ACI Worldwide, Inc. (NASDAQ:ACIW) Q3 2025 Earnings Call Transcript

ACI Worldwide, Inc. (NASDAQ:ACIW) Q3 2025 Earnings Call Transcript November 6, 2025

ACI Worldwide, Inc. misses on earnings expectations. Reported EPS is $0.88 EPS, expectations were $0.99.

Operator: Thank you for standing by. My name is Janice, and I’ll be your conference operator today. At this time, I would like to welcome everyone to the ACI Worldwide Inc. Third Quarter 2025 Financial Results. [Operator Instructions] And I would now like to turn the conference over to John Kraft. You may begin.

John Kraft: Good morning, everyone, and thank you for joining our call. On today’s call, we will discuss ACI’s third quarter 2025 results and our financial outlook for the remainder of the year. We will take your questions at the end of the call. The slides accompanying this webcast can be found at aciworldwide.com under the Investor Relations tab and will remain available after the call. As always, today’s call is subject to safe harbor and forward-looking statements. You can find the full text of these statements in our presentation deck and earnings release, both available on our website and filed with the SEC. Joining me today are Tom Warsop, our President and CEO; and Bobby Leibrock, our CFO. Before I turn it over, I did want to share that we will be attending some investor conferences, including Citi’s 14th Annual Fintech Conference in New York City on November 18, Stephens Annual Investment Conference in Nashville on November 20, and the UBS Global Technology and AI Conference in Scottsdale, December 3.

With that, I’ll turn the call over to Tom.

Thomas Warsop: Thanks, John. Good morning, everyone, and thank you for joining our Q3 earnings call. I’m going to share some key takeaways, and then Bobby will review our financials and guidance before we take your questions. We’ve spent the last couple of years investing in our leading software and working hard to structurally reshape ACI for accelerating growth and financial predictability. Q3 was another strong quarter for ACI and another proof point that our efforts are working. We delivered 7% year-over-year total revenue growth with double-digit recurring revenue growth in the quarter. For the year so far, both total revenue and adjusted EBITDA are up 12%, reflecting consistent execution and operational efficiency across the business.

Given this momentum, we’re again raising our full year guidance, and Bobby will share more about that shortly. As I’ve mentioned on prior calls, our team is working hard to reduce some of the variability introduced by our historic term license software business model. While we can’t completely eliminate it, our focus on getting deals closed earlier in the year, movement toward more ratable pricing structures in our Payment Software segment and consistent growth in our biller business is helping lessen the quarter-to-quarter variability. We’re continuing this effort, and I expect to continue to see benefits. Looking at our segments, the Biller business continues to perform well, with Q3 revenue up 10% compared to a year ago. We’re seeing particularly strong growth in the utility and government verticals.

Our Payment Software segment delivered 4% growth compared to last year, and it’s up 12% year-to-date with the strong start we had to 2025. We continue to see strong demand from both traditional banks and established payment processors as well as from up-and-coming fintechs. Bottom line is the winners in the marketplace are investing, and they’re often choosing ACI for their software needs. I’ve been talking about our ACI Connetic platform for several quarters now, and I’m happy to report we signed our first new ACI Connetic customer in Q3, Solaris, a German fintech and bank. We were very selective in choosing our first customer, as I’ve indicated we would be, and we’re committed to working closely with the Solaris team to successfully implement the technology across their system.

They are an ideal partner focused on the future and on dramatically improving their business, supported by our industry-leading technology and services. Solaris CEO, Carsten Holtkemeyer, was a featured speaker at our recent Payments Unleashed event in New York, and he talked about the many challenges and opportunities in the financial services industry and specifically about how we are working together to take advantage. Looking ahead, Connetic’s architecture and capabilities are resonating with customers who are looking to modernize and simplify their payments infrastructure. We have expanded our pipeline. We’ve deepened relationships with existing customers, and we’re excited about what’s ahead as we roll out this compelling new platform.

