ACI Worldwide - Earnings Call - Q1 2025

Executive Summary

• Beat-and-raise quarter: Q1 revenue $394.6M (+25% y/y) and adjusted EBITDA $94.1M (+95% y/y); diluted EPS adjusted for non-cash/transaction items $0.51 vs S&P Global consensus $0.34; revenue beat ~$30M vs $364.4M consensus; FY25 revenue guidance raised to $1.690–$1.720B, adj. EBITDA reiterated at $480–$495M. Consensus values marked with asterisks below are from S&P Global.*
• Mix/quality: Payment Software (newly combined Bank + Merchant) revenue +42% y/y; Biller +11% y/y; recurring revenue +8% to $285.7M (72% of total). Net adjusted EBITDA margin rose to 36% (on revenue net of interchange) from 24% y/y.
• Balance sheet/capital return: Net leverage ~1.2x; cash $230M; repurchased 1M shares for $52M YTD ($320M authorization remaining).
• Catalysts: Large APAC competitive takeaway; accelerating demos/first version release of Connetic (cloud-native payments hub) with target live customers in early 2026; Q2 guide embeds lighter license timing before re-acceleration in H2.

What Went Well and What Went Wrong

• What Went Well

  • Payment Software strength: “Revenue grew 42%, adjusted EBITDA more than doubled” y/y; issuing/acquiring drove new logo wins in APAC and LatAm.
  • Strategic product execution: Connetic 1.0 released at end of April; robust demos live since Dec; “I have never seen anything like this… blew me away,” per an industry analyst (paraphrased by management).
  • Bookings/new business pull-forward: “We were able to sign more revenue in Q1 than… expected… incremental revenue this quarter comes from net new business and better-than-expected transaction volumes, not renewals”.

• What Went Wrong

  • Seasonality/normalization ahead: “We won’t be able to sustain a 25% revenue growth rate throughout the year,” with Q2 license lighter before picking up in Q3/Q4; front-half weighted but still below 50%.
  • Biller EBITDA essentially flat: Biller segment adj. EBITDA +1% y/y; management flagged IRS/tax partners as contributors, with greater benefit in Q2, but mix limits margin upside near-term.
  • FX and macro watch items: While ACI sees limited tariff/supply chain impact and slight USD benefit to revenue, FX mostly top-line (not margin) and macro remains in focus.

Transcript

Operator (participant)

Welcome to ACI Worldwide Inc Reports Financial Results for the Quarter Ended March 31, 2025. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Please limit yourself to one question and one follow-up. Please note that this call is being recorded. I'd like to turn the call over to John Kraft. You may begin.

John Kraft (Head of Strategy and Finance)

Thank you. Good morning, everyone. On today's call, we will discuss the company's first quarter 2025 results as well as our financial outlook for the rest of the year. We will take your questions at the end. The slides accompanying this call and webcast can be found at aciworldwide.com under the Investor Relations tab and will remain available after the call. Today's call is subject to safe harbor and forward-looking statements like all of our events. You can find the full text of both statements in our presentation deck and earnings press release, both of which are available on our website and with the SEC. On this morning's call is Tom Warsop, our President and CEO, and Scott Behrens, our CFO.

Before I turn it over, I wanted to make you aware that ACI will be participating in several conferences in Q2: the 20th Annual Needham Technology, Media and Consumer Conference on May 12, Barclays' 15th Annual Emerging Payments and Fintech Forum in New York City on May 20, the Annual Seaport Growth Discovery Conference on May 15, Compass Point's Virtual Bus Tour on June 2, the Baird 2025 Global Consumer Technology and Services Conference in New York City on June 5, and D.A. Davidson's Consumer and Technology Conference in Nashville on June 11. With that, I'll turn the call over to Tom.

Tom Warsop (President and CEO)

Thanks, John, and good morning, everyone. As always, I appreciate you joining our earnings conference call this morning. I'll start with some comments about the quarter, and then I'm going to hand it over to Scott, and he'll discuss detailed financial results as well as expectations for the rest of 2025. Then we'll open it up for questions. To begin, Q1 was a very strong start for us. We grew revenue 25% and EBITDA 95%. You probably recall I've said several times that we have been pushing our teams to sign both renewals and new business earlier in the year to both de-risk accomplishment of our full-year targets and to allow us to more quickly focus on longer-term, more strategic opportunities. I'm happy to report this pressure continues to yield results. In fact, we were able to sign more revenue in Q1 than even I expected.

