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ACI WORLDWIDE, INC. (ACIW)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 delivered revenue growth with raised full‑year guidance; recurring revenue mixed shift supported margins despite license timing in Payment Software. Revenue was $0.401B (+7% y/y) and adjusted EBITDA $80.9M; adjusted EPS was $0.35 while GAAP diluted EPS was $0.12 .
  • Both segments contributed: Biller up 16% y/y; Payment Software down 1% y/y due to license timing; ARR bookings up 86% y/y in the quarter (TTM +15%) .
  • Guidance raised: FY25 revenue now $1.710–$1.740B and adjusted EBITDA $490–$505M; new Q3 guide revenue $0.460–$0.470B, adjusted EBITDA $155–$165M .
  • Capital allocation: repurchased ~2.4M shares for $119M; cash $190M; net debt leverage 1.4x after retiring 2026 notes with extended facility .
  • Potential stock reaction catalysts: raised FY guide, accelerating ARR, and narrative around Connetic (cloud‑native hub) and stablecoin readiness supporting long‑term growth .

What Went Well and What Went Wrong

  • What Went Well
    • “ARR bookings in the quarter were up 86%… first half new ARR bookings growth to 71%,” underscoring demand and improved sales execution .
    • Biller segment strength: revenue +16% y/y in Q2, with government/consumer finance/utility vertical momentum; IRS positioning cited on the call .
    • Strengthened balance sheet and buybacks: cash $190M, net leverage 1.4x; $119M buybacks in Q2 and $223M authorization remaining .
    • Management confidence and guidance raise; CEO emphasized “momentum… move towards a more scalable and less seasonally weighted financial model” .
  • What Went Wrong
    • Payment Software revenue −1% y/y and segment EBITDA −12% y/y on license timing and renewals concentration; Q2 adjusted EBITDA −13% y/y .
    • GAAP earnings compressed: Q2 GAAP diluted EPS $0.12 vs $0.29 y/y; net income $12.2M vs $30.9M y/y .
    • Cash from operations down y/y in 1H ($128M vs $178M) due to receivable timing; Q2 CFO was $49.8M vs $55.0M prior year .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD Billions)$0.373 $0.395 $0.401
GAAP Diluted EPS ($)$0.29 $0.55 $0.12
Adjusted EPS ($)$0.47 $0.51 $0.35
Adjusted EBITDA ($USD Millions)$92.8 $94.1 $80.9
Net Adjusted EBITDA Margin (%)37% 36% 32%
Segment Revenue ($USD Millions)Q2 2024Q2 2025
Payment Software$181.7 $179.3
Biller$191.8 $221.9
Total$373.5 $401.3
KPIsQ2 2024Q2 2025
Recurring Revenue ($USD Millions)$284.1 $321.7
ARR Bookings ($USD Millions)$13.1 $24.3
Cash from Operations ($USD Millions)$55.0 $49.8
Cash and Equivalents ($USD Millions)$156.983 $189.697
Net Debt Leverage (x)n/a1.4x
Share Repurchases (Shares / $USD)~2.7M/$119M TTM Q2 2024 2.4M/$119M Q2 2025

Actual vs S&P Global Consensus (Q2 2025)

MetricConsensus*Actual*Surprise*
Revenue ($USD Millions)380.4401.3+20.9
Primary EPS ($)0.2660.35+0.084

Values retrieved from S&P Global.*

Key implications:

  • Revenue and adjusted EPS beat consensus materially; Payment Software timing masked underlying recurring strength (+8% recurring in Q2), while Biller outperformed .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025$1.685B–$1.715B (Feb 27) $1.710B–$1.740B (Aug 7) Raised
Adjusted EBITDAFY 2025$480M–$495M (Feb 27/May 8) $490M–$505M (Aug 7) Raised
RevenueFY 2025$1.690B–$1.720B (May 8) $1.710B–$1.740B (Aug 7) Raised
Adjusted EBITDAFY 2025$480M–$495M (May 8) $490M–$505M (Aug 7) Raised
RevenueQ3 2025n/a$0.460B–$0.470B New
Adjusted EBITDAQ3 2025n/a$155M–$165M New

Drivers: stronger first‑half momentum, robust pipeline, accelerating recurring revenue; but license deal timing creates quarterly variability, reflected in Q3 range .