In addition, we made a small but important acquisition of a European-based fintech Payment Components that provides software for financial messaging translation, orchestration and integration. Although the direct impact to our revenue will not be material, the software they provide and the great team of technologists that have now joined us will augment our AI-first initiatives and help accelerate the development road map of our ACI Connetic offering. We will continue to be opportunistic in our approach to M&A grounded in disciplined capital allocation. I also want to point out our ongoing commitment to returning capital to shareholders and point you to our other announcement today. Year-to-date, we’ve repurchased 3.1 million shares for $150 million.

And just today, we announced the increase of our repurchase authorization to $500 million. Stablecoin has obviously been another hot topic in our industry and on our recent earnings calls. Just a few weeks ago, we announced a partnership with BitPay, which supports our ability to unlock even more potential as cryptocurrencies and stablecoins continue to grow in importance. This partnership strengthens our existing commitment to digital currency innovation by expanding our payments orchestration platforms and established capabilities for our customers. I mentioned Payments Unleashed briefly, and let me take a moment to give you a bit more insight on this great event. Payments Unleashed was ACI’s premier payments summit and a celebration of our 50th anniversary.

We brought together some of the brightest minds, thought leaders, innovators and visionaries to discuss the future of payments. Topics included stablecoins, real-time payments, AI, modernization strategies for banks, merchants and billers. The feedback was overwhelmingly positive, and we’re proud to be at the center of these important conversations. On the topic of thought leadership, ACI has also been active in the media. Most recently, I joined Bloomberg TV’s Crypto show to share our perspective on stablecoins and its role in cross-border real-time payments. A couple of weeks earlier, I discussed similar topics, including the role of Europe in the growth of stablecoins on CNBC’s Squawk Box Europe. This is all part of a focused campaign to make ACI’s points of view clearer and more widely shared.

Expect to see me and the entire ACI leadership team much more often. Before I turn it over to Bobby, I’d also like to touch on the ongoing Board refreshment that has continued to be a priority for us. We recently appointed Todd Ford and welcome back Didier Lamouche as independent directors. Todd’s many years as CFO of high-growth software technology companies in combination with Didier’s successful track record of leadership in global technology companies will add value to our Board and additional support for our management team as we focus on accelerating sustainable growth, delivering industry-leading software solutions and generating shareholder value. Overall, we’re pleased with our progress and optimistic about the remainder of 2025. And none of what we’re doing would be possible without the hard work of our team members.

I want to thank our talented team for their steadfast commitment to our customers and to all of our stakeholders. As I mentioned earlier, our strategy to sign contracts earlier in the year continues to pay off, and our pipeline remains robust. We will continue to focus on increasing shareholder value through operational excellence and technology leadership, solidifying the durability of our improving growth. With that, I’ll turn it over to Bobby to walk through financials and guidance.

Robert Leibrock: Thank you, Tom, and good morning, everyone. I’ll start with our third quarter financial results and then cover our year-to-date performance and outlook. Q3 was another solid quarter, and we exceeded our expectations. Total revenue was $482 million, up 7% year-over-year and up 6% adjusted for foreign exchange. Recurring revenue was $298 million, up 10% and represents 62% of our total revenue. Adjusted EBITDA came in at $171 million and was up 2% year-over-year. Both of our segments contributed to this growth. The Biller business continues to perform well with revenue of $198 million, up 10% year-over-year. Segment adjusted EBITDA for Biller was $32 million, a 4% increase. In Payment Software, revenue grew 4% to $284 million, and adjusted EBITDA was $182 million, up 1%.

We’re pleased with our recurring revenue momentum, which was $100 million in Q3 and accelerated to 9% growth year-over-year. Looking now at the first 9 months of the year, we generated $1.3 billion in total revenue and $346 million in adjusted EBITDA, both up 12% compared to the first 9 months of last year. That growth is the same as reported and adjusted for foreign exchange, so no impact from currency fluctuation. This strong performance reflects consistent execution across the business and the strong start we had in first quarter license sales. Payment Software revenue year-to-date grew 12% and adjusted EBITDA grew 13%. This includes growth across issuing acquiring, merchant, fraud management and real-time payments. Biller revenue is also growing 12% year-to-date and adjusted EBITDA grew 4%.