As a reminder, renewal contracts yield revenue on the date of their renewal, and that does not matter how early we sign them. I think it is probably clear that the incremental revenue this quarter comes from net new business and better-than-expected transaction volumes, not renewals. Some of the new business we signed was originally expected in Q2, but I am sure you agree—you agree with me—that we would rather have it earlier. Scott is going to walk you through the guidance a bit later, but this strong start positions us very well to achieve first-half and full-year results in line with our previous indications. We will not be able to sustain a 25% revenue growth rate throughout the year, but I am very pleased we delivered so much revenue growth so early.

On our last earnings call, I mentioned the organizational improvement we made in combining the bank segment and the merchant segment into a single new business unit called Payments Software. As I said, the combination is synergistic, and it simplifies our operations in many respects. Further, the software, the code, if you will, that we use to serve banks and merchants is very similar. That move has already generated some positives, including generating some new pipeline opportunities and allowing us to more efficiently cover certain geographies where we have customers in both pieces of that segment. If I turn to the segments, let me start with Payments Software. Revenue grew 42%, adjusted EBITDA more than doubled compared to Q1 of last year. As we mentioned previously, we signed the largest new logo and competitive takeaway we have ever had in our Asia-Pacific region.

In addition, we signed another significant new logo in the segment, this one in our Latin America region in South America, in fact. We are proud to have signed two completely new bank logos in a single quarter. Both of these wins are using our issuing and acquiring solutions. Before moving on from Payments Software to Biller, I want to provide you an update on our next-generation Payments Hub solution, and we have now officially named that Connetic. That is C-O-N-N-E-T-I-C. I often joke that you have to make up a word in order to get a name through the IP lawyers. That is what we did here, but I think it is a nice one. The solution, to remind you, is cloud-native. It provides a lot of enhanced capabilities such as automated decisioning, straight-through processing, decline transaction reduction, and AI-driven analytics. It simply improves the experience of a bank and its customers.

The solution also expands our addressable market beyond our traditional large banks to include mid-size and smaller institutions, as well as non-bank financial institutions and payments technology firms, and ultimately even global retailers. Connetic complements our existing solutions, and it's very helpful as our customers plan to migrate to the cloud. Connetic will help customers manage a lower-risk modernization journey. I was speaking to the CIO of a very large Middle Eastern bank last week when I was in the Middle East, and when I finished my description of Connetic, his response to me was, and I'm quoting, "I want to be part of this journey. How quickly can you come back to show me how this works?" That is a pretty common reaction to our story, so I remain extremely excited about the possibilities.

Just discussing this solution and our technology roadmaps has already contributed to expanding relationships with existing customers. It also helped us to win that competitive takeaway in Asia-Pacific that I just mentioned. Stay tuned for details regarding an official Connetic launch celebration, which we're going to do in conjunction with our 50th birthday celebration later this year. Now I'll turn to Biller. Our Q1 revenue was up 11%. We signed several new logos in the Biller segment as well. New logos may not be as rare in the payments as they are in the payment software segment, but they're equally nice, of course. Our bookings momentum continued in Q1, and our new ARR bookings were up about 40% over last year's Q1. Overall, we're very happy with our progress and our positioning for the future.

While the world seems fixated on the tariff and trade discussions, our customers are healthy. Our strong start to the year has boosted our confidence in achieving our full-year targets, and we haven't seen any material impacts from the geopolitical uncertainty that we're all seeing at this point. I'll anticipate a question and tell you that while we do business with several Chinese banks, our financial exposure to China is not material. In this case, that's good news. We remain focused on our broader strategy, our sales execution, and the development of our next-generation Connetic platform. We started the year very strong, and we're confident in our full-year financial forecast. Overall, we're optimistic regarding our long-term profitable growth and our ability to continue to deliver significant shareholder value. I'll turn it over to Scott to discuss financials and our guidance. Scott?

