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ACI WORLDWIDE, INC. (ACIW)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $453.0M and diluted EPS was $0.93; full-year 2024 revenue grew 10% to $1.594B and adjusted EBITDA rose 18% to $466M, with Net Adjusted EBITDA margin expanding >300 bps to 41% .
  • 2025 guidance: revenue $1.685–$1.715B and adjusted EBITDA $480–$495M; Q1 2025 revenue $360–$370M and adjusted EBITDA $70–$80M, with first-half revenue weighting at ~45% reflecting earlier deal closures .
  • Organizational change: Banks and Merchants merged into a single Payment Software business under a GM model to drive operational leverage; go-to-market energized by a functioning demo of the cloud-native “Kinetic” payments hub now being actively sold .
  • Stock-relevant catalysts: accelerated license momentum (including a large Asia-Pacific bank competitive takeaway) and confident 2025 outlook; cash generation and buyback capacity supported by 1.5x net leverage and $373M remaining authorization .

What Went Well and What Went Wrong

What Went Well

  • Strong full-year execution: “we grew revenue 10%, increased adjusted EBITDA margin by more than 300 basis points to 41%, and more than doubled our cash flow to over $350 million,” positioning the company to enter 2025 “from a position of strength” .
  • Strategic win: signed the largest new logo/competitive takeaway in APAC for flagship issuing and acquiring; early-in-year signings yielded >$50M of banking segment first-quarter revenue already contracted .
  • Product readiness and commercialization: Kinetic (cloud-native payments hub) has a functioning demo with “extraordinarily high throughput,” enabling active selling and phased feature rollout across payment types .

What Went Wrong

  • Q4 deceleration vs prior year: revenue declined to $453.0M from $476.6M and adjusted EBITDA fell to $157.7M from $209.7M; Net Adjusted EBITDA margin compressed to 47% from 57% .
  • Biller margin normalization: full-year Biller adjusted EBITDA decreased 8% due to nonrecurring margin benefits in 2023 that did not repeat in 2024, pressuring year-over-year comps .
  • Recurring revenue flat in Q4 year-over-year: recurring revenue was $270.2M vs $274.8M, reflecting mix and lapping of elevated prior-year levels .

Financial Results

Consolidated P&L and Profitability (USD Millions unless noted)

MetricQ2 2024Q3 2024Q4 2024
Revenue$373.5 $451.8 $453.0
Operating Income$53.7 $122.6 $122.3
Net Income$30.9 $81.4 $98.6
Diluted EPS ($)$0.29 $0.77 $0.93
Adjusted EBITDA$92.8 $166.9 $157.7
Net Adjusted EBITDA Margin (%)37% 50% 47%
Recurring Revenue$284.1 $270.9 $270.2

Year-over-year Q4 vs Q4 2023 reference:

MetricQ4 2023
Revenue$476.6
Diluted EPS ($)$1.12
Adjusted EBITDA$209.7
Net Adjusted EBITDA Margin (%)57%
Recurring Revenue$274.8

Segment Revenue

Segment RevenueQ2 2024Q3 2024Q4 2024
Banks$143.7 $222.0 $230.8
Merchants$38.0 $50.2 $42.0
Billers$191.8 $179.6 $180.2
Total$373.5 $451.8 $453.0

Segment Adjusted EBITDA

Segment Adj. EBITDAQ2 2024Q3 2024Q4 2024
Banks$79.2 $153.9 $150.7
Merchants$15.4 $26.7 $16.8
Billers$37.4 $30.9 $32.1

KPIs and Bookings

KPIQ2 2024Q3 2024Q4 2024
ARR Bookings$13.1 $11.1 $35.2
License & Services Bookings$80.7 $67.0 $115.1
Revenue Net of Interchange$249.3 $334.7 $337.3

Non-GAAP EPS Adjustments (Q4 snapshot)

Item (Q4 2024)EPS ImpactNet of Tax ($M)
GAAP Diluted EPS$0.93 $98.6
Amortization of intangibles$0.04 $4.5
Amortization of software$0.03 $3.3
Stock-based compensation$0.08 $8.8
Total adjustments$0.15 $16.6
Diluted EPS adjusted$1.08 $115.2

