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What changed in ACI WORLDWIDE, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of ACI WORLDWIDE, INC.'s 2023 and 2024 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 2024 report.

+319 added−267 removedSource: 10-K (2025-02-27) vs 10-K (2024-02-29)

Top changes in ACI WORLDWIDE, INC.'s 2024 10-K

319 paragraphs added · 267 removed · 223 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

61 edited+17 added−11 removed37 unchanged
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.
Biggest changeACI Payments Orchestration Platform is a holistic, omnichannel payments platform that orchestrates and optimizes payments by combining a powerful payments gateway with multilayered, AI-based fraud management, advanced business intelligence tools, and access to an extensive global network of acquirers, third-party providers, and alternative payment methods. Payments Intelligence ACI’s payments intelligence framework supports banks, merchants, and billers by leveraging generative AI.
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.
ACI ® Acquiring ™ is a solution that helps merchant and ATM acquirers process credit, debit, and prepaid card transactions, deliver digital innovation, improve fraud prevention, and reduce interchange fees.
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.
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 trainer's ability to understand customers' systems means ACI may also provide tailored course materials for individual customers.
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.
Under the premium customer support option, referred to as the Premium Customer Support Program, which is 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.
(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.
(Global Payments), Visa, and Volante, as well as small, locally-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.
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.
We partner with device manufacturers, such as Diebold, NCR, and Wincor-Nixdorf, to ensure compatibility with the latest ATM technology. We also work with network vendors, such as Mastercard, SWIFT, and Visa, to comply with new regulations or processing mandates.
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.
Maintenance services include: • New product releases (major, minor and patches) for active products • 24-hour hotline for priority one (“P1”) problem resolution • Access to our online support portal (eSupport) • Vendor-required mandates and updates • Product documentation • Hardware operating system compatibility • User group membership Premium Customer Support.
ACI's solutions and services are used globally by banks, intermediaries, merchants, and billers, such as third-party digital payment processors, payment associations, switch interchanges, and a wide range of transaction-generating endpoints, including automated teller machines (“ATM”), merchant point-of-sale (“POS”) terminals, bank branches, mobile phones, tablets, corporations, and internet commerce sites.
Our solutions and services are used globally by banks of all sizes, central banks, intermediaries, merchants, and billers, as well as third-party digital payment processors, payment associations, switch interchanges, and a wide range of transaction-generating endpoints, including automated teller machines (“ATM”), merchant point-of-sale (“POS”) terminals, bank branches, mobile phones, tablets, corporations, and internet commerce sites.
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.
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. 5 Table of Contents Customer Support ACI provides our customers with product support that is available 24/7. We offer our customers two support options: Standard Customer Support.
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.
Bill Payment The principal competitors for our ACI Speedpay bill payments solution are FIS, Fiserv, Invoice Cloud, Inc., Kubra Customer Interaction Management, Nelnet, Inc. and Affiliates, Paymentus Corp., PayNearMe, One Inc., Repay, TouchNet Information Systems, Inc., Transact, as well as smaller vertical-specific providers.
Silva served as head of international markets and was responsible for driving commercial strategy and strengthening ACI’s sales and customer success capabilities in Latin America, Europe, Asia Pacific, Middle East and Africa. Prior to joining ACI, Mr.
Silva serves as Executive Vice President and Chief Revenue Officer. Since joining ACI in 2021, Mr. Silva served as head of international markets and was responsible for driving commercial strategy and strengthening ACI’s sales and customer success capabilities in Latin America, Europe, Asia Pacific, Middle East and Africa. Prior to joining ACI, Mr.
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.
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.
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.
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. Behrens served as Senior Vice President, Corporate Controller and Chief Accounting Officer at SITEL Corporation from January 2005 to June 2007.
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.
Generally, customers are required to commit to a minimum contract of five years, or three years in the case of certain SaaS and PaaS contracts. 4 Table of Contents 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.
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.
Key competitors by solution area include the following: Issuing, Acquiring, and Account-to-Account Payments The software competitors for ACI’s Issuing, Acquiring, and Account-to-Account Payments solutions include Atos Orgin S.A., Fidelity National Information Service, Inc. ("FIS"), Finastra, Fiserv, Inc. ("Fiserv"), Mastercard, NCR, OpenWay Group, SiNSYS, Total System Services, Inc.
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.
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.
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.
We are also competing in some areas with the traditional orchestration layer providers such as IXOpay, Payoneer, Nuvei, and Spreedly. 6 Table of Contents Payments Intelligence Principal competitors for our ACI Fraud Management solution are Accertify (American Express), BAE Systems, Cybersource (Visa), Fair Isaac Corporation, Featurespace (Visa), 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.
(“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.
We have alliances with our technology partners Microsoft Corporation, Amazon, Red Hat, Google, HPE, IBM, and 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.
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.
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.
Faster Payments New Access Model, Singapore FAST, India Unified Payments Interface ("UPI"), the Payments Network Malaysia ("PayNet"), Real-time Retail Payments Platform ("RPP"), and others. 2 Table of Contents Merchants ACI’s support of merchants globally includes Tier 1 and Tier 2 merchants, online-only merchants and the PSPs, independent selling organizations (“ISOs”), value-added resellers (“VARs”), and acquirers who service them.
Faster Payments, European TIPS, Australia NPP, South Africa RPP, the Payments Network Malaysia ("PayNet"), Real-time Retail Payments Platform ("RPP"), and others. 2 Table of Contents Merchants ACI’s support of merchants globally includes Tier 1 and Tier 2 merchants (in-store and online), PSPs, independent selling organizations (“ISOs”), value-added resellers (“VARs”), and acquirers who service them.
