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, 2024, and with our financial statements and related notes contained in this Form 10-Q. Results for the three months ended March 31, 2025, 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, 2024, and with our financial statements and related notes contained in this Form 10-Q. Results for the three and six months ended June 30, 2025, are not necessarily indicative of results that may be attained in the future.

Previous wording

Adoption of real-time payments. Expectations from both consumers and businesses are continuing to drive the payments world to more real-time delivery. This is bolstered by the new data-rich ISO 20022 messaging format prevalent in account-to-account payments, which is delivering greater value to banks and their customers and has now been rolled out across the world and continues to see adoption with local schemes, such as FedWire, planned for 2025. We are seeing global players with existing schemes working to expand capacity in anticipation of volume growth and new payment types. Domestic schemes such as Unified Payments Interface ("UPI") in India and others are being made available to their citizens for cross-border transactions when abroad. Mature markets, including India, the United Kingdom, Australia, Brazil, Malaysia, Singapore, and Thailand, continue to accelerate innovation, especially in terms of overlay services, driving new transactions. The United States is driving real-time payments adoption through TCH Real-Time Payments and the FedNow Service. Asia is one of the most innovative markets for adoption of real-time payment systems. According to ACI’s Prime Time for Real-Time report, Asia Pacific is the largest regional market, with four of the global top five real-time payment markets by volume. ACI provides solutions for commercial and central banks across Asia. Latin American countries are pushing ahead with real-time payments modernization initiatives, looking to replicate Brazil’s success with PIX. ACI is also providing solutions centrally in Colombia and Peru. We are seeing success with real-time payments in the Middle East as well, as they have started to renovate their payment systems from legacy payment types to the modern digital and real-time world. ACI's broad software portfolio, experience, and strategic partnerships with Mastercard, Microsoft, and Red Hat, and Mindgate Solutions continue to position us as a leader in real-time payments, helping to drive seamless connectivity, increased security, and end-to-end modernization for organizations throughout the world.

Current wording

Adoption of real-time payments. Expectations from both consumers and businesses are continuing to drive the payments world to more real-time delivery. This is bolstered by the new data-rich ISO 20022 messaging format prevalent in account-to-account payments, which is delivering greater value to banks and their customers and has now been rolled out across the world and continues to see adoption with local schemes, such as FedWire. We are seeing global players with existing schemes working to expand capacity in anticipation of volume growth and new payment types. Domestic schemes such as Unified Payments Interface ("UPI") in India and others are being made available to their citizens for cross-border transactions when abroad. Mature markets, including India, the United Kingdom, Australia, Brazil, Malaysia, Singapore, and Thailand, continue to accelerate innovation, especially in terms of overlay services, driving new transactions. The United States is driving real-time payments adoption through TCH Real-Time Payments and the FedNow Service. Asia is one of the most innovative markets for adoption of real-time payment systems. According to ACI’s Prime Time for Real-Time report, Asia Pacific is the largest regional market, with four of the global top five real-time payment markets by volume. ACI provides solutions for commercial and central banks across Asia. Latin American countries are pushing ahead with real-time payments modernization initiatives, looking to replicate Brazil’s success with PIX. ACI is also providing solutions centrally in Colombia and Peru. We are seeing success with real-time payments in the Middle East as well, as they have started to renovate their payment systems from legacy payment types to the modern digital and real-time world. ACI's broad software portfolio, experience, and strategic partnerships with Mastercard, Microsoft, and Red Hat, and Mindgate Solutions continue to position us as a leader in real-time payments, helping to drive seamless connectivity, increased security, and end-to-end modernization for organizations throughout the world.

Previous wording

•The impact of foreign currencies weakening against the U.S. dollar resulted in a $1.4 million decrease in total revenue during the three months ended March 31, 2025, as compared to the same period in 2024.

Current wording

•The impact of certain foreign currencies strengthening against the U.S. dollar resulted in a $1.4 million increase in total revenue during the three months ended June 30, 2025, as compared to the same period in 2024.

