ACI Worldwide Q1 2025 Earnings Call Transcript

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Provided by Quartr
May 8, 2025

Key Takeaways

  • Revenue rose 25% in Q1 with adjusted EBITDA up 95%, marking a very strong start to fiscal 2025.
  • Payment Software segment delivered 42% revenue growth and more than doubled EBITDA, including record new logo wins in Asia Pacific and Latin America.
  • ACI introduced Kinetic, its next-generation cloud-native payments hub, to accelerate customer modernization and expand into midsize banks, nonbanks and retailers.
  • The company raised full‐year revenue guidance to $1.69–$1.72 billion while maintaining EBITDA targets of $480–$495 million.
  • CFO Scott Barron announced plans to retire in the near future and will assist in the leadership transition to ensure continuity.
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Earnings Conference Call
ACI Worldwide Q1 2025
00:00 / 00:00

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Operator

Hello, and welcome to ACI Worldwide Inc. Reports Financial Results for the Quarter Ended 03/31/2025. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. And please note that this call is being recorded.

Operator

I'd like to turn the call over to John Kraft. You may begin.

John Kraft
John Kraft
Head of Strategy & Finance at ACI Worldwide

Thank you, and good morning, everyone. On today's call, we will discuss the company's first quarter twenty twenty five results as well as our financial outlook for the rest of the year. We will take your questions at the end. The slides accompanying this call and webcast can be found at aciworldwide.com under the Investor Relations tab and will remain available after the call. Today's call is subject to Safe Harbor and forward looking statements like all of our events.

John Kraft
John Kraft
Head of Strategy & Finance at ACI Worldwide

You can find the full text of both statements in our presentation deck and earnings press release, both of which are available on our website and with the SEC. On this morning's call is Tom Warsaw, our President and CEO and Scott Barron, our CFO. But before I turn it over, I wanted to make you aware that ACI will be participating in several conferences in Q2. The twentieth Annual Needham Technology Media and Consumer Conference on May 12, Barclays fifteenth Annual Emerging Payments and Fintech Forum in New York City on May 20, the annual Seaport Growth Discovery Conference on May 15, Compass Point's Virtual Bus Tour on June 2, the Baird twenty twenty five Global Consumer Technology and Services Conference in New York City on June 5 and D. A.

John Kraft
John Kraft
Head of Strategy & Finance at ACI Worldwide

Davidson's Consumer and Technology Conference in Nashville on June 11. With that, I'll turn the call over to Tom.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

Thanks, John, and good morning, everyone. As always, appreciate you joining our earnings conference call this morning. I'll start with some comments about the quarter and then I'm going to hand it over to Scott, and he'll discuss detailed financial results as well as expectations for the rest of 2025. And then we'll open it up for questions. To begin, Q1 was a very strong start for us.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

We grew revenue 25% and EBITDA 95%. You probably recall, I've said several times that we have been pushing our teams to sign both renewals and new business earlier in the year to both de risk accomplishment of our full year targets and to allow us to more quickly focus on longer term, more strategic opportunities. I'm happy to report this pressure continues to yield results. In fact, we were able to sign more revenue in Q1 than even I expected. As a reminder, renewal contracts yield revenue on the date of their renewal and that doesn't matter how early we sign them.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

So I think it's probably clear that the incremental revenue this quarter comes from net new business and better than expected transaction volumes, not renewals. Some of the new business we signed was originally expected in Q2, but I'm sure you agree with me that we'd rather have it earlier. Scott's going to walk you through the guidance a bit later, but this strong start positions us very well to achieve first half and full year results in line with our previous indications. So we won't be able to sustain a 25% revenue growth rate throughout the year, but I'm very pleased we delivered so much revenue growth so early. On our last earnings call, I mentioned the organizational improvement we made in combining the Bank segment and the Merchant segment into a single new business unit called Payments Software.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

As I said, the combination is synergistic and it simplifies our operations in many respects. Further, the software, the code, if you will, that we use to serve banks and merchants is very similar. That move has already generated some positives, including generating some new pipeline opportunities and allowing us to more efficiently cover certain geographies where we have customers in both pieces of that segment. So if I turn to the segments, let me start with Payment Software. Revenue grew 42, adjusted EBITDA more than doubled compared to Q1 of last year.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

As we mentioned previously, we signed the largest new logo and competitive takeaway we have ever had in our Asia Pacific region. And in addition, we signed another significant new logo in the segment, this one in our Latin America region in South America in fact. We're proud to have signed two completely new bank logos in a single quarter. Both of these wins are using our issuing and acquiring solutions. Before moving on from payment software to biller, I want to provide you an update on our next generation payments hub solution and we've now officially named that Kinetic.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

