the same period in 2023.

Current wording

During the first six months of 2024, we used cash of $24.0 million to purchase software, property, and equipment, as compared to $19.6 million during the same period in 2023.

Previous wording

During the first three months of 2024, we repaid a net $29.1 million on the Term Loan under the Amendment, $2.7 million of other debt payments, and $5.1 million of debt issuance costs. In addition, we used $62.5 million to repurchase common stock, $3.3 million for the repurchase of stock-based compensation awards for tax withholdings, and $18.9 million for settlement assets and liabilities due to processing timing. We received net proceeds of $12.0 million on the Revolving Credit Facility, and proceeds of $1.2 million from the exercise of stock options and the issuance of common stock under our 2017 Employee Stock Purchase Plan, as amended. During the first three months of 2023, we repaid $14.6 million on the Term Loans and $5.7 million of other debt payments. In addition, we used $3.0 million for the repurchase of stock-based compensation awards for tax withholdings and $2.8 million for settlement assets and liabilities due to processing timing. We received net proceeds of $5.0 million on the Revolving Credit Facility, and proceeds of $0.8 million from the exercise of stock options and the issuance of common stock under our 2017 Employee Stock Purchase Plan, as amended.

Current wording

During the first six months of 2024, we repaid a net $38.4 million on the Term Loan under the Amendment, $8.7 million of other debt payments, and $5.1 million of debt issuance costs. In addition, we used $119.7 million to repurchase common stock, $6.3 million for the repurchase of stock-based compensation awards for tax withholdings, and $6.2 million for settlement assets and liabilities due to processing timing. We received net proceeds of $12.0 million on the Revolving Credit Facility, and proceeds of $2.1 million from the exercise of stock options and the issuance of common stock under our 2017 Employee Stock Purchase Plan, as amended. During the first six months of 2023, we repaid $34.1 million on the Term Loan, $11.8 million of other debt payments, and $2.2 million of debt issuance costs. In addition, we used $3.3 million for the repurchase of stock-based compensation awards for tax withholdings, and $24.1 million for settlement assets and liabilities due to processing timing. We received net proceeds of $10.0 million on the Revolving Credit Facility, and proceeds of $4.3 million from the exercise of stock options and the issuance of common stock under our 2017 Employee Stock Purchase Plan, as amended.

Previous wording

For the three months ended March 31, 2024, there have been no material changes to the contractual obligations and commercial commitments disclosed in Item 7 of our Form 10-K for the fiscal year ended December 31, 2023.

Current wording

For the six months ended June 30, 2024, there have been no material changes to the contractual obligations and commercial commitments disclosed in Item 7 of our Form 10-K for the fiscal year ended December 31, 2023.

Previous wording

During the three months ended March 31, 2024, there were no significant changes to our critical accounting policies and estimates. Please refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in Part II, Item 7 of our Annual Report on Form 10-K for our fiscal year ended December 31, 2023, for a more complete discussion of our critical accounting policies and estimates.

Current wording

During the six months ended June 30, 2024, there were no significant changes to our critical accounting policies and estimates. Please refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in Part II, Item 7 of our Annual Report on Form 10-K for our fiscal year ended December 31, 2023, for a more complete discussion of our critical accounting policies and estimates.