Previous wording

•Adjusted for the impact of foreign currency, SaaS and PaaS revenue for the three months ended March 31, 2025, increased $21.7 million, or 10%, as compared to the same period in 2024.

Current wording

•Adjusted for the impact of foreign currency, SaaS and PaaS revenue for the three months ended June 30, 2025, increased $35.0 million, or 15%, as compared to the same period in 2024.

Previous wording

Maintenance revenue includes standard and premium customer support and any post contract support fees received from customers for the provision of product support services.

Current wording

Maintenance revenue includes standard, enhanced, and premium customer support and any post contract support fees received from customers for the provision of product support services.

Previous wording

•The impact of foreign currencies weakening against the U.S. dollar resulted in a $0.6 million decrease in maintenance revenue during the three months ended March 31, 2025, as compared to the same period in 2024.

Current wording

•The impact of foreign currencies strengthening against the U.S. dollar resulted in a $0.4 million increase in maintenance revenue during the three months ended June 30, 2025, as compared to the same period in 2024.

Previous wording

•Adjusted for the impact of foreign currency, maintenance revenue for the three months ended March 31, 2025, increased $1.5 million, or 3%, as compared to the same period in 2024.

Current wording

•Adjusted for the impact of foreign currency, maintenance revenue for the three months ended June 30, 2025, increased $1.3 million, or 3%, as compared to the same period in 2024.

Previous wording

•The impact of foreign currencies weakening against the U.S. dollar resulted in a $0.2 million decrease in services revenue during the three months ended March 31, 2025, as compared to the same period in 2024.

Current wording

•The impact of foreign currencies strengthening against the U.S. dollar resulted in a $0.3 million increase in services revenue during the three months ended June 30, 2025, as compared to the same period in 2024.

Previous wording

•Adjusted for the impact of foreign currency, services revenue for the three months ended March 31, 2025, increased $2.0 million, or 9%, as compared to the same period in 2024.

Current wording

•Adjusted for the impact of foreign currency, services revenue for the three months ended June 30, 2025, decreased $1.2 million, or 5%, as compared to the same period in 2024.

Previous wording

•The increase was primarily driven by the timing and magnitude of project-related work during the three months ended March 31, 2025, as compared to the same period in 2024.

Current wording

•The decrease was primarily driven by the timing and magnitude of project-related work during the three months ended June 30, 2025, as compared to the same period in 2024.

Previous wording

•The impact of foreign currencies weakening against the U.S. dollar resulted in a $2.0 million decrease in total operating expenses during the three months ended March 31, 2025, compared to the same period in 2024.

Current wording

•The impact of foreign currencies strengthening against the U.S. dollar resulted in a $0.9 million increase in total operating expenses during the three months ended June 30, 2025, compared to the same period in 2024.

Previous wording

•Adjusted for the impact of foreign currency, cost of revenue for the three months ended March 31, 2025, increased $23.0 million, or 12%, compared to the same period in 2024.

Current wording

•Adjusted for the impact of foreign currency, cost of revenue for the three months ended June 30, 2025, increased $31.2 million, or 15%, compared to the same period in 2024.

Previous wording

•The increase was primarily due to higher payment card interchange fees and personnel and related expenses of $18.4 million and $4.6 million, respectively.

Current wording

•The increase was primarily due to higher payment card interchange and personnel and related expenses of $26.9 million and $4.3 million, respectively.

Previous wording

R&D expense increased $3.9 million, or 11%, during the three months ended March 31, 2025, as compared to the same period in 2024.

Current wording

R&D expense increased $5.7 million, or 16%, during the three months ended June 30, 2025, as compared to the same period in 2024.

Previous wording

•The impact of foreign currencies weakening against the U.S. dollar resulted in a $0.3 million decrease in R&D expenses during the three months ended March 31, 2025, compared to the same period in 2024.

Current wording

•The impact of foreign currencies strengthening against the U.S. dollar resulted in a $0.3 million increase in R&D expenses during the three months ended June 30, 2025, compared to the same period in 2024.

