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What changed in ACI WORLDWIDE, INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of ACI WORLDWIDE, INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+238 added−234 removedSource: 10-K (2024-02-29) vs 10-K (2023-03-01)

Top changes in ACI WORLDWIDE, INC.'s 2023 10-K

238 paragraphs added · 234 removed · 194 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

58 edited+13 added−14 removed38 unchanged
Biggest changeACI Secure eCommerce ™ is a holistic platform that combines a powerful payments gateway, sophisticated real-time fraud prevention capabilities, advanced business intelligence tools, and access to an extensive global network of acquirers and alternative payment methods. 3 Table of Contents Fraud and Risk Management ACI Fraud Management™ enables merchants, banks, and financial institutions to turn fraud and financial crime prevention into a competitive differentiator with a secure and seamless solution that protects customers’ digital channels and payments anytime, anywhere and maximizes business growth.
Biggest changeMerchant Payments (ACI Payments Orchestration Platform TM ) ACI offers merchants a secure and scalable payments platform with the flexibility to support in-store, online, and mobile payments. 3 Table of Contents ACI Payments Orchestration Platform is a holistic, intelligent payments platform that orchestrates and optimizes payments by combining a powerful payments gateway with multilayered fraud management, advanced business intelligence tools, and access to an extensive global network of acquirers, third-party providers, and alternative payment methods.
Bill Payments ACI meets the bill payment needs of corporate customers across myriad industries through a range of electronic bill payment offerings that help companies raise consumer satisfaction while reducing costs. ACI Speedpay ® is an integrated suite of digital billing, payment, disbursement, and communication services that lowers the cost of presenting and accepting bill payments while delivering industry-leading security.
Bill Payment ACI meets the bill payment needs of corporate customers across myriad industries through a range of electronic bill payment offerings that help companies raise consumer satisfaction while reducing costs. ACI Speedpay ® is an integrated suite of digital billing, payment, disbursement, and communication services that lowers the cost of presenting and accepting bill payments while delivering industry-leading security.
Ms. Guerra joined ACI in 2019 and is a seasoned payments industry executive with over three decades of experience spanning payments, fintech, consulting and IT services. Prior to joining ACI, Ms. Guerra led First Data’s small and midsize direct business and merchant portfolios in Brazil and the U.S. while also managing financial institution referral relationships.
Guerra joined ACI in 2019 and is a seasoned payments industry executive with over three decades of experience spanning payments, fintech, consulting and IT services. Prior to joining ACI, Ms. Guerra led First Data’s small and midsize direct business and merchant portfolios in Brazil and the U.S. while also managing financial institution referral relationships.
Bill Payments The principal competitors for our ACI Speedpay solution are Aliaswire Inc., CSG Systems International, Inc., FIS, Fiserv, Invoice Cloud, Inc., Jack Henry & Associates, Inc., Kubra Customer Interaction Management, Nelnet, Inc. and Affiliates, NIC, Paymentus Corp., PayNearMe, Repay, TouchNet Information Systems, Inc., Transact and Worldpay Inc. (FIS), as well as smaller vertical-specific providers.
Bill Payments The principal competitors for our ACI Speedpay bill payment solution are Aliaswire Inc., CSG Systems International, Inc., FIS, Fiserv, Invoice Cloud, Inc., Jack Henry & Associates, Inc., Kubra Customer Interaction Management, Nelnet, Inc. and Affiliates, NIC, Paymentus Corp., PayNearMe, Repay, TouchNet Information Systems, Inc., Transact, and Worldpay Inc. (FIS), as well as smaller vertical-specific providers.
Partnerships and Industry Participation We have two major types of third-party product partners: 1) technology partners, or industry leaders with whom we work closely that drive key industry trends and mandates, and 2) business partners, with whom we embed the partners’ technology in ACI products, host the partners’ software in ACI’s cloud as a part of our cloud offerings, or jointly market solutions that include the products of the other company.
Partnerships and Industry Participation We have two major types of third-party product partners: 1) technology partners, or industry leaders with whom we work closely that drive key industry trends and mandates, and 2) business partners, where we either embed the partners’ technology in ACI products, host the partners’ software in ACI’s cloud as a part of our cloud offerings, or jointly market solutions that include the products of the other company.
On Premise, On Demand, or Hybrid Software Delivery Options Our software solutions are offered to customers through either a traditional term software license arrangement where the software is installed and operated on the customer premises or in a cloud environment, through an on-demand arrangement where the solution is maintained and delivered through the public cloud or ACI's private cloud via our global data centers, or a combination of the two based upon customers' unique needs.
On Premises, On Demand, or Hybrid Software Delivery Options Our software solutions are offered to our customers through either a traditional term software license arrangement where the software is installed and operated on the customer premises or in a cloud environment, through an on-demand arrangement where the solution is maintained and delivered through the public cloud or ACI's private cloud via our global data centers, or a combination of the two based upon their unique needs.
She also held senior leadership roles at Unisys and spent time as a management consultant with PricewaterhouseCoopers. Ms. Guerra is fluent in English, Portuguese and Spanish. She was one of the early female graduates of the United States Military Academy at West Point and holds a Bachelor of Science degree in engineering. 9 Table of Contents Mr.
She also held senior leadership roles at Unisys and spent time as a management consultant with PricewaterhouseCoopers. Ms. Guerra is fluent in English, Portuguese, and Spanish. She was one of the early female graduates of the United States Military Academy at West Point and holds a Bachelor of Science degree in engineering. Mr.
Fiscal 2022 Divestiture Corporate Online Banking Solutions On September 1, 2022, we sold our corporate online banking solutions related assets and liabilities to One Equity Partners for $100.1 million, including a preliminary net working capital adjustment. The sale included employees and customer contracts as well as technology assets and intellectual property.
Fiscal 2022 Divestiture Corporate Online Banking Solutions On September 1, 2022, we sold our corporate online banking solutions related assets and liabilities to One Equity Partners for $100.0 million, and a net working capital adjustment. The sale included employees and customer contracts as well as technology assets and intellectual property.
New releases of our products, which often contain minor product enhancements, are typically provided at no additional fee for customers under standard customer support agreements. Agreements with our customers permit us to charge for substantial product enhancements that are not provided as part of the standard or premium customer support agreement.
We periodically provide new product releases, which often contain minor product enhancements, that are typically provided at no additional fee for customers under standard customer support agreements. Agreements with our customers permit us to charge for substantial product enhancements that are not provided as part of the standard or premium customer support agreement.
We strive to offer competitive salaries and benefits to all employees, and we continuously monitor salary ranges in our market areas. Retention Our voluntary regrettable turnover, or our turnover of high performers, through December 31, 2022 was 12%, which compares favorably to industry turnover rates.
We strive to offer competitive salaries and benefits to all employees, and we continuously monitor salary ranges in our market areas. Retention Our voluntary regrettable turnover, or our turnover of high performers, through December 31, 2023 was 8%, which compares favorably to industry turnover rates.
We are pleased with our retention and will continue to employ strategies to retain and engage our global employees. Benefits We provide our global employees with competitive and comprehensive benefits to meet their needs and the needs of their dependents.
We are pleased with our retention and will continue to employ strategies to retain and engage our global employees. 8 Table of Contents Benefits We provide our global employees with competitive and comprehensive benefits to meet their needs and the needs of their dependents.
In addition, independent 7 Table of Contents auditors annually review several of our operations to provide reports on internal controls for our clients’ auditors and regulators.
In addition, independent auditors annually review several of our operations to provide reports on internal controls for our clients’ auditors and regulators.
We offer these customers scalable solutions that strategically position them to innovate and achieve growth and cost efficiency, while protecting them against fraud. Our solutions also allow new entrants in the digital marketplace to access innovative payment schemes, such as the U.K.
We offer these customers scalable solutions that strategically position them to innovate and achieve growth and cost efficiency, while protecting them against fraud. Our solutions also allow new entrants in the digital marketplace to access innovative payment schemes, such as the U.S. FedNow and RTP from The Clearing House, the U.K.
Primary digital payment processing competitors in this area include global entities such as Atos Origin S.A., Fiserv, Mastercard, SiNSYS, and Visa, as well as regional or country-specific processors. Omni-Commerce Payments Competitors for our ACI Omni-Commerce solution come from both third-party software and service providers as well as service organizations run by major banks.
Primary digital payment processing competitors in this area include global entities such as Atos Origin S.A., Fiserv, Mastercard, SiNSYS, and VISA, as well as regional or country-specific processors. Payments Orchestration Competitors for merchant payments (ACI Payments Orchestration Platform) come from both third-party software and service providers, as well as service organizations run by major banks.
("Fiserv"), NCR, OpenWay Group, and TSYS (Global Payments), as well as small, regionally-focused companies such as BPC Banking Technologies, CR2, Financial Software and Systems, Form3, HPS, Icon Solution, Lusis Payments Ltd., Opus Software Solutions Private Limited, PayEx Solutions AS, Renovite, RS2, and Volante Technologies.
(Global Payments), and Volante, as well as small, regionally-focused companies such as BPC Banking Technologies, CR2, Financial Software and Systems, Form3, HPS, Icon Solution, Lusis Payments Ltd., Opus Software Solutions Private Limited, PayEx Solutions AS, Renovite, and RS2.
He holds a bachelor’s degree in business administration from Universidade Mackenzie in São Paulo and a Master of Business Administration from USP-Universidade de São Paulo. He extended his education at INSEAD, the Harvard Business School and the University of Chicago Booth School of Business. Ms. Guerra was appointed as Executive Vice President and Chief Product Officer on July 5, 2022.
He holds a bachelor’s degree in business administration from Universidade Mackenzie in São Paulo and a Master of Business Administration from USP-Universidade de São Paulo. He extended his education at INSEAD, the Harvard Business School and the University of Chicago Booth School of Business. Ms. Guerra serves as Executive Vice President and Chief Product Officer. Ms.
Fraud Management Principal competitors for our ACI Fraud Management solution are Accertify (American Express), BAE Systems, Cybersource (Visa), Fair Isaac Corporation (FICO), Featurespace, Feedzai, FIS, Fiserv, Forter, Fraugster, IBM, Kount, NICE LTD, Actimize LTD, Oracle, Riskified, SAS Institute, Inc., and Signifyd, as well as dozens of smaller companies focused on niches of this segment such as anti-money laundering.
Fraud Management Principal competitors for our ACI Fraud Management solution are Accertify (American Express), BAE Systems, Cybersource (VISA), Fair Isaac Corporation, Featurespace, Feedzai, FIS, Fiserv, Forter, Kount, NCR, NICE LTD, and SAS Institute, Inc., as well as dozens of smaller companies focused on niches of this segment such as device identification and anti-money laundering.
Behrens serves as Executive Vice President and Chief Financial Officer. Mr. Behrens joined ACI in June 2007 as our Corporate Controller and was appointed as Chief Accounting Officer in October 2007. Mr. Behrens was appointed Chief Financial Officer in December 2009 and ceased serving as our Corporate Controller in December 2010. Mr.
Behrens joined ACI in June 2007 as our Corporate Controller and was appointed as Chief Accounting Officer in October 2007. Mr. Behrens was appointed Chief Financial Officer in December 2009 and ceased serving as our Corporate Controller in December 2010. Mr. Behrens was appointed Executive Vice President in March 2011. Prior to joining ACI, Mr.
Research and Development Our product development efforts focus on new products and improved versions of existing products. We facilitate user group meetings to help us determine our product and solution strategy, development plans, and aspects of customer support. The user groups are generally organized geographically or by product lines.
Research and Development Our product development efforts focus on new products while continuing to increase the functionality of existing products. To ensure we are building for the market, we facilitate user group meetings to help us determine our product and solution strategy, development plans, and aspects of customer support. The user groups are generally organized geographically or by product lines.
Although we believe that our owned and licensed intellectual property rights do not infringe upon the proprietary rights of third parties, there can be no assurance that third parties will not assert infringement claims against us. Further, there can be no assurance that intellectual property protection will be available for our products in all foreign countries.
Although we believe that our owned and licensed intellectual property rights do not infringe upon the proprietary rights of third parties, there can be no assurance that third parties will not assert infringement claims against us.
Competitive factors affecting the market for our solutions, products, and services include product features, price, availability of customer support, ease of implementation, product and company reputation, and a commitment to continued investment in research and development. 5 Table of Contents Our competitors vary by solution, geography, and market segment.
Competition The digital payments market is highly competitive and subject to rapid change. Competitive factors affecting the market for our solutions, products, and services include product features, price, availability of customer support, ease of implementation, product and company reputation, and a commitment to continued investment in research and development. Our competitors vary by solution, geography, and market segment.
Human Capital As of December 31, 2022, we had 3,349 employees worldwide, with 1,516 employees in the Americas, 952 employees in Europe, the Middle East, and Africa ("EMEA"), and 881 employees in Asia Pacific. ACI emphasizes a diverse and inclusive workplace, with approximately 40 sites in over 30 countries. Globally, 34% of our employees are women.
Human Capital As of December 31, 2023, we had 3,212 employees worldwide, with 1,427 employees in the Americas, 890 employees in Europe, the Middle East, and Africa ("EMEA"), and 895 employees in Asia Pacific. ACI emphasizes a diverse and inclusive workplace, with approximately 30 sites in over 40 countries. Globally, 35% of our employees are women.
Maintenance services include: • New product releases (major, minor and patches) for active products • 24-hour hotline for priority one (“P1”) problem resolutions • Access to our online support portal (eSupport) • Vendor-required mandates and updates • Product documentation Premium Customer Support.
Maintenance services include: • New product releases (major, minor and patches) for active products • 24-hour hotline for priority one (“P1”) problem resolutions • Access to our online support portal (eSupport) • Vendor-required mandates and updates • Product documentation • Hardware operating system compatibility • User group membership 5 Table of Contents Premium Customer Support.
We combine our global footprint with a local presence to drive the real-time digital transformation of payments and commerce. Our strategic solution areas include the following: Issuing and Acquiring ACI offers comprehensive consumer payment solutions ranging from core payment engines to back-office support that enable banks and intermediaries to compete effectively in today’s real-time, open payments ecosystem.
Our strategic solution areas include the following: Issuing and Acquiring ACI offers comprehensive consumer payment solutions ranging from core payment engines to back-office support that enable banks and intermediaries to compete effectively in today’s real-time, open payments ecosystem.
Key competitors by solution area include the following: Issuing, Acquiring, and Real-Time Payments The third-party software competitors for ACI’s Issuing, Acquiring, and Real-Time Payments solutions are Computer Sciences Corporation, Fidelity National Information Service, Inc. ("FIS"), Finastra, Fiserv, Inc.
Key competitors by solution area include the following: Issuing, Acquiring, and Real-Time Payments The third-party software competitors for ACI’s Issuing, Acquiring, and Real-Time Payments solutions include Fidelity National Information Service, Inc. ("FIS"), Finastra, Fiserv, Inc. ("Fiserv"), NCR, OpenWay Group, Total System Services, Inc.
To foster a stronger sense of ownership and align with the interests of our shareholders, participation in the employee stock purchase plan is available for eligible employees. 8 Table of Contents Available Information Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”), are available free of charge on our website at www.aciworldwide.com as soon as reasonably practicable after we file such information electronically with the SEC.
Available Information Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”), are available free of charge on our website at www.aciworldwide.com as soon as reasonably practicable after we file such information electronically with the SEC.
ACI High Value Real-Time Payments™ is a global payments engine that offers multi-bank, multi-currency, and 24x7 payment processing capabilities, as well as SWIFT messaging with seamless integrations to multiple clearing and settlement mechanisms. Omni-Commerce and eCommerce Payments ACI provides real-time, any-to-any payment capabilities globally in both card-present and card-not-present environments.
ACI High Value Real-Time Payments™ is a global payments engine that offers multi-bank, multi-currency, and 24x7 payment processing capabilities, as well as SWIFT messaging with seamless integrations to multiple clearing and settlement mechanisms.
Under the premium customer support option, referred to as the Premium Customer Support Program and available at additional cost, customers are provided support beyond the standard offering. The services available may differ by product and are defined in the customer contract. We provide new releases of our products on a periodic basis.
Under the premium customer support option, referred to as the Premium Customer Support Program and available at additional cost, customers are provided support beyond the standard offering. The services available may differ by product and are defined in the customer contract.