Real-Time Payments ACI supports both low- and high-value real-time payment processing for banks and intermediaries globally, ensuring multi-bank, multi-currency, and 24x7 payment processing capabilities, as well as complete and ongoing regulatory compliance.
Account-to-Account Payments ACI supports account-to-account payment processing for banks and intermediaries globally, ensuring multi-bank, multi-currency, and 24x7x365 payment processing capabilities, as well as complete and ongoing regulatory compliance.
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.
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. Behrens holds a Bachelor of Science degree from the University of Nebraska – Lincoln. Mr.
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.
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.
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.
Solutions ACI is a global software company that provides mission-critical, real-time payment solutions that deliver intelligent payments orchestration to banks, merchants, and billers. 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.
Treasury’s Office of Foreign Assets Control (“OFAC”), which enforces economic and trade sanctions against targeted foreign countries, entities and individuals based on external threats to the U.S. foreign policy, national security, or economy; by other governments; or by global or regional multilateral organizations, such as the United Nations Security Council and the European Union as applicable.
Treasury’s Office of Foreign Assets Control (“OFAC”), which enforces economic and trade sanctions against targeted foreign countries, entities and individuals based on external threats to the U.S. foreign policy, national security, or economy; by other governments; or by global or regional multilateral organizations, such as the United Nations Security Council and the European Union as applicable. 8 Table of Contents Human Capital As of December 31, 2024, we had 3,103 employees worldwide, with 1,397 employees in the Americas, 819 employees in EMEA, and 887 employees in Asia Pacific.
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.
ACI Fraud Management ™ for merchants and billers provides a combination of patented AI technology, referred to as incremental machine learning models, fraud and payments data, predictive and behavioral analytics, positive profiling, customizable fraud strategies, expert support, and consortium data to mitigate risks and reduce the burden of compliance, delivered as a multi-tenant platform as a service, deployed in the public cloud, or on premises.
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.
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").
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.
He served as Group President at Fiserv, Inc., a provider of technology solutions to the financial industry, from 2007 to 2012. 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. Mr.
Our 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 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. In addition, we enable banks to meet the requirements of different real-time payment schemes and quickly create differentiated products to meet consumer, business, and merchant demands.
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.
Benefits We provide our global employees with competitive and comprehensive benefits to meet their needs and the needs of their dependents.
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.
These user groups are typically organized by geography and product lines. We believe that timely development of new applications and enhancements is essential to maintaining our competitive position in the market. In developing new products and solutions, we collaborate closely with our customers and industry leaders to understand their requirements.
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.
Our solutions also allow new entrants in the digital marketplace to access innovative payment schemes, such as the U.S. FedNow ® Services and RTP ® from The Clearing House, the U.K.
Billers 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, mortgage, subscription providers, and telecommunications categories. Our 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.
Billers 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, mortgage, subscription provider, and telecommunications categories.
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.
The agreements with business partners include referral, resale, traditional original equipment manufacturer (“OEM”) relationships, and transaction fee-based payment-enablement partnerships. 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.
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.
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. Earlier in his career, Mr. Kuruvilla held technology leadership roles at De Lage Landen Financial Services, a wholly owned subsidiary of Rabobank.
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.
As of December 31, 2024, we serve thousands of organizations, including all 10 of the top 10 banks worldwide, as measured by asset size, and 80,000+ merchants, and we have customers in 90+ countries on six continents. No single customer accounted for more than 10% of our consolidated revenues for the years ended December 31, 2024, 2023, and 2022.
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.
We engage with computer hardware and software manufacturers, such as HPE, IBM, Microsoft Corporation, and Oracle, to ensure are products are compatible with new operating system releases and hardware generations. Customers often provide additional insights and serve as beta-test partners, further refining our solutions.
Silva held various sales and general manager roles in the U.S, Canada, Latin America and Europe, while working for Western Union, GE Capital, The Carlyle Group and Credicard. Mr. Silva is fluent in English, Spanish, and Portuguese.
Silva held various sales and general manager roles in the U.S, Canada, Latin America and Europe, while working for Western Union, GE Capital, The Carlyle Group and Credicard. 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.
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.
ACI Fraud Management ™ for financial institutions offers banks, intermediaries, and merchants with private-label portfolios a robust, sophisticated, and easy-to-integrate solution that is able to deliver precise and actionable intelligence in real time by using a combination of sophisticated AI powered algorithms, data orchestration capabilities, network intelligence, and advanced predictive analytics to help prevent fraud and reduce the burden of compliance, delivered as a service, or deployed in the public cloud, or on premises.
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.
Research and Development Our product development efforts are dedicated to both creating new products and enhancing the functionality of our existing offerings. To ensure we are aligned with market needs, we facilitate user group meetings that help us shape our product and solution strategy, development plans, and customer support aspects.
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 maintain a continuous process to encourage and capture innovative product ideas, which may include new features or entirely new products or services. A proof of concept is conducted to validate these ideas. If viable, the innovation is scheduled into our product roadmap for development and release.
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.
We use distributors and referral partners to supplement our direct sales force in countries where it is more efficient and economical to do so.
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.
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.
Earlier in his career, Mr. Kuruvilla held technology leadership roles at De Lage Landen Financial Services, a wholly owned subsidiary of Rabobank. Mr. Kuruvilla holds a bachelor's degree in electrical and computer engineering and a Master of Business Administration from Drexel University.