Previous wording

•Adjusted for the impact of foreign currency, R&D expenses for the three months ended March 31, 2025, increased $4.2 million, or 12%, compared to the same period in 2024.

Current wording

•Adjusted for the impact of foreign currency, R&D expenses for the three months ended June 30, 2025, increased $5.4 million, or 15%, compared to the same period in 2024.

Previous wording

Interest expense for the three months ended March 31, 2025, decreased $4.3 million, or 23% compared to the same period in 2024, primarily due to lower comparative debt balances during 2025 as well as a decrease in interest rates.

Current wording

Interest expense for the three months ended June 30, 2025, decreased $3.9 million, or 21%, as compared to the same period in 2024, primarily due to lower comparative debt balances during 2025 as well as a decrease in interest rates.

Previous wording

Interest income includes the portion of software license fees paid by customers under extended payment terms that is attributed to the significant financing component. Interest income for the three months ended March 31, 2025, increased $0.1 million, or 1%, as compared to the same period in 2024.

Current wording

Interest income includes the portion of software license fees paid by customers under extended payment terms that is attributed to the significant financing component. Interest income for the three months ended June 30, 2025, remained flat as compared to the same period in 2024.

Previous wording

•Adjusted for the impact of foreign currency, license revenue for the three months ended March 31, 2025, increased $54.7 million, or 184%, as compared to the same period in 2024.

Current wording

•Adjusted for the impact of foreign currency, license revenue for the six months ended June 30, 2025, increased $46.0 million, or 48%, as compared to the same period in 2024.

Previous wording

•The increase was driven by the relative size of new license and capacity events during the three months ended March 31, 2025, as compared to the same period in 2024.

Current wording

•The increase was driven by the relative size of new license and capacity events during the six months ended June 30, 2025, as compared to the same period in 2024.

Previous wording

•The impact of foreign currencies weakening against the U.S. dollar resulted in a $0.2 million decrease in license revenue during the three months ended March 31, 2025, as compared to the same period in 2024.

Current wording

•The impact of foreign currencies weakening against the U.S. dollar resulted in a $0.2 million decrease in maintenance revenue during the six months ended June 30, 2025, as compared to the same period in 2024.

Previous wording

Maintenance revenue increased $0.9 million, or 2%, during the three months ended March 31, 2025, as compared to the same period in 2024.

Current wording

Services revenue increased $0.9 million, or 2%, during the six months ended June 30, 2025, as compared to the same period in 2024.

Previous wording

•The impact of foreign currencies weakening against the U.S. dollar resulted in a $0.7 million decrease in cost of revenue during the three months ended March 31, 2025, compared to the same period in 2024.

Current wording

•The impact of certain foreign currencies weakening against the U.S. dollar resulted in a $0.4 million decrease in cost of revenue during the six months ended June 30, 2025, as compared to the same period in 2024.

Previous wording

SaaS and PaaS revenue increased $21.4 million, or 10%, during the three months ended March 31, 2025, as compared to the same period in 2024.

Current wording

Selling and marketing expense increased $5.6 million, or 10%, during the six months ended June 30, 2025, as compared to the same period in 2024.

Previous wording

•The impact of foreign currencies weakening against the U.S. dollar resulted in a $0.5 million decrease in selling and marketing expense during the three months ended March 31, 2025, as compared to the same period in 2024.

Current wording

•The impact of foreign currencies weakening against the U.S. dollar resulted in a $0.4 million decrease in selling and marketing expense during the six months ended June 30, 2025, as compared to the same period in 2024.

Previous wording

•Adjusted for the impact of foreign currency, selling and marketing expense increased $5.9 million, or 23%, for the three months ended March 31, 2025, as compared to the same period in 2024.

Current wording

•Adjusted for the impact of foreign currency, selling and marketing expense increased $6.0 million, or 11%, for the three months ended June 30, 2025, as compared to the same period in 2024.