Guidance Changes

MetricPeriodPrevious GuidanceCurrent/ActualChange
RevenueFY 2024$1.567B–$1.601B $1.594B Raised (Q3); Delivered near high end
Adjusted EBITDAFY 2024$433M–$448M $466M Beat (above prior high end)
RevenueFY 2025N/A$1.685B–$1.715B New
Adjusted EBITDAFY 2025N/A$480M–$495M New
RevenueQ1 2025N/A$360M–$370M New
Adjusted EBITDAQ1 2025N/A$70M–$80M New
Revenue phasingFY 2025N/A~45% 1H / ~55% 2H New
Interest expense (net)FY 2025N/A~$40M New
Depreciation & amortizationFY 2025N/A~$100M New
Non-cash compFY 2025N/A~$50M New
Effective tax rateFY 2025N/A~25% New
Diluted share countFY 2025N/A~107M (ex buybacks) New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024, Q3 2024)Current Period (Q4 2024)Trend
Payments hub (Kinetic)On-track dev.; show to customers by YE; high interest across APAC/EU Functioning demo; sales launched; phased features (A2A first, cards next) Accelerating commercialization
Segment reorgNew Merchant leader; banks driving growth Banks+Merchants combined into Payment Software; GM structure for accountability/efficiency Operational simplification
Asia-Pacific momentumMalaysia full card modernization; targeted license pull-forward Largest APAC bank win; competitor misstep; modernization path resonating Strengthening wins
Biller marginsQ2 outperformance from tax/utilities volumes; warned about one-off comps Full-year Biller EBITDA down 8% on nonrecurring 2023 benefits; 2025 expected improvement Normalizing margins; improving outlook
Balance sheet & capital returnsLeverage 1.9x; $400M buyback; strong CFO focus Leverage 1.5x; $373M buyback capacity; target leverage ≤2x Increased flexibility
Regulatory/complianceEU instant payment mandate raising infra demand Banfico partnership for VOP/UK CoP; Nacha Preferred Partner for ACH/fraud Enhanced compliance capabilities

Management Commentary

  • “We are proud to have finished 2024 with stronger results than we expected… grew revenue 10%, increased adjusted EBITDA margin by more than 300 basis points to 41%, and more than doubled our cash flow to over $350 million.”
  • “We’ve combined the bank segment and the Merchant segment into one new business called payment software… moving to a general manager structure… highly confident this change will allow us to accelerate progress.”
  • On Kinetic: “We have a functioning demo… running on the same servers that production systems will run on… extraordinarily high throughput… we’ve let the sales force loose to sell the product.”
  • CFO: “For Q1 2025, we expect revenue to be $360–$370M, representing 17%–21% growth… adjusted EBITDA $70–$80M, representing 43%–63% growth… first half ~45% of full-year revenue.”
  • “Net debt leverage ratio declined to 1.5x… below our recently lowered stated target of 2x.”

Q&A Highlights

  • Biller EBITDA dynamics: 2024 down year-over-year due to 2023 one-time margin benefits; management expects net revenue and EBITDA to increase in 2025 once lapping the prior-year items .
  • APAC competitive takeaway detail: bank will run in-house; win driven by competitor’s service issues and ACI’s credible modernization path via Kinetic; pipeline includes similar targets .
  • Reorg implications: GM model centralizes sales, account management, implementation, product marketing; benefits include clearer accountability, happier customers, and efficiency from shared software/R&D, reducing duplication .
  • Path to high end of 2025 EBITDA: upside tied to new/on-prem license wins—incremental dollars flow at high margins given scalable software model .
  • Segment-level growth outlook: long-term targets remain high single-digit; potential double-digit in Banks with hub traction; efforts to derisk seasonality by signing new business earlier .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS/revenue could not be retrieved at the time of analysis due to access limits; therefore, explicit beat/miss vs consensus is unavailable. We will update when S&P Global data access is restored.
  • Management’s Q1 and FY 2025 guidance provides near-term anchors for models: Q1 revenue $360–$370M, adjusted EBITDA $70–$80M; FY 2025 revenue $1.685–$1.715B, adjusted EBITDA $480–$495M .

Key Takeaways for Investors

  • Sequential resilience and strong full-year execution: despite Q4 year-over-year pressure, 2024 delivered double-digit revenue growth, margin expansion, and more than doubled operating cash flow—supportive of buybacks and strategic investment .
  • License-driven upside remains the swing factor: incremental on-prem license wins (e.g., APAC bank) have high EBITDA flow-through and can push results toward the top of guidance .
  • Kinetic commercialization is a medium-term thesis driver: active selling with a functioning demo and phased feature roadmap should broaden TAM across banks and large merchants, with 2025 contribution building through the year .
  • Reorg should unlock efficiency and execution: combining Banks and Merchants into Payment Software under a GM reduces duplication and clarifies accountability—likely improving customer satisfaction and operating leverage .
  • Biller margins set to normalize: 2024 headwinds were comp-related; management expects net revenue and EBITDA to improve in 2025, while recurring biller revenue remains a stabilizer .
  • Balance sheet strength supports capital allocation: net leverage at 1.5x and $373M remaining buyback authorization provide flexibility to offset volatility and invest behind hub rollout .
  • Near-term trading setup: earlier deal timing (first-half weighting) plus Q1 guidance implies strong start to 2025; monitor license closure cadence, hub customer wins, and any segment-level mix shifts that impact margins .