Mr. Kuruvilla holds a bachelor's degree in electrical and computer engineering and a Master of Business Administration from Drexel University.
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.
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. 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 share revenues with these business partners based on several factors related to overall value contribution in the delivery of the joint solution or payment type. The agreements with business partners include referral, resale, traditional original equipment manufacturer (“OEM”) relationships, and transaction fee-based payment-enablement partnerships.
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. We share revenues with these business partners based on several factors related to overall value contribution in the delivery of the joint solution or payment type.
These customers operate in a variety of verticals, including general merchandise, grocery, hospitality, dining, transportation, and others. Our solutions provide merchants with a secure, omni-channel payments platform that gives them independence from third-party payment providers. We also offer secure solutions to online-only merchants that provide consumers with a convenient and seamless way to shop.
These customers operate in a variety of verticals, including general retail, grocery, hospitality, dining, travel and ticketing, fuel, telecommunications, and others. Our solutions provide merchants with a secure, omnichannel payments platform that gives them flexibility and independence.
He has led various portfolio companies for several leading private equity firms since 2012, including One Call Care Management, York Risk Services Group, and The Warranty Group. He served as Group President at Fiserv, Inc., a provider of technology solutions to the financial industry, from 2007 to 2012.
Warsop joined the ACI Board of Directors in June 2015 and became non-executive Chairman in June 2022. He has led various portfolio companies for several leading private equity firms since 2012, including One Call Care Management, York Risk Services Group, and The Warranty Group.
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.
Government Regulation Certain of our solutions are subject to federal, state, and foreign regulations and requirements. Oversight by Banking Regulators.
The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov .
The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
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.
Merchant Payments 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. 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.
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.
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. Outside of the United States, our international subsidiaries sell, support, and service our products and solutions in their local countries.
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.
Support for high-value and cross-border payments offering multi-bank, multi-currency, and wire and Real-Time Gross Settlement ("RTGS") payment processing capabilities, as well as cross-border and domestic SWIFT messaging with seamless integrations to multiple clearing and settlement mechanisms. 3 Table of Contents Merchant Payments ACI offers merchants a secure and scalable payments platform with the flexibility to support in-store, online, and mobile payments.
We are committed to ensuring employees feel safe and respected, regardless of race, color, age, gender, disability, minority, sexual orientation, or any other protected class. Employees have the ability to challenge themselves and continue to grow through various assignments, projects, and development programs.
ACI emphasizes a diverse and inclusive workplace, with employees in over 40 countries. Globally, 35% of our employees are women. We are committed to ensuring employees feel safe and respected, regardless of race, color, age, gender, disability, minority, sexual orientation, or any other protected class.
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.
Warsop, III 58 President, Chief Executive Officer, and Director Scott W. Behrens 53 Chief Financial Officer Alessandro Silva 48 Chief Revenue Officer Abe Kuruvilla 53 Chief Technology and Operations Officer Mr. Warsop was appointed President and Chief Executive Officer on June 1, 2023. Mr.
ACI Low Value Real-Time Payments™ is a platform with a complete range of capabilities for processing real-time payments, including origination, processing, orchestration, clearing and settlement, fraud detection, and connectivity.
Offered to the market in several forms, the ACI account-to-account payments capability enables banks to process all types of digital payments with a specific focus on two key growth areas for digital payments: Support for domestic low-value real-time payments with a complete range of capabilities for 24x7x365 processing of real-time payments, including origination, orchestration, clearing and settlement, fraud detection, and connectivity.
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.
Retention Our voluntary regrettable turnover, or our turnover of high performers, through December 31, 2024 was 5%, 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.
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.
He extended his education at INSEAD, the Harvard Business School and the University of Chicago Booth School of Business. Mr. Kuruvilla was appointed as Executive Vice President and Chief Technology Officer on October 30, 2023. Prior to joining ACI, Mr.
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.
No customer accounted for more than 10% of the Company’s consolidated receivables balance as of December 31, 2024 and 2023. 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.
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.
Warsop holds a bachelor's degree in finance from Southern Methodist University Mr. 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.
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.
The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov . 9 Table of Contents Executive Officers of the Registrant As of February 27, 2025, our executive officers, their ages, and their positions were as follows: Name Age Position Thomas W.
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ITEM 1. BUSINESS General ACI develops, markets, installs, and supports a broad line of software products and solutions primarily focused on facilitating real-time digital payments.
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ITEM 1. BUSINESS General ACI develops, markets, installs, and supports a broad line of software solutions that deliver intelligent payments o rchestration to banks, merchants, and billers . ACI powers the payments ecosystem by supporting any channel, any network, and any payment type. Our solutions support the new payment experiences that help power customers' growth and drive innovation.
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ACI’s enterprise payments capabilities target any channel, any network, and any payment type and our solutions empower customers to regain control, choice, and flexibility in today’s complex payments environment, get to market more quickly, and reduce operational costs.
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Our intelligent payments orchestration solutions empower customers to modernize their payments infrastructure to support the transactions their businesses need to stay ahead - at scale and without downtime. At ACI, we build software solutions that make complex payments simple and secure for the world’s leading financial institutions and large enterprises.
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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.
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ACI’s payment solutions support intermediaries, such as processors, networks, payment service providers (“PSPs”), and new financial technology ("fintech") entrants. We offer these customers scalable solutions that strategically position them to innovate and achieve growth and cost efficiency, while protecting them against fraud with our artificial intelligence or AI, human, and data expertise.