Scott Behrens (CFO)

Thanks, Tom, and good morning, everyone. I first plan to review our financial results for the quarter and then provide our outlook for the rest of 2025. We'll then open the line for questions. Q1 2025 revenue was $395 million, up 25% from Q1 2024, and total adjusted EBITDA was $94 million, up 95% from Q1 2024. Looking at the results by segment, our payment software segment revenue increased 42%, and adjusted EBITDA more than doubled versus Q1 2024. Our biller segment revenue increased 11%, while adjusted EBITDA increased 1% from Q1 2024. We continued to see strong cash flow growth in Q1, with cash flow from operating activities of $78 million. We ended the quarter with strong liquidity, including $230 million in cash on hand and approximately $853 million of total debt outstanding.

This represents a net debt leverage ratio of 1.2x, which is below our stated target of 2x that we've discussed previously. As of today, we have repurchased approximately 1 million shares of our stock year-to-date for $52 million, and have $320 million remaining on our share purchase authorization. Also, in the quarter, we sold our non-controlling interest in India-based Mindgate to PayU India. The gain on sale is included in other income and expense on the income statement. Even though we'll no longer have a minority investment in Mindgate, we will continue our strategic partnership with them in the region. As we look at our outlook for the rest of the year, obviously, there's been a lot of volatility in the capital markets in recent weeks, but we're comfortable that we are fairly insulated from a lot of the macroeconomic events.

Meaning on the payment software side of the business, as you know, these are mission-critical payment systems, and most of the revenue for the year is either under long-term contracts or subject to renewal. On the biller side, the verticals we serve are really non-discretionary bill payments. As a software company, we really do not see a lot of impacts from tariffs on the supply chain. We are really not exposed to China, and with our low leverage and strong cash flow, we are in a tremendously flexible financial position if interest rates stay higher for longer. We will actually see a slight benefit from the moves in the US dollar that we have seen so far this year. Remember that 75%-80% of our payment software business is outside the US, and a good portion of that revenue is contracted in local currencies.

We're naturally hedged having expenses also in local currencies, so FX rate moves have more of a top-line impact than a margin impact. With the strong start to the year and the impact of changes in FX rates, we are raising our guidance for full-year revenue. We now expect revenue to be in the range of $1.69 billion-$1.72 billion, and we continue to expect adjusted EBITDA to be in the range of $480 million-$495 million. For Q2, we expect revenue to be in a range of $375 million-$385 million and adjusted EBITDA to be in a range of $55 million-$65 million. With this guidance, we still expect approximately 46% of our full-year revenue for 2025 in the first half of the year versus the 43% weight of the first half we saw in 2024.

This is really due to the continued efforts, as Tom mentioned, to sign our new contracts earlier in the year. In summary, in Q1, we saw strong revenue growth contributing to strong EBITDA growth and margin expansion, and we continue to see strong cash flow contributing to our ability to both delever and deploy capital to our share repurchase program. We are raising our full-year revenue guidance. Before I hand it back to Tom, I want to switch now to a personal note. As we look ahead, I've begun to plan for my retirement. I've been with ACI now for almost 18 years. During that time, we've grown the company from $370 million of revenue and $30 million of EBITDA to our current 2025 projections of $1.7 billion of revenue and nearly $500 million of EBITDA.

I'm extremely proud of what we've achieved, including building a world-class finance organization. To ensure an orderly and well-planned transition, I'm announcing today that it is my plan to retire in the near future, during which time I will work with Tom and the board to accomplish a smooth transition in the financial leadership of the company. I told Tom and the board that I'll be here as long as they need me. With that, I will now hand it back to Tom for some closing remarks. Tom?

Tom Warsop (President and CEO)

Thank you very much, Scott. Before I conclude my remarks about the quarter and the year, let me pause to offer my sincere personal thanks to Scott for all of his contributions to ACI. Scott has been working at ACI for nearly two decades, and he's been a true partner to me. His leadership and individual contributions have been a key part of our success throughout that time. Scott's transparent approach to his decision to retire gives us the opportunity to execute the robust succession plan we already had in place and have had in place for a long time. I've already begun working on it, and Scott is committed to supporting us throughout the transition. I'm really pleased for Scott and his family as they enter this next phase. I'll keep you informed about our progress in filling these very big shoes.

As I conclude, it's an exciting time for global electronic payments. Change is constant, and ACI is at the heart of all that excitement. We power the world's payments ecosystem, and that's exactly where we want to be. Our leadership team is intensely focused on delivering for our customers, for our people, and for you, our investors. We understand very clearly that delivering strong shareholder value is our job, and we intend to continue doing just that. Thank you for joining our call this morning and for the faith you show through your ownership and support of ACI shares. Operator, we can now take questions.