Executive Officers of the Registrant As of March 1, 2023, our executive officers, their ages, and their positions were as follows: Name Age Position Thomas W. Warsop, III 56 Interim President and Chief Executive Officer Scott W.
Executive Officers of the Registrant As of February 29, 2024, our executive officers, their ages, and their positions were as follows: Name Age Position Thomas W. Warsop, III 57 President, Chief Executive Officer, and Director Scott W.
We also seek to protect the source code of our software as a trade secret and as a copyrighted work. Despite these precautions, there can be no assurance that misappropriation of our software products and technology will not occur. In addition to our own products, we distribute, or act as a sales agent for, software developed by third parties.
Despite these precautions, there can be no assurance that misappropriation of our software products and technology will not occur. In addition to our own products, we distribute, or act as a sales agent for, software developed by third parties. However, we typically are not involved in the development process used by these third parties.
He served in various capacities at Electronic Data Systems for 17 years, including President of its Business Process Outsourcing unit in Asia Pacific, Vice President in the United Kingdom, and Vice President of Global Financial Services. He currently serves as President of the North Florida Chapter of the Juvenile Diabetes Research Foundation. Mr.
He served in various capacities at Electronic Data Systems for 17 years, including President of its Business Process Outsourcing unit in Asia Pacific, Vice President in the United Kingdom, and Vice President of Global Financial Services. 9 Table of Contents Mr. Behrens serves as Executive Vice President and Chief Financial Officer. Mr.
Behrens 51 Chief Financial Officer Alessandro Silva 46 Chief Revenue Officer Debbie Guerra 59 Chief Product Officer Ram Puppala 53 Chief Technology and Operations Officer Mr. Warsop was appointed Interim President and Chief Executive Officer on November 8, 2022. Mr. Warsop joined the ACI Board of Directors in June 2015 and became non-executive Chairman in June 2022.
Behrens 52 Chief Financial Officer Alessandro Silva 47 Chief Revenue Officer Debbie Guerra 60 Chief Product Officer Abe Kuruvilla 52 Chief Technology and Operations Officer Mr. Warsop was appointed President and Chief Executive Officer on June 1, 2023. Mr. Warsop joined the ACI Board of Directors in June 2015 and became non-executive Chairman in June 2022.
However, we typically are not involved in the development process used by these third parties. Our rights to those third-party products and the associated intellectual property rights are limited by the terms of the contractual agreement between us and the respective third party.
Our rights to those third-party products and the associated intellectual property rights are limited by the terms of the contractual agreement between us and the respective third party.
We believe that the timely development of new applications and enhancements is essential to maintaining our competitive position in the market. During the development of new products and solutions, we work closely with our customers and industry leaders to determine requirements. We work with device manufacturers, such as Diebold, NCR, and Wincor-Nixdorf, to ensure compatibility with the latest ATM technology.
We believe that the timely development of new applications and enhancements is essential to maintaining our competitive position in the market. 6 Table of Contents During the development of new products and solutions, we work closely with our customers and industry leaders to determine requirements.
We work with network vendors, such as Mastercard, SWIFT, and Visa, to ensure compliance with new regulations or processing mandates. We work with computer hardware and software manufacturers, such as HPE, IBM, Microsoft Corporation, and Oracle, to ensure compatibility with new operating system releases and generations of hardware. Customers often provide additional information on requirements and serve as beta-test partners.
We work with computer hardware and software manufacturers, such as HPE, IBM, Microsoft Corporation, and Oracle, to ensure compatibility with new operating system releases and generations of hardware. Customers often provide additional information on requirements and serve as beta-test partners. We have a continuous process to encourage and capture innovative product ideas.
Behrens was appointed Executive Vice President in March 2011. Prior to joining ACI, Mr. Behrens served as Senior Vice President, Corporate Controller and Chief Accounting Officer at SITEL Corporation from January 2005 to June 2007. He also served as Vice President of Financial Reporting at SITEL Corporation from April 2003 to January 2005. From 1993 to 2003, Mr.
Behrens served as Senior Vice President, Corporate Controller and Chief Accounting Officer at SITEL Corporation from January 2005 to June 2007. He also served as Vice President of Financial Reporting at SITEL Corporation from April 2003 to January 2005. From 1993 to 2003, Mr. Behrens was with Deloitte & Touche, LLP, including two years as a Senior Audit Manager. Mr.
In addition, ACI has membership in or participates in the relevant committees of several industry associations, such as the International Organization for Standardization (“ISO”), Accredited Standards Committee ("ASC") X9, ATM Industry Association ("ATMIA"), Financial Services, Nexo Standards, U.K. Cards Association, U.S. Payments Forum, and the PCI Security Standards Council.
Technology partners help us add value to our solutions and stay abreast of current market conditions and industry developments such as standards. In addition, ACI has membership in or participates in the relevant committees of several industry associations, such as the International Organization for Standardization (“ISO”), Accredited Standards Committee ("ASC") X9, ATM Industry Association ("ATMIA"), Financial Services, Nexo Standards, U.K.
Behrens was with Deloitte & Touche, LLP, including two years as a Senior Audit Manager. Mr. Behrens holds a Bachelor of Science from the University of Nebraska – Lincoln. Mr. Silva was appointed as Executive Vice President and Chief Revenue Officer on May 6, 2022. Since joining ACI in 2021, Mr.
Behrens holds a Bachelor of Science from the University of Nebraska – Lincoln. Mr. Silva serves as Executive Vice President and Chief Revenue Officer. Since joining ACI in 2021, Mr.
Solutions ACI is a global leader in mission-critical, real-time payments software. Our proven, secure, and scalable software solutions enable corporations, fintechs, and financial disruptors to process and manage digital payments, power omni-commerce payments, present and process bill payments, and manage fraud and risk.
Solutions ACI is a global software company that provides mission-critical, real-time payment solutions to corporations. Customers use our proven, scalable, and secure solutions to process and manage digital payments, enable omni-commerce payments, present and process bill payments, and manage fraud and risk. We combine our global footprint with local presence to drive the real-time digital transformation of payments and commerce.
As of December 31, 2022, we serve more than 6,000 organizations, including 9 of the top 10 banks worldwide and 80,000+ merchants directly and through payment service providers, as measured by revenue, in 95+ countries on six continents. No single customer accounted for more than 10% of our consolidated revenues for the years ended December 31, 2022, 2021, and 2020.
Our biller products and solutions are sold in the United States. As of December 31, 2023, we serve more than 6,000 organizations, including all 10 of the top 10 banks worldwide, as measured by asset size, and 80,000+ merchants directly and through payment service providers, and we have customers in 95+ countries on six continents.
We distribute our software products under software license agreements that typically grant customers nonexclusive licenses to use our products. Use of our software products is usually restricted to designated computers, specified locations and/or specified capacity, and is subject to terms and conditions prohibiting unauthorized reproduction or transfer of our software products.
Use of our software products is usually restricted to designated computers, specified locations and/or specified capacity, and is subject to terms and conditions prohibiting unauthorized reproduction or transfer of our software products. We also seek to protect the source code of our software as a trade secret and as a copyrighted work.
These partnerships provide direction as it relates to the specifications that are used in real-time payment standards, by card schemes, and, in some cases, by hardware vendors. These organizations typically look to ACI as a source of knowledge and experience that can inform their work to create and enhance standards.
Cards Association, U.S. Payments Forum, and the PCI Security Standards Council. These partnerships provide direction as it relates to the specifications that are used by the card schemes, real-time payment standards, and, in some cases, hardware vendors.
If determined to be viable, the innovation is scheduled into a product roadmap for development and release. 6 Table of Contents Customers We provide software products and solutions to our banks, intermediary, and merchants customers worldwide. Our biller products and solutions are sold in the United States.
Such ideas include features, as well as entirely new products or service offerings. A proof of concept (“POC”) may be conducted to validate the idea. If determined to be viable, the innovation is scheduled into a product roadmap for development and release. Customers We provide software products and solutions to our banks, intermediary, and merchants customers worldwide.
We are typically responsible for the sales and marketing of the vendor’s products, and agreements with these vendors generally provide for revenue sharing based on relative responsibilities. Proprietary Rights and Licenses We rely on a combination of trade secret and copyright laws, license agreements, contractual provisions, and confidentiality agreements to protect our proprietary rights.
Proprietary Rights and Licenses We rely on a combination of trade secret and copyright laws, license agreements, contractual provisions, and confidentiality agreements to protect our proprietary rights. We distribute our software products under software license agreements that typically grant customers nonexclusive licenses to use our products.
Government Regulation Certain of our solutions are subject to federal, state, and foreign regulations and requirements. Oversight by Banking Regulators.
Further, there can be no assurance that intellectual property protection will be available for our products in all foreign countries. 7 Table of Contents Government Regulation Certain of our solutions are subject to federal, state, and foreign regulations and requirements. Oversight by Banking Regulators.
These agreements generally grant ACI the right to create an integrated solution that we host or distribute, or provide ACI access to established payment networks or capabilities.
These agreements generally grant ACI the right to create an integrated solution that we host or distribute, or provide ACI access to established payment networks or capabilities. The agreements are generally worldwide in scope and have a term of several years. We have alliances with our technology partners Microsoft Corporation, Amazon, Google, HPE, IBM, and Oracle USA, Inc.
Customer Support ACI provides our customers with product support that is available 24 hours a day, seven days a week. We offer our customers two support options: Standard Customer Support. After implementation completion, we provide maintenance services to customers for a monthly product support fee.
After implementation completion, we provide maintenance services to customers for a monthly product support fee.
ACI’s distributors, resellers, and system integration partners are enabled to provide supplemental or complete product implementation and customization services directly to our customers or in a joint delivery model. Our broad geographic footprint allows us to leverage the business and technical expertise of a global workforce. We distribute the products of other vendors where they complement our existing product lines.
We use distributors and referral partners to supplement our direct sales force in countries where it is more efficient and economical to do so. ACI’s distributors, resellers, and system integration partners are enabled to provide supplemental or complete product implementation and customization services directly to our customers or in a joint delivery model.
ACI instructor-led courses include both theory and practical sessions to allow students to work though real business scenarios and put their newly learned skills to use. This hands-on approach ensures that the knowledge is retained, and the student is more productive upon their return to the workplace.
An extensive team of support analysts are available to assist customers. In addition, ACI education services with instructor-led courses include both theory and practical sessions to allow students to work though real business scenarios and put their newly learned skills to use.
ACI ® Acquiring ™ is a merchant management system that helps acquirers offer merchants capabilities to deliver digital innovation, handle new payment methods, and maximize margins. ACI Issuing ™ is a digital payments issuing solution that helps issuers accelerate innovation, give customers new payment offerings and enable channels, services, endpoints, and integrations from a single cloud-based or on-premise solution.
ACI Issuing ™ is a digital payments issuing solution that helps issuers process card transactions, accelerate innovation, give customers new payment offerings, and deliver innovative security, with flexible cloud-based or on-premises deployment.
ACI also provides further, more in-depth technical courses that allow students to use practical labs to enhance what they have learned in the classroom. Training services are frequently a blended part of implementation services, enabling learning to occur in the right phase of the project lifecycle.
ACI also provides further, more in-depth technical courses that allow students to use practical labs to enhance what they have learned in the classroom. The ACI trainers' ability to understand customers' systems means ACI may also provide tailored course materials for individual customers.
These partnerships allow us to understand developments in the partners’ technology and to utilize their expertise in topics like sizing, scalability, and performance testing. Services We offer our customers a wide range of professional services, including consultation, analysis, design, development, implementation, integration, testing, and project management.
Services We offer our customers a wide range of professional services, including consultation, analysis, design, development, implementation, integration, testing, and project management. Our service professionals generally perform the majority of the work associated with implementing and integrating our software solutions.
One customer accounted for 10.1% and 13.8% of the Company's consolidated receivables balance as of December 31, 2022 and December 31, 2021, respectively. Selling and Implementation Our products are sold and supported directly and through distribution networks covering three geographic regions – the Americas, Europe/Middle East/Africa ("EMEA") and Asia Pacific.
Selling and Implementation Our products are sold and supported directly and through distribution networks covering three geographic regions – the Americas, Europe/Middle East/Africa ("EMEA") and Asia Pacific. Our primary method of distribution is direct sales by employees assigned to specific target customer segments. We have sales and services personnel in offices throughout the United States.
Third-party software and service competitors include Adyen, Braintree (PayPal), Cybersource (Visa), First Data (Fiserv), GlobalCollect, Ingenico Group, NCR, Square, Inc., Tender Retail Inc., PPRO, StripeVeriFone Systems, Inc., and Worldpay Inc. (FIS).
Third-party software and service competitors include Adyen, Cybersource (VISA Acceptance Solutions), Fiserv, Ingenico Group, NCR, Square, Inc., Tender Retail Inc., VeriFone Systems, Inc., Worldpay Inc. (FIS), and Worldline. We are also competing in some areas with the traditional orchestration layer providers such as IXOpay, Payoneer, Nuvei, and Spreedly.
Training from ACI Training Academy is available throughout the customer lifecycle to address ongoing or changing business needs. Depending on the products owned and course selected, training is conducted either at a dedicated education facility at one of ACI’s offices, online, on demand or at the customer site.
Depending on the products purchased, training may be conducted at a dedicated education facility at one of ACI’s offices, online, on demand, or at the customer site. Customer Support ACI provides our customers with product support that is available 24 hours a day, seven days a week. We offer our customers two support options: Standard Customer Support.
Our service professionals generally perform the majority of the work associated with implementing and integrating our software solutions. In addition, we work with a number of trained global and regional systems integration and services partners for staff augmentation and coordinated co-prime delivery where appropriate.
In addition, we work with a limited number of systems integration and services partners such as Accenture, LLC, Cognizant Technology Solutions Corporation, and Stanchion Payments Solution for staff augmentation and coordinated co-prime delivery where appropriate. Product support services are available to customers after a solution has been installed and are based on the relevant product support category.
Headquartered in Coral Gables, Florida, we have sales and services personnel in offices throughout the United States. Outside of the United States, our international subsidiaries sell, support, and service our products and solutions in their local countries.
Outside of the United States, our international subsidiaries sell, support, and service our products and solutions in their local countries. Our broad geographic footprint allows us to leverage the business and technical expertise of a global workforce. We generate a majority of our sales leads through existing relationships with vendors, direct marketing programs, customers and prospects, or through referrals.
Puppala serves as Executive Vice President and Chief Technology Officer. Prior to joining ACI, Mr. Puppala served as Chief Digital Officer of Metropolitan Commercial Bank, where he led the digital payment product portfolio. Prior to that he served as Chief Technology Officer at State Street Global Exchange.
Kuruvilla was appointed as Executive Vice President and Chief Technology Officer on October 30, 2023. Prior to joining ACI, Mr. Kuruvilla served as Chief Information Officer at CoreLogic, Inc., where he led all aspects of technology strategy, engineering, cyber security, internal systems, and IT operations. Prior to that he served as Chief Information Officer at Dell Financial Services.
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ACI Omni Commerce ™ offers merchants a scalable, omnichannel payment processing platform with the flexibility to support in-store, online, and mobile payments, protected by advanced P2P encryption, tokenization, and fraud management capabilities.
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ACI ® Acquiring ™ is a solution that helps merchant acquirers and ATM acquirers process credit, debit, and prepaid card transactions, deliver digital innovation, improve fraud prevention, and reduce interchange fees.
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ACI Fraud Management for banking is powered by state-of-the-art machine learning and enables financial institutions to fight fraud and money laundering across the enterprise while meeting increasing regulatory and customer demand. The solution offers flexible deployment, unprecedented transaction processing and contextual risk analysis for authorized and unauthorized transactions.
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ACI Fraud Management ™ for Merchants, ACI’s multi-layered fraud management solution, supports merchants with a comprehensive, real-time approach to fraud management that uses a combination of patented incremental machine learning, fraud and payments data, predictive and behavioral analytics, positive profiling, customized fraud strategies, expert support, and consortium data to help prevent fraud and reduce the burden of compliance, delivered as a multi-tenant platform, as a service, or deployed in the public cloud or on premises.
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ACI Fraud Management for merchants is a real-time, cloud-based managed service that uses advanced artificial intelligence (AI), machine learning and behavioral analytics to identify and assess inconsistent and unexpected patterns and behaviors. The solution automatically advises and alerts enterprises and merchants about potential threats or anomalies.