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In addition, we enable banks to meet the requirements of different real-time payment schemes and to quickly create differentiated products to meet consumer, business, and merchant demands. ACI’s payment solutions support intermediaries, such as processors, networks, payment service providers (“PSPs”), and new financial technology ("fintech") entrants.
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Leveraging the vast choice of integrations through a single application programming interface ("API") and ACI’s proven artificial intelligence ("AI"), human, and data capabilities, merchant customers can orchestrate and protect payments and maximize convergence while reducing risk and operational costs.
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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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ACI ® Payments Orchestration Platform ™ serves more than 80,000 merchants worldwide and is powering payments for five of the top 10 retailers globally. We also offer secure solutions to online-only merchants that provide consumers with a convenient and seamless way to shop.
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Generally, customers are required to commit to a minimum contract of five years, or three years in the case of certain acquired SaaS and PaaS contracts.
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Our solution and products 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. We also provide fraud abuse protection to our biller customers leveraging our proven AI, human, and data capabilities.
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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.
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It effectively combines artificial and human insights with data intelligence to achieve precision, mitigate sophisticated threats, and deliver value-added services for hyper-personalized consumer experiences.
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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.
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It enables customers to protect their payments end to end from customer check-in to payment and post authorization, enhancing the customer experience. The solution also supports merchants and billers in managing abuses with returns, coupons, payment aggregators, and other first-party behaviors, reducing operational costs and enabling enriched services and offers to good consumers.
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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.
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Business users are empowered with a full set of AI and expert rules capabilities they can operate on their own, streamlining business strategy deployment and immediate impact against emerging threats.
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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.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOther potential risks include difficulties associated with staffing and management, competing with more established companies in international markets, reliance on independent distributors, longer payment cycles, potentially unfavorable changes to foreign tax rules, unfavorable trade treaties or tariffs, compliance with foreign regulatory requirements, effects of a variety of foreign laws and regulations, including restrictions on access to personal information, reduced protection of intellectual property rights, variability of foreign economic conditions, governmental currency controls, difficulties in enforcing our contracts in foreign jurisdictions, and general economic and political conditions in the countries where we sell our products and services.
Biggest changeOther potential risks include difficulties associated with staffing and management in an environment of diverse cultures, laws, and customs, challenges caused by distance, language, and cultural differences, and the increased travel, infrastructure, and legal and compliance costs associated with global operations, failure to anticipate competitive conditions and competition with service providers or other market-players that have greater experience in the foreign markets than we do, failure to conform with applicable business customs, including translation into foreign languages, cultural context, and associated expenses, changes to the way we do business as compared with our current operations, inability to support and integrate with local third-party service providers, difficulties in maintaining our company culture, difficulty in gaining acceptance and maintaining 16 Table of Contents compliance with industry self-regulatory bodies, compliance with U.S. and foreign anti-corruption, anti-bribery, and anti-money laundering laws, increased exposure to public health issues such as pandemics, and related industry and governmental actions to address these issues, competing with more established companies in international markets, reliance on independent distributors, longer payment cycles, potentially unfavorable changes to foreign tax rules, unfavorable trade treaties or tariffs, compliance with foreign regulatory requirements, effects of a variety of foreign laws and regulations, including restrictions on access to personal information, reduced protection of intellectual property rights, variability of foreign economic conditions, governmental currency controls, difficulties in enforcing our contracts in foreign jurisdictions, trade wars, and general economic and political conditions in the countries where we sell our products and services.
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 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 23 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.
Factors that could cause fluctuations in our operating results include: • a change in customer demand for our products, which is highly dependent on our ability to continue to offer innovative technology solutions in very competitive markets; • the timing of customer orders; • the timing of product implementations, which are highly dependent on customers’ resources and discretion; • overall economic conditions, which may affect our customers’ and potential customers’ budgets for information technology expenditures; • foreign exchange rate volatility, which can have a significant effect on our total revenues and costs when our foreign operations are translated to U.S. dollars; • the incurrence of costs relating to the integration of software products and operations in connection with acquisitions of technologies or businesses; and • the timing and market acceptance of new products or product enhancements by either us or our competitors. 21 Table of Contents ITEM 1B.
Factors that could cause fluctuations in our operating results include: • a change in customer demand for our products, which is highly dependent on our ability to continue to offer innovative technology solutions in very competitive markets; • the timing of customer orders; • the timing of product implementations, which are highly dependent on customers’ resources and discretion; • overall economic conditions, which may affect our customers’ and potential customers’ budgets for information technology expenditures; • foreign exchange rate volatility, which can have a significant effect on our total revenues and costs when our foreign operations are translated to U.S. dollars; • the incurrence of costs relating to the integration of software products and operations in connection with acquisitions of technologies or businesses; and • the timing and market acceptance of new products or product enhancements by either us or our competitors. 24 Table of Contents ITEM 1B.
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 banks and 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.
Security breaches in connection with the delivery of our products and services, including products and services utilizing the Internet, or well-publicized security breaches, and the trend toward broad consumer and general public notification of such incidents, could significantly harm our business, financial condition, cash flows and/or results of operations.
Security breaches and cybersecurity incidents in connection with the delivery of our products and services, including products and services utilizing the Internet, or well-publicized security breaches, and the trend toward broad consumer and general public notification of such incidents, could significantly harm our business, financial condition, cash flows and/or results of operations.
Several states in the U.S. have adopted or proposed new privacy and cybersecurity laws targeting these issues. Legislation and regulations on cybersecurity, data privacy and data localization may compel us to need to modify our systems, invest in new systems or alter our business practices or our policies on data governance and privacy.