Previous wording

•The increase was primarily due to higher personnel and related expenses of $6.6 million, partially offset by a decrease in advertising and professional fees of $0.7 million.

Current wording

•The increase was primarily due to higher personnel and related expenses of $6.6 million, partially offset by a decrease in advertising and professional fees of $0.6 million.

Previous wording

•The impact of foreign currencies weakening against the U.S. dollar resulted in a $0.4 million decrease in general and administrative expense during the three months ended March 31, 2025, as compared to the same period in 2024.

Current wording

•The impact of foreign currencies weakening against the U.S. dollar resulted in a $0.3 million decrease in general and administrative expense during the six months ended June 30, 2025, as compared to the same period in 2024.

Previous wording

•Adjusted for the impact of cost reduction strategies, significant transaction-related expenses, and foreign currency, general and administrative expense increased $4.9 million, or 22%, for the three months ended March 31, 2025, as compared to the same period in 2024.

Current wording

•Adjusted for the impact of significant transaction-related expenses and foreign currency, general and administrative expense increased $12.8 million, or 27%, for the six months ended June 30, 2025, as compared to the same period in 2024.

Previous wording

•The increase was primarily due to higher personnel and related expenses, including a $2.9 million increase in stock-based compensation expense.

Current wording

•The increase was primarily due to higher personnel and related expenses of $10.1 million, including a $6.1 million increase in stock-based compensation expense, as well as an increase in professional and other legal fees of $2.7 million.

Previous wording

Other, net is primarily comprised of foreign currency transaction gains and losses. During the three months ended March 31, 2025, other, net also included the $25.9 million gain on the sale of the Company's equity method investment. Other, net was $23.7 million of income and $2.0 million of expense for the three months ended March 31, 2025 and 2024, respectively.

Current wording

Other, net is primarily comprised of foreign currency transaction gains and losses. During the six months ended June 30, 2025, other, net also included the $25.9 million gain on the sale of the Company's equity method investment and the $1.1 million loss on extinguishment of debt. Other, net was $17.3 million income and $0.9 million of expense for the six months ended June 30, 2025 and 2024, respectively.

Previous wording

Biller Segment Adjusted EBITDA increased $0.2 million for the three months ended March 31, 2025, compared to the same period in 2024, due to a $19.0 million increase in revenue, partially offset by a $18.8 million increase in cash operating expense, primarily payment card interchange and processing fees.

Current wording

Biller Segment Adjusted EBITDA increased $2.4 million for the three months ended June 30, 2025, compared to the same period in 2024, due to a $30.1 million increase in revenue, partially offset by a $27.7 million increase in cash operating expense primarily for payment card interchange and other processing fees.

Previous wording

Payment Software Segment Adjusted EBITDA increased $54.3 million for the three months ended March 31, 2025, compared to the same period in 2024, due to a $59.6 million increase in revenue primarily due to an increase in license and services revenues, partially offset by a $5.3 million increase in cash operating expense.

Current wording

Payment Software Segment Adjusted EBITDA increased $43.0 million for the six months ended June 30, 2025, compared to the same period in 2024, due to a $57.2 million increase in revenue primarily related to an increase in license and capacity revenue, partially offset by a $14.2 million increase in cash operating expense.

Previous wording

Cash and cash equivalents consist of highly liquid investments with original maturities of three months or less. As of March 31, 2025, we had $230.1 million of cash and cash equivalents, of which $117.3 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, 2025, only the earnings from our Indian foreign subsidiaries are indefinitely reinvested. We are also permanently reinvested in the outside book/tax basis differences related to foreign subsidiaries. These outside basis differences could reverse through the sale of foreign subsidiaries, as well as various other events, none of which are considered probable as of March 31, 2025.

Current wording

Cash and cash equivalents consist of highly liquid investments with original maturities of three months or less. As of June 30, 2025, we had $189.7 million of cash and cash equivalents, of which $90.7 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, 2025, only the earnings from our Indian foreign subsidiaries are indefinitely reinvested. We are also permanently reinvested in the outside book/tax basis differences related to foreign subsidiaries. These outside basis differences could reverse through the sale of foreign subsidiaries, as well as various other events, none of which are considered probable as of June 30, 2025.

