"ACI had a strong second quarter, driven by continued market interest in our Universal Payments solutions and solid execution company wide," commented Phil Heasley, President and CEO, ACI Worldwide. "We expect the addition of Retail Decisions to continue this momentum and we remain optimistic regarding the remainder of 2014 and beyond."

FINANCIAL SUMMARY

Financial Results for Q2

Non-GAAP revenue in Q2 was $255 million, an increase of $47 million, or 23%, above the prior year quarter. Excluding the Official Payments contribution of $39 million, organic revenue grew 4%.

New sales bookings, net of term extensions (SNET) increased 16% compared to the prior year quarter, or 14% excluding the contribution from Official Payments. Our 12-month backlog increased by $2 million from last quarter to $885 million, while our 60-month backlog increased by $14 million from last quarter to $3.92 billion.

Non-GAAP operating income was $31 million for the quarter, versus $17 million in the prior year quarter. Adjusted EBITDA of $56 million grew 46%, or $18 million above last year's $38 million. Net EBITDA margin in Q2 2014 was 25% versus 19% margin last year, after adjusting for $34 million and $7 million of pass through interchange fees in Q2 2014 and Q2 2013, respectively.

Q2 GAAP net income was $11 million, or $0.10 per diluted share, versus net income of $2 million, or $0.02 per diluted share in Q2 2013. The variance was primarily driven by higher revenues and cost containment.

We ended the second quarter with $55 million in cash on hand. Operating free cash flow (OFCF) for the quarter was $28 million, up from $22 million in Q2 of last year. The quarter ended with a debt balance of $753 million, down from $779 million in Q1.

Reiterating Guidance

Excluding contribution from the pending acquisition of Retail Decisions (ReD), we continue to expect to generate non-GAAP revenue in a range of $1.06 to $1.08 billion for the full year. We expect non-GAAP revenue of $250 to $260 million in the third quarter. Adjusted EBITDA expectations remain in a range of $290 to $300 million. This guidance excludes approximately $15 million of significant integration-related expenses and includes $2 million for the deferred revenue adjustments. If closed in the middle of the third quarter, we expect the acquisition of ReD will generate approximately $18 million in revenue and $4 million in adjusted EBITDA for the remainder of 2014 and we will update our financial guidance upon closing. Lastly, our full year 2014 net new sales bookings growth is expected to be in the upper single digit range. 

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