That's c o n n e t I c. I often joke that, you have to make up a word in order to to to get a, get a name through the IP lawyers. That's what we did here, but I think it's a nice one. The solution, to remind you, cloud native. It provides a lot of enhanced capabilities such as automated decisioning, straight through processing, declined transaction reduction and AI driven analytics.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

It simply improves the experience of a bank and its customers. The solution also expands our addressable market beyond our traditional large banks to include midsize and smaller institutions as well as non bank financial institutions and payments technology firms and ultimately even global retailers. Kinetic complements our existing solutions and it's very helpful as our customers plan to migrate to the cloud. Kinetic will help customers manage a lower risk modernization journey. I was speaking to the CIO of a very large Middle Eastern bank last week when I was in The Middle East.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

And when I finished my description of Kinetic, his response to me was, and I'm quoting, I want to be part of this journey. How quickly can you come back to show me how this works? And that's a pretty common reaction to our story, so I remain extremely excited about, the possibilities. Just discussing this solution and our technology roadmaps has already contributed to expanding relationships with existing customers. It also helped us to win that competitive takeaway in Asia Pacific that I just mentioned.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

So stay tuned for details regarding an official Kinetic launch celebration, which we're going to do in conjunction with our fiftieth birthday celebration later this year. Now I'll turn to Biller. Our Q1 revenue was up 11%. We signed several new logos in the Biller segment as well. And new logos may not be as rare in the payments as they are in the payment software segment, but they're equally nice of course.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

Our bookings momentum continued in Q1 and our new ARR bookings were up about 40% over last year's Q1. Overall, we're very happy with our progress and our positioning for the future. While the world seems fixated on the tariff and trade discussions, our customers are healthy. Our strong start to the year has boosted our confidence in achieving our full year targets, and we haven't seen any material impacts from the geopolitical uncertainty that we're all seeing at this point. I'll anticipate a question to tell you that while we do business with several Chinese banks, our financial exposure to China is not material.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

So in this case, that's good news. We remain focused on our broader strategy, our sales execution and the development of our next generation Kinetic platform. We started the year very strong, and we're confident in our full year financial forecast. Overall, we're optimistic regarding our long term profitable growth and our ability to continue to deliver significant shareholder value. I'll turn it over to Scott to discuss financials and our guidance. Scott?

Scott Behrens
Scott Behrens
CFO at ACI Worldwide

Thanks, Tom, and good morning, everyone. I first plan to review our financial results for the quarter and then provide our outlook for the rest of 2025. We'll then open the line for questions. Q1 twenty twenty five revenue was $395,000,000 up 25% from Q1 twenty twenty four, and total adjusted EBITDA was $94,000,000 up 95% from Q1 twenty twenty four. Looking at the results by segment, our Payment Software segment revenue increased 42% and adjusted EBITDA more than doubled versus Q1 twenty twenty four.

Scott Behrens
Scott Behrens
CFO at ACI Worldwide

And our billers segment revenue increased 11%, while adjusted EBITDA increased 1% from Q1 twenty twenty four. We continued to see strong cash flow growth in Q1, with cash flow from operating activities of $78,000,000 We ended the quarter with strong liquidity, including $230,000,000 in cash on hand and approximately $853,000,000 of total debt outstanding. This represents a net debt leverage ratio of 1.2x, which is below our stated target of 2x that we discussed previously. As of today, we have repurchased approximately 1,000,000 shares of our stock year to date for $52,000,000 and have the $320,000,000 remaining on our share repurchase authorization. Also in the quarter, we sold our non controlling interest in India based Mindgate to PayU India.

Scott Behrens
Scott Behrens
CFO at ACI Worldwide

The gain on sale is included in other income and expense on an income statement. And even though we'll no longer have a minority investment in Mindgate, we will continue our strategic partnership with them in the region. As we look at our outlook for the rest of the year, obviously, there's been a lot of volatility in the capital markets in recent weeks, but we're comfortable that we are fairly insulated from a lot of the macroeconomic events. Meaning on the payment software side of the business, as you know, these are mission critical payment systems, and most of the revenue for the year is either under long term contracts or subject to renewal. And on the biller side, the verticals we serve are really nondiscretionary bill payments.

Scott Behrens
Scott Behrens
CFO at ACI Worldwide

And as a software company, we really don't see a lot of impacts from tariffs on the supply chain. We're really not exposed to China. And with our low leverage and strong cash flow, we are in a tremendously flexible financial position if interest rates stay higher for longer. We'll actually see a slight benefit from the moves in the U. S.