Our revenue momentum is driven by our continued bookings strength. Net new ARR bookings year-to-date grew 50% to $46 million, and new license and services bookings grew 8% to $189 million. And as Tom mentioned, we were pleased to welcome Solaris as our first Connetic customer. These results reflect the execution focus across our team and the growing customer demand across both segments. Turning to the balance sheet. We ended the quarter with $199 million in cash and a net debt leverage ratio of 1.3x. We continue to generate strong underlying cash flow with $201 million cash flow from operations year-to-date. That compares to $232 million last year and reflects the anticipated timing of receivables and tax payments between periods. We also repurchased approximately 400,000 shares in the third quarter, bringing our year-to-date total to 3.1 million or about 3% of our shares outstanding.

As Tom mentioned, we have increased our share repurchase authorization to a total of $500 million, underscoring our commitment to returning capital to shareholders. Based on this strong year-to-date performance and a healthy fourth quarter pipeline, we are again raising our 2025 guidance. We now expect total revenue to be in the range of $1.73 billion to $1.754 billion, up from our prior range of $1.71 billion to $1.74 billion. We expect adjusted EBITDA to be in the range of $495 million to $510 million, up from our previous guidance of $490 million to $505 million. As I complete my first full quarter as ACI’s CFO, I want to thank the team for their seamless collaboration and disciplined execution. Over the past few months, I’ve had the opportunity to engage with employees across ACI and more deeply with our Board.

I’ve heard directly from our customers and partners and had a chance to meet many of you, both current and prospective investors. And after these first few months, I’m even more energized by the opportunity ahead for ACI. I’ve been impressed by the strength of our team, the quality of our technology, and the clarity of our strategy. This is a strong, well-run company, and I’m excited to be part of it. I’m also very pleased with the operational discipline and financial controls across ACI. There is a strong tone from the top, both our Board and Tom, and we have the processes and assurances to back it up. We are prudent in how we manage financial risk. For example, as you know, our Payment Software business operates across approximately 90 countries with nearly 75% of revenue generated outside the U.S. While this demonstrates our global scale and leadership, we’ve always managed this exposure carefully and transparently.

In hyperinflationary markets, we transact almost entirely in U.S. dollars to mitigate risk and we consistently disclosed the impact of foreign exchange on our results, providing visibility into our underlying operational performance. Looking forward, we remain focused on maintaining a proactive dialogue with the investment community. Transparency remains a top priority, and we’re actively exploring ways to provide even greater clarity into our business and the progress we’re making. I look forward to spending more time on the road again in Q4, continuing the conversation and deepening our engagement with investors. Tom, back to you.

Thomas Warsop: Thanks, Bobby. We’re proud of our performance in Q3, and we’re energized by the momentum that we have heading into Q4. Our strategy, execution and innovation, especially with ACI Connetic, position us well to enter 2026 on track to achieve our longer-term targets. Thank you for your continued support and for your continued interest in ACI. We’re ready to take some questions.

Q&A Session

Operator: [Operator Instructions] Your first question is coming from the line of Trevor Williams from Jefferies.

Trevor Williams: I wanted to start on pricing. Tom, maybe bigger picture, I’m curious how you would frame the runway for pricing as a lever within the longer-term growth algo. I know it’s something you’ve talked about increasing monetization has been a focus over the last year plus. So I’m curious kind of where you still see the most opportunity? And then any way to put into perspective how impactful pricing has been this year relative to ’24, maybe the historical growth algo? Any context around that would be helpful.