Earnings Call Themes & Trends

TopicQ4 2024 (Prior‑2)Q1 2025 (Prior‑1)Q2 2025 (Current)Trend
Cloud‑native hub (Connetic/Kinetic)MVP completed; launch in 2025; broadened target beyond large banks Renamed Connetic; v1.0 deployable; demos live; first sales expected late 2025 Official launch (Kinetic); strong interest; pipeline tied to real‑time/wires; positive feedback Building momentum, closer to commercialization
Sales execution & seasonalityStrategy to pull signings earlier; reduce Q4 skew Signed more net‑new in Q1 than expected; raised FY revenue guide Early signings continue; ARR +86% Q2; backlog >$7B (60‑mo est.) Earlier booking cadence improving visibility
Stablecoin & real‑time paymentsn/aCustomers exploring; tech readiness, volumes small Well‑positioned; regulatory clarity (“Genius Act”); cross‑border RTP use cases; stack placement middle layer Strategy signaling optionality
Segment dynamicsBanks + Merchants to Payment Software GM model Payment Software +42% y/y in Q1; Biller +11% Payment Software −1% y/y on license timing; recurring +8%; Biller +16% Payment Software recurring resilient; Biller accelerating
Capital allocationDeleveraging; buybacks ~$128M FY24 $52M buybacks YTD; net leverage 1.2x $119M buybacks Q2; net leverage 1.4x; extended maturities Continued buybacks, flexible balance sheet

Management Commentary

  • CEO: “ARR bookings… up 86%… first half new ARR bookings growth to 71%… Kinetic is cloud native… AI‑powered insights… feedback… overwhelmingly positive” .
  • CFO: “We now expect total revenue… $1.710B to $1.740B… adjusted EBITDA… $490M to $505M… Q3 revenue $460M–$470M; adjusted EBITDA $155M–$165M” .
  • CEO on stablecoin: “ACI is well positioned… our software handles more alternative payment networks… increasing payment complexity drives customers to our solutions” .
  • CFO on Q3: “Higher Payment Software mix drives margin; variability from timing of high‑margin license deals” .

Q&A Highlights

  • Stablecoin positioning: ACI sits mid‑stack for banks/merchants; cross‑border RTP use cases promising; unit economics favorable at early volumes vs debit due to pricing curve dynamics .
  • Biller acceleration: IRS position and new logos driving Q2; FY performance strong albeit below Q2 run‑rate; contributed to $20M full‑year revenue guide raise .
  • ARR bookings mix: Diversified across geographies and customer types; not dominated by one deal .
  • Backlog and capital allocation: First time 60‑month backlog >$7B; flexible capital deployment across growth investments, M&A, and buybacks .
  • Comparative positioning vs peers: Different business drivers than large processors; strong cash flows and margins, rebalanced seasonality .

Estimates Context

  • Q2 beats: Revenue $401.3M vs $380.4M consensus*; Primary EPS $0.35 vs $0.266 consensus* (bold beat).
  • Sequential context: Q1 actual $394.6M vs $364.4M consensus*; Primary EPS $0.51 vs $0.344 consensus*. Q3 company guidance ($460–$470M revenue; $155–$165M adjusted EBITDA) broadly in line with consensus revenue $465.1M* .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Raised FY25 revenue and EBITDA guidance amid robust H1 execution; narrative supports estimate revisions upward for revenue/EBITDA and adjusted EPS .
  • Biller strength provides durable, nondiscretionary bill‑pay exposure (government/utility), offsetting Payment Software license timing in quarterly prints .
  • Recurring revenue and ARR momentum (+86% Q2) improve visibility and underpin a less seasonal model; watch continued backlog growth as a leading indicator .
  • Balance sheet flexibility (1.4x net leverage) and active buybacks ($119M in Q2) support per‑share compounding; extended 2029 maturity lowers refinancing risk .
  • Connetic/Kinetic progress and stablecoin readiness broaden TAM (cards + A2A); near‑term commercialization milestones (pilots/sales) are potential multiple catalysts .
  • Near‑term trading: Strong Q3 guide and license‑deal timing could add volatility; upside skew if additional high‑margin licenses close intra‑quarter .
  • Medium‑term thesis: High single‑digit organic revenue trajectory with recurring scale, disciplined capital allocation, and hub innovation should support sustained margin expansion .