Scott Behrens
Scott Behrens
CFO at ACI Worldwide

Dollar that we've seen so far this year. Remember that 75% to 80% of our payment software business is outside The U. S, and a good portion of that revenue is contracted in local currencies. We're naturally hedged, having expenses also in local currencies, so FX rate moves have more of a top line impact than a margin impact. So with a strong start to the year and the impact of changes in FX rates, we are raising our guidance for full year revenue.

Scott Behrens
Scott Behrens
CFO at ACI Worldwide

We now expect revenue to be in the range of $1,690,000,000 to $1,720,000,000 and we continue to expect adjusted EBITDA to be in the range of $480,000,000 to $495,000,000 For Q2, we expect revenue to be in a range of three seventy five million to $385,000,000 and adjusted EBITDA to be in a range of 55,000,000 to $65,000,000 With this guidance, we still expect approximately 46% of our full year revenue for 2025 in the first half of the year versus the 43% weight of the first half we saw in 2024. And this is really due to the continued efforts, as Tom mentioned, to sign our new contracts earlier in the year. So in summary, in Q1, we saw strong revenue growth contributing to strong EBITDA growth and margin expansion, and we continue to see strong cash flow contributing to our ability to both delever and deploy capital to our share repurchase program. And we are raising our full year revenue guidance. But before I hand it back to Tom, I want to switch now to a personal note.

Scott Behrens
Scott Behrens
CFO at ACI Worldwide

As we look ahead, I've begun to plan for my retirement. I've been with ACI now for almost eighteen years. During that time, we've grown the company from $370,000,000 of revenue and $30,000,000 of EBITDA to our current twenty twenty five projections of $1,700,000,000 of revenue and nearly $500,000,000 of EBITDA. I'm extremely proud of what we've achieved, including building a world class finance organization. To ensure an orderly and well planned transition, I'm announcing today that it is my plan to retire in the near future, during which time I will work with Tom and the Board to accomplish a smooth transition in the financial leadership of the company.

Scott Behrens
Scott Behrens
CFO at ACI Worldwide

And I told Tom and the Board that I'll be here as long as they need me. So with that, I will now hand it back to Tom for some closing remarks. Tom?

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

Thank you very much, Scott. Before I conclude my remarks about the quarter and the year, let me pause to offer my sincere personal thanks to Scott for all of his contributions to ACI. Scott has been working at ACI for nearly two decades, and he's been a true partner to me. His leadership and individual contributions have been a key part of our success throughout that time. Scott's transparent approach to his decision to retire gives us the opportunity to execute the robust succession plan we already had in place and have had in place for a long time.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

I've already begun working on it and Scott is committed to supporting us throughout the transition. I'm really pleased for Scott and his family as they enter this next phase. I'll keep you informed about our progress in filling these very big shoes. As I conclude, it's an exciting time for global electronic payments. Change is constant and ACI is at the heart of all that excitement.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

We power the world's payments ecosystem, and that's exactly where we want to be. Our leadership team is intensely focused on delivering for our customers, for our people and for you, our investors. We understand very clearly that delivering strong shareholder value is our job and we intend to continue doing just that. Thank you for joining our call this morning and for the faith you show through your ownership and support of ACI shares. Operator, we can now take questions.

Operator

We will now begin the question and answer session. And your first question comes from the line of Trevor Williams with Jefferies. Trevor, please go ahead.

Trevor Williams
Managing Director at Jefferies LLC

Great. Thanks. Hey, guys. Good morning. And Scott, congrats on the retirement.

Trevor Williams
Managing Director at Jefferies LLC

Well deserved. Maybe if I could just ask the first one on the current environment. And Tom, you kind of alluded to this in your prepared remarks. It sounds like you guys aren't seeing anything yet, at least in terms of the way that your customers are behaving. But maybe just based on your discussions and over the last month or two, Tom, with your customers, I mean, is there any kind of wavering that you're seeing just in terms of decision making timelines, willingness to take on kind of more investment in modernization and just kind of how you guys are thinking about that potentially playing out over the rest of the year just given the macro uncertainty? Thanks.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

Yes. So thanks, Trevor. And no. It's the short answer. It's it's interesting.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

I was I was telling Scott and John, I just returned from the from The Middle East and spoke with many customers. And the way those conversations went, it was it was almost identically in each each each instance. First, you know, small talk introductions. Second, what's going on with these tariffs and and and the president and all the changes and, you know, how's that impacting your business? And so we had a good conversation.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