Thomas Warsop: Yes, sure. Thanks, Trevor. So it’s a lever that we always pull as appropriate against the value that we provide to our customers. We — essentially, we always get a price increase when we do a renewal or when a customer needs additional volume. And I think we — I’m sure you and I have probably talked about the way we structure the capacity purchases by customers. We try to encourage through our pricing model, we encourage customers to buy as close to exactly the number of transactions they need as possible because if they need to come back and buy more, they’re more expensive. So there’s a lot of levers that we pull there. I don’t see that fading at all. In fact, as we add more value with new versions of software as we start to move customers on to Connetic, the value we add is higher, and we expect to get our fair share of that.

So this is an important lever. It’s been an important lever in ’24 and ’25. You specifically asked about those. It’s always been an important lever. But ’24, ’25, it’s been an important lever, will continue to be. And I think we’re just excited about continuing to add new, more valuable features, functions and capabilities for our customers and then getting our share.

Trevor Williams: Okay. Understood. And then on Payment Software, just as we’re getting closer to ’26, anything we should be mindful of in terms of the cadence of renewals, just thinking whether renewal cadence has been a tailwind to ’25, if that potentially abates in ’26? Any context you could give us around that would be helpful.

Robert Leibrock: And Trevor, I’ll jump in. This is Bobby. So one — let me put it in the context of our backlog, and I’ll give you the total number. We were healthy growth, again, double digits in our $7.1 billion 60-month backlog. And that’s across both Payment Software, as you asked about, and our Biller business. As I look into 2026, as I mentioned, we feel good about continuing to be on track for our longer-term high single-digit growth model and EBITDA tracking along that revenue growth. As you think about the cadence of the renewals, as you put it, we got off to a great start here in the beginning of this year, overall growing 25% and almost 50% in Payment Software. That level is something we’re continuing to be focused on to have deals spread out throughout the year.

But I do expect things to be more balanced throughout the quarters next year, especially against that compare against the first quarter. So in terms of cadence of renewals next year, we feel good about achieving our longer-term growth model. But I do expect it to be the levels we have this year, more balanced from a SKU standpoint.

Thomas Warsop: Yes. Trevor, just one more comment on that. I sometimes get the question, is it highly variable year-to-year, the volume of renewals? And if you just do the average math, obviously, it’s — if you have 5-year terms, you think kind of 20% per year. It’s not exactly 20% per year, but it isn’t that far off. So we don’t — the good news, I think, is that we don’t have huge variability year-to-year. A little bit, yes, but we feel very comfortable managing that relatively small level of variability.

Trevor Williams: Okay. Great. So it sounds like there’s not going to be some major change in the percentage of the portfolio that’s renewing next year that we need to be mindful of. You’re on track for the high singles. So all that sounds good.

Operator: Your next question is coming from the line of Jeff Cantwell from Seaport Research.

Jeffrey Cantwell: Congrats on the signing of your first Connetic client. Would you mind just telling us high level about the progression from here? Maybe talk about the pipeline. Do you think you’ll start seeing more contracts signed from here? And what is the timing on when that converts into revenue? Any thoughts on sizing or the magnitude of that revenue would be great.

Thomas Warsop: Yes. So we’re really excited actually about the pipeline. These are big decisions, Jeff, first of all, thanks for the question. Good to talk to you. But we’ve — these are complicated decisions for financial institutions and fintechs. And as I’ve — hopefully, I’ve been clear that we want to make sure we get the right first few customers. So we’ve got a strong pipeline. It’s getting stronger literally every month as we look at it. So I feel great about that. Obviously, we never know the exact timing of when sales are going to happen, but they’re progressing really well. So we’ll continue to keep everybody informed as we add new customers. And you were asking specifically about the — when it converts to revenue.

The first couple of these are highly likely to be SaaS models where we’re hosting the solution on behalf of our customer. And those — the way that revenue model works is when the implementation is finished and transactions start to flow, that’s when we’ll see the revenue. So it will be a few months in the case of this first customer, several months, but we feel great about that. And I expect the first few will probably be like that.