Operator (participant)

We will now begin the question and answer session. If you would like to ask a question, press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Please limit yourself to one question and one follow-up. Your first question comes from the line of Trevor Williams with Jefferies. Trevor, please go ahead.

Trevor Williams (Managing Director and Fintech Equity Research)

Great. Thanks. Hey, guys. Good morning. And Scott, congrats on the retirement. Well-deserved. Maybe if I could just ask the first one on the current environment. Tom, you kind of alluded to this in your prepared remarks. It sounds like you guys aren't seeing anything yet, at least in terms of the way that your customers are behaving. Maybe just based on your discussions over the last month or two, Tom, with your customers, I mean, is there any kind of wavering that you're seeing just in terms of decision-making timelines, willingness to take on kind of more investment in modernization, and just kind of how you guys are thinking about that potentially playing out over the rest of the year just given the macro uncertainty? Thanks.

Tom Warsop (President and CEO)

Yeah. Thanks, Trevor. No, it's a short answer. It's interesting. I was telling Scott and John, I just returned from the Middle East and spoke with many customers. The way those conversations went, it was almost identical in each instance. First, small talk introductions. Second, what's going on with these tariffs and the president and all the changes, and how's that impacting your business? We had a good conversation. Of course, I took the opportunity to then turn that question around and say, "How are you thinking about it? Is it going to change the way you think about your business as a whole?" Of course, selfishly, is it going to have any impact on the way we think about expanding our relationship?

In each instance, absolutely unanimously, the answer was, "No, it has no impact on what we're doing." In fact, they did not say it this way because they would not, of course. The feeling I get is it may create a little bit more opportunity for us, especially on the modernization front. That was specifically, you mentioned that, and that is a good call-out because the way that we are thinking about modernization and Connetic, it has so many positive impacts for the customers and their customers that I think most of the people I am talking to see it as an opportunity to get better faster. I do not know exactly how big that opportunity will be and exactly when it will come, but we are not seeing a negative at this point at all. We are seeing a little bit of positive momentum. I feel great about that.

The last point I'll make on this is I said and Scott said, and we've talked about this a lot, that we've been pushing to get deals closed earlier. That absolutely happened in Q1. Some of those deals we expected in Q2, we were able to get signed in Q1. I think one very small driver to that was customers saying, "Let's get this done now so that we can start to get some benefits given all the uncertainty. Let's push to get it done faster," which is great. That is kind of what I'm alluding to. That is what we're seeing at the moment, a little bit of positive and really haven't seen negative at this point.

Trevor Williams (Managing Director and Fintech Equity Research)

Okay. No, that's great. For my follow-up, I wanted to ask on stablecoins. It's something that we're starting to hear a lot more about, especially as it relates to more cross-border B2B money movement. First, can you just remind us within the bank's business what exposure you have to cross-border, if at all? Then secondarily, is this something that's coming up at all in your discussion with your bank's customers, their willingness to look at stablecoins as kind of an alternative rail for money movement and just where ACI could potentially fit in that discussion? Thanks.

Tom Warsop (President and CEO)

Yeah, sure. Just on cross-border, we have a lot of business that facilitates—our software in many ways facilitates cross-border payments. I mean, just one example is Swift. Swift payments, we handle, I think, at least trillions of dollars a day in those cross-border very large payments. We do a lot with it. I think the next phase, and I've probably talked about this several times, but I think it's very important. The real-time payments ecosystem in the world at the moment is almost all inside of a country, a little bit regionally in a couple of places around the world. Some super interesting use cases get facilitated once you start allowing, and I'll come back to why I use the word specifically, allowing cross-border real-time payments. Our technology already is ready for cross-border real-time. That's not the issue.

The issue is the regulators have to agree on what the rules are. We have seen a little bit of that start to happen. In particular, one example, Singapore and UPI in India. In Singapore, there are some limited examples where you can use UPI, which is the Indian real-time payment scheme, to make payments while you are traveling in Singapore if you are an Indian national. That is just one example, but we are going to start to see more of those, and that will get really interesting. You asked about stablecoin. I get lots of questions, and we have lots of discussion around stablecoin. It is very interesting. There is certainly potential there. At this point, certainly the bank customers, it is mostly a, "Hey, what do we think might happen with stablecoin?