Previous wording

We repurchased 264,936 shares for $14.4 million under the program during the three months ended March 31, 2025. Under the program to date, we have repurchased 63,132,773 shares for approximately $1.1 billion. As of March 31, 2025, the maximum remaining amount authorized for purchase under the stock repurchase program was approximately $358.1 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 2,713,799 shares for $134.7 million under the program during the six months ended June 30, 2025. Under the program to date, we have repurchased 65,581,636 shares for approximately $1.2 billion. As of June 30, 2025, the maximum remaining amount authorized for purchase under the stock repurchase program was approximately $223.5 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 $78.2 million were $45.0 million lower for the three months ended March 31, 2025, compared to $123.2 million for the same period in 2024. Operating cash flows for the current quarter decreased primarily due to lower customer receipt collections as a result of lower invoiced amounts at the prior year-end and higher income taxes paid, partially offset by improved profitability.

Current wording

Cash flows provided by operating activities were $50.2 million lower for the six months ended June 30, 2025, compared to the same period in 2024. Operating cash flows for the current year decreased primarily due to lower customer receipt collections as a result of lower invoiced amounts at the prior year-end and higher income taxes paid, partially offset by improved profitability.

Previous wording

Our cash flow from operating activities can fluctuate from period to period due to several factors, including: the timing of billings, which are typically higher in the third and fourth quarters in conjunction with sales timing and are variable based upon license renewal timing; collections, which will lag the quarters with higher billings; the timing and amounts of interest due to interest rate fluctuations and semi-annual Senior Notes interest payments; income tax and other payments; and our operating results.

Current wording

Our cash flow from operating activities can fluctuate from period to period due to several factors, including: the timing of billings, which are typically higher in the third and fourth quarters in conjunction with sales timing and are variable based upon license renewal timing; collections, which will lag the quarters with higher billings; the timing and amounts of interest due to interest rate fluctuations; income tax and other payments; and our operating results.

Previous wording

During the first three months of 2025, we received net proceeds of $46.0 million from the sale of our equity method investment. In addition, we used cash of $8.9 million to purchase software, property, and equipment, as compared to $17.8 million during the same period in 2024.

Current wording

During the first six months of 2025, we received net proceeds of $46.0 million from the sale of our equity method investment. In addition, we used cash of $16.5 million to purchase software, property, and equipment, as compared to $24.0 million during the same period in 2024.

Previous wording

During the first three months of 2025, we repaid a net $9.4 million on the Term Loan under the Amendment, $70.0 million on the Revolving Credit Facility, and $4.2 million of other debt payments. In addition, we used $14.4 million to repurchase common stock and $7.1 million for the repurchase of stock-based compensation awards for tax withholdings. We received net proceeds of $1.4 million from the exercise of stock options and the issuance of common stock under our 2017 Employee Stock Purchase Plan, as amended, and $88.3 million for settlement assets and liabilities due to processing timing. 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.

Current wording

During the first six months of 2025, we repaid $400.0 million for the redemption of the 2026 Notes and $10.7 million of other debt payments. In addition, we used $133.8 million to repurchase common stock and $20.2 million for the repurchase of stock-based compensation awards for tax withholdings. We received net proceeds of $190.0 million on the Revolving Credit Facility and $181.3 million on the Incremental Term Loan, used for the redemption of the 2026 Notes. In addition, we received proceeds of $2.4 million from the exercise of stock options and the issuance of common stock under our 2017 Employee Stock Purchase Plan, as amended, and $61.6 million for settlement assets and liabilities due to processing timing. 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.

Previous wording

For the three months ended March 31, 2025, 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, 2024.

Current wording

For the six months ended June 30, 2025, 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, 2024, other than as disclosed in Note 3, Debt.