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It enables customers to protect their payments end to end from the customer check-in to payment and post authorization, enhancing the customer experience. Payments Intelligence and Risk Management ACI’s data engine uses powerful analytics to deliver robust and precise real-time decisioning, prevention, and detection capabilities to banks and intermediary customers.
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Technology partners help us add value to our solutions and stay abreast of current market conditions and industry developments such as standards. Technology partners include organizations such as Diebold Nixdorf (“Diebold”), NCR Corporation (“NCR”), Visa, Mastercard, and SWIFT.
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ACI Fraud Management for financial institutions offers banks and intermediaries a comprehensive, real-time approach to fraud management that uses a combination of machine learning, fraud and payments data, and advanced analytics to help prevent fraud and reduce the burden of compliance, delivered as a service, or deployed in the public cloud or on premises.
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The partnerships provide us the opportunity to influence these standards with concepts and ideas that will benefit the market, our customers, and ACI. Business partner relationships extend our product portfolio, improve our ability to get our solutions to market, and enhance our ability to deliver market-leading solutions.
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These organizations typically look to ACI as a source of knowledge and experience to be shared in conjunction with creating and enhancing their standards. The benefit to ACI is having the opportunity to influence these standards with concepts and ideas that will benefit the market, our customers, and ACI.
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The agreements are generally worldwide in scope and have a term of several years. 4 Table of Contents We have alliances with our technology partners Amazon, HPE, IBM, Microsoft Corporation, and Oracle USA, Inc. (“Oracle”), whose industry-leading hardware, software, and cloud-based infrastructure services are utilized by and in delivery of ACI’s products.
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ACI also holds important positions at different payment advisory leader groups worldwide, including advisory board membership with the Faster Payments Council in the U.S., global advisory board membership with the Merchant Risk Council ("MRC"), and a key stakeholder membership with the European Payments Council ("EPC"). 4 Table of Contents Business partner relationships extend our product portfolio, improve our ability to get our solutions to market, and enhance our ability to deliver market-leading solutions.
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Product support services are available to customers after a solution has been installed and are based on the relevant product support category. An extensive team of support analysts are available to assist customers. In addition, we provide education services to ACI customers to enhance and improve their understanding of our products.
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(“Oracle”), whose industry-leading hardware, software, and cloud-based infrastructure services are utilized by and in delivery of ACI’s products. These partnerships allow us to understand developments in the partners’ technology and to utilize their expertise in topics like sizing, scalability, and performance testing.
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This learning is made available through the ACI Training Academy, which offers flexible, powerful training in multiple formats: self-paced eLearning, instructor-led courses and hands-on virtual training. Our interactive, self-paced eLearning is available on demand via our online learning management system.
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This hands-on approach ensures that the knowledge is retained, and the student is more productive upon their return to the workplace. Some training topics are further supplemented by self-paced eLearning, available to students on demand to support their skills journey. ACI’s education courses provide students with knowledge at all levels to enhance and improve their understanding of ACI products.
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Competition The digital payments market is highly competitive and subject to rapid change.
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We work with device manufacturers, such as Diebold, NCR, and Wincor-Nixdorf, to ensure compatibility with the latest ATM technology. We work with network vendors, such as Mastercard, SWIFT, and VISA, to ensure compliance with new regulations or processing mandates.
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Third-party software and service competitors include Adyen, Aurus, Cybersource (Visa), First Data (Fiserv), FreedomPay, Ingenico Group, Modo Payments, NCR, Square, Inc., VeriFone Systems, Inc., Worldline, and Worldpay Inc. (FIS). eCommerce Payments Competitors for our ACI Secure eCommerce solution come from both third-party software and service providers, as well as service organizations run by major banks.
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No single customer accounted for more than 10% of our consolidated revenues for the years ended December 31, 2023, 2022, and 2021. No customer accounted for more than 10% of the Company’s consolidated receivables balance as of December 31, 2023. One customer accounted for 10.1% of the Company's consolidated receivables balance as of December 31, 2022.
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We have a continuous process to encourage and capture innovative product ideas. Such ideas include features, as well as entirely new products or service offerings. A proof of concept (“POC”) may be conducted to validate the idea.
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We distribute the products of other vendors where they complement our existing product lines. We are typically responsible for the sales and marketing of the vendors' products, and agreements with these vendors generally provide for revenue sharing based on relative responsibilities.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeSuch risks include the diversion of management time and resources, disruption of our ongoing business, potential overpayment for the acquired company or assets, dilution to existing stockholders if our common stock is issued in consideration for an acquisition or investment, incurring or assuming indebtedness or other liabilities in connection with an acquisition which may increase our interest expense and leverage significantly, lack of familiarity with new markets, and difficulties in supporting new product lines. 11 Table of Contents Further, even if we successfully complete acquisitions, we may encounter issues not discovered during our due diligence process, including product or service quality issues, intellectual property issues and legal contingencies, the internal control environment of the acquired entity may not be consistent with our standards and may require significant time and resources to improve and we may impair relationships with employees and customers as a result of migrating a business or product line to a new owner.
Biggest changeSuch risks include the diversion of management time and resources, disruption of our ongoing business, potential overpayment for the acquired company or assets, dilution to existing stockholders if our common stock is issued in consideration for an acquisition or investment, incurring or assuming indebtedness or other liabilities in connection with an acquisition which may increase our interest expense and leverage significantly, lack of familiarity with new markets, and difficulties in supporting new product lines.
Our level of debt could have adverse consequences for our business, financial condition, operating results and operational flexibility, including the following: (i) the debt level may cause us to have difficulty borrowing money in the future for working capital, capital expenditures, acquisitions or other purposes; (ii) our debt level may limit operational flexibility and our ability to pursue business opportunities and implement certain business strategies; (iii) we use a large portion of our operating cash flow to pay principal and interest on our credit facility and the 2026 Notes, which reduces the amount of money available to finance operations, acquisitions and other business activities; (iv) we have a higher level of debt than some of our competitors or potential competitors, which may cause a competitive disadvantage and may reduce flexibility in responding to changing business and economic conditions, including increased competition and vulnerability to general adverse economic and industry conditions; (v) some of our debt has a variable rate of interest, which exposes us to the risk of increased interest rates; (vi) there are significant maturities on our debt that we may not be able to fulfill or that may be refinanced at higher rates; and (vii) if we fail to satisfy our obligations under our outstanding debt or fail to comply with the financial or other restrictive covenants required under our credit facility and the 2026 Notes, an event of default could result that could cause all of our debt to become due and payable and could permit the lenders under our credit facility to foreclose on the assets securing such debt.
Our level of debt could have adverse consequences for our business, financial condition, operating results and operational flexibility, including the following: (i) the debt level may cause us to have difficulty borrowing money in the future for working capital, capital expenditures, acquisitions or other purposes; (ii) our debt level may limit operational flexibility and our ability to pursue business opportunities and implement certain business strategies; (iii) we use a large portion of our operating cash flow to pay principal and interest on our credit facility and the 2026 Notes, which reduces the amount of money available to finance operations, acquisitions and other business activities; (iv) we have a higher level of debt than some of our competitors or potential competitors, which may cause a competitive disadvantage and may reduce flexibility in responding to changing business and economic conditions, including increased competition and vulnerability to general adverse economic and industry conditions; (v) some of our debt has a variable rate of interest, which exposes us to the risk of increased interest rates; (vi) there are significant maturities on our debt that we may not be able to fulfill or that may be refinanced at higher rates; and (vii) if we fail to satisfy our obligations under our outstanding debt or fail to comply with the financial or other restrictive covenants 20 Table of Contents required under our credit facility and the 2026 Notes, an event of default could result that could cause all of our debt to become due and payable and could permit the lenders under our credit facility to foreclose on the assets securing such debt.
Our business could be harmed if we fail to comply with privacy and cybersecurity regulations imposed on providers of services to financial institutions. As a provider of services to financial institutions, we may be bound by the same limitations on disclosure of the information we receive from our customers as apply to the financial institutions themselves.
Our business could be harmed if we fail to comply with privacy and cybersecurity laws and regulations imposed on providers of services to financial institutions. As a provider of services to financial institutions, we may be bound by the same limitations on disclosure of the information we receive from our customers as apply to the financial institutions themselves.
Compliance with these and new laws could involve substantial expenses and divert resources from other initiatives and projects. More restrictive privacy laws adopted in the future could have an adverse impact on our business.
Compliance with these and new laws could involve substantial expenses and divert resources from other initiatives and projects. More restrictive privacy and cybersecurity laws adopted in the future could have an adverse impact on our business.
While it is difficult to estimate the impact on our business and financial position of our augmented operations with respect to businesses in Russia, Belarus and the restricted areas in Ukraine and the current or future sanctions, such changes could have adverse impacts on us in future periods.
While it is difficult to estimate the impact on our business and financial position of our augmented operations with respect to businesses in Russia, Belarus, the restricted areas in Ukraine, and in the Middle East and the current or future sanctions, such changes could have adverse impacts on us in future periods.
Our balance sheet includes goodwill and intangible assets that represent a significant portion of our total assets at December 31, 2022. On at least an annual basis, we assess whether there have been impairments in the carrying value of goodwill and intangible assets.
Our balance sheet includes goodwill and intangible assets that represent a significant portion of our total assets at December 31, 2023. On at least an annual basis, we assess whether there have been impairments in the carrying value of goodwill and intangible assets.
Increased competition in our markets could lead to price reductions, reduced profits, or loss of market share. To compete successfully, we need to maintain a successful research and development effort.
Increased competition in our markets could lead to price reductions, reduced profits, or loss of market share. 10 Table of Contents To compete successfully, we need to maintain a successful research and development effort.
Specifically, there are a number of risks associated with this activity, including but not limited to the following: • communications and information flow may be less efficient and accurate as a consequence of the time, distance and language differences between our primary development organization and the foreign based activities, resulting in delays in development or errors in the software developed; • in addition to the risk of misappropriation of intellectual property from departing personnel, there is a general risk of the potential for misappropriation of our intellectual property that might not be readily discoverable; • the quality of the development efforts undertaken offshore may not meet our requirements because of language, cultural and experiential differences, resulting in potential product errors and/or delays; • potential disruption from the involvement of the United States in political and military conflicts around the world; and • currency exchange rates could fluctuate and adversely impact the cost advantages intended from maintaining these facilities. 14 Table of Contents Risks Related to Our International Operations There are a number of risks associated with our international operations that could have a material impact on our operations and financial condition.
Specifically, there are a number of risks associated with this activity, including but not limited to the following: • communications and information flow may be less efficient and accurate as a consequence of the time, distance and language differences between our primary development organization and the foreign based activities, resulting in delays in development or errors in the software developed; • in addition to the risk of misappropriation of intellectual property from departing personnel, there is a general risk of the potential for misappropriation of our intellectual property that might not be readily discoverable; • the quality of the development efforts undertaken offshore may not meet our requirements because of language, cultural and experiential differences, resulting in potential product errors and/or delays; • potential disruption from the involvement of the United States in political and military conflicts around the world; and • currency exchange rates could fluctuate and adversely impact the cost advantages intended from maintaining these facilities.
If we fail to comply with applicable regulations, including the EU GDPR, CCPA, and other laws, we could be exposed to suits for breach of contract or to governmental or consumer claims, our customer relationships and reputation could be harmed, and we could be inhibited in our ability to obtain new customers.
If we fail to comply with applicable laws and regulations, including the EU GDPR, CCPA, and other laws, we could be exposed to regulatory investigations and actions, lawsuits for breach of contract or to governmental or consumer claims, our customer relationships and reputation could be harmed, and we could be inhibited in our ability to obtain new customers.
These actions could significantly increase our operational costs. Our risk management and information security programs are subject to oversight and periodic reviews by governmental agencies that regulate our business.
These actions could significantly increase our operational costs. 17 Table of Contents Our risk management and information security programs are subject to oversight and periodic reviews by governmental agencies that regulate our business.
We may experience difficulties implementing our strategy, and the strategy could prove unsuccessful in growing our business. Our strategy focuses on investments in real-time payments, large sophisticated global merchants, and fast-growing emerging markets. Successfully implementing our strategy may present organizational and infrastructure challenges, and we may not be able to fully implement or realize the intended benefits of our strategy.
Our strategy focuses on investments in real-time payments, large sophisticated global merchants, and fast-growing emerging markets. Successfully implementing our strategy may present organizational and infrastructure challenges, and we may not be able to fully implement or realize the intended benefits of our strategy.
In addition, a subscription model presents a number of risks to us including the following: • arrangements entered into on a subscription basis generally delay the timing of revenue recognition and can require the incurrence of up-front costs, which may be significant; • subscription models make it difficult to rapidly increase revenues through additional bookings in any period, as revenues are recognized ratably over the subscription period; • customers in a subscription arrangement may elect not to renew their contract upon expiration or they may attempt to renegotiate pricing or other contractual terms at the point of (or prior to) renewal on terms that are less favorable to us; and • there is no assurance that our customers will broadly accept a subscription model for our on-premise licenses. 12 Table of Contents Certain anti-takeover provisions contained in our charter and under Delaware law could hinder a takeover attempt.
In addition, a subscription model presents a number of risks to us including the following: • arrangements entered into on a subscription basis generally delay the timing of revenue recognition and can require the incurrence of up-front costs, which may be significant; • subscription models make it difficult to rapidly increase revenues through additional bookings in any period, as revenues are recognized ratably over the subscription period; • customers in a subscription arrangement may elect not to renew their contract upon expiration or they may attempt to renegotiate pricing or other contractual terms at the point of (or prior to) renewal on terms that are less favorable to us; and • there is no assurance that our customers will broadly accept a subscription model for our on-premise licenses.
We have an office with 57 employees in Russia and a customer in Russia. The U.S. and other global governments have placed restrictions on how companies may transact with, and provide services or solutions to, parties in these regions, particularly Russia, Belarus and restricted areas in Ukraine.
The U.S. and other global governments have placed restrictions on how companies may transact with, and provide services or solutions to, parties in these regions, particularly Russia, Belarus and restricted areas in Ukraine.
The amount of debt that may be borrowed or issued, refinanced, and/or repurchased, repaid, redeemed or otherwise retired, if any, will depend on market conditions, trading levels of our debt, our cash position, compliance with our debt covenants and other considerations.
The amount of debt that may be borrowed or issued, refinanced, and/or repurchased, repaid, redeemed or otherwise retired, if any, will depend on market conditions, trading levels of our debt, our cash position, compliance with our debt covenants and other considerations. Any such actions could impact our financial condition or results of operations.
A lessening demand in either the overall economy, the banking and financial services industry or the software sector could also result in the implementation by banks and related financial service providers of cost reduction measures or reduced capital spending resulting in longer sales cycles, deferral or delay of purchase commitments for our products and increased price competition which could lead to a material decrease in our future revenues and earnings. 15 Table of Contents Our business may be negatively affected by domestic and global economic and credit conditions.
A lessening demand in either the overall economy, the banking and financial services industry or the software sector could also result in the implementation by banks and related financial service providers of cost reduction measures or reduced capital spending resulting in longer sales cycles, deferral or delay of purchase commitments for our products and increased price competition which could lead to a material decrease in our future revenues and earnings.
If the governing tax authorities have a different interpretation of the applicable law and successfully challenge any of our tax positions, our financial condition, cash flows and/or results of operations could be adversely affected. 17 Table of Contents Our U.S. companies are the subject of an examination by several state tax departments.
We believe that our tax-saving strategies comply with applicable tax law. If the governing tax authorities have a different interpretation of the applicable law and successfully challenge any of our tax positions, our financial condition, cash flows and/or results of operations could be adversely affected. Our U.S. companies are the subject of an examination by several state tax departments.
The delay or cancellation of a customer project or inaccurate project completion estimates may adversely affect our operating results and financial performance. Any unanticipated delays in a customer project, changes in customer requirements or priorities during the project implementation period, or a customer’s decision to cancel a project, may adversely impact our operating results and financial performance.
Any unanticipated delays in a customer project, changes in customer requirements or priorities during the project implementation period, or a customer’s decision to cancel a project, may adversely impact our operating results and financial performance.
Beyond this, our products are affected by PCI Security Standards. As a provider of electronic data processing to financial institutions, we must comply with FFIEC regulations and are subject to FFIEC examinations. Legislation and regulation related to credit availability, data usage, privacy, or other related regulatory developments could have an adverse effect on our customers or us.