Is it going to be a big deal or not? I don't know how big and how fast, but I think there's a place for stablecoin. Now, it's not exactly responsive to your question, Trevor, but our software, we have allowed and facilitated crypto payments for a long time. Volumes are very, very, very small, but it's no problem for us from a technology perspective. We are carefully and interestedly thinking about what's coming and what might be possible. I think for us, it's more about making sure we are working with our customers to take advantage of opportunity in the future. We are not concerned about being able to handle it and facilitate it. It's more about where does the market go. We are keeping our eye on that.

Trevor Williams (Managing Director and Fintech Equity Research)

Okay. I appreciate all that. Thanks again, guys.

Tom Warsop (President and CEO)

Yep. Thanks, Trevor.

Operator (participant)

Your next question comes from the line of Jeff Cartwell with Seaport Research. Jeff, please go ahead.

Jeff Cantwell (Analyst)

Hey, thank you very much. First of all, congrats, Scott. On a job well done. I want to wish you the best in your retirement.

Scott Behrens (CFO)

Thanks, Jeff.

Jeff Cantwell (Analyst)

Can you talk more to us about payment software? That was over $200 million in the quarter. That was up 42%. If you think about the overall revenue gap, how are you thinking about that segment over the course of the remainder of the year? Do you mind just explaining some of the puts and takes as far as revenue and growth expectations for that line and how we should be thinking about modeling that? Thanks.

Tom Warsop (President and CEO)

Sure. I'll let Scott comment. I mean, the big picture, we're pretty much in the same spot we were when we gave guidance in Q1 for the full year. What really happened was, I think this is really good news, what really happened is we were able to sign quite a bit more of that net new in Q1 than we originally thought we would. If you look at the first half, the guidance we provided is basically right on where we expected to be. What happened is we were able to shift those net new signings into Q1, which is a great thing from my perspective. I hope you see it that way too. We did sign some of the renewals early also, but that didn't affect anything because of the way the accounting must work.

Directly responding to your question, we have the same expectations essentially for the full year as we did at the beginning of the year. Great news, we were able to shift some of it forward. Scott, you probably.

Scott Behrens (CFO)

Yeah. The only other thing I'd add to that, yes, so we're still tracking to calls at 7-9% constant currency revenue growth. And that's in total, the payment software plus billers. If you look at Q1 year-over-year revenue growth, it's the recurring base of the business that was up 8% in Q1. So that was right in that range. Q2 is lining up to look very similar. That kind of solid, predictable, reliable base of recurring revenue is lining up in that 8% range. Where you're going to have some variability is on some of these bank license deals. Got a lot more done in Q1. Q2 will be a little lighter in terms of those license deals. It'll pick up again in Q3 and Q4.

If you look at it, if you're modeling that underlying base recurring revenue about that 8% mark, and then the variability in any given quarter is going to come from the timing of license fees. It will pick back up again in Q3, but overall, we're still tracking that 7-9% constant currency growth for the year.

Jeff Cantwell (Analyst)

Okay, great. Thank you. And then as a follow-up, during the quarter, you announced a partnership with Ingo Payments and Speedpay. That was around digital disbursements. Can you maybe talk about that, frame that for us, help us understand what you're doing strategically, and then how we might see certain areas like billers/Speedpay evolve as we think about yourselves doing partnerships with Ingo and maybe even some others? Also, what's the right way to be thinking about billers' growth from here? Can you just remind us about that segment? Given all the changes in macro, wanted to ask what your thoughts are there for the segment. Thanks.

Tom Warsop (President and CEO)

Yeah. A couple of thoughts. Let me start with the second question first. Biller, we feel just as good, actually maybe a little bit better about biller now than we did at the beginning of the year. We've talked about the IRS moving from three providers to two, us being one of the two. The numbers aren't fully in yet from the tax season, but we're cautiously optimistic there. Just as a reminder, most of the bill payment that we facilitate, a significant majority of that is non-discretionary. It's your car payment, your tuition bill, your electric bill, etc., etc. You got to pay those bills. We're not expecting big, certainly not expecting big negative impact from some of this uncertainty. There will be puts and takes, but we're not seeing negative impacts. Again, cautiously optimistic on the IRS and tax in general.