Robert Leibrock: Yes. I think — and Jeff, if I can add to Tom’s comments. The other comment I’d say is this is the first proper Connetic customer that will start getting revenue as we onboard but it’s not a large discrete amount, but it is across every one of our customer conversations. We talked about Payments Unleashed and those conversations we had 2 weeks ago, it was across every one of them. And right now, we’re focusing on our European and U.S. capabilities for Connetic. We’ll have more of a global rollout through the medium term. But every customer in Mexico loves it. Every customer in Asia we talk to is excited about it. So I like the effect that Connetic has had to raise those conversations and encourage customers and get them to commit to the continued long-term ACI relationship they’ve had.

Thomas Warsop: Absolutely.

Jeffrey Cantwell: Okay. Great. And then you made a lot of moves during the quarter. So I want to ask you about a couple of them. Can you talk more about the payments components acquisition, why you wanted to capitalize on that opportunity, what that does for you? How should we be thinking about the revenue contribution for your results going forward? And also, can you elaborate on the BitPay announcement? Maybe just explain what that unlocks for ACI? Is that domestic, international? I’m just trying to get a sense of how that becomes part of the story and what we should expect to see from here on that one as well.

Thomas Warsop: Yes. Thanks, Jeff. So I would say super high level, they’re similar. The reasons that we did both the BitPay partnership and the Payment Components acquisition, they’re similar in that they allow us to accelerate progress in terms of adding or enhancing capabilities in our solutions so we can go faster through the partnership and the acquisition, different capabilities, obviously. But the BitPay partnership, we already have a lot of capabilities around crypto and stablecoin. We talked a little bit about that on the last call. We have good capabilities. BitPay allows us to improve those — the way that we serve our customers in those really important and increasingly important areas. And they — frankly, that partnership allows us to add a few things that we didn’t have.

And so it’s really an enhancement of the tools that we already have. We’re excited about it. I think BitPay is excited about it. So that’s a great one, good strategic reason to do that. So we’re excited about that. On the Payment Components, we were faced with a decision as we continue to build out and enhance ACI Connetic, we needed world-class payment message translation and orchestration. And we either had to build some of the capabilities that Payment Components has or we needed to buy them. And we did tons of research, lots of due diligence. We really think highly of the Payment Components team and the capabilities and software that they already have, ready to go on the shelf was exactly what we felt we needed for ACI Connetic. So it’s not — it’s a small acquisition, as I said, but really important strategically.

We didn’t buy it for immediate revenue growth. We bought it because the capabilities they have and the talent they have is a great add to ACI. So we do not expect to say to you next quarter, oh, Payment Components added a bunch of revenue. That’s not the reason we did it. But it makes ACI Connetic more impactful and gets us where we want to go faster. That’s why we did that.

Operator: Your next question is coming from the line of George Sutton from Craig-Hallum.

George Sutton: A highlight at Payments Unleashed for me was Scotty’s Connetic presentation and demo. And it seemed clear to me that, Tom, when you originally announced this, it was really meant for an SMB type of a customer, potentially a mid-market customer. And it would appear that this is now potentially an offering that could be delivered to virtually any size. Can you just talk about that?

Thomas Warsop: Yes, absolutely, George. Thanks for joining us. So you’re 100% right. And when we were talking about the — what new markets could we potentially tap or new segments could we potentially tap with ACI Connetic, if you’re thinking about really new, then it really was focused on the — it still is focused on the mid-market because they — those customers may not have made enough investment or have enough experience and expertise to take advantage of the historical ACI offerings. So that — from a new market perspective, that was true. We always expected that large financial institutions, large merchants would eventually be ready to take advantage of ACI Connetic and what we’re building. So we always believe that what I — maybe I should say it this way, we didn’t want to get people too excited about that opportunity because that’s going to take some time.