As a provider of electronic data processing to financial institutions, we must comply with FFIEC regulations and are subject to FFIEC examinations. 16 Table of Contents Legislation and regulation related to credit availability, data usage, privacy, or other related regulatory developments could have an adverse effect on our customers or us.
The OECD, which represents a coalition of member countries, including the U.S., is contemplating changes to numerous longstanding tax principles, including ensuring all companies pay a global minimum tax and expanding taxing rights of market countries.
The OECD, which represents a coalition of member countries, including the U.S., is contemplating changes to numerous longstanding tax principles, including ensuring all companies pay a 15% global minimum tax through the enactment of Pillar Two Model Rules (“Pillar Two”) and expanding taxing rights of market countries.
Before these contracts are executed, we create and rely on forecasted revenues for planning, modeling and earnings guidance. Forecasts, however, are only estimates and actual results may vary for a particular quarter or longer periods of time.
In addition, large portions of our customer contracts are executed in the final weeks of each quarter. Before these contracts are executed, we create and rely on forecasted revenues for planning, modeling and earnings guidance. Forecasts, however, are only estimates and actual results may vary for a particular quarter or longer periods of time.
Our financial results may also fluctuate from quarter to quarter and year to year due to a variety of factors, including changes in product sales mix that affect average selling prices, and the timing of customer renewals (any of which may impact the pattern of revenue recognition). 19 Table of Contents In addition, large portions of our customer contracts are executed in the final weeks of each quarter.
Our financial results may also fluctuate from quarter to quarter and year to year due to a variety of factors, including changes in product sales mix that affect average selling prices, and the timing of customer renewals (any of which may impact the pattern of revenue recognition).
If we do not complete these activities in a timely manner, or do not realize anticipated cost savings, synergies and efficiencies, business disruption occurs during or following such activities, or we incur unanticipated charges, this may negatively impact our business, financial condition, operating results, and cash flows.
If we do not complete these activities in a timely manner, or do not realize anticipated cost savings, synergies and efficiencies, business disruption occurs during or following such activities, or we incur unanticipated charges, this may negatively impact our business, financial condition, operating results, and cash flows. 12 Table of Contents We may experience difficulties implementing our strategy, and the strategy could prove unsuccessful in growing our business.
In the event an examination of our information security and risk management functions results in adverse findings, such findings could be made public or communicated to our regulated financial institution customers, which could have a material adverse effect on us. We are involved in investigations, lawsuits and other proceedings that are expensive, time-consuming and could seriously harm to our business.
In the event an examination of our information security and risk management functions results in adverse findings, such findings could be made public or communicated to our regulated financial institution customers, which could have a material adverse effect on us.
Although we have legal recourse against our clients for the amount of the shortfall, timing of recovery may be delayed by litigation or the amount of any recovery may be less than the shortfall. In either case, we would have to fund the shortfall in our settlement account from our corporate funds.
Although we have legal recourse against our clients for the amount of the shortfall, timing of recovery may be delayed by litigation or the amount of any recovery may be less than the shortfall.
Potential customers may be reluctant to switch to a new vendor, which may adversely affect our growth, both in the United States and internationally. For banks, intermediaries, and other potential customers of our products, switching from one vendor of core financial services software (or from an internally developed legacy system) to a new vendor is a significant endeavor.
For banks, intermediaries, and other potential customers of our products, switching from one vendor of core financial services software (or from an internally developed legacy system) to a new vendor is a significant endeavor.
Furthermore, our implementation of new practices and processes designed to comply with changing tax laws and regulations could require us to make substantial changes to our business practices, allocate additional resources, and increase our costs, which could negatively affect our business, results of operations, and financial condition.
Furthermore, our implementation of new practices and processes designed to comply with changing tax laws and regulations could require us to make substantial changes to our business practices, allocate additional resources, and increase our costs, which could negatively affect our business, results of operations, and financial condition. 18 Table of Contents Risks Related to Our Industry Consolidations and failures in the financial services industry may adversely impact the number of customers and our revenues in the future.
In addition to risks related to license requirements, usage of open source software can lead to greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties or controls on origin of the software. 13 Table of Contents Our exposure to risks associated with the use of intellectual property may be increased for third-party products distributed by us or as a result of acquisitions since we have a lower level of visibility, if any, into the development process with respect to such third-party products and acquired technology or the care taken to safeguard against infringement risks.
Our exposure to risks associated with the use of intellectual property may be increased for third-party products distributed by us or as a result of acquisitions since we have a lower level of visibility, if any, into the development process with respect to such third-party products and acquired technology or the care taken to safeguard against infringement risks.
Any one or more of the foregoing occurrences could have a material adverse effect on our reputation, business, financial condition, cash flows and results of operations. 10 Table of Contents If our security measures are breached or become infected with a computer virus, or if our services are subject to attacks that degrade or deny the ability of users to access our products or services, our business may be harmed by disrupting delivery of services and damaging our reputation.
If our security measures are breached or become infected with a computer virus, or if our services are subject to attacks that degrade or deny the ability of users to access our products or services, our business may be harmed by disrupting delivery of services and damaging our reputation.
Any such actions could impact our financial condition or results of operations. 20 Table of Contents General Risk Factors Our business and operating results could be adversely affected by events outside of our control, including natural disasters, wars and outbreaks of disease or other adverse public health developments .
General Risk Factors Our business and operating results could be adversely affected by events outside of our control, including natural disasters, wars and outbreaks of disease or other adverse public health developments . We may be impacted by natural disasters, wars, and outbreaks of disease or other adverse public health developments such as the COVID-19 coronavirus outbreak.
If our revenues or mix of revenues are below anticipated levels or if our operating results are below analyst or investor expectations, the market price of our common stock could be adversely affected.
These events could also result in a decrease in consumers’ use of our customers’ services, further adversely affecting our business and operating results. If our revenues or mix of revenues are below anticipated levels or if our operating results are below analyst or investor expectations, the market price of our common stock could be adversely affected.
Because the timing of implementation and the specific measures adopted will vary among participating countries, significant uncertainty remains regarding the impact of these initiatives and their implementation could adversely affect our business or financial results.
Significant uncertainty remains regarding the implementation and impact of these initiatives, which could adversely affect our business or financial results.
Federal, state, foreign or industry authorities could adopt laws, rules, or regulations affecting our customers’ businesses that could lead to increased operating costs that may lead to reduced market acceptance.
In addition, our customers must ensure that our services comply with the government regulations, including the EU GDPR, and industry standards that apply to their businesses. Federal, state, foreign or industry authorities could adopt laws, rules, or regulations affecting our customers’ businesses that could lead to increased operating costs that may lead to reduced market acceptance.
Revenues and profit generated by international operations will increase or decrease compared to prior periods as a result of changes in foreign currency exchange rates. Our exposures resulting from fluctuations in foreign currency exchange rates may change over time as our business evolves and could have an adverse impact on our financial condition, cash flows and/or results of operations.
Our exposures resulting from fluctuations in foreign currency exchange rates may change over time as our business evolves and could have an adverse impact on our financial condition, cash flows and/or results of operations. We have not entered into any derivative instruments or hedging contracts to reduce exposure to adverse foreign currency changes.
Any violations of these laws may also result in civil or criminal penalties against us and our officers or the prohibition against us providing money transmitter services in particular jurisdictions.
Any violations of these laws may also result in civil or criminal penalties against us and our officers or the prohibition against us providing money transmitter services in particular jurisdictions. We could also be forced to change our business practices or be required to obtain additional licenses or regulatory approvals that could cause us to incur substantial costs.
Our business is sensitive to the strength of domestic and global economic and credit conditions, particularly as they affect, either directly or indirectly, the banking and financial services industries. Economic and credit conditions are influenced by a number of factors, including political conditions, consumer confidence, unemployment levels, interest rates, tax rates, commodity prices, and government actions to stimulate economic growth.
Economic and credit conditions are influenced by a number of factors, including political conditions, consumer confidence, unemployment levels, interest rates, tax rates, commodity prices, and government actions to stimulate economic growth.
Recent events in eastern Europe present challenges and risks to us, and no assurances can be given that current or future developments would not have a material adverse effect on our business, results of operations and financial condition. The crisis in eastern Europe continues to be a challenge to global companies, including us.
Political, military, and other international developments can undermine bilateral cooperation in key policy areas, significantly disrupt trade, and otherwise adversely affect economic conditions. 15 Table of Contents Recent events in eastern Europe and the Middle East present challenges and risks to us, and no assurances can be given that current or future developments would not have a material adverse effect on our business, results of operations and financial condition.
Competition for such technical personnel is intense, and our failure to hire and retain talented personnel could have a material adverse effect on our business, operating results and financial condition.
Competition for such technical personnel is intense, and our failure to hire and retain talented personnel could have a material adverse effect on our business, operating results and financial condition. 11 Table of Contents Our future growth will also require sales and marketing, financial and administrative personnel to develop and support new solutions and services, to enhance and support current solutions and services and to expand operational and financial systems.
Risks Related to Our Industry Consolidations and failures in the financial services industry may adversely impact the number of customers and our revenues in the future. Mergers, acquisitions, and personnel changes at key financial services organizations have the potential to adversely affect our business, financial condition, cash flows, and results of operations.
Mergers, acquisitions, and personnel changes at key financial services organizations have the potential to adversely affect our business, financial condition, cash flows, and results of operations. Our business is concentrated in the financial services industry, making us susceptible to consolidation in, or contraction of, the number of participating institutions within that industry. Our stock price may be volatile.
We derive a significant portion of our revenues from international operations and anticipate continuing to do so. As a result, we are subject to risks of conducting international operations. One of the principal risks associated with international operations is potentially adverse movements of foreign currency exchange rates.
Risks Related to Our International Operations There are a number of risks associated with our international operations that could have a material impact on our operations and financial condition. We derive a significant portion of our revenues from international operations and anticipate continuing to do so. As a result, we are subject to risks of conducting international operations.
Any claim against us, with or without merit, could be time-consuming, result in costly litigation, cause product delivery delays, require us to enter into royalty or licensing agreements or pay amounts in settlement, or require us to develop alternative non-infringing technology.
Any claim against us, with or without merit, could be time-consuming, result in costly litigation, cause product delivery delays, require us to enter into royalty or licensing agreements or pay amounts in settlement, or require us to develop alternative non-infringing technology. 14 Table of Contents We anticipate that software product developers and providers of electronic commerce solutions could increasingly be subject to infringement claims, and third parties may claim that our present and future products infringe upon their intellectual property rights.
If the carrying value of the asset is determined to be impaired, then it is written down to fair value by a charge to operating earnings. An impairment of a significant portion of goodwill or intangible assets could materially negatively affect our results of operations. Management’s backlog estimate may not be accurate and may not generate the predicted revenues.
An impairment of a significant portion of goodwill or intangible assets could materially negatively affect our results of operations. 19 Table of Contents Management’s backlog estimate may not be accurate and may not generate the predicted revenues. Estimates of future financial results are inherently unreliable.
Any reduction in demand for, or increase in competition with respect to, our Issuing and Acquiring solutions could have a material adverse effect on our financial condition, cash flows and/or results of operations. 18 Table of Contents Failure to obtain renewals of customer contracts or obtain such renewals on favorable terms could adversely affect our results of operations and financial condition.
A significant portion of our total revenues result from licensing our Issuing and Acquiring solutions, including our BASE24 product line and providing related services and maintenance. Any reduction in demand for, or increase in competition with respect to, our Issuing and Acquiring solutions could have a material adverse effect on our financial condition, cash flows and/or results of operations.
Our business is concentrated in the financial services industry, making us susceptible to consolidation in, or contraction of, the number of participating institutions within that industry. Our stock price may be volatile. No assurance can be given that operating results will not vary from quarter to quarter, and past performance may not accurately predict future performance.
No assurance can be given that operating results will not vary from quarter to quarter, and past performance may not accurately predict future performance. Any fluctuations in quarterly operating results may result in volatility in our stock price.
We are subject to income and non-income based taxes in the United States and in various foreign jurisdictions. Significant judgment is required in determining our worldwide income tax liabilities and other tax liabilities. We believe that these tax-saving strategies comply with applicable tax law.
We may face exposure to unknown tax liabilities, which could adversely affect our financial condition, cash flows and/or results of operations. We are subject to income and non-income based taxes in the United States and in various foreign jurisdictions. Significant judgment is required in determining our worldwide income tax liabilities and other tax liabilities.
Failure to achieve favorable renewals of customer contracts could negatively impact our business. Our contracts with our customers generally run for a period of five years, or three years in the case of certain acquired SaaS and PaaS contracts.
Our contracts with our customers generally run for a period of five years, or three years in the case of certain acquired SaaS and PaaS contracts. At the end of the contract term, customers have the opportunity to renegotiate their contracts with us and to consider whether to engage one of our competitors to provide products and services.
We may be impacted by natural disasters, wars, and outbreaks of disease or other adverse public health developments such as the COVID-19 coronavirus outbreak. These events could cause disruptions or restrictions on us, our partners and customers, including restrictions on travel, temporary closure of facilities, and other restrictions.
These events could cause disruptions or restrictions on us, our partners and customers, including restrictions on travel, temporary closure of facilities, and other restrictions. Such disruptions or restrictions may result in delays or losses of sales and delays in the development or implementation of our products.
These decisions, which we believe are in line with the approach of other companies in our industry, help us comply with our obligations under the various requirements in the U.S. and around the world.
We are currently in the process of closing our office in Russia and terminating our agreement with our customer in Russia, and do not expect to incur material expenses in connection with such activities. We believe the closure and termination will help us comply with our obligations under the various requirements in the U.S. and around the world.
There can be no assurance that we will be able to successfully address these challenges. Political, military, and other international developments can undermine bilateral cooperation in key policy areas, significantly disrupt trade, and otherwise adversely affect economic conditions.
There can be no assurance that we will be able to successfully address these challenges.
At the end of the contract term, customers have the opportunity to renegotiate their contracts with us and to consider whether to engage one of our competitors to provide products and services. Failure to achieve high renewal rates on commercially favorable terms could adversely affect our results of operations and financial condition.
Failure to achieve high renewal rates on commercially favorable terms could adversely affect our results of operations and financial condition. The delay or cancellation of a customer project or inaccurate project completion estimates may adversely affect our operating results and financial performance.
Removed
Our future growth will also require sales and marketing, financial and administrative personnel to develop and support new solutions and services, to enhance and support current solutions and services and to expand operational and financial systems.
Added
Any one or more of the foregoing occurrences could have a material adverse effect on our reputation, business, financial condition, cash flows and results of operations.
Removed
We anticipate that software product developers and providers of electronic commerce solutions could increasingly be subject to infringement claims, and third parties may claim that our present and future products infringe upon their intellectual property rights.
Added
Further, even if we successfully complete acquisitions, we may encounter issues not discovered during our due diligence process, including product or service quality issues, intellectual property issues and legal contingencies, the internal control environment of the acquired entity may not be consistent with our standards and may require significant time and resources to improve and we may impair relationships with employees and customers as a result of migrating a business or product line to a new owner.
Removed
We have not entered into any derivative instruments or hedging contracts to reduce exposure to adverse foreign currency changes.
Added
Certain anti-takeover provisions contained in our charter and under Delaware law could hinder a takeover attempt.
Removed
Because of these restrictions, we have augmented the services and solutions we provide to our customer in Russia and the manner in which we support our employees in Russia.
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In either case, we would have to fund the shortfall in our settlement account from our corporate funds. 13 Table of Contents Potential customers may be reluctant to switch to a new vendor, which may adversely affect our growth, both in the United States and internationally.
Removed
We could also be forced to change our business practices or be required to obtain additional licenses or regulatory approvals that could cause us to incur substantial costs. 16 Table of Contents In addition, our customers must ensure that our services comply with the government regulations, including the EU GDPR, and industry standards that apply to their businesses.
Added
In addition to risks related to license requirements, usage of certain open source software can lead to greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties or controls on origin of the software.
Removed
We are involved in lawsuits, including class-action lawsuits, and government investigations relating to the conduct of our business. For example, in April 2021, ACH files associated with one of our mortgage servicing customers were inadvertently transmitted into the ACH network during a test of our payment processing system.
Added
One of the principal risks associated with international operations is potentially adverse movements of foreign currency exchange rates. Revenues and profit generated by international operations will increase or decrease compared to prior periods as a result of changes in foreign currency exchange rates.