Several states in the U.S. have adopted or proposed new privacy and cybersecurity laws targeting these issues. Legislation and regulations on cybersecurity, data privacy, data protection and data localization may compel us to need to modify our systems, invest in new systems or alter our business practices or our policies on data governance and privacy.
In addition, no assurances can be given that additional developments in the impacted regions, and responses thereto from the U.S. and other global governments, would not have a material adverse effect on our business, results of operations and financial condition.
No assurances can be given that additional developments in the impacted regions, and responses thereto from the U.S. and other global governments, would not have a material adverse effect on our business, results of operations and financial condition.
Additionally, future tax laws, regulations or guidance from the Internal Revenue Service, the Securities and Exchange Commission, or the Financial Accounting Standards Board could cause us to adjust current estimates in future periods, which could impact our earnings and have an adverse effect on our results of operations and cash flow. The U.S.
Additionally, future tax laws, regulations or guidance from the Internal Revenue Service, the Securities and Exchange Commission, or the Financial Accounting Standards Board could cause us to adjust current estimates in future periods, which could impact our earnings and have an adverse effect on our results of operations and cash flow.
Further, our property and business interruption insurance may not be adequate to compensate us for all losses or failures that may occur.
Further, our cybersecurity, property and business interruption insurance may not be adequate to compensate us for all losses or failures that may occur.
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.
An impairment of a significant portion of goodwill or intangible assets could materially negatively affect our results of operations. 22 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.
Although we have taken steps to prevent system failures and we have installed back-up systems and procedures to prevent or reduce disruption, such steps may not be sufficient to prevent an interruption of services and our disaster recovery planning may not account for all eventualities.
Although we have taken steps to prevent system failures and we have installed back-up systems and procedures to prevent or reduce disruption, such steps may not be sufficient to prevent an interruption of services and our business continuity and disaster recovery planning may not account for all eventualities.
Our stock price may also be volatile, in part, due to external factors such as speculation regarding potential transactions, announcements by third parties or competitors, inherent volatility in the technology sector, variability in demand from our existing customers, failure to meet the expectations of market analysts, the level of our operating expenses, changing market conditions in the software industry, and the global economic downturn.
Our stock 21 Table of Contents price may also be volatile, in part, due to external factors such as speculation regarding potential transactions, announcements by third parties or competitors, inherent volatility in the technology sector, variability in demand from our existing customers, failure to meet the expectations of market analysts, the level of our operating expenses, changing market conditions in the software industry, and the global economic downturn.
Adverse economic conditions such as those caused by the global economic downturn, the Russia-Ukraine conflict, the COVID-19 pandemic, and the potential for disruptions in these industries as well as the general software sector could result in a decrease in consumers’ use of banking services and financial service providers resulting in significant decreases in the demand for our products and services which could adversely affect our business and operating results.
Adverse economic conditions such as those caused by a global economic downturn, the Russia-Ukraine conflict, and the potential for disruptions in these industries as well as the general software sector could result in a decrease in consumers’ use of banking services and financial service providers resulting in significant decreases in the demand for our products and services which could adversely affect our business and operating results.
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.
Compliance with these and new laws could involve substantial expenses and divert resources from other initiatives and projects. More restrictive privacy, data protection and cybersecurity laws adopted in the future could have an adverse impact on our business.
If we experience business interruptions or failure of our information technology and communication systems, the availability of our products and services could be interrupted which could adversely affect our reputation, business and financial condition.
If we experience business interruptions, cybersecurity incidents or failure of our information technology and communication systems, the availability of our products and services could be interrupted which could adversely affect our reputation, business and financial condition.
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.
Any claim against us, with or without merit, could be time-consuming, divert management's attention, 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. 15 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.
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.
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 and could make it difficult for investors to understand our results of operations as they compare to prior periods; • 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.
A negative or unpredictable economic climate could create uncertainty or financial pressures that impact the ability or willingness of our customers to make capital expenditures, thereby affecting their decision to purchase or roll out our products or services or to pay accounts receivable owed to us.
A negative or unpredictable economic climate could create uncertainty or financial pressures that impact the ability or willingness of our customers to make capital expenditures, thereby affecting their decision to purchase or roll out our products or services 17 Table of Contents or to pay accounts receivable owed to us.
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.
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; • compliance with laws of the foreign countries where the operations are conducted could be complex or costly; • 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.
An operational failure or outage in any of these systems, or damage to or destruction of these systems, which causes disruptions in our services, could result in loss of customers, damage to customer relationships, reduced revenues and profits, refunds of customer charges and damage to our brand and reputation and may require us to incur substantial additional expense to repair or replace damaged equipment and recover data loss caused by the interruption.
An operational failure, disruption, or outage in any of these systems, or damage to or destruction of these systems, which causes disruptions in our services, could result in a failure to make required regulatory filings, loss of customers, damage to customer relationships, reduced revenues and profits, refunds of customer charges and damage to our brand and reputation and may require us to incur substantial additional expense to repair or replace damaged equipment and recover data loss caused by the interruption.
Divestiture activities involve risks as they may divert management's attention from our core businesses, increase expenses on a short‑term basis and lead to potential issues with employees or customers.
Divestiture activities involve risks as they may divert management's attention from our core businesses, increase expenses on a short‑term basis and lead to 12 Table of Contents potential issues with employees or customers.
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.
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 20 Table of Contents maintain compliance with the Consent Orders and Compliance Agreements in all instances.
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.
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.
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.
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 pandemics.
