ACI Worldwide, Inc. Q2 FY2025 earnings call

• Q2 was a solid quarter with revenue up 7% year-over-year and 15% vs first half of 2024. Confidence to raise full year guidance for revenue and adjusted EBITDA. - Strong business momentum across segments. Biller up 16% in Q2 and 13% first half. Payment Software roughly flat in Q2 but up 18% first half. - Signed notable new contracts, ARR bookings in quarter up 86%, first half 2025 new ARR bookings growth 71%. - Launched Connetic, a next-generation payments hub platform. - Committed to returning capital to shareholders, repurchased 2.4 million shares in Q2 2025. - Finished quarter with strong cash balance and low net leverage ratio. - Highlighted efforts to improve growth performance like improving solution mix, portfolio management, aggressive pricing, and earlier contract signings. - Addressed stablecoin, stating ACI is well positioned to benefit from stablecoin adoption. - Recognized as one of CNBC's world's top fintech companies and one of Time's America's best midsized companies. - Robert Leibrock introduced as new CFO, committed to financial transparency and operational discipline.

Biller segment: Q2 up 16%, first half of 2025 up 13%. Payment Software segment: Q2 roughly flat, first half of 2025 up 18%. Revenue was $401 million in Q2, growing 7% year-over-year. Recurring revenue of $322 million accelerated to 13% growth year-over-year. Total adjusted EBITDA in Q2 was $181 million, down 13% year-over-year. First half of the year: revenue grew 15%, recurring revenue grew 11%, adjusted EBITDA grew 24%. Payment Software segment revenue grew 18% and adjusted EBITDA grew 29% in first half. Biller segment revenue in first half grew 13% and adjusted EBITDA grew 4%.

• Raised full year 2025 revenue guidance to $1.71 billion to $1.74 billion, previously $1.69 billion to $1.72 billion. - Raised full year 2025 adjusted EBITDA guidance to $490 million to $505 million, previously $480 million to $495 million. - Q3 2025 guidance: total revenue in range of $460 million to $470 million, adjusted EBITDA in range of $155 million to $165 million.

Q: Go back to stablecoins, frame conversations with bank's customers and where ACI sits in the stack relative to core.

A: Stablecoin is getting press, ACI ready for digital currencies, sits in middle of payments infrastructure for banks and merchants.

Q: Unpack acceleration in Biller segment, any change to full year expectation.

A: Biller teams strong in Q2, some from government area and new logos, rest of year still strong, reflected in guidance increase.

Q: Talk about areas of strength in ARR bookings, dominated by large or small deals.

A: ARR bookings not dominated by single deal, had couple of nice size deals and tail of smaller deals, diverse mix.

Q: Update on project within merchant to serve U.S. market.

A: Merchant project tracking well, getting good traction with U.S. and global merchants.

Q: Compare to Red Hat, see same dynamics.

A: Similarities in passion, expertise, customer trust, and operational execution opportunity.

Q: Strategically positioned against large payment players.

A: Different business drivers, not seeing same weakness as others, different business model working well.

Q: Trends underlying strength in backlog, investment trends.

A: No fundamental change in customer investment thinking, drivers are modernization, ability to bring new products, and better sales execution.

Q: Capital allocation philosophy, buybacks and M&A.

A: Capital allocation flexible, aggressive on buybacks in Q2, look for M&A to accelerate Connetic progress or for geographic expansion, else return capital to shareholders.

Q: Unit economics of stablecoin transaction vs other form factors.

A: Real-time payment generates more revenue than debit transaction today, volumes determine pricing, as adoption ramps up economics can become similar.

Q: Walk through Q3 EBITDA guidance, puts and takes.

A: Q3 guide based on strong Q2, higher Payment Software revenue stream, investment in new platforms, uncertainty around high-margin license deals closing, mix of deals affects range.