ACI Reports Steady Growth as Management Says Real-Time Payments Revolution Accelerating

For ACI Worldwide, software and platform as a service remain steady growth businesses.

In the company’s most recent earnings results on Wednesday (March 1),

ACI said that SaaS and PaaS fees gained 7.8% year on year to $205.8 million.

Thomas Warsop, interim president and CEO, said on the conference call with analysts that there are a number of tailwinds in place for the company as “payments continue to mature as a key differentiator for our customers.”

He added, “the real-time payments revolution, around the world, is real and it’s accelerating.”

Those tailwinds, he said, have underpinned mid-single-digit organic revenue growth through the past year. Warsop said that ARR bookings in the biller segment were up 93% in 2022 over 2021’s levels.

Acknowledging the Rumors

And with a nod to rumors that the company is a takeover target, Warsop said, “we don’t comment on rumor,” adding that “my team is fully aligned on doing what is best in the long-term interests of our shareholders. That is not going to change no matter how many stories pop up.”

Chief Financial Officer Scott Behrens said that despite macro uncertainties, the company is expected to log mid-single-digit organic revenue growth in 2023 and maintains its long-term target of 7% to 9% organic revenue growth. Investors bid up the shares a bit more than 2% upon the opening of the markets on Wednesday.

Management sees particular potential in the cloud-based and as-a-service models, as smaller financial institutions (FIs), especially, don’t have the infrastructure to manage ACI’s software on their own. They lack the data centers and the expertise, said Warsop. He noted later on the call that the company is 70% of the way through contract negotiations with its Biller clients (including utilities), and should be close to complete by the end of this year. The merchant segment, according to management, has exited 2022 with 9% recurring revenue growth on a constant currency basis, and that rate is in the double digits moving forward.

The Real-Time Opportunity

During the question and answer session with analysts, management noted that real-time payments represent about 10% of the company’s business — and is growing by double-digit percentage points, according to the CFO (the company already supports more than two dozen real-time payments schemes across the globe).

The upcoming FedNow launch will drive that business, management said on the call, as ACI Worldwide helps power the connectivity to real-time schemes. ACI, for its part, has been focused on providing its software solution for the connectivity — and when transaction volumes do increase, it will see the benefits of that volume surge.

“Many of our customers are buying at low volume today and waiting for that critical mass to come,” said Warsop.