HIGHLIGHTS

• Revenue up 3% for the full year 2017*
• Cash flow from operations up 46% in 2017
• Repurchased 3 million shares for $68 million, as of February 22, 2018
• Increased repurchase authorization to $200 million
• Providing 2018 guidance and 2019-2020 outlook
• New tax law lowers forward effective tax rate
• No cash tax impact of new repatriation tax

*Adjusted for FX and the Community Financial Services (CFS) divestiture

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“Q4 capped a solid year for ACI.  In 2017, we achieved our revenue and profitability goals.  We are especially happy with our EBITDA, which grew 9%, and our net EBITDA margin, which increased 200 basis points,” commented Phil Heasley, President and CEO, ACI Worldwide.  “We are off to a strong start in 2018, and with an investment cycle largely completed and a bookings pipeline larger than ever, we look forward to continued growth in 2018 and beyond.”

FULL YEAR 2017 FINANCIAL SUMMARY

Full year new bookings of $619 million and total bookings of $1.093 billion were down from last year due in part to contract signing delays into early 2018.  We ended the year with a 60-month backlog of $4.1 billion and a 12-month backlog of $825 million.  Excluding the impact of foreign currency movements, our 60-month backlog grew $16 million and our 12-month backlog decreased $10 million versus Q3 2017.

Full year GAAP revenue was $1.024 billion, up $18 million, over 2016.  Excluding the impact of foreign currency fluctuations and the CFS divestiture, full year revenue grew 3%.  ACI’s On Premise segment revenue grew 1% to $598 million and now represents 58% of total revenue.  ACI’s On Demand segment revenue grew 7% to $426 million and now represents 42% of total revenue.

Full year 2017 net income was reduced by higher income tax expense resulting from the enactment of the Tax Cuts and Jobs Act (the “2017 Tax Act”) related to the write-down of net deferred tax assets and the tax charge related to unremitted foreign earnings. The enactment of the 2017 Tax Act is not expected to have an impact on cash taxes as we expect to utilize foreign tax credits to cover any cash tax repatriation obligations.

Net income in 2017 was $5 million, or $0.04 per diluted share, versus net income of $130 million, or $1.09 per diluted share in 2016.  Adjusting for the CFS divestiture, the previously disclosed legal judgment, the enactment of the 2017 Tax Act, and other significant transaction related expenses, adjusted net income grew 65%, to $81 million, or $0.68 per diluted share, from $49 million, or $0.41 per diluted share.

Adjusted EBITDA was $262 million, up 9% from $241 million in 2016.  After adjusting for pass through interchange revenues of $163 million and $144 million in 2017 and 2016, respectively, net adjusted EBITDA margin was 30% in 2017 versus 28% in 2016. 

Cash flow from operating activities in 2017 was $146 million, up 46% from $100 million in 2016.  2017 adjusted operating free cash flow (OFCF) was up 80% from $72 million in 2016.

As of December 31, 2017, we had $70 million in cash on hand and a debt balance of $696 million, down $57 million from $753 million at year end 2016.  As of February 22, 2018, we repurchased 3 million shares for $68 million at an average price of $22.83 per share.  Following our increased authorization, we have $200 million available to repurchase ACIW shares.

2018 GUIDANCE

Effective January 1, 2018, the Company adopted Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“ASC 606”), which supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition (“ASC 605”). The Company expects the adoption of ASC 606 to impact the timing and amount of revenue recognition for its on-premise licensing arrangements. The Company does not expect the adoption of ASC 606 to have a significant impact on its other revenue streams or cash flows from operations.  The Company has provided its full-year and first quarter outlook under both ASC 606 and ASC 605 in order to provide additional transparency. The Company will continue to provide actual results under both ASC 606 and ASC 605 throughout 2018. 

For the full year 2018, the Company expects revenue under ASC 605 to be between $1.05 billion and $1.075 billion, which represents 3-5% growth over 2017 on a comparable GAAP basis.  Adjusted EBITDA is expected to be in a range of $270 million to $285 million, which excludes approximately $5-7 million in significant transaction related expenses. We expect to generate between $210 million and $220 million of revenue in the first quarter.  We expect full year 2018 new bookings to grow in the low double digits.  

For the full year 2018, the Company expects revenue under ASC 606 to be between $1.03 billion and $1.055 billion and adjusted EBITDA to be in a range of $255 million to $270 million, which excludes approximately $5-7 million in significant transaction related expenses. We expect to generate between $200 million and $210 million of revenue in the first quarter.  

In addition to our 2018 guidance, we are providing a longer-term EBITDA outlook.  2019 adjusted EBITDA is targeted to be in a range of $300 million to $315 million and 2020 adjusted EBITDA is targeted to be in a range of $335 million to $350 million.

CONFERENCE CALL TO DISCUSS FINANCIAL RESULTS AND OUTLOOK

Management will host a conference call at 8:30 am ET to discuss these results as well as 2018 guidance.  Interested persons may access a real-time audio broadcast of the teleconference at http://investor.aciworldwide.com/ or use the following numbers for dial-in participation:  US/Canada: (866) 914-7436, international:  +1 (817) 385-9117.   Please provide your name, the conference name ACI Worldwide, Inc. and conference code 5696244. There will be a replay of the call available for two weeks on (855) 859-2056 for US/Canada callers and +1 (404) 537-3406 for international participants.