Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- ACI Worldwide Inc (ACIW, Financial) reported a 24% year-over-year increase in total revenue for Q3 2024, exceeding expectations and guidance.
- The company has successfully accelerated the signing of both renewal and new contracts, reducing seasonality and derisking full-year financial guidance.
- More than 99% of the full-year 2024 revenue forecast is already signed and contracted, allowing the company to focus on 2025 and beyond.
- The bank segment saw a 43% increase in revenue and a 69% increase in EBITDA, driven by strong performance in real-time payments.
- The merchant segment experienced a 38% revenue growth and a 159% increase in EBITDA, with improvements in transaction-based recurring revenue.
Negative Points
- The Biller segment only grew by 5%, with a decline in adjusted EBITDA due to nonrecurring margin benefits from the previous year.
- Despite strong performance, the real-time product revenues can be lumpy, indicating potential volatility in future quarters.
- The company faces a tough comparison for 2025 due to the significant outperformance in 2024, which may challenge maintaining growth rates.
- There is uncertainty regarding the impact of the U.S. election on regulatory and economic conditions, which could affect the banking sector.
- The Payments hub is still in development, with pilot implementations expected in Q2 2025, indicating a delay in full-scale availability.
Q & A Highlights
Q: Can you discuss the medium-term growth outlook for the bank segment and the main drivers behind it?
A: Thomas Warsop, President and CEO, explained that the bank segment's growth is driven by strong market health and increased customer investment in new products. ACI is seen as a partner in helping banks apply technology to improve efficiency and market speed. The company is leveraging its long-standing relationships to engage in more strategic discussions with customers, focusing on future growth and the development of the payments hub.
Q: How does completing renewals earlier in the year impact your strategic focus and growth?
A: Warsop noted that completing renewals early allows ACI to focus on new business for 2025 and beyond. It frees up resources to accelerate the sales pipeline and engage with customers about future offerings, such as the payments hub. This strategic shift is expected to enhance growth and align with long-term goals.
Q: What are your expectations for 2025, given the strong performance in 2024?
A: Scott Behrens, CFO, stated that ACI has a strong pipeline for 2025, which positions the company to maintain growth despite the high performance in 2024. The focus is on pulling the pipeline forward to ensure continued strength in revenue and EBITDA growth.
Q: Can you provide an update on the development and rollout of the payments hub?
A: Warsop mentioned that the payments hub is on track, with pilot implementations expected in early Q2 2025. The company is focused on ensuring the solution works as intended before full-scale availability. The payments hub is not a significant factor in next year's expectations but is a strategic focus for future growth.
Q: How might the recent U.S. election impact ACI's business, particularly in the banking sector?
A: Warsop expressed cautious optimism about potential regulatory and economic tailwinds for banks following the election. While the U.S. is a significant market, ACI's global presence means that changes in the U.S. regulatory environment are not expected to have a major impact on the overall business. The company remains focused on leveraging opportunities with its banking customers.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
