Aci worldwide, inc. reports financial results for the quarter and full year ended december 31, 2022
Miami--(business wire)--aci worldwide (nasdaq: aciw), the global leader in mission-critical, real-time payments software, announced financial results today for the quarter and full year ended december 31, 2022. "2022 was an important year for aci, with significant new business wins, solid organic revenue growth and accelerating arr bookings,” said thomas warsop, interim president and ceo of aci worldwide. “looking forward, we are excited about the opportunities across our businesses, particularly in real time and the cloud, and confident in our ability to achieve our long term revenue growth target of 7-9% by 2024. we are making progress in our ceo search and expect to conclude the search in the coming months.” financial summary in q4 2022, revenue was $452 million, down from $467 million in q4 2021. net income was $90 million, versus $109 million in q4 2021. adjusted ebitda in q4 2022 was $194 million, versus $205 million in q4 2021. full-year 2022 total revenue was $1.422 billion, up 4% from 2021, or 7% adjusted for fx and the divestiture. net income of $142 million increased 11% from $128 million in 2021. total adjusted ebitda in 2022 was $373 million compared to $384 million in 2021. consolidated arr bookings for 2022 grew 35% over 2021. bank segment revenue increased 9% and bank segment adjusted ebitda increased 4%, versus 2021, adjusted for fx and the divestiture. merchant segment revenue increased 5% and merchant segment adjusted ebitda decreased 4%, versus 2021 on a constant currency basis, driven by investment that is expected to increase growth in 2023. biller segment revenue increased 6%, while biller segment adjusted ebitda decreased 17%, versus 2021, driven by increased interchange costs due to inflationary increases in average bill size. aci ended 2022 with $125 million in cash on hand and a debt balance of $1 billion, which represents a net debt leverage ratio of 2.6x. the company repurchased 8.6 million shares for $207 million during the year and the board has approved an increase in the share repurchase authorization up to $200 million. “the aci board continues to actively pursue opportunities to enhance shareholder value, as evidenced by the increase in the share repurchase authorization,” warsop concluded. 2023 guidance for the full year of 2023, we expect revenue growth to be in the mid-single-digits on a constant currency and divestiture-adjusted basis, or in the range of $1.436 billion to $1.466 billion. we expect adjusted ebitda to be in the range of $380 million to $395 million with net adjusted ebitda margin expansion. we expect revenue to be between $280 million and $290 million and adjusted ebitda of $20 million to $30 million in q1 2023. this excludes one-time charges related to the move of our european data centers to the public cloud and one-time costs to implement certain efficiency strategies. 1 corporate online banking divestiture 2 “arr”' is annual recurring revenue expected to be generated from new bookings signed in the quarter, including new accounts, new applications and add-on sales conference call to discuss financial results today, management will host a conference call at 8:30 am et to discuss these results. interested persons may access a real-time audio broadcast of the teleconference at http://investor.aciworldwide.com/ or use the following number for dial-in participation: toll-free 1 (888) 660-6377; and conference code 3153574. a call replay will be available for two weeks on (855) 859-2056 for us/canada callers and +1 (404) 537-3406 for international participants. about aci worldwide aci worldwide is a global leader in mission-critical, real-time payments software. our proven, secure and scalable software solutions enable leading corporations, fintechs and financial disruptors to process and manage digital payments, power omni-commerce payments, present and process bill payments, and manage fraud and risk. we combine our global footprint