Of course, I took the opportunity to turn that question around and say, well, how are you thinking about it? And is it going to change the way you think about your business as a whole? And then, of course, selfishly, is does it is it gonna have any impact on on the way we think about expanding our relationship? And in each instance, absolutely unanimously, the answer is no. It has no impact on what we're doing.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

In fact, they didn't say it this way because they they wouldn't, of course. But the feeling I get is it may create a little bit more opportunity for us, especially on the modernization front. Now that's how it's specifically, mentioned that. And that's a that's a good call out because the the way that we're thinking about modernization and kinetics, it has so many positive impacts for the customers and their customers that I think most of most of the people I'm talking to see it as a as an opportunity to get better faster. And so, you know, I don't I don't know exactly how big that opportunity will be and exactly when it will come, but we're not seeing a negative at this point at all.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

We're seeing a little bit of positive momentum. So I feel great about that. And then the last point I'll make on this is, I said and Scott said and we've talked about this a lot, that we've been pushing to get deals closed earlier. And that absolutely happened in Q1. Some of those deals we expect in Q2, we were able to get signed in Q1.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

And one of the I think one very small driver to that was customer saying, let's let's get this done now so that we can start to get some benefits given all the uncertainty. Let's push to get it done faster, which is great. So that's kind of what I'm alluding to. That's what we're seeing at the moment is a little bit of positive and really haven't seen negative at this point.

Trevor Williams
Managing Director at Jefferies LLC

Okay. No, that's great. For my follow-up, wanted to ask on stablecoins. It's something that we're starting to hear a lot more about, especially as it relates to more kind of cross border B2B money movement. First, can you just remind us within the bank's business what exposure you have to cross border, if at all?

Trevor Williams
Managing Director at Jefferies LLC

And then secondarily, is this something that's coming up at all in your discussion with your bank's customers, their willingness to look at stablecoins as kind of an alternative, rail for money movement and just where ACI could potentially fit, in that discussion? Thanks.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

Yes, sure. So, just on cross border, we have a lot of business that facilitates our software, in many ways, facilitates cross border payments. I mean, just one example is Swift. So Swift payments, handle, I I think, at least trillions of dollars a day, in in those cross border, very large payments. So, we do a lot with it.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

We're I think the next phase that and I've probably talked about this several times, but just I I I think it's very important. The real time payments ecosystem in the world at the moment is almost all inside of a country, a little bit regionally in a couple of places around the world. But the some super interesting use cases get facilitated once you start you start allowing and and I'll come back to why I used the word specifically, allowing cross border real time payments. So our our technology already is is ready for for cross border real time. That's not the issue.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

The issue is the regulators have to agree on what the rules are. And we've seen a little bit of that start to happen. In particular, it's one example, Singapore and UPI in India. So in Singapore, there are some limited examples where you can use UPI, which is the Indian real time payment scheme, to make payments while you're traveling in Singapore for an Indian national. So that's just one example, but we're gonna start to see more of those, and that'll get really interesting.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

Now you asked about Sablecoin. I do I get lots of questions, and we have lots of discussion around stablecoin. It's interesting. It's it's very interesting. There's certainly potential there.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

But at this point, certainly, the bank customers, it's mostly a, hey, what do we think might happen with stablecoin? Is is it gonna be a big deal or not? I don't I don't know how big and how fast, but I think there's a place for stablecoin. Now it's not exactly responsive to your question, Trevor, but our software, we we have allowed and facilitated, crypto payments for a long time. Volumes are very, very, very small, but it's no problem for us from a technology perspective.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

So we're, you know, we're we're carefully and interestedly thinking about what's coming and what what might be possible. I think for us, it's more about, making sure we are working with our customers to take advantage of opportunity in the future. That's not you know, there's there's not we're not we're not concerned about being able to handle it and facilitate it. It's more about where does the market go. And so we're keeping our eye on that.

Trevor Williams
Managing Director at Jefferies LLC

Okay. I appreciate all that. Thanks again, guys.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

Yes. Thanks, Trevor.

Operator

And your next question comes from the line of Jeff Caldwell with Seaport Research. Jeff, please go ahead.

Jeff Cantwell
Senior Equity Analyst at Seaport Research Partners

Hey, thank you very much. First of all, congrats, I mean, job well done. Want to wish you the best in your retirement.