Removed
We took immediate corrective action and issued reversing ACH files, restoring affected accounts. This incident gave rise to class action litigation as to which we reached a settlement with the lead plaintiff that is subject to final court approval. It also gave rise to state and federal investigations that are ongoing.
Added
The crises in eastern Europe and the Middle East continues to be a challenge to global companies, including us. We currently have an office with 48 employees in Russia, a customer in Russia, and customers located in the Middle East.
Removed
See Legal Proceedings in Note 13, Commitments and Contingencies, to our Notes to Consolidated Financial Statements in Part IV, Item 15 of this Form 10-K for a discussion of these matters. Damage claims in lawsuits, and fines and penalties imposed by governmental agencies, can be substantial, and injunctive or other remedies imposed by governmental agencies can be costly to implement.
Added
Our business may be negatively affected by domestic and global economic and credit conditions. Our business is sensitive to the strength of domestic and global economic and credit conditions, particularly as they affect, either directly or indirectly, the banking and financial services industries.
Removed
Any litigation may result in an onerous or unfavorable judgment that might not be reversed on appeal, or we may decide to settle lawsuits or resolve government investigations on adverse terms. Any such negative outcomes could result in the payment of substantial monetary damages or penalties or require changes to our products or business practices that materially affect us.
Added
Beyond this, our products are affected by PCI Security Standards.
Removed
Even where the ultimate outcome of any such litigation or regulatory proceeding may be favorable, defending against claims and responding to regulatory proceedings is costly and can impose a significant burden on us. The existence of lawsuits and investigations, and any adverse outcome, may create negative publicity for the Company and undermine the Company’s goodwill with customers.
Added
We are subject to consent orders and other compliance agreements (the “Consent Orders and Compliance Agreements”) entered into in connection with the settlement of state and federal regulators’ investigations. Failure to comply with the Consent Orders and Compliance Agreements could result in further, and more significant, enforcement actions against us.
Removed
Competitors may use these lawsuits and investigations against us in the marketplace, making it difficult for us to attract new customers and retain our existing customers. We may face exposure to unknown tax liabilities, which could adversely affect our financial condition, cash flows and/or results of operations.
Added
We are required to conduct our operations in compliance with the Consent Orders and Compliance Agreements.
Removed
Any fluctuations in quarterly operating results may result in volatility in our stock price.
Added
While we have complied with the Consent Orders and Compliance Agreements, and have implemented processes by which we believe we will maintain compliance with the Consent Orders and Compliance Agreements going forward, we cannot be certain that we will maintain compliance with the Consent Orders and Compliance Agreements in all instances.
Removed
A significant portion of our total revenues result from licensing our Issuing and Acquiring solutions, including our BASE24 product line and providing related services and maintenance.
Added
In the event that we are deemed to be non-compliant with the terms of the Consent Orders and/or Compliance Agreements, the state and/or federal regulators have the authority to subject us to additional, and potentially more significant, corrective actions and could seek to initiate further enforcement actions against us, including seeking civil money penalties.
Removed
Estimates of future financial results are inherently unreliable.
Added
Any failure by us to comply with the terms of the Consent Orders and Compliance Agreements or additional actions could adversely affect our business, financial condition and results of operations. In addition, our competitors may not be subject to similar actions, which could limit our ability to compete effectively.
Removed
Such disruptions or restrictions may result in delays or losses of sales and delays in the development or implementation of our products. These events could also result in a decrease in consumers’ use of our customers’ services, further adversely affecting our business and operating results.
Added
Pillar Two is expected to be applicable to us beginning January 1, 2024; however, the timing of implementation of Pillar Two rules at the local country level is uncertain. The specific Pillar Two measures requiring adoption will vary among participating countries.
Added
Failure to obtain renewals of customer contracts or obtain such renewals on favorable terms could adversely affect our results of operations and financial condition. Failure to achieve favorable renewals of customer contracts could negatively impact our business.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAs of the end of 2022, we owned and leased a total of approximately 323,000 square feet of office and data center space in the United States and leased approximately 389,000 square feet of office and data center space outside the United States, primarily in India, the United Kingdom, Ireland, South Africa, Romania, and Singapore.
Biggest changeAs of the end of 2023, we owned and leased a total of approximately 286,000 square feet of office and data center space in the United States and leased approximately 332,000 square feet of office and data center space outside the United States, primarily in India, Ireland, South Africa, Romania, and Singapore.
ITEM 2. PROPERTIES We lease office space in Coral Gables, Florida, for our principal executive headquarters.
ITEM 2. PROPERTIES We lease office space in Elkhorn, Nebraska, for our principal executive offices.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS For a description of our material pending legal proceedings, please refer to Note 13, Commitments and Contingencies , to our Notes to Consolidated Financial Statements in Part IV, Item 15 of this Form 10-K. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 22 Table of Contents PART II
Biggest changeITEM 3. LEGAL PROCEEDINGS For a description of our material pending legal proceedings, please refer to Note 13, Commitments and Contingencies , to our Notes to Consolidated Financial Statements in Part IV, Item 15 of this Form 10-K. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 23 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Purchases of Equity Securities The following table provides information regarding our repurchases of common stock during the three months ended December 31, 2022: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program October 1, 2022 through October 31, 2022 935,736 $ 22.46 935,736 $ 104,357,000 November 1, 2022 through November 30, 2022 2,021,322 20.93 2,008,645 62,317,000 December 1, 2022 through December 31, 2022 (1) (2) 2,612,636 21.29 2,469,544 9,771,000 Total 5,569,694 $ 21.36 5,413,925 (1) Pursuant to our 2016 and 2020 Equity and Performance Incentive Plans, (the "2016 Incentive Plan" and "2020 Incentive Plan"), we granted RSUs.
Biggest changeIssuer Purchases of Equity Securities The following table provides information regarding our repurchases of common stock during the three months ended December 31, 2023: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program October 1, 2023 through October 31, 2023 — $ — — $ 200,000,000 November 1, 2023 through November 30, 2023 (1) 35,997 26.10 — 200,000,000 December 1, 2023 through December 31, 2023 (1) 939,764 29.36 939,567 172,413,000 Total 975,761 $ 29.24 939,567 (1) Pursuant to our 2016 and 2020 Equity and Performance Incentive Plans, (the "2016 Incentive Plan" and "2020 Incentive Plan"), we granted RSUs.
This presentation assumes that $100 was invested in shares of the relevant issuers on December 31, 2017, and that dividends received were immediately invested in additional shares. The graph plots the value of the initial $100 investment at one-year intervals for the fiscal years shown. This information was provided by Zacks Investment Research, Inc. of Chicago, Illinois.
This presentation assumes that $100 was invested in shares of the relevant issuers on December 31, 2018, and that dividends received were immediately invested in additional shares. The graph plots the value of the initial $100 investment at one-year intervals for the fiscal years shown. This information was provided by Zacks Investment Research, Inc. of Chicago, Illinois.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock trades on The NASDAQ Global Select Market under the symbol ACIW. As of February 27, 2023, there were 245 holders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock trades on The NASDAQ Global Select Market under the symbol ACIW. As of February 27, 2024, there were 229 holders of record of our common stock.
As of December 31, 2022, the maximum remaining amount authorized for purchase under the stock repurchase program was approximately $9.8 million. 23 Table of Contents There is no guarantee as to the exact number of shares we will repurchase. Repurchased shares are returned to the status of authorized but unissued shares of common stock.
As of December 31, 2023, the maximum remaining amount authorized for purchase under the stock repurchase program was approximately $172.4 million. 24 Table of Contents There is no guarantee as to the exact number of shares we will repurchase. Repurchased shares are returned to the status of authorized but unissued shares of common stock.
We do not presently anticipate paying cash dividends. However, any future determination relating to our dividend policy will be made at the discretion of our board of directors (the "board") and will depend upon our financial condition, capital requirements, and earnings, as well as other factors the board may deem relevant.
However, any future determination relating to our dividend policy will be made at the discretion of our board of directors (the "board") and will depend upon our financial condition, capital requirements, and earnings, as well as other factors the board may deem relevant.
A substantially greater number of shareholders hold our common stock in “street name”, or as beneficial holders whose shares are held in the name of banks, brokers, or other financial institutions. For equity compensation plan information, please refer to Item12 in Part III of this Annual Report. Dividends We have never declared nor paid cash dividends on our common stock.
A substantially greater number of shareholders hold our common stock in “street name”, or as beneficial holders whose shares are held in the name of banks, brokers, or other financial institutions. For equity compensation plan information, please refer to Item 12 in Part III of this Annual Report.
Under each arrangement, shares are issued without direct cost to the employee. During the three months ended December 31, 2022, 91,877 shares of RSUs vested. We withheld 32,146 of these RSUs to pay the employees’ portion of the applicable minimum payroll withholding taxes.
Under each arrangement, shares are issued without direct cost to the employee. During the three months ended December 31, 2023, 112,536 shares of RSUs vested. We withheld 36,194 of these RSUs to pay the employees’ portion of the applicable minimum payroll withholding taxes.
On December 1, 2021, the board approved the repurchase of the Company's common stock for up to $250.0 million, in place of the remaining purchase amounts previously authorized.
On February 24, 2023, the board approved the repurchase of the Company's common stock for up to $200.0 million, in place of the remaining purchase amounts previously authorized.
Removed
(2) Pursuant to our 2005 Equity and Performance Incentive Plan, as amended (the "2005 Incentive Plan"), we granted stock options. These awards have a term that may not exceed ten years and vesting is determined by the administrator of the plan. During the three months ended December 31, 2022, 152,691 stock options were exercised by means of net settlement.
Added
Dividends We have never declared nor paid cash dividends on our common stock. We do not presently anticipate paying cash dividends.
Removed
We withheld 123,623 of these stock options to pay the employees’ portion of the applicable minimum payroll withholding taxes and cover the respective exercise price.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeAdditionally, because certain components of Committed Backlog and all of Renewal Backlog estimates are operating metrics, the estimates are not required to be subject to the same level of internal review or controls as contracted but not recognized Committed Backlog. 28 Table of Contents Results of Operations The following tables present the consolidated statements of operations, as well as the percentage relationship to total revenues of items included in our consolidated statements of operations (in thousands): Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 2022 2021 Amount % of Total Revenue $ Change vs 2021 % Change vs 2021 Amount % of Total Revenue Revenues: Software as a service and platform as a service $ 802,880 57 % $ 28,538 4 % $ 774,342 57 % License 348,134 24 % 28,267 9 % 319,867 23 % Maintenance 200,045 14 % (10,454) (5) % 210,499 15 % Services 70,842 5 % 4,952 8 % 65,890 5 % Total revenues 1,421,901 100 % 51,303 4 % 1,370,598 100 % Operating expenses: Cost of revenue 696,071 49 % 57,200 9 % 638,871 47 % Research and development 146,311 10 % 2,001 1 % 144,310 11 % Selling and marketing 134,812 9 % 8,273 7 % 126,539 9 % General and administrative 114,194 8 % (9,607) (8) % 123,801 9 % Depreciation and amortization 126,678 9 % (502) — % 127,180 9 % Total operating expenses 1,218,066 85 % 57,365 5 % 1,160,701 85 % Operating income 203,835 15 % (6,062) (3) % 209,897 15 % Other income (expense): Interest expense (53,193) (4) % (8,133) 18 % (45,060) (3) % Interest income 12,547 1 % 1,025 9 % 11,522 1 % Other, net 43,446 3 % 44,740 (3,457) % (1,294) — % Total other income (expense) 2,800 — % 37,632 (108) % (34,832) (2) % Income before income taxes 206,635 15 % 31,570 18 % 175,065 13 % Income tax expense 64,458 5 % 17,184 36 % 47,274 3 % Net income $ 142,177 10 % $ 14,386 11 % $ 127,791 10 % Revenues Total revenue for the year ended December 31, 2022, increased $51.3 million, or 4%, as compared to the same period in 2021. • The divestiture resulted in a $17.6 million decrease in total revenue for the year ended December 31, 2022. • The impact of certain foreign currencies weakening against the U.S. dollar resulted in a $19.1 million decrease in total revenue during the year ended December 31, 2022, as compared to the same period in 2021. • Adjusted for the impact of the divestiture and foreign currency, total revenue for the year ended December 31, 2022, increased $88.0 million, or 7%, as compared to the same period in 2021. 29 Table of Contents Software as a Service (“SaaS”) and Platform as a Service (“PaaS”) Revenue The Company’s SaaS arrangements allow customers to use certain software solutions (without taking possession of the software) in a single-tenant cloud environment on a subscription basis.
Biggest changeAdditionally, because certain components of Committed Backlog and all of Renewal Backlog estimates are operating metrics, the estimates are not required to be subject to the same level of internal review or controls as contracted but not recognized Committed Backlog. 29 Table of Contents Results of Operations The following tables present the consolidated statements of operations, as well as the percentage relationship to total revenues of items included in our consolidated statements of operations (in thousands): Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 2023 2022 Amount % of Total Revenue $ Change vs 2022 % Change vs 2022 Amount % of Total Revenue Revenues: Software as a service and platform as a service $ 849,147 59 % $ 46,267 6 % $ 802,880 57 % License 321,224 22 % (26,910) (8) % 348,134 24 % Maintenance 205,068 14 % 5,023 3 % 200,045 14 % Services 77,140 5 % 6,298 9 % 70,842 5 % Total revenues 1,452,579 100 % 30,678 2 % 1,421,901 100 % Operating expenses: Cost of revenue 719,211 50 % 23,140 3 % 696,071 49 % Research and development 140,758 10 % (5,553) (4) % 146,311 10 % Selling and marketing 132,639 9 % (2,173) (2) % 134,812 9 % General and administrative 117,190 8 % 2,996 3 % 114,194 8 % Depreciation and amortization 122,373 8 % (4,305) (3) % 126,678 9 % Total operating expenses 1,232,171 85 % 14,105 1 % 1,218,066 85 % Operating income 220,408 15 % 16,573 8 % 203,835 15 % Other income (expense): Interest expense (78,486) (5) % (25,293) 48 % (53,193) (4) % Interest income 14,215 1 % 1,668 13 % 12,547 1 % Other, net (8,510) (1) % (51,956) (120) % 43,446 3 % Total other income (expense) (72,781) (5) % (75,581) (2,699) % 2,800 — % Income before income taxes 147,627 10 % (59,008) (29) % 206,635 15 % Income tax expense 26,118 2 % (38,340) (59) % 64,458 5 % Net income $ 121,509 8 % $ (20,668) (15) % $ 142,177 10 % Revenues Total revenue for the year ended December 31, 2023, increased $30.7 million, or 2%, as compared to the same period in 2022. • The divestiture resulted in a $32.0 million decrease in total revenue for the year ended December 31, 2023. • The impact of certain foreign currencies weakening against the U.S. dollar resulted in a $2.4 million decrease in total revenue during the year ended December 31, 2023, as compared to the same period in 2022. • Adjusted for the impact of the divestiture and foreign currency, total revenue for the year ended December 31, 2023, increased $65.1 million, or 5%, as compared to the same period in 2022. 30 Table of Contents Software as a Service (“SaaS”) and Platform as a Service (“PaaS”) Revenue The Company’s SaaS arrangements allow customers to use certain software solutions (without taking possession of the software) in a single-tenant cloud environment on a subscription basis.
The TSA is meant to reimburse the Company for direct costs in order to provide such functions, which are no longer generating revenue for the Company. 26 Table of Contents Backlog Backlog is comprised of: • Committed Backlog, which includes (1) contracted revenue that will be recognized in future periods (contracted but not recognized) from software license fees, maintenance fees, service fees, and SaaS and PaaS fees specified in executed contracts (including estimates of variable consideration if required under ASC 606) and included in the transaction price for those contracts, which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods and (2) estimated future revenues from software license fees, maintenance fees, services fees, and SaaS and PaaS fees specified in executed contracts. • Renewal Backlog, which includes estimated future revenues from assumed contract renewals to the extent we believe recognition of the related revenue will occur within the corresponding backlog period.