We're feeling good about it. No change in our view for the full year and going forward. That's that piece. You asked about Ingo Payments in particular. Let me, instead of just talking about that, talk about disbursements. Hopefully, it's clear we're really good at the bill payment part, collecting the money on behalf of our customers. The next big opportunity is disbursements. I'll give you one quite interesting use case. For several years, I ran workers' compensation and/or healthcare third-party administrators. The biggest headache that I had was how to efficiently and effectively disperse claim payments to healthcare providers. This is only one use case. That was really hard to do. It was expensive. It was painful.

By partnering to allow the disbursement side, the opposite of the bill pay side, and that can take many forms, not just healthcare, that is sort of the other piece of the puzzle. As we get better at that, as we expand that business, now it's a money movement business instead of a bill payment business. That has a lot of incremental opportunity. It's much more interesting. The value propositions are much more robust. That is why we're doing this. It's small. That part of the business is small, obviously. We're just starting. Over time, we expect that to grow, and we expect we'll get better and better in that area.

Jeff Cantwell (Analyst)

Great. Thanks very much. You have some results.

Tom Warsop (President and CEO)

Thank you, Jeff.

Operator (participant)

Your next question comes from the line of Peter Hackman with D.A. Davidson. Peter, please go ahead.

Peter Heckmann (Managing Director and Equity Research)

Hey, good morning. Thanks for taking my questions. I wanted to have a few questions, but on the recent merger divestiture within merchant acquiring and issuer business of Global Payments and FIS, how do you think ACI shakes out there? Is it something where customers on both sides do not envision a change, or could there be something that changes there based on the change of ownership of those two businesses?

Tom Warsop (President and CEO)

Yeah. I mean, it's obviously early days in that. We don't have any special insight into how they're thinking about that business going forward, but they're both very good customers of ours, and we have strong relationships with both of them. I think, and again, too early to say, but we're actually excited. I'm personally excited about how they figured out us trying—we're going to try to be a partner to them. Figure out how can we help them bring the pieces together and facilitate faster growth. I don't have anything specific for you at the moment because we literally haven't spoken to them about it. I think they're still getting their feet under the desk after the announcements and trying to figure out how to do it.

I don't have anything specific for you, but I think it's a good opportunity for us to really show how we partner with a customer, with two customers.

Peter Heckmann (Managing Director and Equity Research)

Okay. Okay. It looks like we're shaking up to have about 45% of revenue in 2025 in the first half and a little bit more front-end loaded than normal. In terms of thinking about the back half and that 55%, would you expect it to kind of look like historicals of maybe 25% revenue in the third quarter and 32% in the fourth, or?

Scott Behrens (CFO)

Yeah. I think that'd be—yeah, I think that'd be—that goes back to my previous comment. If you look at how that modeled that underlying base in revenue, call that at that 8%. The variability in Q3 and Q4 will be predominantly in that license fee. Both renewals, signing, net new, and Q4 is always a little bit heavier than Q3. I would say that that mix for the second half is pretty good.

Peter Heckmann (Managing Director and Equity Research)

Probably about right. Okay. Okay. Great. If you hear me just on Connetic, sounds like we're making some nice progress there. What milestones should we be thinking about this year in terms of kind of a number of demos, beta customers, and then when do you think you actually start to see some customers go live, the first customers go live in the GA version?

Tom Warsop (President and CEO)

Yeah. In terms of—I do not know the exact number of people. We've already given a pretty significant number of demos. The way I thought about this was I did not want our salespeople to be out there selling—I call it sales by PowerPoint. We've all seen this, I'm sure, where it's really easy to show somebody a really cool technology if it's not real. In PowerPoint, I did not want to do that. We did not do that. We did not give any demos. We talked generally about Connetic. We were calling it Connetic in the beginning, but we talked generally about it, told them expect more. We now, at the end of last year, as planned, we had our super robust working demos.

We can actually show what looked like absolutely real transactions with test data that is robust and looks like the data that customers expect. We have had that since I think the beginning of December of last year. At the end of April, as planned, we released version 1.0, which is—I actually think we coded it a little differently. I think it is 0.1 or something like that. Anyway, the first version that could be deployed. We are using that now as the basis of our demo. We are going to have a lot of demos this year. I do not know exactly how many we have given. I do not know exactly how many we are going to give this year, but there is a tremendous demand to see more, to understand how it works. Let us play with it with our real data. I get this question a lot.