Scott Behrens
Scott Behrens
CFO at ACI Worldwide

Thanks, Can

Jeff Cantwell
Senior Equity Analyst at Seaport Research Partners

you talk more to us about payment software? That was over $200,000,000 in the quarter. That was up 42%. So if you think about the overall revenue guidance, how are you thinking about that segment over the course of the remainder of the year? Am I just explaining some of the puts and takes as far as revenue and growth expectations for that line? And how we should be thinking about modeling that? Sure.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

So I'll let Scott comment. I mean, the big picture, we're we're pretty much in the same spot we were when we gave guidance in q one for the full year. What really happened was and and, again, I think this is a really good news. But what really happened is we were able to sign quite a bit more of that net new in q one than we originally thought we would. And so if you look at the first half, the the guidance we provided is basically right arm where we expected to be.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

And so what happened is we were able to shift those net new signings into Q1, which is a great thing from my perspective. I hope you see it that way too. We did sign some of the renewals early also, but that didn't affect anything because of the way the accounting works. So, directly responding to your question, we we we have we we have the same expectations essentially for the full year as we did at the beginning of the year, but great news we're able to shift some of it forward. So, Scott, we've got one.

Scott Behrens
Scott Behrens
CFO at ACI Worldwide

Yeah. The only other thing I'd add to that, yes, so we're still tracking to call it that seven to 9% constant currency revenue growth, And that, in in total, the the payments off plus billers. If you look at q one year over year revenue growth, it's the recurring base of the business that was up 8% in q one. So that was right in that range. Q two is lining up to look very similar. So that kind of solid, predictable, revised base of recurring revenue is lining up in that, you know, eight percent range.

Scott Behrens
Scott Behrens
CFO at ACI Worldwide

And then where you're gonna have some variabilities on some of these these bank license deals. So got a lot more done in q one. Q '2 will be a little lighter in terms of those license deals, and then it'll pick up again in in q three, q '4. But if you look at it, you're modeling, you know, that underlying base recurring revenue, you know, about that 8% mark. And then the variability in a given quarter is gonna come from the timing of license fees.

Scott Behrens
Scott Behrens
CFO at ACI Worldwide

So it'll pick back up again in q three, but overall, we're still tracking that 79% constant currency growth for the year.

Jeff Cantwell
Senior Equity Analyst at Seaport Research Partners

Okay. Great. And then as a follow-up, during the quarter you announced a partnership with Ingo Payments and Speedpay that was around digital disbursements. Can you maybe talk about that, frame that for us, help us understand what you're doing strategically and then how we might see certain areas like billerspeedpay evolve as we think about yourselves doing partnerships with Ingo or maybe even some others? Also, what's the right way to be thinking about billers growth from here?

Jeff Cantwell
Senior Equity Analyst at Seaport Research Partners

Can you just remind us about that segment given all the changes in macro? Wanted to ask what your thoughts are there for the segment?

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

Yeah. So a couple of thoughts. Let me start with the second question first. So Biller, we feel feel just as good actually, maybe a little bit better about Biller now than we did at the beginning of the year. We've talked about the IRS moving from three providers to two, us being one of the two.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

So the numbers aren't fully in yet from the tax season, but we're we're cautiously optimistic there. And just as a reminder, most of the bill payment that we facilitate, but significant majority of that, is nondiscretionary. So we're you know, it's your car payment, your your tuition bill, your electric bill, etcetera, etcetera. You you gotta pay those bills. And so we're not expecting big, certainly not expecting big negative impact from some of this uncertainty.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

There'll be puts and takes, but we're not seeing negative impacts. And again, cautiously optimistic on the IRS and tax in general. So that's we're feeling good about it. No change in our view for the full year and going forward. So that's that piece.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

And then you asked about Ingle Payments in particular. And let me instead of just talking about that, let me talk about disbursements. Hopefully, it's clear we're really good at the bill payment part, so collecting the money on behalf of our customers. The next big opportunity is disbursements. And I'll give you one quite interesting use case.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

I used you know, for several years, I ran workers' compensation and or health care third party administrators. And the biggest headache that I had was how to efficiently and effectively disperse claim payments to health care providers. So this is only one use case. But that was really hard to do. It was expensive.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

It was painful. And so by by partnering to allow the dispersion side, the opposite of the bill pay side, and that can take many forms, not just health care, But that is sort of the other piece of the puzzle. So as we as we get better at that, as we expand that business now, it's all it's it's a money movement business instead of a bill payment business. And that that has a lot of incremental opportunity. It's much more interesting.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

The value propositions are much more robust. So that's why we're doing this. It's small. The business the capital business is small, honestly, just starting. But over time, we expect that to grow, and we expect it will get better and better in that area. Thank you, Kevin. And

Operator

your next question comes from the line of Peter Heckmann with D. A. Davidson. Peter, please go ahead.

