Q4 2024 Earnings Summary
- Significant New Customer Acquisition: ACI secured a substantial new client in Q1 2025—a large Asia-Pacific-based financial institution—which marks the company's largest new logo and competitive takeaway in the region. This win contributes over $50 million in first-quarter revenue, boosts confidence in the 2025 outlook, and opens additional opportunities in the region.
- Launch of Next-Generation Payment Hub "Kinetic": The company is launching its cloud-native payment hub solution, Kinetic, which has received exceptionally positive feedback from industry analysts, indicating that no other market offering matches its capabilities. Early sales efforts are underway, with significant customer interest and the potential to drive new revenue streams and competitive advantages.
- Organizational Restructuring to Drive Growth: ACI combined its bank and merchant segments into a new Payment Software segment under experienced leadership, implementing a general manager structure. This realignment is expected to enhance operational efficiencies, leverage synergies between similar software platforms, improve customer satisfaction, and accelerate progress and growth in both segments.
- The Biller segment's EBITDA decreased year-over-year in 2024 due to the non-recurrence of certain one-time margin benefits from 2023, indicating potential challenges in sustaining profitability in this segment.
- The Merchant segment has struggled to achieve the desired size and has been merged with the Bank segment, possibly reflecting ongoing difficulties in this business area and questioning the effectiveness of this integration strategy.
- The company's ability to reach the higher end of its adjusted EBITDA guidance is heavily dependent on overachieving in new license deals, suggesting potential volatility and uncertainty in achieving its earnings targets.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue Q3 2023 | +18% | Increased by $56.4M largely driven by a $36.0M (82%) rise in license revenue and a 10% boost in recurring revenue, with supportive factors such as timing of license renewals and FX benefits contrasting the prior year’s divestiture impact. |
Total Revenue Q3 2024 | +24% | Growth accelerated by early contract renewals and strong segment performance. The bank segment’s revenue gains—bolstered by a 43% increase overall, including 72% growth in real‐time payments—and merchant segment improvements helped drive a higher pace of revenue growth than in Q3 2023. |
Banks Segment Q3 2023 | +42% | Revenue rose from $117M to $156M due to higher license fee revenues (facilitated by favorable licensing renewal timing), a 13% increase in recurring revenue from maintenance and SaaS, and additional deals fueling capacity expansion, as well as inflationary price adjustments. |
Banks Segment Q3 2024 | +43% | Driven by a combination of increased license revenues and robust real-time payments, which grew by 72%, alongside issuing and acquiring solutions rising by 40%—factors that built on and slightly improved the previous year’s momentum. |
U.S. Revenue Q3 2023 | +21% | Boosted by an 82% jump in license revenue and a 10% increase in recurring revenues, compounded by strong contributions from the bank and biller segments, where improved renewals and new capacity events created a compounded effect compared to the prior period. |
U.S. Revenue Q3 2024 | +24% | Accelerated by strategic contract renewals and a focus on new business, the U.S. market benefited from strong performance in both bank (up 43%) and merchant (up 38%) segments, offsetting historical seasonality and laying a solid foundation relative to Q3 2023. |
Other Geographies Q3 2023 | +22.6% (from $111.0M to $136.1M) | Growth owed largely to the bank segment’s 42% revenue increase and new customer onboarding in the biller segment, with an ancillary FX benefit of $1.3M, reflecting improved international demand over the previous period. |
Other Geographies Q3 2024 | +55% (from $136.1M to $210.7M) | Expansion was fueled by exceptional performance in bank (43% increase) and merchant (38% increase) segments, with real-time payments (up 72%) and international wins in Mexico and South Africa likely spurring this remarkable uplift, building on the previous year's gains. |
SaaS and PaaS Q3 2023 | +8% (or +10% underlying growth) | The revenue increase of $15.8M was primarily driven by higher transaction volumes and several new customer go-lives, though a $4.5M decline from a divestiture and a $0.9M FX boost meant that the underlying growth was around 10% compared to prior performance. |
SaaS and PaaS Q3 2024 | +6% | Growth by $12.0M resulted from continued new customer go-lives and increased transaction volumes, albeit at a slightly lower rate than the prior period, reflecting a stabilization phase following earlier dynamic growth. |
License Revenue Q3 2023 | +82% | Boosted by a $36.0M increase, the significant jump was driven by heavier weighting of license renewals in the second half of the year and larger new license and capacity events, with a minor FX contribution adding further upside. |
License Revenue Q3 2024 | +98% | An even stronger performance was realized with a $77.8M increase, as continued favorable timing for renewals and substantially larger new license events amplified revenue compared to the previous year’s figures. |
Maintenance Revenue Q3 2023 | +6% (reported; +9% adjusted) | A $2.8M increase was achieved despite a $1.6M hit from a divestiture; underlying drivers included annual inflationary increases in product support fees and a supportive $0.2M FX impact, thereby enhancing performance relative to the prior period. |
Maintenance Revenue Q3 2024 | -8% | Declined by $4.4M as customers pared down on premium support and maintenance for non-strategic products, marking a reversal from previous growth patterns that had benefitted from higher fee adjustments. |