However, there can be no assurance that our strategies for overcoming potential customers’ reluctance to change vendors will be successful, and this resistance may adversely affect our growth, both in the United States and internationally. Risks Related to Our Intellectual Property We may be unable to protect our intellectual property and technology.
There can be no assurance that our strategies for overcoming potential customers’ reluctance to change vendors will be successful, and this resistance may adversely affect our growth. Risks Related to Our Intellectual Property We may be unable to protect our intellectual property and technology.
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.
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.
In the future, we may transition some or all of these licenses to a subscription model. A transition to a subscription model would reflect a significant shift from a fixed-term license.
Our on-premise licenses currently have a five-year fixed term model. In the future, we may transition some or all of these licenses to a subscription model. A transition to a subscription model would reflect a significant shift from a fixed-term license.
The vast majority of these occurrences are resolved quickly through normal processes. However, if they are not resolved and we are then unable to reverse the transaction that sent funds to the intended destination, a shortfall in our settlement account will be created.
However, if they are not resolved and we are then unable to reverse the transaction that sent funds to the intended destination, a shortfall in our settlement account will be created.
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.
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.
We face intense competition in our businesses and we expect competition to remain intense in the future. We have many competitors that are significantly larger than us and have significantly greater financial, technical and marketing resources, have well-established relationships with our current or potential customers, advertise aggressively or beat us to the market with new products and services.
We have many competitors that are significantly larger than us and have significantly greater financial, technical and marketing resources, have well-established relationships with our 10 Table of Contents current or potential customers, advertise aggressively or beat us to the market with new products and services.
In order for us to be successful as we enter and invest in emerging markets, these markets must continue to grow. However, this growth depends on a variety of factors that we are not always able to predict.
In order for us to be successful as we enter and invest in emerging markets, these markets must continue to grow. However, this growth depends on a variety of factors that we are not always able to predict. Failure to attract and retain senior management personnel and skilled technical employees could harm our ability to grow.
Failure to attract and retain senior management personnel and skilled technical employees could harm our ability to grow . Our senior management team has significant experience in the financial services industry. The loss of this leadership could have an adverse effect on our business, operating results and financial condition.
Our senior management team has significant experience in the financial services industry. The loss of this leadership could have an adverse effect on our business, operating results and financial condition.
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 compromised or we experience a cybersecurity incident or similar attack, 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.
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.
The crises in eastern Europe and the Middle East continue to be a challenge to global companies, including us. We currently have one employee in Russia, a dormant customer in Russia, and customers located in the Middle East.
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.
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.
In addition, action by regulatory authorities relating to credit availability, data usage, privacy, or other related regulatory developments could have an adverse effect on our customers and, therefore, could have a material adverse effect on our business, financial condition, and results of operations.
In addition, action by regulatory authorities relating to credit availability, data usage, privacy, or other related regulatory developments could have an adverse effect on our customers and, therefore, could have a material adverse effect on our business, financial condition, and results of operations. 19 Table of Contents 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.
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.
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.
Laws and regulations concerning the handling of personal information are expanding and becoming more complex. Our failure, or perceived failure, to comply with these and other laws and regulations could adversely affect our business and harm our reputation.
A heightened regulatory environment in the financial services industry may have an adverse impact on our clients and our business. Laws and regulations concerning the handling of personal information are expanding and becoming more complex. Our failure, or perceived failure, to comply with these and other laws and regulations could adversely affect our business and harm our reputation.
Our systems and data centers, and those of our external service providers, could be exposed to damage or interruption from fire, natural disasters, constraints within our workforce due to pandemics such as outbreaks of COVID-19, power loss, telecommunications failure, unauthorized entry and computer viruses.
Our systems and data centers, and those of our external service providers or business partners, could be exposed to damage or interruption from fire, natural disasters, constraints within our workforce due to pandemics such as outbreaks of COVID-19, power loss, telecommunications failure, unauthorized entry, computer viruses, cybersecurity incidents, ransom attacks, denial of service attacks, human error, software errors or design defaults, labor issues, vandalism, terrorism, and other events beyond our control.
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.
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.
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.
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.
Significant uncertainty remains regarding the implementation and impact of these initiatives, which could adversely affect our business or financial results.
While Pillar Two did not significantly impact us in 2024, uncertainty remains regarding the implementation and impact of these initiatives, which could adversely affect our business or financial results in future years.
Our certificate of incorporation and bylaws contain provisions relating to the limitation of liability and indemnification of our directors and officers, dividing our board of directors into three classes of directors serving three-year terms and providing that our stockholders can take action only at a duly called annual or special meeting of stockholders.
Our certificate of incorporation and bylaws contain provisions relating to the limitation of liability and indemnification of our directors and officers and providing that our stockholders can take action only at a duly called annual or special meeting of stockholders. Risks Related to Our Customers Certain payment funding methods expose us to the credit and/or operating risk of our customers.
Risks Related to Our Customers Certain payment funding methods expose us to the credit and/or operating risk of our clients. When we process an automated clearing house or ATM network payment transaction for certain clients, we occasionally transfer funds from our settlement account to the intended destination account before we receive funds from a client’s source account.
When we process an automated clearing house or ATM network payment transaction for certain customers, we occasionally transfer funds from our settlement account to the intended destination account before we receive funds from a client’s source account. The vast majority of these occurrences are resolved quickly through normal processes.
We seek to overcome this resistance through value enhancing strategies such as a defined conversion/migration process, continued investment in the enhanced functionality of our software and system integration expertise.