with a local presence to drive the real-time digital transformation of payments and commerce. © copyright aci worldwide, inc. 2023. aci, aci worldwide, aci payments, inc., aci pay, speedpay and all aci product/solution names are trademarks or registered trademarks of aci worldwide, inc., or one of its subsidiaries, in the united states, other countries or both. other parties' trademarks referenced are the property of their respective owners. to supplement our financial results presented on a gaap basis, we use the non-gaap measures indicated in the tables, which exclude significant transaction-related expenses, as well as other significant non-cash expenses such as depreciation, amortization, and stock-based compensation, that we believe are helpful in understanding our past financial performance and our future results. the presentation of these non-gaap financial measures should be considered in addition to our gaap results and are not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with gaap. management generally compensates for limitations in the use of non-gaap financial measures by relying on comparable gaap financial measures and providing investors with a reconciliation of non-gaap financial measures only in addition to and in conjunction with results presented in accordance with gaap. we believe that these non-gaap financial measures reflect an additional way to view aspects of our operations that, when viewed with our gaap results, provide a more complete understanding of factors and trends affecting our business. certain non-gaap measures include: adjusted ebitda: net income (loss) plus income tax expense (benefit), net interest income (expense), net other income (expense), depreciation, amortization and stock-based compensation, as well as significant transaction-related expenses. adjusted ebitda should be considered in addition to, rather than as a substitute for, net income (loss). net adjusted ebitda margin: adjusted ebitda divided by revenue net of pass-through interchange revenue. net adjusted ebitda margin should be considered in addition to, rather than as a substitute for, net income (loss). diluted eps adjusted for non-cash and significant transaction related items: diluted eps plus tax effected significant transaction related items, amortization of acquired intangibles and software, and non-cash stock-based compensation. diluted eps adjusted for non-cash and significant transaction related items should be considered in addition to, rather than as a substitute for, diluted eps. recurring revenue: revenue from software as a service and platform as a service fees and maintenance fees. recurring revenue should be considered in addition to, rather than as a substitute for, total revenue. *arr: annual recurring revenue expected to be generated from new accounts, new applications, and add-on sales bookings contracts signed in the quarter. forward-looking statements this press release contains forward-looking statements based on current expectations that involve a number of risks and uncertainties. generally, forward-looking statements do not relate strictly to historical or current facts and may include words or phrases such as “believes,” “will,” “expects,” “anticipates,” “intends,” and words and phrases of similar impact. the forward-looking statements are made pursuant to safe harbor provisions of the private securities litigation reform act of 1995. forward-looking statements in this press release include, but are not limited to: (i) excitement about the opportunities across our businesses, particularly in real time and the cloud, (ii) confidence in our ability to achieve our long term revenue growth of 7-9% by 2024, (iii) progress in our ceo search and expectations to conclude the search in the coming months, (iv) the aci board continuing to actively pursue opportunities to enhance shareholder value, and (v) statements regarding q1 2023 and full year 2023 revenue and adjusted ebitda financial guidance. all of the foregoing forward-looking statements are