These very big banks, for example, they’ve made so much investment in their infrastructure, and they have so many processes and ways of doing things that making a change to a new platform, no matter how good it is, is a big, big, big change. So we absolutely see what you said, which is this is super appealing to a large customer, a large potential customer. Absolutely, yes. I think the early adopters are likely to be a little bit smaller, but we are in active conversations with people — customers along that whole continuum. I couldn’t think of the right word, along that whole continuum. So we have smaller financial institutions, smaller merchants, we have midsized and we have very, very large. They’re all interested in the capabilities, and we’re just trying to work with them to make them comfortable and get them ready for the transition.

George Sutton: Got you. And just one other question on Biller. It sounds like utilities were really a key component of the growth this quarter. Can you just talk about your win rates and what you’re broadly seeing in terms of opportunities for continued growth there? There’s definitely a movement we see in the market from bespoke solutions to kind of moving to an outsourced model like yours. So just curious your thoughts and that would be helpful.

Thomas Warsop: Yes, sure. So I think we highlighted that utilities and government were very — a big contributor to the growth in this quarter. That’s been true through the year. But we see very good pipeline and pipeline growth across all of the verticals that we serve. So we feel good about the business. I agree with what you just said that there continues to be a real interest and a move away from — I think you called them bespoke, good the name as any, solutions per Biller to outsource. And that’s been happening for quite a long time. It continues to happen. Obviously, that’s the reason that we’re so excited about this business. We have a great offering, great client base. And what we’re — our new customers are all going on to our Speedpay ONE platform, which is our new — I don’t know if you saw that one, George, at Payments Unleashed, but we also had a demo of Speedpay ONE, which is our new cloud-native solution around Biller.

And it’s exciting. And so we’re putting new customers on that platform. It gives them much faster time to market for new capabilities, better experience for the consumers, better experience for the Biller themselves. So we’re really excited about that. We’re happy with the performance of the segment, and we’re just focused on accelerating that growth.

Robert Leibrock: Yes. Maybe I’ll just add one comment on Tom, too. I think I mean besides the financials that you’ll see, George, right, 10% in the period and a backlog that’s growing at the same level going forward. The other part I’d say, I met with a lot of those same customers you asked about at Payments Unleashed in the utility space. The reason they’re coming to us and some of the top players is the complexity is increasing. And that’s what a player like Speedpay can actually bring to them is to address that complexity that some of those bespoke ones can’t. So that — in terms of win rates, that’s one of our bigger competitive advantages I see in that segment and one of the reasons we’re winning more.

Operator: Your next question is coming from the line of Alex Neumann from Stephens Inc.

Alexander Neumann: Just to double-click there, there’s another great quarter for Biller with double-digit growth. I was wondering if you could just provide some additional detail on the drivers of growth there, whether it’s new customers, volume, price and maybe the relative contribution there? And then just the same for the Payment Software segment, which had some nice growth over which was a pretty tough comparison this quarter.

Robert Leibrock: I can jump in, Alex. One, it’s pretty broad-based across both. I’ll start with the second part on Payment Software. As I mentioned in my opening comments, all key cylinders, all key solution areas are growing in that — across that business on a year-to-date basis. In the third quarter, we saw a great contributing — contribution from the issuing and acquiring space. We saw real-time and fraud in Q2, they had really blowout quarters there on a year-to-date basis, all growing. You go into the Biller side of it, it’s — I would emphasize it’s new customers and retention. The price lever I view — there was an earlier question that Tom was answering around pricing. I view that as untapped potential in our billing business actually. I view it more as success rates on getting new customers, onboarding them and expanding those into more use cases across there.

Operator: [indiscernible] Q&A session. I will now turn the conference back over to the company for closing remarks. Please go ahead.

Thomas Warsop: Well, thanks, everybody, for joining us. We do look forward to catching up with individually — with you guys individually in the coming weeks at the various events that we mentioned earlier. Have a great day.

Robert Leibrock: Thanks, everybody.

Operator: Ladies and gentlemen, that concludes our today’s call. Thank you for joining. You may now disconnect.