The TSA is meant to reimburse the Company for direct costs in order to provide such functions, which are no longer generating revenue for the Company. 27 Table of Contents Backlog Backlog is comprised of: • Committed Backlog, which includes (1) contracted revenue that will be recognized in future periods (contracted but not recognized) from software license fees, maintenance fees, service fees, and SaaS and PaaS fees specified in executed contracts (including estimates of variable consideration if required under ASC 606) and included in the transaction price for those contracts, which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods and (2) estimated future revenues from software license fees, maintenance fees, services fees, and SaaS and PaaS fees specified in executed contracts. • Renewal Backlog, which includes estimated future revenues from assumed contract renewals to the extent we believe recognition of the related revenue will occur within the corresponding backlog period.
The United States is driving real-time payments adoption through Zelle, TCH Real-Time Payments, and the planned FedNow service. We are seeing success with real-time payments in the Middle East as well, as they have started to renovate their payment systems from legacy payment types to the modern digital and real-time world.
The United States is driving real-time payments adoption through Zelle, TCH Real-Time Payments, and the FedNow service. We are seeing success with real-time payments in the Middle East as well, as they have started to renovate their payment systems from legacy payment types to the modern digital and real-time world.
If determined to be significant, the financing component is calculated using a rate that discounts the license fees to the cash selling price. 37 Table of Contents Our SaaS-based and PaaS-based arrangements represent a single promise to provide continuous access to our software solutions and their processing capabilities in the form of a service through one of our data centers.
If determined to be significant, the financing component is calculated using a rate that discounts the license fees to the cash selling price. 39 Table of Contents Our SaaS-based and PaaS-based arrangements represent a single promise to provide continuous access to our software solutions and their processing capabilities in the form of a service through one of our data centers.
Within the biller segment, ACI provides electronic bill presentment and payment (“EBPP”) services to companies operating in the consumer finance, insurance, healthcare, higher education, utility, government, and mortgage categories. The solutions enable these customers to support a wide range of payment options and provide a convenient consumer payments experience that drives consumer loyalty and increases revenue.
Within the billers segment, ACI provides electronic bill presentment and payment (“EBPP”) services to companies operating in the consumer finance, insurance, healthcare, higher education, utility, government, and mortgage categories. The solutions enable these customers to support a wide range of payment options and provide a convenient consumer payments experience that drives consumer loyalty and increases revenue.
ACI has recognized the industry's technical inflection point in the transition from traditional on-premise infrastructure to the public cloud, and we are supporting our customers' cloud strategies. Public and private cloud technology innovations allow the financial services ecosystem to accelerate innovation and ensure scalability and resiliency while improving operating economics over time.
ACI has recognized the industry's technical inflection point in the transition from traditional on-premises infrastructure to the public cloud, and we are supporting our customers' cloud strategies. Public and private cloud technology innovations allow the financial services ecosystem to accelerate innovation and ensure scalability and resiliency while improving operating economics over time.
Regulators are beginning to litigate between consumers and financial institutions on the losses, and between emitting and receiving banks on the accountability for reimbursement. Banks and intermediaries, merchants, and billers are pursuing solutions to mitigate their risks while improving their customer experience, protecting their margins, and securing their revenue streams, especially with their new products and offerings.
Regulators are beginning to litigate between consumers and financial institutions on the losses, and between remitting and receiving banks on the accountability for reimbursement. Banks and intermediaries, merchants, and billers are pursuing solutions to mitigate their risks while improving their customer experience, protecting their margins, and securing their revenue streams, especially with their new products and offerings.
See Note 7, Common Stock and Treasury Stock , to our Notes to Consolidated Financial Statements in Part IV, Item 15 of this Form 10-K for additional information. Cash Flows The following table sets forth summary cash flow data for the periods indicated (in thousands).
See Note 7, Common Stock and Treasury Stock , to our Notes to Consolidated Financial Statements in Part IV, Item 15 of this Form 10-K for additional information. 37 Table of Contents Cash Flows The following table sets forth summary cash flow data for the periods indicated (in thousands).
Prior Year Results For discussion of 2021 compared to 2020, see Liquidity and Capital Resources in Part II, Item 7 of our annual report on Form 10-K for the year ended December 31, 2021. 36 Table of Contents Contractual Obligations Our largest contractual obligations as of December 31, 2022, include the following: • principal payments related to our Credit Agreement that are included in our consolidated balance sheet and the related periodic interest payments; • semi-annual interest payments on our 2026 Notes and the ultimate principal payment that is included in our consolidated balance sheet; • scheduled payments related to liabilities for certain multi-year license agreements for internal-use software that are included in our consolidated balance sheet; • operating lease obligations that are included in our consolidated balance sheet; and • other contractual commitments associated with agreements that are enforceable and legally binding.
Prior Year Results For discussion of 2022 compared to 2021, see Liquidity and Capital Resources in Part II, Item 7 of our annual report on Form 10-K for the year ended December 31, 2022. 38 Table of Contents Contractual Obligations Our largest contractual obligations as of December 31, 2023, include the following: • principal payments related to our Credit Agreement that are included in our consolidated balance sheet and the related periodic interest payments; • semi-annual interest payments on our 2026 Notes and the ultimate principal payment that is included in our consolidated balance sheet; • scheduled payments related to liabilities for certain multi-year license agreements for internal-use software that are included in our consolidated balance sheet; • operating lease obligations that are included in our consolidated balance sheet; and • other contractual commitments associated with agreements that are enforceable and legally binding.
Use of a discounted cash flow valuation model is common practice in impairment testing in the absence of available transactional market evidence to determine the fair value. 38 Table of Contents The key assumptions used in the discounted cash flow valuation model include discount rates, growth rates, cash flow projections, and terminal value rates.
Use of a discounted cash flow valuation model is common practice in impairment testing in the absence of available transactional market evidence to determine the fair value. 40 Table of Contents The key assumptions used in the discounted cash flow valuation model include discount rates, growth rates, cash flow projections, and terminal value rates.
As of December 31, 2022, only the earnings in our Indian foreign subsidiaries are indefinitely reinvested. The earnings of all other foreign entities are no longer indefinitely reinvested. We are also permanently reinvested for outside book/tax basis differences related to foreign subsidiaries.
As of December 31, 2023, only the earnings in our Indian foreign subsidiaries are indefinitely reinvested. The earnings of all other foreign entities are no longer indefinitely reinvested. We are also permanently reinvested for outside book/tax basis differences related to foreign subsidiaries.
Segment Adjusted EBITDA is the measure reported to the CODM for purposes of making decisions on allocating resources and assessing the performance of our segments and, therefore, Segment Adjusted EBITDA is presented in conformity with ASC 280, Segment Reporting .
Segment Adjusted EBITDA is the measure reported to the CODM for purposes of making decisions on allocating resources and assessing the performance of the Company's segments and, therefore, Segment Adjusted EBITDA is presented in conformity with ASC 280, Segment Reporting .
Prior Year Results For discussion of 2021 compared to 2020, see Segment Results in Part II, Item 7 of our annual report on Form 10-K for the year ended December 31, 2021.
Prior Year Results For discussion of 2022 compared to 2021, see Segment Results in Part II, Item 7 of our annual report on Form 10-K for the year ended December 31, 2022.
Divestiture On September 1, 2022, we sold our corporate online banking solutions related assets and liabilities to One Equity Partners ("OEP") for $100.1 million, including a preliminary net working capital adjustment. The sale included employees and customer contracts as well as technology assets and intellectual property.
Divestiture On September 1, 2022, we sold our corporate online banking solutions related assets and liabilities to One Equity Partners ("OEP") for $100.0 million, and a net working capital adjustment. The sale included employees and customer contracts as well as technology assets and intellectual property.
We believe these needs will be satisfied using cash flow generated by our operations, cash and cash equivalents, and available borrowings under our revolving credit facility over the next 12 months and beyond. Cash and cash equivalents consist of highly liquid investments with original maturities of three months or less.
We believe these needs will be satisfied using cash flow generated by our operations, cash and cash equivalents, and available borrowings under our revolving credit facility over the next 12 months and beyond. 36 Table of Contents Cash and cash equivalents consist of highly liquid investments with original maturities of three months or less.
These outside basis differences could reverse through sales of the foreign subsidiaries, as well as various other events, none of which are considered probable as of December 31, 2022.
These outside basis differences could reverse through sales of the foreign subsidiaries, as well as various other events, none of which are considered probable as of December 31, 2023.
In the event a significant revision to renewal assumptions is determined to be necessary, prior periods will be adjusted for comparability purposes. 27 Table of Contents The following table sets forth our 60-month backlog estimate, by reportable segment, as of December 31, 2022; September 30, 2022; June 30, 2022; March 31, 2022; and December 31, 2021 (in millions).
In the event a significant revision to renewal assumptions is determined to be necessary, prior periods will be adjusted for comparability purposes. 28 Table of Contents The following table sets forth our 60-month backlog estimate, by reportable segment, as of December 31, 2023; September 30, 2023; June 30, 2023; March 31, 2023; and December 31, 2022 (in millions).
As the threat of scams becomes a greater concern for emitting and receiving institutions, consumers are challenged with increased friction to prevent account take-over and criminals successfully persuading consumers to push transactions themselves, inadvertently, to mule accounts they have full control of, created with 25 Table of Contents fake or synthetic identity, or simply "borrowed" with or without consent of the legit account holders.
As the threat of scams becomes a greater concern for remitting and receiving institutions, consumers are challenged with increased friction to prevent account take-over and criminals successfully persuading consumers to push transactions themselves, inadvertently, to mule accounts they have full control of, created with fake or synthetic identity, or simply "borrowed" with or without consent of the legit account holders.
Income Taxes The effective tax rates for the years ended December 31, 2022 and 2021, were approximately 31% and 27%, respectively. Our effective tax rates vary from our federal statutory rates due to operating in multiple foreign countries where we apply foreign tax laws and rates which differ from those we apply to the income generated from our domestic operations.
Income Taxes The effective tax rates for the years ended December 31, 2023 and 2022, were approximately 18% and 31%, respectively. Our effective tax rates vary from our federal statutory rates due to operating in multiple foreign countries where we apply foreign tax laws and rates which differ from those we apply to the income generated from our domestic operations.
COVID-19 further accelerated this growth as more people, governments, and businesses embraced digital payments - a change likely to continue. We leverage the growth in transaction volumes through the licensing of new systems to customers whose older systems cannot handle increased volume, through the sale of capacity upgrades to existing customers, and through the scalability of our platform-based solutions.
COVID-19 further accelerated this growth as more people, governments, and businesses embraced digital payments - a change that has continued. We leverage the growth in transaction volumes through the licensing of new systems to customers whose older systems cannot handle increased volume, through the sale of capacity upgrades to existing customers, and through the scalability of our platform-based solutions.
Interest income includes the portion of software license fees paid by customers under extended payment terms that is attributed to the significant financing component. Interest income for the year ended December 31, 2022, increased $1.0 million, or 9%, as compared to the same period in 2021. Other, net is primarily comprised of foreign currency transaction gains and losses.
Interest income includes the portion of software license fees paid by customers under extended payment terms that is attributed to the significant financing component. Interest income for the year ended December 31, 2023, increased $1.7 million, or 13%, as compared to the same period in 2022. Other, net is primarily comprised of foreign currency transaction gains and losses.
As banks and intermediaries, merchants, and billers seek to transition their systems to make use of cloud technology, our investments and partnerships, as demonstrated by our product enablement and initial optimization onto Microsoft Azure, enable us to leverage those cloud technology benefits today and for the future while preserving ACI's fundamental base of performance, resiliency, and scalability.
As banks and intermediaries, merchants, and billers seek to transition their systems to make use of cloud technology, our investments and partnerships, as demonstrated by our product enablement and initial optimization onto Microsoft Azure, enable us to leverage those cloud technology benefits today and for the future while preserving ACI's fundamental base of performance, resiliency, and scalability. 26 Table of Contents Payments intelligence. fraud, and compliance .
As of December 31, 2022 and 2021, our intangible assets, excluding goodwill, net of accumulated amortization, were $228.7 million and $283.0 million, respectively. The determination of the value of such intangible assets requires management to make estimates and assumptions that affect the consolidated financial statements.
As of December 31, 2023 and 2022, our intangible assets, excluding goodwill, net of accumulated amortization, were $195.6 million and $228.7 million, respectively. The determination of the value of such intangible assets requires management to make estimates and assumptions that affect the consolidated financial statements.
During the year ended December 31, 2022, other, net also included a $38.5 million gain from the divestiture. Other, net was $43.4 million of income and $1.3 million of expense for the years ended December 31, 2022 and 2021, respectively.
During the year ended December 31, 2022, other, net also included a $38.5 million gain from the divestiture. Other, net was $8.5 million of expense and $43.4 million of income for the years ended December 31, 2023 and 2022, respectively.
These assumptions may turn out to be inaccurate or wrong for reasons outside of management’s control. For example, our customers may attempt to renegotiate or terminate their contracts for many reasons, including mergers, changes in their financial condition, or general changes in economic conditions (e.g., economic declines resulting from COVID-19 ) in the customer’s industry or geographic location.
These assumptions may turn out to be inaccurate or wrong for reasons outside of management’s control. For example, our customers may attempt to renegotiate or terminate their contracts for many reasons, including mergers, changes in their financial condition, or general changes in economic conditions in the customer’s industry or geographic location.
Services revenue increased $5.0 million, or 8%, during the year ended December 31, 2022, as compared to the same period in 2021. • The divestiture resulted in a $3.5 million decrease in services revenue for the year ended December 31, 2022. • The impact of foreign currencies weakening against the U.S. dollar resulted in a $1.6 million decrease in services revenue during the year ended December 31, 2022, as compared to the same period in 2021. • Adjusted for the impact of the divestiture and foreign currency, services revenue for the year ended December 31, 2022, increased $10.1 million, or 17%, as compared to the same period in 2021. • The increase was primarily driven by the timing and magnitude of project-related work during the year ended December 31, 2022, as compared to the same period in 2021.
Services revenue increased $6.3 million, or 9%, during the year ended December 31, 2023, as compared to the same period in 2022. • The divestiture resulted in a $6.4 million decrease in services revenue for the year ended December 31, 2023. • The impact of foreign currencies weakening against the U.S. dollar resulted in a $0.8 million decrease in services revenue during the year ended December 31, 2023, as compared to the same period in 2022. • Adjusted for the impact of the divestiture and foreign currency, services revenue for the year ended December 31, 2023, increased $13.5 million, or 21%, as compared to the same period in 2022. • The increase was primarily driven by the timing and magnitude of project-related work during the year ended December 31, 2023, as compared to the same period in 2022.
As of December 31, 2022, we had $125.0 million of cash and cash equivalents, of which $38.9 million was held by our foreign subsidiaries. If these funds were needed for our operations in the United States, we may potentially be required to accrue and pay foreign and U.S. state income taxes to repatriate these funds.
As of December 31, 2023, we had $164.2 million of cash and cash equivalents, of which $60.9 million was held by our foreign subsidiaries. If these funds were needed for our operations in the United States, we may potentially be required to accrue and pay foreign and U.S. state income taxes to repatriate these funds.
The Company and OEP have also entered into a Transition Services Agreement ("TSA"), whereby the Company will continue to perform certain functions on OEP's behalf during a migration period not expected to exceed 18 months.
The Company and OEP have also entered into a Transition Services Agreement ("TSA"), whereby the Company will continue to perform certain functions on OEP's behalf during a migration period.
Payments intelligence. fraud, and compliance . The accelerated adoption of real-time payments increases the urgency for industry-wide collaboration against fraud.
The accelerated adoption of real-time payments increases the urgency for industry-wide collaboration against fraud.
During the year ended December 31, 2022, we received net proceeds of $100.1 million from the divestiture. In addition, we used cash of $39.9 million to purchase software, property, and equipment, as compared to $45.4 million during the same period in 2021.
During the year ended December 31, 2023, we used cash of $37.8 million to purchase software, property, and equipment, as compared to $39.9 million during the same period in 2022. During the year ended December 31, 2022, we received net proceeds of $100.1 million from the divestiture.
Of the foreign jurisdictions in which we operate, our December 31, 2022, effective rate was most impacted by our operations in Ireland and our December 31, 2021, effective tax rate was most impacted by our operations in Colombia, Ireland and Singapore.
Of the foreign jurisdictions in which we operate, our December 31, 2023 effective rate was most impacted by our operations in Ireland and the United Kingdom and our December 31, 2022 effective tax rate was most impacted by our operations in Ireland.
