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ACI Worldwide revises guidance as renewals drag

03 November 2016  |  3235 views  |  0 Source: ACI Worldwide

ACI Worldwide (ACIW), a leading global provider of real-time electronic payment and banking solutions, today announced financial results for the quarter ended September 30, 2016.

“ACI is seeing growing interest in our Universal Payments solution and significant momentum in our SaaS and platform delivery. With success booking net new customers, our new bookings in Q3 grew 9% and our SaaS-specific bookings grew 24%. Also in the quarter we went live with our new state-of-the-art data center in Europe and signed an important partnership with VocaLink,” commented Phil Heasley, President and CEO, ACI Worldwide. “With our renewal business, we believe our plan to bundle Universal Payments has the potential to double our large customer average contract size with compelling value to both customers and ACI. However, it has caused our renewal negotiations to take longer than they have in the past and is impacting our forecast. This is simply a timing issue and we are making the conscious decision to realize economic value to ACI and our long-term shareholders. Overall, I believe our positioning is as exciting as it ever has been.”

Q3 FINANCIAL SUMMARY

Net new bookings grew 9% compared to Q3 2015, bolstered by SaaS-specific bookings that grew 24%. These numbers are adjusted for the Community Financial Services (CFS) divestiture.

Excluding the impact of foreign currency movements, our 12-month backlog declined $2 million to $850 million and our 60-month backlog grew $42 million to $4 billion during the quarter.

GAAP revenue of $217 million decreased 9% from last year and was below our guidance given the timing of certain renewals. After adjusting for the CFS divestiture and foreign currency fluctuations, revenue grew 2%. Recurring revenue increased $13 million, or 8%, and SaaS-based revenue grew $13 million, or 13%, compared to Q3 2015, after adjusting for CFS. This growth was offset by a decline in non-recurring license revenue.

Q3 2016 adjusted EBITDA was $35 million down from $46 million in the prior year period, excluding CFS contribution and related costs. The decline in adjusted EBITDA was primarily due to timing of non-recurring license revenue compared to Q3 last year. Net adjusted EBITDA margin in Q3 2016 was 18%, versus 24% in Q3 2015, after adjusting for pass through interchange fees of $31 million and $27 million in Q3 2016 and Q3 2015, respectively.

ACI ended Q3 2016 with $51 million in cash on hand, roughly flat with Q2, and a debt balance of $753 million, a decrease of $186 million from a debt balance of $939 million at year end 2015. Excluding the impact of our previously announced one-time capital investments in our European data center and cyber security, operating free cash flow (OFCF) for the quarter was negative $1 million.

UPDATING GUIDANCE

We are updating our full-year 2016 guidance expectations given the delayed timing of certain larger renewals. We now expect to generate revenue from ongoing operations in a range of $960 million to $990 million in 2016, down from a range of $990 million to $1.02 billion, which represents up to 4% organic growth after adjusting for the PAY.ON acquisition and foreign currency fluctuations. Adjusted EBITDA in 2016 is now expected to be in a range of $235 million to $245 million, down from a range of $265 million to $275 million. These ranges exclude the partial quarter contribution from the recently divested CFS operations of $15 million in revenue and $1 million in adjusted EBITDA in Q1 2016 and exclude $7 million of CFS-related indirect overhead costs and approximately $18 million in one-time integration related expenses for PAY.ON, the CFS divestiture, data center and facilities consolidation, and bill payment platform rationalization. We continue to expect full-year 2016 net new bookings to grow in the upper single digit range.

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