Services Revenue Q3 2023 | +10% (reported; +27% adjusted) | An increase of $1.8M was observed, though a $2.4M divestiture masked stronger underlying performance. After adjustment, project-related work drove a 27% growth compared to the year-ago period, highlighting effective ramp-up in project work intensity. |
Services Revenue Q3 2024 | +17% | A $3.4M increase was achieved through strong project-related work, where the timing and magnitude of projects in the quarter generated an appreciable improvement over the previous year. |
Total Revenue Q4 2024 | -5% (from $476.55M to $453.07M) | A 5% decline occurred YoY, primarily driven by lower revenues in the Banks (–9%) and U.S. segments (–8%), despite stable performance in Other geographies, suggesting that challenges in core segments offset gains seen elsewhere. |
Banks Segment Q4 2024 | -9% (from $254.82M to $230.82M) | Fell by 9% YoY, indicative of seasonal or execution challenges (such as reduced license renewal timing or capacity expansion deals) that contrasted with the robust growth experienced in previous quarters like Q3 2023 and Q3 2024. |
U.S. Revenue Q4 2024 | -8% (from $253.82M to $232.35M) | An 8% decline was noted YoY, driven by customers reducing premium support for non-strategic products and overall market adjustments, reflecting a downward trend compared to the higher growth observed in earlier periods. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue | FY 2025 | no prior guidance | $1.685 billion to $1.715 billion, 7% to 9% growth | no prior guidance |
Adjusted EBITDA | FY 2025 | no prior guidance | $480 million to $495 million | no prior guidance |
Revenue Phasing | FY 2025 | no prior guidance | First half expected to account for approximately 45% of total revenue (vs. 43% in 2024) | no prior guidance |
Revenue | Q1 2025 | no prior guidance | $360 million to $370 million, 17% to 21% growth | no prior guidance |
Adjusted EBITDA | Q1 2025 | no prior guidance | $70 million to $80 million, 43% to 63% growth | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Next-Generation Cloud-Native Payments Hub | Q1 discussions focused on active development and initial customer engagements for a payments hub aimed at smaller to mid-market banks. Q2 details emphasized steady development progress, strong customer interest, and highlighted competitive advantages. Q3 discussions mentioned pilot implementations and a tangible solution on track by year‑end. | In Q4 the hub—now branded as Kinetic—received extensive coverage with a functioning demo, detailed features (high throughput, account‑to‑account payments), a 2025 launch timeline, and an emphasis on modernization and scalability. | Evolving from early-stage development and cautious pilot launches to a near-commercialized, transformative solution, with increased confidence and actionable demos; sentiment has shifted positively as execution and strategic positioning become clearer. |
Bank Segment Performance and Strategic Partnerships | Q1 highlighted strong revenue growth and key renewal/new deals, while Q2 cited significant increases in revenue and EBITDA with strategic renewals (including a Malaysia partnership). Q3 reported robust growth figures including central infrastructure wins and multi‐regional strategic renewals. | Q4 continued to showcase impressive revenue and EBITDA growth numbers, further emphasizing strategic partnerships – notably a landmark new logo win in Asia Pacific—and leadership moves to support the payments hub's go‑to‑market strategy. | Consistently positive with reinforcing strategic deals and strong performance metrics. Growth numbers and the focus on partnerships have steadily improved, suggesting robust future performance. |
Biller Segment Performance and Sustainability | Q1 presented modest revenue growth and sustainable customer onboarding with improved retention and pipeline for new logos. Q2 reported stronger outperformance with notable revenue and EBITDA growth, though noted some seasonal drivers. Q3 indicated revenue gains but lower adjusted EBITDA due to prior one‑time benefits. | Q4 demonstrated revenue growth and strong bookings momentum, despite EBITDA challenges driven by the absence of one‑time margin benefits from the prior year. | Overall growth remains, but EBITDA fluctuations due to nonrecurring items have led to a more cautious tone; ongoing strong bookings and pipeline activity suggest sustainability even as margin dynamics evolve. |
Licensing Deals and Revenue Forecast Dependence | Q1 mentioned signing over $20 million in high-margin license contracts, which helped raise revenue and EBITDA guidance. Q2 emphasized early renewals to de‑risk the forecast and reduce reliance on Q4 deals. Q3 reiterated the importance of license-based renewals in the revenue mix. | Q4 stressed that new licensing deals are critical to hitting high‑end EBITDA guidance. Executives reiterated that additional large license deals can have a substantial positive impact on margins and forecast stability. | There is an increased focus on licensing as a margin‑rich, predictable revenue source. The strategy to secure renewals early is solving timing issues, with renewed optimism in Q4 that additional large deals could boost future margins and overall financial stability. |
Strong Sales Pipeline and New Customer Acquisition | Q1 cited a strong sales pipeline with accelerating SaaS demand and new customer wins, particularly among smaller institutions. Q2 discussed a growing net new pipeline bolstered by early renewal signings and emerging new logo opportunities. Q3 emphasized pulling forward deals for 2025 and highlighted key customer wins in real-time payments. | Q4 reported a robust pipeline with continued momentum from prior years and highlighted a record new customer acquisition in Asia Pacific – the largest new logo win seen in that region – reinforcing the integrated sales approach. | Consistent high performance with an increasingly proactive strategy to sign deals earlier and target new logos. The enhanced pipeline and record wins indicate sustained optimism and potential for accelerated growth in upcoming periods. |