We're prepared to do that. We're doing that. We've trained all of our salespeople on how to talk about the program, how to demo it. I'm not saying everybody's great at it yet, because they're not, but they're going to get better and better. You asked about first live customers. My expectation—I don't know exactly. It depends, but I think it will be early next year that we'll have live. I'm absolutely confident we'll have some sales occurring before that, so probably late this year. The interesting thing is we've got a lot of demand, a lot of people pulling on it, wanting to be one of those beta customers. We're trying to be very thoughtful about which customers are the right ones to be those beta customers. That's really what we're working through right now.

Each quarter, we'll talk about that and how we're progressing, but we're achieving the milestones that we set out. Demo late last year, first version, end of April, we've achieved both of those milestones, and we expect to continue achieving those.

Peter Heckmann (Managing Director and Equity Research)

Great. Great. That's good to hear. I'll get back in the queue. I appreciate your time.

Scott Behrens (CFO)

Thanks a lot.

Tom Warsop (President and CEO)

Thanks, Pete.

Operator (participant)

Your next question comes from the line of George Sutton with Craig-Hallum Capital. George, please go ahead.

Logan Lillehaug (Equity Research Associate)

Hey, good morning, guys. Logan on for George, and congrats on another nice quarter here. Maybe to start, Tom, you called out an increase in the pipeline opportunities as a result of the now combined bank and merchant segments. Can you just maybe give us any more detail on what you mean by that? And then maybe just broadly, kind of any benefits you've seen in the go-to-market motion there?

Tom Warsop (President and CEO)

Sure. I'll give you an example. I'm going to give you a generic example. I'm not going to give you a customer name on this, but I recently was traveling in the Middle East as well. I've made two trips to the Middle East in the last six weeks. It's an interesting region, a lot of traveling. What I was talking to—I was talking to a very big bank that has a big set of customers that are large merchants. Historically, we've approached bank customers and bank value propositions almost completely independently from those merchant opportunities. I'll give you a specific—it's about thought. We have great fraud solutions, but we've tended to create value propositions that are specifically aimed at a bank or specifically aimed at a merchant.

I was having this conversation with a bank whose customers are mostly big merchants, and they were really interested in how we package our fraud solutions so that the bank gets the benefit, and they have specific needs. They can also use those same basic tools and same approaches to help their merchant customers get better fraud detection and prevention, better insights into what's happening with transactions. Because we've now combined those businesses, and I have one customer success manager—so that's like an account manager. We call it an account manager. We have one for both the merchant opportunity and the bank opportunity calling on this customer. We were able to have a much more comprehensive discussion about the opportunity. That turned into a pipeline opportunity. It's sitting in our Salesforce pipeline now.

I think in the past, that would not be the case. Maybe we would have had a bank opportunity. Maybe we would have had a merchant opportunity. This combined thing, we would not have had that yet. We might have gotten an intervention. That is a specific example of that. I think the big thing is we have begun to train our sales team and our account management team across all of the solutions in Payments Software. Now they can have much more robust conversations with customers across all of those products and services instead of having to say, "Let me bring in one of my colleagues to talk about this other thing." We are not having to do that as much. There is a little bit of an efficiency thing.

The last thing I was talking about and what that is leading to is incremental, different pipeline opportunities. That is what I was alluding to.

Logan Lillehaug (Equity Research Associate)

Got it. Appreciate the detail. Maybe just a quick follow-up. Obviously, we'll be able to see the numbers when the queue comes out, but can you just give us a sense for what the contribution was from real-time payments this quarter? And then maybe just broadly, kind of how should we think about the cadence of that revenue? I mean, I look at it being, I think, kind of flat last year relative to fiscal 2023, and it feels like that doesn't really represent the true momentum there. So maybe just kind of help us square that and how we should think about that going forward.

Scott Behrens (CFO)

Right. Yeah. This is Scott. Yeah. On the real-time payments, that is almost entirely on-premise. So you're going to have volatility when you look at quarter to quarter because of timing of renewals and timing of new deals. It doesn't have as big of a base of that kind of recurring revenue stream. And it's called 10% of the overall business, and it's going to grow at double digits. You're going to have year-over-year comparability just based on the timing of the renewals. If you look at it over the course of the year, it'll still be real-time and fraud detection are still going to be our highest-growing segments, both double-digit growers over the near and long term.

