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ACI Worldwide (ACIW) 1 Aug 24 2024 Q2 Earnings call transcript

AInvestThursday, Aug 1, 2024 10:06 pm ET
1min read

In ACI Worldwide's second quarter 2024 earnings call, the company reported a strong performance with total revenue up by 16% year-over-year. The company attributed this growth to higher volumes in the biller segment and increased deal activity in the bank segment. Let's dive deeper into the key themes and trends that emerged from the call.

Segmental Analysis

The company's biller segment saw a record 13% growth in gross revenue and a 20% increase in EBITDA compared to the same period last year. The biller team's ability to onboard new customer transaction volumes ahead of expectations, coupled with strong tax-related volumes in the government vertical, contributed to this outperformance. However, the company noted that the level of outperformance in Q2 may not continue in the subsequent quarters due to the seasonal nature of the tax-related volumes.

The bank segment also performed well, with revenue up by 22% and EBITDA up by 53% compared to Q2 of last year. The signing of important renewal contracts and strategic expansions, including a top bank in Malaysia, were key contributors to this growth. The issuing and acquiring solutions in the bank segment grew by 38%, highlighting the continued value and importance of ACI's mission-critical solutions.

Renewals and New Business

ACI Worldwide's focus on signing renewal contracts earlier in the year has derisked the full-year forecast and allowed the team to focus on new deals in the second half. The company signed more than $100 million in renewal contracts that will be recognized in Q3 and Q4 of this year, including the expanded WorldPay partnership. This strategic move has increased confidence in the company's ability to deliver significant shareholder value.

Investments and Future Outlook

The company is making significant investments in its next-generation payment hub program, with development on track and customers expressing high levels of interest. The payment hub strategy, which allows customers to migrate volumes onto the platform at their own pace, is seen as a competitive advantage. The company's pipeline is strong, with a focus on both renewals and new business. The outlook for 2024 is raised, with revenue expected to be in the range of $1.557 billion to $1.591 billion and adjusted EBITDA in the range of $423 million to $438 million.

Conclusion

ACI Worldwide's second quarter 2024 earnings call revealed a company in a strong financial position, with key growth drivers in both the biller and bank segments. The company's focus on renewals, strategic expansions, and investments in its next-generation payment hub position it well for future growth. With a strong pipeline and a positive outlook for 2024, ACI Worldwide is well on its way to creating significant shareholder value.

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