expressly qualified by the risk factors discussed in our filings with the securities and exchange commission. such factors include, but are not limited to, increased competition, business interruptions or failure of our information technology and communication systems, security breaches or viruses, our ability to attract and retain senior management personnel and skilled technical employees, future acquisitions, strategic partnerships and investments, divestitures and other restructuring activities, implementation and success of our strategy, impact if we convert some or all on-premise licenses from fixed-term to subscription model, anti-takeover provisions, exposure to credit or operating risks arising from certain payment funding methods, customer reluctance to switch to a new vendor, our ability to adequately defend our intellectual property, litigation, our offshore software development activities, risks from operating internationally, including fluctuations in currency exchange rates, events in eastern europe, adverse changes in the global economy, compliance of our products with applicable legislation, governmental regulations and industry standards, the complexity of our products and services and the risk that they may contain hidden defects, complex regulations applicable to our payments business, our compliance with privacy and cybersecurity regulations, our involvement in investigations, lawsuits and other expense and time-consuming legal proceedings, exposure to unknown tax liabilities, changes in tax laws and regulations, consolidations and failures in the financial services industry, volatility in our stock price, demand for our products, failure to obtain renewals of customer contracts or to obtain such renewals on favorable terms, delay or cancellation of customer projects or inaccurate project completion estimates, impairment of our goodwill or intangible assets, the accuracy of management’s backlog estimates, the cyclical nature of our revenue and earnings and the accuracy of forecasts due to the concentration of revenue-generating activity during the final weeks of each quarter, restrictions and other financial covenants in our debt agreements, our existing levels of debt, events outside of our control including natural disasters, wars, and outbreaks of disease, and revenues or revenue mix. for a detailed discussion of these risk factors, parties that are relying on the forward-looking statements should review our filings with the securities and exchange commission, including our most recently filed annual report on form 10-k and our quarterly reports on form 10-q. aci worldwide, inc. and subsidiaries consolidated balance sheets (unaudited and in thousands, except share and per share amounts) december 31, 2022 2021 assets current assets cash and cash equivalents $ 124,981 $ 122,059 receivables, net of allowances 403,781 320,405 settlement assets 540,667 452,396 prepaid expenses 28,010 24,698 other current assets 17,366 17,876 total current assets 1,114,805 937,434 noncurrent assets accrued receivables, net 297,818 276,164 property and equipment, net 52,499 63,050 operating lease right-of-use assets 40,031 47,825 software, net 129,109 157,782 goodwill 1,226,026 1,280,226 intangible assets, net 228,698 283,004 deferred income taxes, net 53,738 50,778 other noncurrent assets 67,171 62,478 total assets $ 3,209,895 $ 3,158,741 liabilities and stockholders’ equity current liabilities accounts payable $ 47,997 $ 41,312 settlement liabilities 539,087 451,575 employee compensation 45,289 51,379 current portion of long-term debt 65,521 45,870 deferred revenue 58,303 84,425 other current liabilities 102,645 79,594 total current liabilities 858,842 754,155 noncurrent liabilities deferred revenue 23,233 25,925 long-term debt 1,024,351 1,019,872 deferred income taxes, net 40,371 36,122 operating lease liabilities 33,910 43,346 other noncurrent liabilities 36,001 34,544 total liabilities 2,016,708 1,913,964 stockholders’ equity preferred stock — — common stock 702 702 additional