We seek to overcome this resistance through value enhancing strategies such as a defined conversion/migration process, continued investment in the enhanced functionality of our software and system integration expertise. These actions require the expenditure of time and resources, and there can be no assurance that they will result in a potential customer switching to use our products and services.
Because the development of our solutions and services requires knowledge of computer hardware, operating system software, system management software, and application software, our technical personnel must be proficient in a number of disciplines.
We may need to invest significant amounts of cash and equity to attract and retain new employees, and we may never realize returns on these investments. Because the development of our solutions and services requires knowledge of computer hardware, operating system software, system management software, and application software, our technical personnel must be proficient in a number of disciplines.
Our ability to provide reliable service in a number of our businesses depends on the efficient and uninterrupted operation of our data centers, information technology and communication systems, and those of our external service providers. As we continue to grow our private and public cloud offerings, our dependency on the continuing operation and availability of these systems increases.
Our ability to provide reliable service in a number of our businesses depends on the efficient and uninterrupted operation of our data centers, information technology and communication systems, and those of our external service providers or business partners. We have experienced non-material incidents in the past.
Congress, the Organization for Economic Co-operation and Development (the “OECD”) and other government agencies in jurisdictions in which we do business remain focused on the taxation of multinational corporations.
Congress, the Organization for Economic Co-operation and Development (the “OECD”) and other government agencies in jurisdictions in which we do business remain focused on the taxation of multinational corporations. Under the OECD Inclusive Framework, over 140 countries have agreed to implement a two-pillar solution to address the challenges posed by the digitalization of the economy.
To the extent that we convert some or all of our on-premise licenses from a fixed-term to a subscription model, our future financial results will be affected by the frequency at which our customers adopt our subscription model, which carries with it certain risks. Our on-premise licenses currently have a five-year fixed term model.
Failure to attract, hire, develop, motivate and retain highly qualified and diverse employee talent, or to maintain a corporate culture that fosters innovation, creativity, and teamwork could harm our overall business and results of operations. 13 Table of Contents To the extent that we convert some or all of our on-premise licenses from a fixed-term to a subscription model, our future financial results will be affected by the frequency at which our customers adopt our subscription model, which carries with it certain risks.
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.
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.
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.
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.
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.
On at least an annual basis, we assess whether there have been impairments in the carrying value of goodwill and intangible assets. 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.
Additionally, errors could occur during our provision of services, including processing services such as our bill payment services and other services delivered through public or private cloud. Software defects or service errors may result in the loss of, or delay in, market acceptance of our products and services and a corresponding loss of sales or revenues.
Software may contain bugs or defects that could unexpectedly interfere with the operation of the software products when first introduced or as new versions are released. Additionally, errors could occur during our provision of services, including processing services such as our bill payment services and other services delivered through public or private cloud.
Customers depend upon our products and services for mission-critical applications, and product defects or service errors may hurt our reputation with customers. In addition, software product defects or errors could subject us to liability for damages, performance and warranty claims, and fines or penalties from governmental authorities, which could be material.
In addition, software product defects or errors could subject us to liability for damages, performance and warranty claims, government inquiries or investigations, claims and litigation, and fines or penalties from governmental authorities, which could be material. We may incur additional costs or expenses to remediate the issues.
Any inaccuracies or changes in estimates resulting from changes in customer requirements, delays or inaccurate initial project completion estimates may result in increased project costs and adversely impact our operating results and financial performance. Our balance sheet includes significant amounts of goodwill and intangible assets. The impairment of a significant portion of these assets could negatively affect our financial results.
Any inaccuracies or changes in estimates resulting from changes in customer requirements, delays or inaccurate initial project completion estimates may result in increased project costs and adversely impact our operating results and financial performance. Changes in card association and debit network fees or products could increase costs or otherwise limit our operations.
As part of our business, we electronically receive, process, store, and transmit sensitive business information of our customers. Unauthorized access to our computer systems or databases could result in the theft or publication of confidential information or the deletion or modification of records or could otherwise cause interruptions in our operations.
Unauthorized access, use, or disruptions to our data, computer systems or databases or other cybersecurity incidents or similar attacks could result in the theft or publication of confidential information or the deletion or modification of records or could 11 Table of Contents otherwise cause interruptions in our operations.
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.
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.
In addition, some of our clients have chosen to develop key products in-house. As a result, we may compete against our existing and potential clients' in-house capabilities. Additionally, we expect that the markets in which we compete will continue to attract new competitors and new technologies.
Mergers and acquisitions by, and collaborations between, the companies we compete against may lead to even larger competitors with more resources. In addition, some of our clients have chosen to develop key products in-house, and others may choose to do so in the future. As a result, we may compete against our existing and potential clients’ in-house capabilities.
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.
Additionally, we expect that the markets in which we compete will continue to attract new competitors and new technologies. Increased competition in our markets could lead to price reductions, reduced profits, or loss of market share.
Our software products may contain undetected errors or other defects, which could damage our reputation with customers, decrease profitability, and expose us to liability. Our software products are complex. Software may contain bugs or defects that could unexpectedly interfere with the operation of the software products when first introduced or as new versions are released.
Existing and future laws governing issues such as digital and social marketing, privacy, consumer protection or commercial email may limit our ability to market and provide our products and services. Our software products may contain undetected errors or other defects, which could damage our reputation with customers, decrease profitability, and expose us to liability. Our software products are complex.
Royalty or licensing agreements, if required, may not be available on terms acceptable to us or at all, which could adversely affect our business. We are engaged in offshore software development activities, which may not be successful and which may put our intellectual property at risk.