Years Ended December 31, 2022 2021 Net cash provided by (used in): Operating activities $ 143,381 $ 220,473 Investing activities 60,246 (45,368) Financing activities (171,060) (256,878) Cash Flows from Operating Activities The primary source of operating cash flows is cash collections from our customers for purchase and renewal of licensed software products and various services including software and platform as a service, maintenance, and other professional services.
Years Ended December 31, 2023 2022 Net cash provided by (used in): Operating activities $ 168,517 $ 143,381 Investing activities (37,777) 60,246 Financing activities (111,552) (171,060) Cash Flows from Operating Activities The primary source of operating cash flows is cash collections from our customers for purchase and renewal of licensed software products and various services including software and platform as a service, maintenance, and other professional services.
Our primary uses of operating cash flows includes employee expenditures, taxes, interest payments, and leased facilities. Cash flows provided by operating activities were $77.1 million lower for the year ended December 31, 2022, compared to the same period in 2021, due to the timing of working capital.
Our primary uses of operating cash flows includes employee expenditures, taxes, interest payments, and leased facilities. Cash flows provided by operating activities were $25.1 million higher for the year ended December 31, 2023, compared to the same period in 2022.
R&D expense increased $2.0 million, or 1%, during the year ended December 31, 2022, as compared to the same period in 2021. • During the year ended December 31, 2022, there was a $0.6 million reduction in R&D expense related to the divestiture. • Total R&D expense for the year ended December 31, 2021 included $2.4 million of expense related to significant transactions and cost reduction strategies implemented during the period. • The impact of foreign currencies weakening against the U.S. dollar resulted in a $3.5 million decrease in R&D expense during the year ended December 31, 2022, as compared to the same period in 2021. • Adjusted for the impact of the divestiture, significant transaction-related expenses, and foreign currency, R&D expense increased $8.4 million, or 6%, during the year ended December 31, 2022, as compared to the same period in 2021. • The increase was primarily due to higher professional fees and personnel and related expenses of $6.8 million and $1.6 million, respectively.
R&D expense decreased $5.6 million, or 4%, during the year ended December 31, 2023, as compared to the same period in 2022. • During the year ended December 31, 2023, there was a $1.3 million reduction in R&D expense related to the divestiture. • The impact of foreign currencies weakening against the U.S. dollar resulted in a $1.0 million decrease in R&D expense during the year ended December 31, 2023, as compared to the same period in 2022. • Adjusted for the impact of the divestiture, significant transaction-related expenses, and foreign currency, R&D expense decreased $3.3 million, or 2%, during the year ended December 31, 2023, as compared to the same period in 2022. • The decrease was primarily due to lower professional fees of $5.8 million, partially offset by an increase in personnel and related expenses of $2.5 million.
Excluding the divestiture, Banks Segment Adjusted EBITDA increased $7.0 million for the year ended December 31, 2022, compared to the same period in 2021, primarily due to a $31.1 million increase in revenue, partially offset by a $24.2 million increase in cash operating expense.
Excluding the divestiture, Banks Segment Adjusted EBITDA decreased $1.6 million for the year ended December 31, 2023, compared to the same period in 2022, primarily due to a $11.2 million increase in cash operating expense, partially offset by a $9.6 million increase in revenue.
As of December 31, 2022 and 2021, our goodwill was $1.2 billion and $1.3 billion, respectively.
As of December 31, 2023 and 2022, our goodwill was $1.2 billion.
SaaS and PaaS revenue increased $28.5 million, or 4%, during the year ended December 31, 2022, as compared to the same period in 2021. • The divestiture resulted in a $10.6 million decrease in SaaS and PaaS revenue for the year ended December 31, 2022. • The impact of certain foreign currencies weakening against the U.S. dollar resulted in a $6.5 million decrease in SaaS and PaaS revenue during the year ended December 31, 2022, as compared to the same period in 2021. • Adjusted for the impact of the divestiture and foreign currency, SaaS and PaaS revenue for the year ended December 31, 2022, increased $45.6 million, or 6%, as compared to the same period in 2021. • The increase was primarily due to new customer go-lives and higher transaction volumes during the year ended December 31, 2022, as compared to the same period in 2021.
SaaS and PaaS revenue increased $46.3 million, or 6%, during the year ended December 31, 2023, as compared to the same period in 2022. • The divestiture resulted in a $18.1 million decrease in SaaS and PaaS revenue for the year ended December 31, 2023. • The impact of certain foreign currencies strengthening against the U.S. dollar resulted in a $0.6 million increase in SaaS and PaaS revenue during the year ended December 31, 2023, as compared to the same period in 2022. • Adjusted for the impact of the divestiture and foreign currency, SaaS and PaaS revenue for the year ended December 31, 2023, increased $63.8 million, or 8%, as compared to the same period in 2022. • The increase was primarily due to higher transaction volumes during the year ended December 31, 2023, as compared to the same period in 2022, as well as new customer go-lives since December 31, 2022.
Depreciation and Amortization Depreciation and amortization decreased $0.5 million, during the year ended December 31, 2022, as compared to the same period in 2021. Other Income and Expense Interest expense for the year ended December 31, 2022, increased $8.1 million, or 18%, as compared to the same period in 2021, primarily due to higher interest rates.
Depreciation and Amortization Depreciation and amortization decreased $4.3 million, or 3%, during the year ended December 31, 2023, as compared to the same period in 2022. Other Income and Expense Interest expense for the year ended December 31, 2023, increased $25.3 million, or 48%, as compared to the same period in 2022, primarily due to higher interest rates.
Operating Expenses Total operating expenses for the year ended December 31, 2022, increased $57.4 million, or 5%, as compared to the same period in 2021. • During the year ended December 31, 2022, there was a $8.8 million reduction in operating expenses related to the divestiture. • Total operating expenses for the year ended December 31, 2022, included $5.8 million of European data center migration expenses, $3.0 million of divestiture transaction-related expenses, and $3.6 million of CEO transition expenses during the period.
Operating Expenses Total operating expenses for the year ended December 31, 2023, increased $14.1 million, or 1%, as compared to the same period in 2022. • During the year ended December 31, 2023, there was a $18.2 million reduction in operating expense related to the divestiture. • Total operating expenses for the year ended December 31, 2023, included $21.0 million for cost reduction strategies, $2.6 million of significant transaction-related expenses, $1.8 million for CEO transition, and $2.8 million of European data center migration expenses during the period.
The assumptions utilized in the Monte Carlo simulation models, as well as the description of the plans the stock-based awards are granted under are described in further detail in Note 6, Stock-Based Compensation Plans , to our Notes to Consolidated Financial Statements in Part IV, Item 15 of this Form 10-K. 39 Table of Contents Accounting for Income Taxes Accounting for income taxes requires significant judgments in the development of estimates used in income tax calculations.
The assumptions utilized in the Monte Carlo simulation models, as well as the description of the plans the stock-based awards are granted under are described in further detail in Note 6, Stock-Based Compensation Plans , to our Notes to Consolidated Financial Statements in Part IV, Item 15 of this Form 10-K.
We estimate the fair value of RSUs based upon the market price of our stock on the date of grant. We recognize compensation expense for RSUs on a straight-line basis over the requisite service period.
Under each arrangement, RSUs are issued without direct cost to the employee on the vesting date. We estimate the fair value of RSUs based upon the market price of our stock on the date of grant. We recognize compensation expense for RSUs on a straight-line basis over the requisite service period.
General and administrative expense decreased $9.6 million, or 8%, during the year ended December 31, 2022, as compared to the same period in 2021. • General and administrative expenses for the year ended December 31, 2022 included $5.8 million of European data center migration expenses, $3.0 million of divestiture transaction-related expenses, and $3.6 million of CEO transition expenses during the period.
General and administrative expense increased $3.0 million, or 3%, during the year ended December 31, 2023, as compared to the same period in 2022. • General and administrative expenses for the year ended December 31, 2023, included $21.0 million for cost reduction strategies, $2.6 million of significant transaction-related expenses, $1.8 million for CEO transition, and $2.8 million of European data center migration expenses during the period.
General and administrative expense for the year ended December 31, 2021 included $11.0 million of significant transaction-related expenses associated with cost reduction strategies implemented during the period. • The impact of foreign currencies weakening against the U.S. dollar resulted in a $2.3 million decrease in general and administrative expense during the year ended December 31, 2022, as compared to the same period in 2021. 32 Table of Contents • Adjusted for the impact of significant transaction-related expenses and foreign currency, general and administrative expense decreased $8.7 million, or 8%, for the year ended December 31, 2022, as compared to the same period in 2021. • The decrease was primarily due to lower professional and other legal fees and personnel and other related expenses of $8.2 million and $0.5 million, respectively.
General and administrative expenses for the year ended December 31, 2022 included $5.8 million of European data center migration expenses, $3.0 million of divestiture transaction-related expenses, and $3.6 million of CEO transition expenses during the period. • The impact of foreign currencies weakening against the U.S. dollar resulted in a $0.3 million decrease in general and administrative expense during the year ended December 31, 2023, as compared to the same period in 2022. • Adjusted for the impact of significant transaction-related expenses and foreign currency, general and administrative expense decreased $12.5 million, or 12%, for the year ended December 31, 2023, as compared to the same period in 2022. • The decrease was primarily due to lower personnel and related expenses and professional and other legal fees of $7.6 million and $4.9 million, respectively.
For the year ended December 31, 2022, we recognized a gain of $38.5 million on the sale, which is recorded in other, net in the accompanying consolidated statements of operations. This gain is preliminary subject to finalization of post-closing adjustments pursuant to the definitive transaction agreement.
For the year ended December 31, 2022, we recognized a gain of $38.5 million on the sale, which is recorded in other, net in the accompanying consolidated statements of operations.
ACI provides payment solutions to large and mid-size banks globally for retail banking, real time, digital, and other payment services. These solutions transform banks’ complex payment environments to speed time to market, reduce costs, and deliver a consistent experience to customers across channels while enabling them to prevent and rapidly react to fraudulent activity.
These solutions transform banks’ complex payment environments to speed time to market, reduce costs, and deliver a consistent experience to customers across channels while enabling them to prevent and rapidly react to fraudulent activity.
Our current policy is to use our operating cash flow primarily for funding capital expenditures, lease payments, stock repurchases, and acquisitions. Cash Flows from Investing Activities The changes in cash flows from investing activities primarily relate to the timing of our purchases and investments in capital and other assets, including strategic acquisitions, that support our growth.
Cash Flows from Investing Activities The changes in cash flows from investing activities primarily relate to the timing of our purchases and investments in capital and other assets, including strategic acquisitions, that support our growth.
The CODM, together with other senior management personnel, focus their review on consolidated financial information and the allocation of resources based on operating results, including revenues and Segment Adjusted EBITDA, for each segment, separate from the corporate operations. No operating segments have been aggregated to form the reportable segments. Banks.
The Company’s Chief Executive Officer is also the chief operating decision maker ("CODM"). The CODM, together with other senior management personnel, focus their review on consolidated financial information and the allocation of resources based on operating results, including revenues and Segment Adjusted EBITDA, for each segment, separate from corporate operations.
Termination of the 2016 Incentive Plan did not affect any equity awards outstanding under the 2016 Incentive Plan or 2005 Incentive Plan. Total shareholder return awards (“TSRs”) are performance shares that are earned, if at all, based upon our total shareholder return as compared to a group of peer companies over a three-year performance period.
Termination of the 2016 Incentive Plan did not affect any equity awards outstanding under the 2016 Incentive Plan or 2005 Incentive Plan. Performance awards granted with a total shareholder return multiplier ("TSRs") are shares that are earned, if at all, based upon achievement of performance goals over a specified period.
Our solutions provide merchants with a secure, omni-channel payments platform that gives them independence from third-party payment providers. They also offer secure solutions to online-only merchants that provide consumers with a convenient and seamless way to shop. Billers.
These customers operate in a variety of verticals, including general merchandise, grocery, hospitality, dining, transportation, and others. The Company's solutions provide merchants with a secure, omni-channel payments platform that gives them independence from third-party payment providers. They also offer secure solutions to online-only merchants that provide consumers with a convenient and seamless way to shop. Billers.
The Company and ACI Payments, Inc., a wholly owned subsidiary, maintain a $75.0 million uncommitted overdraft facility with Bank of America, N.A. The overdraft facility acts as a secured loan under the terms of the Credit Agreement to provide an additional funding mechanism for timing differences that can occur in the bill payment settlement process.
The overdraft facility acts as a secured loan under the terms of the Credit Agreement to provide an additional funding mechanism for timing differences that can occur in the bill payment settlement process. As of December 31, 2023, the full $75.0 million was available.
Selling and marketing expense increased $8.3 million, or 7%, during the year ended December 31, 2022, as compared to the same period in 2021. • During the year ended December 31, 2022, there was a $0.2 million reduction in selling and marketing expense related to the divestiture. • The impact of foreign currencies weakening against the U.S. dollar resulted in a $3.8 million decrease in selling and marketing expense during the year ended December 31, 2022, as compared to the same period in 2021. • Adjusted for the impact of the divestiture and foreign currency, selling and marketing expense increased $12.3 million, or 10%, for the year ended December 31, 2022, as compared to the same period in 2021. • The increase was primarily due to higher personnel and related expenses and travel and entertainment expenses of $12.8 million and $2.7 million, respectively, partially offset by lower advertising and professional fees of $3.2 million.
Cost of revenue increased $23.1 million, or 3%, during the year ended December 31, 2023, as compared to the same period in 2022. • During the year ended December 31, 2023, there was a $16.8 million reduction in cost of revenue related to the divestiture. • The impact of foreign currencies weakening against the U.S. dollar resulted in a $2.0 million decrease in cost of revenue during the year ended December 31, 2023, as compared to the same period in 2022. • Adjusted for the impact of the divestiture and foreign currency, cost of revenue increased $41.9 million, or 6%, for the year ended December 31, 2023, as compared to the same period in 2022. • The increase was primarily due to higher personnel and related expenses, payment card interchange and processing fees, and cloud computing fees of $15.7 million, $14.5 million, and $12.3 million, respectively.
We also used $14.8 million for the repurchase of stock-based compensation awards for tax withholdings and $37.8 million for settlement assets and liabilities due to processing timing.
In addition, we used $27.6 million to repurchase common stock, $5.1 million for the repurchase of stock-based compensation awards for tax withholdings, and $15.4 million for settlement assets and liabilities due to processing timing.
License revenue increased $28.3 million, or 9%, during the year ended December 31, 2022, as compared to the same period in 2021. • The impact of certain foreign currencies weakening against the U.S. dollar resulted in a $4.1 million decrease in license revenue during the year ended December 31, 2022, as compared to the same period in 2021. • Adjusted for the impact of foreign currency, license revenue for the year ended December 31, 2022, increased $32.5 million, or 10%, as compared to the same period in 2021. • The increase in license revenue was primarily driven by renewal timing and relative size of license and capacity events during the year ended December 31, 2022, as compared to the same period in 2021.
Maintenance revenue increased $5.0 million, or 3%, during the year ended December 31, 2023, as compared to the same period in 2022. • The divestiture resulted in a $7.4 million decrease in maintenance revenue for the year ended December 31, 2023. • The impact of foreign currencies weakening against the U.S. dollar resulted in a $1.6 million decrease in maintenance revenue during the year ended December 31, 2023, as compared to the same period in 2022. • Adjusted for the impact of the divestiture and foreign currency, maintenance revenue for the year ended December 31, 2023, increased $14.0 million, or 7%, as compared to the same period in 2022. • The increase was primarily driven by annual inflationary increases in product support fees subsequent to December 31, 2022.
As of December 31, 2022, the full $75.0 million was available. Stock Repurchase Program Our board approved a stock repurchase program authorizing the Company, as market and business conditions warrant, to acquire its common stock and periodically authorizes additional funds for the program.
Stock Repurchase Program Our board approved a stock repurchase program authorizing the Company, as market and business conditions warrant, to acquire its common stock and periodically authorizes additional funds for the program. In February 2023, the board approved the repurchase of the Company's common stock of up to $200.0 million, in place of the remaining purchase amounts previously authorized.
Cash Flows from Financing Activities The changes in cash flows from financing activities primarily relate to borrowings and repayments related to our debt instruments and other debt, stock repurchases, and net proceeds related to employee stock programs.
Cash Flows from Financing Activities The changes in cash flows from financing activities primarily relate to borrowings and repayments related to our debt instruments and other debt, stock repurchases, and net proceeds related to employee stock programs. During 2023, we repaid $73.0 million on the Term Loans, $16.8 million of other debt payments, and $2.2 million of debt issuance costs.