paid-in capital 702,458 688,313 retained earnings 1,273,458 1,131,281 treasury stock (665,771) (475,972) accumulated other comprehensive loss (117,660) (99,547) total stockholders’ equity 1,193,187 1,244,777 total liabilities and stockholders’ equity $ 3,209,895 $ 3,158,741 aci worldwide, inc. and subsidiaries consolidated statements of operations (unaudited and in thousands, except per share amounts) three months ended december 31, years ended december 31, 2022 2021 2022 2021 revenues software as a service and platform as a service $ 205,800 $ 190,812 $ 802,880 $ 774,342 license 179,874 209,484 348,134 319,867 maintenance 48,902 51,462 200,045 210,499 services 17,229 15,071 70,842 65,890 total revenues 451,805 466,829 1,421,901 1,370,598 operating expenses cost of revenue (1) 178,699 162,060 696,071 638,871 research and development 31,963 39,519 146,311 144,310 selling and marketing 32,019 36,328 134,812 126,539 general and administrative 29,441 34,372 114,194 123,801 depreciation and amortization 31,460 31,746 126,678 127,180 total operating expenses 303,582 304,025 1,218,066 1,160,701 operating income 148,223 162,804 203,835 209,897 other income (expense) interest expense (16,179 ) (11,117 ) (53,193 ) (45,060 ) interest income 3,342 2,969 12,547 11,522 other, net (2,355 ) (258 ) 43,446 (1,294 ) total other income (expense) (15,192 ) (8,406 ) 2,800 (34,832 ) income before income taxes 133,031 154,398 206,635 175,065 income tax expense 42,803 44,927 64,458 47,274 net income $ 90,228 $ 109,471 $ 142,177 $ 127,791 income per common share basic $ 0.81 $ 0.94 $ 1.25 $ 1.09 diluted $ 0.81 $ 0.93 $ 1.24 $ 1.08 weighted average common shares outstanding basic 111,077 116,912 113,700 117,407 diluted 111,354 118,141 114,238 118,647 (1) the cost of revenue excludes charges for depreciation but includes amortization of purchased and developed software for resale. aci worldwide, inc. and subsidiaries consolidated statements of cash flows (unaudited and in thousands) three months ended december 31, years ended december 31, 2022 2021 2022 2021 cash flows from operating activities: net income $ 90,228 $ 109,471 $ 142,177 $ 127,791 adjustments to reconcile net income to net cash flows from operating activities: depreciation 6,129 5,062 23,181 20,900 amortization 25,330 27,965 104,147 112,493 amortization of operating lease right-of-use assets 2,740 2,763 11,036 10,515 amortization of deferred debt issuance costs 1,126 1,160 4,561 4,685 deferred income taxes 10,662 15,475 1,603 3,733 stock-based compensation expense 7,869 6,452 29,753 27,242 gain on divestiture — — (38,452 ) — other 545 882 3,028 855 changes in operating assets and liabilities, net of impact of acquisitions: receivables (137,961 ) (99,783 ) (132,194 ) (43,830 ) accounts payable 10,777 6,488 7,730 1,408 accrued employee compensation 711 4,814 (3,161 ) 3,674 deferred revenue 3,390 (27,671 ) (2,977 ) (17,332 ) other current and noncurrent assets and liabilities 19,869 22,913 (7,051 ) (31,661 ) net cash flows from operating activities 41,415 75,991 143,381 220,473 cash flows from investing activities: purchases of property and equipment (4,980 ) (7,614 ) (13,103 ) (20,582 ) purchases of software and distribution rights (8,396 ) (4,745 ) (26,790 ) (24,786 ) proceeds from divestiture — — 100,139 — net cash flows from investing activities (13,376 ) (12,359 ) 60,246 (45,368 ) cash flows from financing activities: proceeds from issuance of common stock 780 914 3,581 3,440 proceeds from exercises of stock options 2,792 1,610 4,584 8,862 repurchase of stock-based compensation awards for tax withholdings (1,163 ) — (6,983 ) (14,833 ) repurchases of common stock (115,603 ) (67,967 ) (206,537 ) (107,378 ) proceeds from revolving credit facility 95,000 35,000 180,000 35,000 repayment of revolving credit facility — (35,000 ) (75,000 ) (90,000 ) repayment of term portion of credit agreement (14,606 ) (9,738 ) (85,431 ) (38,950 ) payments on or proceeds from other debt, net (2,017 ) (4,998 ) (12,123 ) (15,185 ) net increase (decrease) in settlement