Pete Heckmann
MD & Senior Research Analyst at D.A. Davidson

Hey, good morning. Thanks for taking my questions. I wanted to have a few questions. But on the recent merger divestiture within merchant acquiring and issuer business of Global Payments and FIS, How do you think ACI shakes out there? Is it something where customers on both sides don't envision the change? Or or or could there be something that changes there based on on the change of ownership of of those two businesses?

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

Yeah. I mean, we're it's obviously early days in that. We don't we don't have, any special insight into how they're thinking about that business going forward. But, they're both they're both very good customers of ours, and, we have, we have strong relationships with both of them. So I think, and, you know, again, too early to say, but, we're actually excited.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

I'm personally excited about, you know, as they figured out, us trying you know, we're gonna try to be a partner to them. We are how do they how can we help them bring the pieces together and facilitate faster growth. I I don't, you know, I don't have anything specific for you at the moment because we literally haven't spoken to them about it. I think they're still they're still getting their feet under the desk after they announced this and and trying to figure out how to do it. So I don't have anything specific for you, but think it's a good opportunity for us to really show how we partner with the customer, with two customers.

Pete Heckmann
MD & Senior Research Analyst at D.A. Davidson

Okay. Okay. And then it looks like we're shaking up shaking up to have about 45% of revenue, in 2025 in the first half, and and a little bit more front end loaded than normal. In terms of thinking about the back half and that 55%, would you expect it to kind of look like historicals of maybe twenty five percent of revenue in the third quarter and 32% in the fourth?

Scott Behrens
Scott Behrens
CFO at ACI Worldwide

Yes. I think that'd be yes, I think that'd be here. That goes back to my previous comment. If you look at how that model, that underlying base, stream revenue, call that at that 8%. And then the variability in Q3 and Q4 will be predominantly in that license fee.

Scott Behrens
Scott Behrens
CFO at ACI Worldwide

So both renewals, ID, net new, and Q4 is always a little bit heavier than Q3. So I would say that that mix is for second half.

Pete Heckmann
MD & Senior Research Analyst at D.A. Davidson

Probably. Alright. Okay. Okay. Great.

Pete Heckmann
MD & Senior Research Analyst at D.A. Davidson

And then if you if you hear me just on Kinetic, you know, sounds like we're making some nice progress there and and but but but, like, what milestones should we be thinking about this year in terms of, you know, kind of a number of demos, you know, beta customers, and and and then when do you think you actually start to see some customers go live, the first customers go live in in the GA version?

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

Yeah. So well, in terms of I I don't I don't know the exact number of people. We've already given a a pretty significant number of demos. And the way the way I thought about this was I did not want our our salespeople to be out there selling I I I call it sales by PowerPoint. You know, they're and we've all seen this, I'm sure, where it's really easy to show somebody a really cool technology if it's not real.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

And in PowerPoint, we I didn't wanna do that. We did not do that. We did not we did not get any any demos. We we talked generally about Kinetics. Well, we were calling it Kinetics in the beginning, but we talked generally about it.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

Both of them, you know, expect expect more. We now, at the end of last year, as planned, we had our our super robust working demos. It's a we we can actually show, and show what look like absolutely real transactions with with test data that's robust and looks looks like the data they the customers expect. So we've had that since, I think, the December. At the April, as planned, we released version one point zero, which is actually think we coded it a little differently.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

I think it's 0.1 or something like that. But, anyway, the first version that that could be deployed. And so we're using that we're using that now as the basis of our of our demo. So, we're gonna have a lot of demos this year. I don't know exactly how many we've given.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

I don't know exactly how many we're gonna give this year, but there's a tremendous demand to see more, to understand how it works. Let's play with it with real you know, our real data. I get this question a lot. We're and we're prepared to do that. We're doing that.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

We've trained all of our salespeople, on how to how to talk about the the program, how to how to demo it. I'm I'm not saying everybody's great at it yet, but, because they're not. But they're gonna get better and better. And so you you asked about first live customers. My expectation I don't know exactly.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

It depends, but I think it will be early next year that that we'll have to fly. But we're gonna we're gonna I'm absolutely confident we'll have we'll have some some sales occurring before that, so probably late this year. And really, the interesting thing is we got a lot of demand, a lot of people pulling on wanting to be one of those beta customers, and we're trying to be pretty thoughtful about, which customers are the right ones to, to be those beta customers. That's really what we're working through right now. And each quarter, we'll talk about that and how we're progressing.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

But, we're we're achieving the milestones that we set out, the demo late last year, first version April, we've achieved both of those milestones, and we expect to continue achieving those.

