The following is a summary of the ACI Worldwide Inc. (ACIW) Q3 2024 Earnings Call Transcript:

Financial Performance:

• ACI Worldwide reported a robust financial performance in Q3 2024, with total revenue reaching $452 million, reflecting a 24% increase year-over-year. Adjusted EBITDA also significantly improved, reaching $167 million, marking a 61% increase from the previous year.

• In the Bank segment, revenue saw a substantial rise of 43% compared to the same quarter last year, with adjusted EBITDA growing even more impressively by 69%. This increase was heavily supported by a 72% growth in real-time payments revenue.

• While the Biller segment showed a more modest revenue growth of 5%, the Merchant segment exhibited a substantial 38% increase in revenue and a striking 159% increase in EBITDA.

Business Progress:

• Notably, ACI's strategic focus on reducing seasonality and derisking financial guidance achievement through the acceleration of contract signings has indeed paid off, evidenced by their revenue forecast coverage, which is over 99% for the upcoming quarter.

• The development of the next generation payments hub platform remains on track, with intentions to showcase it by year-end. This platform aims to target not only large banks but also broader customer segments.

• ACI's significant contract with QuikTrip, leveraging their hosted omni-channel solutions for scalability and reliability, underscores their strong positioning for future growth.

Opportunities:

• There has been a substantial increase in the sales pipeline, notably higher than usual for this time of the year, which paves the way for strong revenue and EBITDA growth into 2025. The company has a robust momentum exiting 2024, enabling it to confidently project continued financial growth.

• Investment and advancements in AI across various operational domains should further enhance productivity and operational efficiency. Moreover, the positive reception of ACI's payments solutions globally, especially in the context of financial inclusion and economic growth through their real-time payment platforms, adds to the growth prospects.

Risks:

• The Biller segment exhibits some challenges as Q3's modest growth included high margin revenue from certain non-recurable transactions in the prior year, making future growth rates uncertain.

• As most of ACI's renewals for 2024 have already been signed or are in final stages of approval, there's a potential risk associated with the focus shift towards 2025, which could lead to unforeseen challenges in managing transitions and implementing new contracts.

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