assets and liabilities 6,765 17,635 26,849 (37,834 ) net cash flows from financing activities (28,052 ) (62,544 ) (171,060 ) (256,878 ) effect of exchange rate fluctuations on cash (1,977 ) 449 (2,037 ) 533 net increase (decrease) in cash and cash equivalents (1,990 ) 1,537 30,530 (81,240 ) cash and cash equivalents, including settlement deposits, beginning of period 216,662 182,605 184,142 265,382 cash and cash equivalents, including settlement deposits, end of period $ 214,672 $ 184,142 $ 214,672 $ 184,142 reconciliation of cash and cash equivalents to the consolidated balance sheets cash and cash equivalents $ 124,981 $ 122,059 $ 124,981 $ 122,059 settlement deposits 89,691 62,083 89,691 62,083 total cash and cash equivalents $ 214,672 $ 184,142 $ 214,672 $ 184,142 adjusted ebitda (millions) three months ended december 31, years ended december 31, 2022 2021 2022 2021 net income $ 90.2 $ 109.5 $ 142.2 $ 127.8 plus: income tax expense 42.8 44.9 64.5 47.3 net interest expense 12.8 8.1 40.6 33.5 net other (income) expense 2.4 0.3 (43.4 ) 1.3 depreciation expense 6.1 5.1 23.2 20.9 amortization expense 25.3 28.0 104.1 112.5 non-cash stock-based compensation expense 7.9 6.4 29.8 27.2 adjusted ebitda before significant transaction-related expenses $ 187.5 $ 202.3 $ 361.0 $ 370.5 significant transaction-related expenses: ceo transition 3.6 — 3.6 — employee related actions — 2.2 — 10.3 european datacenter migration 2.4 — 5.8 — divestiture transaction related 0.4 — 3.0 — other — 0.6 — 3.1 adjusted ebitda $ 193.9 $ 205.1 $ 373.4 $ 383.9 revenue, net of interchange: revenue $ 451.8 $ 466.8 $ 1,421.9 $ 1,370.6 interchange 111.2 90.0 406.6 352.7 revenue, net of interchange $ 340.6 $ 376.8 $ 1,015.3 $ 1,017.9 net adjusted ebitda margin 57 % 54 % 37 % 38 % segment information (millions) three months ended december 31, years ended december 31, 2022 2021 2022 2021 revenue banks $ 247.0 $ 283.4 $ 638.6 $ 625.1 merchants 40.8 37.9 153.9 153.0 billers 164.0 145.5 629.4 592.5 total $ 451.8 $ 466.8 $ 1,421.9 $ 1,370.6 recurring revenue banks $ 53.6 $ 61.0 $ 232.9 $ 250.6 merchants 37.1 35.8 140.6 141.8 billers 164.0 145.5 629.4 592.4 total $ 254.7 $ 242.3 $ 1,002.9 $ 984.8 segment adjusted ebitda banks $ 186.3 $ 213.6 $ 371.0 $ 372.9 merchants 16.8 12.3 49.0 54.3 billers 26.4 28.4 107.4 129.0 eps impact of non-cash and significant transaction-related items (millions) three months ended december 31, 2021 eps impact $ in millions (net of tax) eps impact $ in millions (net of tax) gaap net income $ 0.81 $ 90.2 $ 0.93 $ 109.5 adjusted for: significant transaction-related expenses 0.04 4.9 0.02 2.1 amortization of acquisition-related intangibles 0.06 6.4 0.06 7.0 amortization of acquisition-related software 0.04 4.5 0.05 5.5 non-cash stock-based compensation 0.05 6.0 0.04 4.9 total adjustments $ 0.19 $ 21.8 $ 0.17 $ 19.5 diluted eps adjusted for non-cash and significant transaction-related items $ 1.00 $ 112.0 $ 1.10 $ 129.0 eps impact of non-cash and significant transaction-related items (millions) years ended december 31, 2022 2021 eps impact $ in millions (net of tax) eps impact $ in millions (net of tax) gaap net income $ 1.24 $ 142.2 $ 1.08 $ 127.8 adjusted for: gain on divestiture (0.26 ) (29.2 ) — — significant transaction-related expenses 0.08 9.6 0.09 10.2 amortization of acquisition-related intangibles 0.24 27.0 0.24 28.1 amortization of acquisition-related software 0.16 18.6 0.21 24.6 non-cash stock-based compensation 0.20 22.6 0.17 20.7 total adjustments $ 0.42 $ 48.6 $ 0.71 $ 83.6 diluted eps adjusted for non-cash and significant transaction-related items $ 1.66 $ 190.8 $ 1.79 $ 211.4 recurring revenue (millions) three months ended december 31, years ended december 31, 2022 2021 2022 2021 saas and paas fees $ 205.8 $ 190.8 $ 802.9 $ 774.3 maintenance fees 48.9 51.5 200.0 210.5 recurring revenue $ 254.7 $ 242.3 $ 1,002.9 $ 984.8 annual recurring revenue (arr) bookings (millions) three months ended december 31, years ended december 31, 2022 2021 2022 2021 arr bookings $ 40.2 $ 31.8 $ 109.7 $ 81.5