Pete Heckmann
MD & Senior Research Analyst at D.A. Davidson

Great. Great. Well, that's good to hear. I'll get back in the queue. I appreciate your time.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

Thanks a lot. And

Operator

your next question comes from the line of George Sutton with Craig Hallum Capital. George, please go ahead.

George Sutton
Partner & Senior Research Analyst at Craig-Hallum Capital Group LLC

Hey, good morning, guys. Logan on for George and congrats on another nice quarter here. Maybe to start, Tom, you called out an increase in the pipeline opportunities as a result of the now combined banking merchant segments. Can you just maybe give us any more detail on what you mean by that? And then maybe just broadly kinda any benefits you've seen in in the go to market motion there?

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

Sure. So I I'll give you an example. I'm gonna give you a generic deal. I'm not gonna give you a customer name on this, I recently was was was traveling in well, it was The Middle East as well. I I've made two trips to The Middle East in the last six weeks.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

It's a interesting region, a lot of traveling. But what we're what I was talking to I was talking to a very big bank that has a big set of customers that are are large merchants. And, historically, we've approached, bank customers and bank value propositions almost completely independently from those merchant opportunities. And I'll give you the specifics. It was it's about fraud.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

And so we have great fraud solutions, but we've tended to create value propositions that are specifically aimed at a bank or specifically aimed at a merchant. So I was having this conversation with the with the bank whose customers are mostly big merchants, And they were they were really interested in how we package our fraud solutions so that the bank gets the benefit and, you know, they have specific needs. And then they can also use those same basic tools and same approaches to help their merchant customers get better fraud detection and prevention, better insights into what's happening with transactions. And so because we've now combined those businesses and and I have one customer success manager, so that's like an account manager. That's we call an account manager.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

We have one for both the merchant opportunity and the bank opportunity calling on this customer. If we we were able to have a much more comprehensive discussion about the opportunity. And so that turned into a pipeline opportunity. It's sitting in our Salesforce pipeline now. And I think in the past, that wouldn't be the case.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

We would've maybe we would've had a bank opportunity. Maybe we would've a merchant opportunity. But this combined bank, we wouldn't have had that yet. So we might have gotten an invention. So that's that's a specific example of of that.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

But I think the the big the big thing is we now we we've begun to train our our sales team and our account management team across all of the solutions in payment soft. And so now they can have much more robust conversations with customers across all of those products and services instead of having to say, well, let let me let me bring in one of my colleagues to talk about this other thing. We're not having to do that as much. So that that's that's the there's a little bit of an efficiency thing, and the last thing I was talking about and what that's leading to is incremental different pipeline opportunities. So that's what I was alluding to.

George Sutton
Partner & Senior Research Analyst at Craig-Hallum Capital Group LLC

Got it. Appreciate the detail. And maybe just a quick follow-up. I was able to be able to see the numbers when the queue comes out, but can you just give us a sense for what the contribution was from real time payments this quarter? Then maybe just broadly kinda, how should we think about, like, the cadence of that revenue?

George Sutton
Partner & Senior Research Analyst at Craig-Hallum Capital Group LLC

I mean, I look at it being, I think, kinda flat last year relative to fiscal twenty three, and it feels like that doesn't really represent the true momentum there. So maybe just kinda help us square that and and how we should think about that going forward.

Scott Behrens
Scott Behrens
CFO at ACI Worldwide

Yeah. This is Scott. Yeah. On the real time payments, you that is almost entirely on premise. So you're gonna have volatility when you look at quarter to quarter because of timing of renewals and timing of new deals. It doesn't have as big of a base of that, you know, kind of recurring revenue stream. And it it's, call it, 10% of the overall business, and it's gonna grow at double digits. So but you're gonna have year over year comparability just based on the timing of the renewals.

Scott Behrens
Scott Behrens
CFO at ACI Worldwide

But if you look at it over the course of the year, it'll it'll still be real time and fraud detection are still gonna be our highest growing segments, both double digit growers over the near and long term.

George Sutton
Partner & Senior Research Analyst at Craig-Hallum Capital Group LLC

Okay. Got it. Thanks for taking my questions.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

Yes. Thank you.

Operator

And your final question comes from the line of Alex Newman with Stephens. Alex, please go ahead.

Alex Neumann
Research Associate at Stephens Inc

Hi, good morning. Thanks for taking my question. Just to start off, could you discuss, where you're seeing traction in different product areas that led to some of the higher net new business this quarter?