On February 24, 2023, the Board of Directors approved $200.0 million for the stock repurchase program in place of the remaining purchase amounts previously authorized. 35 Table of Contents Our stock repurchase authorization does not have an expiration date and the pace of our repurchase activity will depend on factors such as our working capital needs, cash requirements for acquisitions, debt repayment obligations, our stock price, and global economic and market conditions.
Subsequent to December 31, 2023, the Company has repurchased additional shares under the repurchase program. Our stock repurchase authorization does not have an expiration date and the pace of our repurchase activity will depend on factors such as our working capital needs, cash requirements for acquisitions, debt repayment obligations, our stock price, and global economic and market conditions.
Merchants Segment Adjusted EBITDA decreased $5.2 million for the year ended December 31, 2022, compared to the same period in 2021, primarily due to a $6.1 million increase in cash operating expenses, partially offset by a $0.9 million increase in revenue. 34 Table of Contents Billers Segment Adjusted EBITDA decreased $21.7 million for the year ended December 31, 2022, compared to the same period in 2021, primarily due to a $53.9 million increase in interchange and processing fees, partially offset by a $36.9 million increase in revenue.
Billers Segment Adjusted EBITDA increased $35.0 million for the year ended December 31, 2023, compared to the same period in 2022, primarily due to a $56.5 million increase in revenue, partially offset by a $14.5 million increase in interchange and processing fees.
Implementation services include product installations, product configurations, and custom software modifications (“CSMs”). Other professional services include business consultancy, technical consultancy, on-site support services, product education, and testing services. These services include new customer implementations as well as existing customer migrations to new products or new releases of existing products.
Services Revenue Services revenue includes fees earned through implementation services and other professional services. Implementation services include product installations, product configurations, and custom software modifications (“CSMs”). Other professional services include business consultancy, technical consultancy, on-site support services, product education, and testing services.
In addition, we used $107.4 million to repurchase common stock, and we received proceeds of $12.3 million from the exercise of stock options and the issuance of common stock under our 2017 Employee Stock Purchase Plan, as amended.
We received net proceeds of $19.0 million on the Revolving Credit Facility, and proceeds of $9.5 million from the exercise of stock options and the issuance of common stock under our 2017 Employee Stock Purchase Plan, as amended.
The following is selected financial data for our reportable segments for the periods indicated (in thousands): Years Ended December 31, 2022 2021 Revenues Banks $ 638,585 $ 625,125 Merchants 153,905 152,988 Billers 629,411 592,485 Total revenue $ 1,421,901 $ 1,370,598 Segment Adjusted EBITDA Banks $ 371,017 $ 372,949 Merchants 49,029 54,266 Billers 107,371 129,048 Depreciation and amortization (127,328) (133,393) Stock-based compensation expense (29,753) (27,242) Corporate and unallocated expenses (166,501) (185,731) Interest, net (40,646) (33,538) Other, net 43,446 (1,294) Income before income taxes $ 206,635 $ 175,065 The Banks Segments Adjusted EBITDA decreased $8.9 million due to the divestiture.
These costs along with depreciation and amortization and stock-based compensation are not considered when management evaluates segment performance. 35 Table of Contents The following is selected financial data for our reportable segments for the periods indicated (in thousands): Years Ended December 31, 2023 2022 Revenues Banks $ 616,051 $ 638,585 Merchants 150,616 153,905 Billers 685,912 629,411 Total revenue $ 1,452,579 $ 1,421,901 Segment Adjusted EBITDA Banks $ 355,489 $ 371,017 Merchants 44,345 49,029 Billers 142,343 107,371 Depreciation and amortization (122,373) (127,328) Stock-based compensation expense (24,547) (29,753) Corporate and unallocated expenses (174,849) (166,501) Interest, net (64,271) (40,646) Other, net (8,510) 43,446 Income before income taxes $ 147,627 $ 206,635 Banks Segment Adjus ted EBITDA decreased $13.9 million due to the divestiture.
Prior Year Results For discussion of the year ended December 31, 2021, compared to the year ended December 31, 2020, see Results of Operations in Part II, Item 7 of our annual report on Form 10-K for the year ended December 31, 2021.
Prior Year Results For discussion of the year ended December 31, 2022, compared to the year ended December 31, 2021, see Results of Operations in Part II, Item 7 of our annual report on Form 10-K for the year ended December 31, 2022. 34 Table of Contents Segment Results The Company reports financial performance based on its operating segments, Banks, Merchants, and Billers, and analyzes Segment Adjusted EBITDA as a measure of segment profitability.
In addition, they enable banks to meet the requirements of different real-time payments schemes and to quickly create differentiated products to meet consumer, business, and merchant demands. 33 Table of Contents Merchants.
In addition, they enable banks to meet the requirements of different real-time payments schemes and to quickly create differentiated products to meet consumer, business, and merchant demands. Merchants. ACI’s support of merchants globally includes Tier 1 and Tier 2 merchants, online-only merchants and the payment service providers, independent selling organizations, value-added resellers, and acquirers who service them.
Restricted share unit awards (“RSUs”) generally have requisite service periods of three years and may vest 100% upon the three-year anniversary or in equal increments quarterly or annually. Under each arrangement, RSUs are issued without direct cost to the employee on the vesting date.
We recognize compensation expense for the TSRs over the performance period based on the grant date fair value. 41 Table of Contents Restricted share unit awards (“RSUs”) generally have requisite service periods of three years and may vest 100% upon the three-year anniversary or in equal increments quarterly or annually.
Maintenance revenue decreased $10.5 million, or 5%, during the year ended December 31, 2022, as compared to the same period in 2021. • The divestiture resulted in a $3.5 million decrease in maintenance revenue for the year ended December 31, 2022. • The impact of foreign currencies weakening against the U.S. dollar resulted in a $6.8 million decrease in maintenance revenue during the year ended December 31, 2022, as compared to the same period in 2021. • Adjusted for the impact of the divestiture and foreign currency, maintenance revenue for the year ended December 31, 2022, decreased $0.2 million as compared to the same period in 2021. 30 Table of Contents Services Revenue Services revenue includes fees earned through implementation services and other professional services.
License revenue decreased $26.9 million, or 8%, during the year ended December 31, 2023, as compared to the same period in 2022. • The impact of certain foreign currencies weakening against the U.S. dollar resulted in a $0.7 million decrease in license revenue during the year ended December 31, 2023, as compared to the same period in 2022. • Adjusted for the impact of foreign currency, license revenue for the year ended December 31, 2023, decreased $26.2 million, or 8%, as compared to the same period in 2022. • The decrease in license revenue was driven by license renewal timing as well as the relative size of new license agreements during the year ended December 31, 2023, as compared to the same period in 2022. 31 Table of Contents Maintenance Revenue Maintenance revenue includes standard, enhanced, and premium customer support and any post contract support fees received from customers for the provision of product support services.
As a result of the divestiture, 60-month backlog decreased $170.1 million during the period ended September 30, 2022. Dollar amounts reflect foreign currency exchange rates as of each period end. This is a non-GAAP financial measure being presented to provide comparability across accounting periods.
Dollar amounts reflect foreign currency exchange rates as of each period end. This is a non-GAAP financial measure being presented to provide comparability across accounting periods. We believe this measure provides useful information to investors and others in understanding and evaluating our financial performance.
December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 December 31, 2021 Banks $ 2,095 $ 2,038 $ 2,231 $ 2,282 $ 2,272 Merchants 810 772 762 772 754 Billers 3,390 3,267 3,179 3,128 3,084 Total $ 6,295 $ 6,077 $ 6,172 $ 6,182 $ 6,110 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 December 31, 2021 Committed $ 2,338 $ 2,051 $ 2,089 $ 2,038 $ 2,095 Renewal 3,957 4,026 4,083 4,144 4,015 Total $ 6,295 $ 6,077 $ 6,172 $ 6,182 $ 6,110 Estimates of future financial results require substantial judgment and are based on several assumptions, as described above.
December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 Banks $ 2,261 $ 2,173 $ 2,207 $ 2,154 $ 2,095 Merchants 754 778 810 821 810 Billers 3,505 3,484 3,396 3,395 3,390 Total $ 6,520 $ 6,435 $ 6,413 $ 6,370 $ 6,295 December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 Committed $ 2,178 $ 2,147 $ 2,192 $ 2,266 $ 2,338 Renewal 4,342 4,288 4,221 4,104 3,957 Total $ 6,520 $ 6,435 $ 6,413 $ 6,370 $ 6,295 Estimates of future financial results require substantial judgment and are based on several assumptions, as described above.
The overhead costs relate to human resources, finance, legal, accounting, and merger and acquisition activity. These costs along with depreciation and amortization and stock-based compensation are not considered when management evaluates segment performance.
The overhead costs relate to human resources, finance, legal, accounting, and merger and acquisition activity.
The award payout can range from 0% to 200%. To determine the grant date fair value of TSRs, a Monte Carlo simulation model is used. We recognize compensation expense for the TSRs over a three-year performance period based on the grant date fair value.
To determine the grant date fair value of the TSRs, a Monte Carlo simulation model is used.
As of December 31, 2022, the maximum remaining amount authorized for purchase under the stock repurchase program was approximately $9.8 million.
We repurchased 939,567 shares for $27.6 million under our stock repurchase program during the year ended December 31, 2023. Under the program to date, we have repurchased 58,921,300 shares for approximately $953.8 million. As of December 31, 2023, the maximum remaining amount authorized for purchase under the stock repurchase program was approximately $172.4 million.
Total operating expenses for the year ended December 31, 2021, included $13.4 million of expense related to significant transactions and cost reduction strategies implemented during the period. • The impact of foreign currencies weakening against the U.S. dollar resulted in a $17.9 million decrease in total operating expenses for the year ended December 31, 2022, as compared to the same period in 2021. • Adjusted for the impact of the divestiture, significant transaction-related expenses, and foreign currency, total operating expenses for the year ended December 31, 2022, increased $84.9 million, or 8%, as compared to the same period in 2021.
Total operating expenses for the year ended December 31, 2022, included $5.8 million of European data center migration expenses, $3.0 million of divestiture transaction-related expenses, and $3.6 million of CEO transition expenses during the period. • The impact of foreign currencies weakening against the U.S. dollar resulted in a $3.0 million decrease in total operating expenses for the year ended December 31, 2023, as compared to the same period in 2022. • Adjusted for the impact of the divestiture, significant transaction-related expenses, and foreign currency, total operating expenses for the year ended December 31, 2023, increased $19.5 million, or 2%, as compared to the same period in 2022. 32 Table of Contents Cost of Revenue Cost of revenue includes costs to provide SaaS and PaaS, third-party royalties, amortization of purchased and developed software for resale, the costs of maintaining our software products, as well as the costs required to deliver, install, and support software at customer sites.
Available Liquidity The following table sets forth our available liquidity for the periods indicated (in thousands): December 31, 2022 2021 Cash and cash equivalents $ 124,981 $ 122,059 Availability under revolving credit facility 393,500 498,500 Total liquidity $ 518,481 $ 620,559 The decrease in total liquidity is primarily attributable to $206.5 million of payments related to stock repurchases, partially offset by proceeds of $100.1 million from the divestiture.
Available Liquidity The following table sets forth our available liquidity for the periods indicated (in thousands): December 31, 2023 2022 Cash and cash equivalents $ 164,239 $ 124,981 Availability under revolving credit facility 373,900 393,500 Total liquidity $ 538,139 $ 518,481 The Company and ACI Payments, Inc., a wholly owned subsidiary, maintain a $75.0 million uncommitted overdraft facility with Bank of America, N.A.
General and Administrative General and administrative expenses are primarily human resource costs including executive salaries and benefits, personnel administration costs, and the costs of corporate support functions such as legal, administrative, human resources, and finance and accounting.
Selling and marketing expense decreased $2.2 million, or 2%, during the year ended December 31, 2023, as compared to the same period in 2022. • The decrease was primarily due to lower personnel and related expenses and travel and entertainment expenses of $2.6 million and $0.6 million, respectively, partially offset by an increase in advertising and professional fees of $1.0 million. 33 Table of Contents General and Administrative General and administrative expenses are primarily human resource costs including executive salaries and benefits, personnel administration costs, and the costs of corporate support functions such as legal, administrative, human resources, and finance and accounting.
Removed
We believe this measure provides useful information to investors and others in understanding and evaluating our financial performance.
Added
During the year ended December 31, 2023 , the Company recognized a loss for the final post-closing adjustment pursuant to the definitive agreement of $0.5 million, which is recorded in other, net in the accompanying consolidated statements of operations.
Removed
Maintenance Revenue Maintenance revenue includes standard, enhanced, and premium customer support and any post contract support fees received from customers for the provision of product support services.
Added
These services include new customer implementations as well as existing customer migrations to new products or new releases of existing products.
Removed
Cost of Revenue Cost of revenue includes costs to provide SaaS and PaaS, third-party royalties, amortization of purchased and developed software for resale, the costs of maintaining our software products, as well as the costs required to deliver, install, and support software at customer sites.
Added
Research and Development Research and development (“R&D”) expenses are primarily human resource costs related to the creation of new products, improvements made to existing products as well as compatibility with new operating system releases and generations of hardware.
Removed
Cost of revenue increased $57.2 million, or 9%, during the year ended December 31, 2022, as compared to the same period in 2021. • During the year ended December 31, 2022, there was a $8.0 million reduction in cost of revenue related to the divestiture. • The impact of foreign currencies weakening against the U.S. dollar resulted in a $7.0 million decrease in cost of revenue during the year ended December 31, 2022, as compared to the same period in 2021. • Adjusted for the impact of the divestiture and foreign currency, cost of revenue increased $72.2 million, or 12%, for the year ended December 31, 2022, as compared to the same period in 2021. • The increase was primarily due to higher payment card interchange and processing fees and personnel and related expenses of $53.9 million and $23.8 million, respectively, partially offset by a decrease in software amortization expense of $5.5 million. 31 Table of Contents Research and Development Research and development (“R&D”) expenses are primarily human resource costs related to the creation of new products, improvements made to existing products as well as compatibility with new operating system releases and generations of hardware.
Added
No operating segments have been aggregated to form the reportable segments. Banks. ACI provides payment solutions to large and mid-size banks globally for retail banking, real time, digital, and other payment services.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−1 removed5 unchanged
Biggest changeWe had approximately $1.1 billion of debt outstanding at December 31, 2022, with $697.7 million outstanding under our Credit Facility and $400.0 million in 2026 Notes. Our Credit Facility has a floating rate, which was 6.20% at December 31, 2022. Our 2026 Notes are fixed-rate long-term debt obligations with a 5.750% interest rate.
Biggest changeOur Credit Facility has a floating rate, which was 7.21% at December 31, 2023. Our 2026 Notes are fixed-rate long-term debt obligations with a 5.750% interest rate. A hypothetical ten percent increase or decrease in effective interest rates would increase or decrease interest expense related to the Credit Facility by approximately $4.6 million. ITEM 8.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Excluding the impact of changes in interest rates, inflationary pressures, and the uncertainty in the global financial markets, there have been no material changes to our market risk for the year ended December 31, 2022.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Excluding the impact of changes in interest rates, inflationary pressures, and the uncertainty in the global financial markets, there have been no material changes to our market risk for the year ended December 31, 2023.
If we maintained similar cash investments for a period of one year based on our cash investments and interest rates at December 31, 2022, a hypothetical ten percent increase or decrease in effective interest rates would increase or decrease interest income by less than $0.1 million annually.
If we maintained similar cash investments for a period of one year based on our cash investments and interest rates at December 31, 2023, a hypothetical ten percent increase or decrease in effective interest rates would increase or decrease interest income by $0.1 million annually. 42 Table of Contents We had approximately $1.0 billion of debt outstanding at December 31, 2023, with $643.7 million outstanding under our Credit Facility and $400.0 million in 2026 Notes.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The required consolidated financial statements and notes thereto are included in this annual report and are listed in Part IV, Item 15. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.
Removed
A hypothetical ten percent increase or decrease in effective interest rates would increase or decrease interest expense related to the Credit Facility by approximately $4.3 million. 40 Table of Contents ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The required consolidated financial statements and notes thereto are included in this annual report and are listed in Part IV, Item 15.

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