Organizational Restructuring and Segment Integration | There were no discussions in Q1, Q2, or Q3 regarding restructuring or integration between segments. | Q4 introduced an organizational restructuring that merged the bank and merchant segments into a new Payment Software unit, alongside the appointment of a new general manager to lead the business. | A new topic emerging in Q4, signifying a strategic shift aimed at achieving operational synergies and improved efficiency. This restructuring could have a large future impact by streamlining operations and enhancing customer satisfaction. |
Real-Time Payments Growth and International Expansion | Q1 showed strong growth rates in real‑time payments driven largely by international regulatory mandates. Q2 provided detailed insights into both regulatory-driven demand in Europe and expansions in Asia-Pacific and South America. Q3 highlighted significant growth with central infrastructure wins in Mexico and partnerships in South Africa. | Q4 did not include specific mention of real‑time payments growth or international expansion strategies. | Previously a robust narrative across Q1–Q3, but its absence in Q4 signals a de‑emphasis or possible integration into broader themes. The omission may warrant close future monitoring to assess if the shift reflects strategic consolidation or reduced emphasis on this growth area. |
Execution Uncertainty and Timing Risks | Q1 discussed timing elements related to earlier-than‑expected license signings and revenue recognition, hinting at potential timing risks. Q2 and Q3 did not explicitly raise these issues despite some cautious commentary regarding product launch timelines. | Q4 did not specifically address execution uncertainty or timing risks. | The explicit discussion of timing risks has faded by Q4. While earlier periods acknowledged revenue timing challenges, the current period’s omission may reflect improved execution confidence or a strategic decision to integrate timing considerations into other operational narratives. |
-
Adjusted EBITDA Guidance
Q: What factors could drive EBITDA to the high end of guidance?
A: Management explained that achieving the high end of EBITDA guidance would likely result from overperformance in new license deals, which are highly scalable and contribute directly to EBITDA. If they secure another large deal like the one signed in Q1, there's a real chance to exceed expectations. -
Growth Expectations by Segment
Q: What are the growth expectations at the segment level?
A: They reiterated long-term targets of high single-digit revenue growth over a three-year horizon for all segments. Combining banks and merchants into payment software doesn't change this trajectory. Renewals are expected to be around 20% of the total book, with efforts to balance revenue more evenly across quarters to reduce variability. -
Recent Large Win and Its Impact
Q: Can you discuss the recent competitive win in Asia Pacific?
A: They secured a major deal with a large financial institution in Asia Pacific, previously served by a competitor. This win showcases their strategy of offering proven technology with a path to modernization, which resonated well with the client. It's a significant competitive takeaway, and they are excited about similar opportunities in their pipeline. -
Reorganization and Expected Benefits
Q: What prompted the shift to the GM model, and what benefits are expected?
A: The move to a general manager model aims to create leadership teams fully accountable for business results. By uniting sales, account management, implementation, and product marketing under one team, they anticipate better customer service and internal efficiencies. Customers will benefit from clearer accountability, and the company expects to eliminate duplicative efforts, leading to improved performance. -
Payment Hub (Kinetic) Launch Details
Q: Can you provide specifics on the Kinetic launch and its functionality?
A: They've begun selling Kinetic, their payment hub, which is now demo-ready with working software handling common payment types like account-to-account transactions. Plans are in place to add cards and ACH functionalities. Early feedback has been extremely positive, with industry analysts noting it's unparalleled in the market. Sales efforts are underway, and they are confident in its potential impact. -
Competitive Takeaway in Asia Pacific
Q: Can you share more about the competitive takeaway in Asia Pacific?
A: While they couldn't name the client, they emphasized it's a large financial institution that switched due to dissatisfaction with a competitor. Their ability to offer immediate, proven solutions with a clear modernization path was key to winning the deal. They see this as indicative of broader sales opportunities and a validation of their strategy. -
Net Revenue Dynamics in Biller Segment
Q: What affected net revenue and EBITDA in the Biller segment?
A: The year-over-year decline in EBITDA was primarily due to non-recurring one-time margin benefits from certain contracts in 2023 that didn't repeat in 2024. Despite this headwind, they achieved a 300 basis point margin expansion at the consolidated level. -
Status of Merchant Segment
Q: Is the merchant segment being de-emphasized in the new structure?
A: Management clarified that the merchant business is not being de-emphasized. By integrating merchants with banks under one leader, they aim to leverage software similarities and capitalize on opportunities. They believe this approach will unlock potential and better serve large merchants interested in their payment orchestration solutions.