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

Yeah. Sure.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

So, a lot of it came from our issuing and acquiring solutions, which you know, those are those are flagship solutions for us. They are they are absolutely proven technologies. Cadillac solution are met our clients used to face us talking about them. But the what's really interesting is and if I use that Asia Pacific competitive takeaway net new as the example, we we won that deal for two reasons, and they're obviously connected. But there are two reasons.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

One, here's a customer that needed a better a better issuing and acquiring solution right now, And they they were one of the few very large banks in the world that don't use use our base 24 platform. And they they wanted to use it. They it was sort of a historical reason. I don't even know all the reasons, but they they didn't use it before. And they they really they knew it was a great solution.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

They they were interested, but they, you know, they've never decided to to make the effort to to switch. But then piece number two happened, and, I had the first conversation, but, smarter people than me, followed up and helped this bank understand the journey that we can allow them to make to modernize their time payments infrastructure with Connect. And so we were able to show them we can solve your problem right now with the best solution in the market, and we allow you to show your board, your your stakeholders of all kinds that you have a very clear lower risk, absolutely rational path to get from where you are to where you wanna be. Cloud, cloud native, rapid ex scalability, vertical and horizontal, all the things that that we're able to deliver. And so that combination of those two things, solve their problem now, give them a very clear path to the future, that was it it was almost, you know, a no brainer for them.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

Once once they were able to dig in, talk to other customers, talk to our architects, understand how it's gonna work, that became very clear to them that this is the right way to go. Let's do it. And so that that basic conversation is is happening in multiple places around the world. I had a few of those conversations last week In The Middle East, very similar. And that that is what is getting prospective customers and our current customers really interested in exploring opportunities going forward.

Alex Neumann
Research Associate at Stephens Inc

Okay. Makes sense. And then what and for 1Q, what was the uplift on filler this quarter from the reduction vendors, for IRS processing? And then what are your expectations for ex FX on growth for '25?

Scott Behrens
Scott Behrens
CFO at ACI Worldwide

Well, on, billers total, revenue grew, 11% in the quarter. And we don't describe or we don't call out what any particular customer delivers, but it was obviously a contributor to the Q1 growth. We'll see that further a little bit more in q two, but that was obviously a contributor not just through the IRS, but through our other partners that we do bill pay for a tax preparation software. So I would say it's more broadly not just the IRS, but our our tax partners as well. We don't really just what we're publish, what we get from an individual customer, but definitely contributed to the uptick in growth year over year.

Scott Behrens
Scott Behrens
CFO at ACI Worldwide

And on the full year of FX, we're probably talking it's going to give us it's going to be, call it, 5,000,000 or up to year that we bought coming into the year. We started the year with about we thought it was going to be about a headwind on FX of about $25,000,000 That's come down by far.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

Thanks, John.

Operator

There's no further question at this time. I will now turn the call back to the company.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

Okay. Well, thank you. First of all, thanks for joining us again, and we appreciate the support. I look forward to continuing to deliver for our shareholders and delivering more and more shareholder value. And the very the last thing I want to say is I want to reiterate my intense personal thanks to Scott because he has been, as I said, he's been an amazing partner to me.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

I've known Scott now for about ten years in multiple ways. You know, we've interacted in multiple ways, and each one of those ways and opportunities has been a super positive experience for me, and I hope it has for him. And after, you know, nearly a few decades of service, he absolutely deserves to to enter the next phase. And great great for him, great for his family. We'll obviously miss him that he's gonna be he he's been very clear he's gonna be tremendously supportive to us as we as we find his replacement.

Thomas Warsop
Thomas Warsop
CEO, President & Director at ACI Worldwide

I don't know if replacement is even the right word, but the next CFO of ACI. And we're well underway in that process. And as I said, we'll keep you up to date. But congratulations, Scott. Thanks, everybody, for joining. Thanks, That

Operator

concludes today's call. Thank you all for joining. You may now disconnect.

Executives
    • John Kraft
      John Kraft
      Head of Strategy & Finance
    • Thomas Warsop
      Thomas Warsop
      CEO, President & Director
    • Scott Behrens
      Scott Behrens
      CFO
Analysts
    • Trevor Williams
      Managing Director at Jefferies LLC
    • Jeff Cantwell
      Senior Equity Analyst at Seaport Research Partners
    • Pete Heckmann
      MD & Senior Research Analyst at D.A. Davidson
    • George Sutton
      Partner & Senior Research Analyst at Craig-Hallum Capital Group LLC
    • Alex Neumann
      Research Associate at Stephens Inc
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