Tom Warsop (President and CEO)

Okay. Got it. Thanks for taking my questions.

Yeah. Thank you.

Operator (participant)

Your final question comes from the line of Alex Newman with Stephens. Alex, please go ahead.

Alex Neumann (Equity Research Associate)

Hi. Good morning. Thanks for taking my question. Just to start off, could you discuss where you're seeing traction in different product areas that led to some of the higher net new business this quarter?

Tom Warsop (President and CEO)

Yeah. Sure. So a lot of it came from our issuing and acquiring solutions, which those are flagship solutions for us. They are absolutely proven technologies. Cadillac Solution or MIT, our clients used to make them talking about them. What's really interesting is, and if I use that Asia-Pacific competitive takeaway, net new as the example, we won that deal for two reasons. They are obviously connected, but there are two reasons. One, here's a customer that needed a better issuing and acquiring solution right now. They were one of the few very large banks in the world that do not use our BASE24 platform. They wanted to use it. It was sort of a historical reason. I do not even know all the reasons, but they did not use it before. They knew it was a great solution.

They were interested, but they'd never decided to make the effort to switch. Then piece number two happened, and I had the first conversation, but smarter people than me followed up and helped this bank understand the journey that we can allow them to make to modernize their entire payment infrastructure with Connetic. We were able to show them we can solve your problem right now with the best solution in the market, and we allow you to show your board, your stakeholders of all kinds, that you have a very clear, lower-risk, absolutely rational path to get from where you are to where you want to be: cloud, cloud-native, rapid scalability, vertical and horizontal, all the things that we're able to deliver.

The combination of those two things—solve their problem now, give them a very clear path to the future—it was almost a no-brainer for them. Once they were able to dig in, talk to other customers, talk to our architects, understand that was going to work, that became very clear to them that this is the right way to go. Let's do it. That basic conversation is happening in multiple places around the world. I had a few of those conversations last week in the Middle East, very similar. That is what is getting prospective customers and our current customers really interested in exploring opportunities going forward.

Alex Neumann (Equity Research Associate)

Okay. Makes sense. For Q1, what was the uplift on biller this quarter from the reduction vendors for IRS processing? What are your expectations for FX on growth for 2025?

Scott Behrens (CFO)

Biller's total revenue grew 11% in the quarter. We do not describe or call out what any particular customer delivers, but it was obviously a contributor to the Q1 growth. We will see that further a little bit more in Q2, but that was obviously a contributor not just through the IRS, but through our other partners that we do bill pay for on a tax preparation software. I would say it is more broadly, not just the IRS, but our tax partners as well. We do not really need to say what we are publishing, what we get from an individual customer, but it definitely contributed to the uptick in growth year-over-year. On the full-year FX, we are probably talking it is going to give us—it is going to be probably $5 million more out the year than we bought coming into the year.

We started the year with about—we thought it was going to be about a headwind on FX of about $12 million-$13 million. That's come down by $5 million.

Alex Neumann (Equity Research Associate)

Great. Thank you for taking my questions.

Tom Warsop (President and CEO)

Thanks.

Alex Neumann (Equity Research Associate)

Thanks, Tom.

Operator (participant)

There's no further question at this time. I will now turn the call back to the company.

Tom Warsop (President and CEO)

Okay. Thank you. First of all, thanks for joining us again, and we appreciate the support. I look forward to continuing to deliver for our shareholders and delivering more and more shareholder value. The last thing I want to say is I want to reiterate my intense personal thanks to Scott because he has been, as I said, he's been an amazing partner to me. I've known Scott now for about 10 years in multiple ways. We've interacted in multiple ways, and each one of those ways and opportunities has been a super positive experience for me, and I hope it has for him. After nearly two decades of service, he absolutely deserves to enter the next phase. Great for him, great for his family. We'll obviously miss him, but he's going to be, he's been very clear.

He's going to be tremendously supportive to us as we find his replacement. I don't know if replacement is even the right word, but the next CFO of ACI. We're well underway in that process. As I said, we'll keep you up to date. Congratulations, Scott. Thanks, everybody, for joining us.

Scott Behrens (CFO)

Thanks, everyone.

Operator (participant)

That concludes today's call. Thank you all for joining. You may now disconnect.