Q3 2024 Summary
Published Feb 18, 2025, 5:23 PM UTC- ACI Worldwide has a strong sales pipeline and momentum as it exits 2024, positioning the company for continued strength in revenue and EBITDA growth in 2025 and beyond, even after significant outperformance this year.
- The development of ACI's next-generation cloud-native payments hub platform is on track, with pilot implementations expected in early Q2 next year. High customer interest, including early adopters, indicates potential for future growth and expansion into new customer segments. ,
- The company's bank segment is experiencing robust growth, driven by deepening partnerships with large global banks who view ACI as a strategic partner. This shift allows ACI to focus on helping customers achieve their objectives, supporting sustained growth over the medium term. ,
- Uncertainty around the Payments Hub launch: The company's next-generation Payments Hub platform is still under development, with pilot implementations expected in the beginning of second quarter next year, but the full-scale general availability date is uncertain. The CEO stated, "I don't know exactly when the full-scale general availability will be." This uncertainty could delay revenue growth from this product.
- Challenging growth comparisons for 2025 due to strong 2024 performance: After a year where software license fees could be up 20%, there may be difficulty in continuing strong overall growth rates in 2025. An analyst noted, "It just does seem to... present a pretty tough comparison to continue strong overall growth rates, at least in certain quarters next year."
- Limited contribution from mid-sized banks: The growth in the Bank segment is primarily driven by large banks, with minimal contribution from mid-sized banks so far. The CEO mentioned that there is "not a whole lot of contribution directly from that segment at this point", indicating reliance on large customers, which may pose risks if demand slows.
-
Banks Segment Growth Outlook
Q: What's driving medium-term growth in banks?
A: The banks segment is experiencing strong growth due to customers investing heavily in new products and seeking partners like ACI to enhance efficiency and speed to market. ACI is exercising some pricing power and is increasingly perceived as a partner helping banks achieve their objectives, strengthening the medium-term growth outlook. -
2025 Pipeline and Outlook
Q: How is early renewal activity impacting future growth?
A: By completing most of this year's renewals earlier, ACI can focus on accelerating next year's pipeline. This shift allows the team to concentrate on new business for 2025, resulting in a strong pipeline and positioning ACI to continue seeing strength in 2025 and beyond, even with this year's outperformance. -
Payments Hub Development
Q: When will the Payments Hub be piloted and available?
A: Initial pilot implementations of the Payments Hub are expected to begin at the beginning of the second quarter next year. ACI aims to ensure the solution works as intended before determining full-scale general availability, focusing on solidifying the initial pilots. -
Impact of U.S. Election
Q: How might the U.S. election impact your business?
A: While it's early to quantify, the potential for a less regulated environment in the U.S. could be positive for ACI. Banks may have tailwinds like regulatory and economic factors, leading to more technology spending. However, as a global company, changes in the U.S. don't significantly alter ACI's overall expectations. -
Segment Performance and Outlook
Q: Has anything changed in the segment outlook?
A: There haven't been significant changes under the hood. Banks have been extremely strong, and this strength is expected to continue. The biller segment shows seasonality but is performing well, and the merchant business has turned positive, contributing to growth. All segments are expected to contribute to growth next year. -
Mid-sized Banks Opportunity
Q: How are mid-sized banks contributing to growth?
A: Currently, mid-sized banks are contributing very little to the segment. The opportunity mainly comes from the Payments Hub, but ACI is not yet advancing sales there to avoid overpromising. Future contributions are expected, particularly through SaaS delivery to mid-tier banks, but current strength comes from core large banks. -
Competitive Environment in Real-Time Payments
Q: What's the competitive landscape in real-time payments?
A: The competitive environment remains stable. Most new business in real-time payments is net new, not from expansion. ACI has secured 11 central infrastructures globally, all new implementations. The company continues to see tremendous growth in this area and often partners with organizations like Mastercard. -
Strategic Position with Banks
Q: How do existing relationships with banks affect future products?
A: ACI's platforms are integral to the payments infrastructure of the largest banks, processing trillions of dollars daily. This trusted position makes ACI a natural partner for future initiatives like the Payments Hub. Customers rely on ACI's reliable products and are open to collaborating on future solutions.