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ACI Worldwide, Inc. Reports Financial Results for the Quarter Ended June 30, 2011

Tuesday, July 26, 2011

Operating Highlights

• Raised full year guidance outlook
• Achieved total revenue increase of $21.0 million, or 23%, over second quarter 2010 led by recurring revenue growth of 25% over prior-year quarter  
• Sales growth of 36% over second quarter 2010 driven by new account sales  and strong renewals
• Strong Growth in Operating Income and Adjusted EBITDA

“The company is harvesting more of our revenue from backlog as demonstrated by the rise in recurring revenue, thereby resulting in larger and more predictable, ratable and consistent quarters. This consistency in recurring revenue has also contributed to our decision to raise guidance. In addition to the superior operational metrics attained, we achieved record sales bookings of approximately $270 million in the first half of 2011. All of these accomplishments underscore ACI’s maturation as a disciplined leader with strong business processes,” said Chief Executive Officer Philip Heasley.

Financial Summary

Sales 

Sales bookings in the quarter totaled $147.0 million, which was an increase of $39.0 million, or 36%, as compared to the June 2010 quarter. The stronger quarter was driven by new account sales and strong renewals with both large financial institutions and processors in Australia, Canada, India, United States and the United Kingdom.  Notable changes in the mix of sales compared to last year’s quarter included a rise of approximately $35 million and $18.5 million in term renewal and new account sales, respectively.

Backlog

As of June 30, 2011, our estimated 60-month backlog was $1.640 billion, an increase of $74 million as compared to $1.566 billion at December 31, 2010. The growth was primarily attributable to the impact of new sales, the acquisition of ISD Corporation, and foreign exchange translation. As of June 30, 2011, our 12-month backlog was $400 million, an increase of $19 million as compared to $381 million for the quarter ended December 31, 2010.

Revenue

Revenue was $113.4 million in the quarter ended June 30, 2011, an increase of $21.0 million, or 23%, over the prior-year quarter revenue. The growth in 2011 revenue over the prior-year quarter includes higher recurring revenue with an increase of $16.1 million, or 25%, over prior-year quarter resulting in $81.1 million in recurring revenue for the quarter ended June 30, 2011.

Operating Expenses

Operating expenses were $102.9 million in the June 2011 quarter compared to $88.1 million in the June 2010 quarter, an increase of $14.8 million, or 17%. Operating expense growth was led primarily by increased sales & marketing and research & development expenses.

Operating Income

Operating income was $10.4 million in the June 2011 quarter, an increase of approximately $6.0 million or 136%, as compared to operating income of $4.4 million in the June 2010 quarter.

Adjusted EBITDA

Adjusted EBITDA rose to $19.9 million in the June 2011 quarter, an increase of $7.1 million, or 55%, as compared to Adjusted EBITDA of $12.8 million in the June 2010 quarter.

Liquidity

We had $170.8 million in cash on hand as of June 30, 2011.  As of June 30, 2011, we also had $75.0 million in unused borrowings under our credit facility.

Operating Free Cash Flow

Operating free cash flow (“OFCF”) for the quarter was $1.6 million, an increase of $1.8 million over the June 2010 quarter.  

Other Income/Expense

Other income for the quarter was $0.1 million, an improvement of $2.2 million compared to other expense of $2.1 million in the June 2010 quarter.  The variance was led by a positive $2.0 million change in foreign exchange translation.  

Taxes

Income tax expense in the quarter was $0.7 million, or a 6.7% effective tax rate, compared to $2.4 million in the prior-year quarter.  The decrease in income tax expense is primarily the result of a release of approximately $2.2 million of tax reserves.

Net Income and Diluted Earnings Per Share

Net income for the quarter ended June 30, 2011 was $9.8 million, compared to net loss of $0.1 million during the same period last year, an improvement of $9.9 million.

Earnings per share for the quarter ended June 30, 2011 was $0.29 per diluted share compared to $0.00 per diluted share during the same period last year.  The improvement was largely due to stronger operating income and a lower effective tax rate.

Weighted Average Shares Outstanding

Total diluted weighted average shares outstanding were 34.3 million for the quarter ended June 30, 2011 as compared to 33.5 million shares outstanding for the quarter ended June 30, 2010.

2011 Guidance 

We are raising our annual guidance based upon what we are seeing in our business markets to date. Hence, guidance for calendar year is as follows: Revenue to achieve a range of $450-460 million, Operating Income of $65-69 million and Adjusted EBITDA of $101-104 million.

Contact details

Tamar Gerber, Vice President, Investor Relations & Financial Communications
ACI Worldwide
+1 646 348 6706
invrel@aciworldwide.com

Notes to editors

About ACI Worldwide

ACI Worldwide powers electronic payments for more than 800 financial institutions, retailers and processors around the world, with its broad and integrated suite of electronic payment software. More than 90 billion times each year, ACI’s solutions process consumer payments. On an average day, ACI software manages more than US$12 trillion in wholesale payments. And for more than 160 organizations worldwide, ACI software helps to protect their customers from financial crime. To learn more about ACI and understand why we are trusted globally, please visit www.aciworldwide.com. You can also find us on www.paymentsinsights.com or on Twitter @ACI_Worldwide.