Royalty or licensing agreements, if required, may not be available on terms acceptable to us or at all, which could adversely affect our business. In addition, companies that incorporate open source software into their solutions have, from time to time, faced claims challenging the ownership of solutions developed using open source software.
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.
Our balance sheet includes significant amounts of goodwill and intangible assets. The impairment of a significant portion of these assets could negatively affect our financial results. Our balance sheet includes goodwill and intangible assets that represent a significant portion of our total assets at December 31, 2024.
There can be no assurance that we will be able to successfully address these challenges.
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.
Removed
Failure to attract, hire, develop, motivate and retain highly qualified and diverse employee talent, or to maintain a corporate culture that fosters innovation, creativity, and teamwork could harm our overall business and results of operations.
Added
We face intense competition in our businesses and we expect competition to remain intense in the future.
Removed
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.
Added
To compete successfully, we need to maintain a successful research and development effort and adapt to technological changes and evolving industry standards, including the implementation of AI in our products.
Removed
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.
Added
As we continue to grow our private and public cloud offerings, our dependency on the continuing operation and availability of these systems increases.
Removed
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.
Added
Moreover, to the extent that any system failure or similar event results in damages to our customers or contractual counterparties, those customers and contractual counterparties could seek compensation from us for their losses, and those claims, even if unsuccessful, would likely be time-consuming and costly for us to address.
Removed
Beyond this, our products are affected by PCI Security Standards.
Added
As part of our business, we electronically receive, process, store, and transmit information, including personal information and sensitive business information of our customers.
Removed
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.
Added
Cybersecurity incidents vary in their form and can include the deployment of harmful malware or ransomware, denial-of-services attacks, and other attacks, which may affect business continuity and threaten the availability, confidentiality and integrity of our systems and information.
Removed
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
Cybersecurity incidents can also include employee or personnel failures, fraud, phishing or other social engineering attempts or other methods to cause confidential information, payments, account access or access credentials, or other data to be transmitted to an unintended recipient.
Added
Cybersecurity threat actors also may attempt to exploit vulnerabilities in software including software commonly used by companies in cloud-based services and bundled software. Like many other companies, we detect attempts by threat actors to gain access to our systems and networks on a frequent basis, and the frequency of such attempts could increase in the future.
Added
A cybersecurity incident or failure or disruption relating to our information or systems or that of our third-party business partners, or any failure by us or our third-party business partners to effectively address, enforce and maintain our information technology infrastructure, systems, or security measures may result in substantial harm to our business strategy, results of operations and financial condition, including major disruptions to business operations, loss of intellectual property, release of confidential information, alteration or corruption of data or systems, costs related to remediation or the payment of ransom, and litigation including individual claims or consumer class actions, commercial litigation, administrative, and civil or criminal investigations or actions, regulatory intervention and sanctions or fines, investigation and remediation costs and possible prolonged negative publicity.
Added
Although we maintain a cyber insurance policy, there is no guarantee that such coverage will be sufficient to address costs, liabilities and damages we may incur in connection with a cybersecurity incident or that such coverage will continue to be available on commercially reasonable terms or at all.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeGovernance GIS oversees our cybersecurity program and is responsible for identifying, assessing, monitoring, managing and communicating our cybersecurity risks. GIS is led by our Chief Information Security Officer (“CISO”) and is comprised of information security professionals with a variety of cybersecurity certifications and accreditations.
Biggest changeGovernance Our Chief Information Security Officer (“CISO”) leads GIS, and together with our Chief Compliance Officer (“CCO”) are responsible for managing and assessing cybersecurity risk and strategy. They oversee our cybersecurity program and are responsible for identifying, assessing, monitoring, managing and communicating our cybersecurity risks. GIS is comprised of information security professionals with a variety of cybersecurity certifications and accreditations.
GIS is aided by the Executive Risk Management Committee, which is comprised of senior leaders and subject matter experts throughout our company, including our Chief Information Security Officer (“CISO”) and Chief Compliance Officer (“CCO”), who serve on the committee to assess and mitigate specific business unit risks, promote an understanding of potential issues, and provide risk resolution and prevention support.
GIS is aided by the Executive Risk Management Committee, which is comprised of senior leaders and subject matter experts throughout our company, including our CISO and CCO, who serve on the committee to assess and mitigate specific business unit risks, promote an understanding of potential issues, and provide risk resolution and prevention support.
GIS and the Executive Risk Management Committee are responsible for keeping the Audit Committee apprised of developments with respect to our cybersecurity strategy and risks. 22 Table of Contents Our CISO has served in various roles in information technology and information security for more than 30 years, including serving as the Chief Information Security Officer at two other large public companies and has been with ACI since 2015.
GIS and the Executive Risk Management Committee are responsible for keeping the Audit Committee apprised of developments with respect to our cybersecurity strategy and risks. 25 Table of Contents Our CISO has served in various roles in information technology and information security for more than 30 years, including 20 years in Financial Services, along with serving as the Deputy Head of Global Information Security at ACI prior to being designated as CISO and has been with ACI since 2008.
The training is administered to employees on an annual basis, and we use a third-party provider for the content to ensure that the training is periodically updated to incorporate new cybersecurity-related developments and best practices. In the event of a reported potential cybersecurity incident, GIS determines whether such incident triggers our cybersecurity threat evaluation and response plan (the “Response Plan”).
The training is administered to employees on an annual basis, and we use a third-party provider for the content to ensure that the training is periodically updated to incorporate new cybersecurity-related developments and best practices.
ITEM 1C. CYBERSECURITY Risk Management Strategy Our cybersecurity risk management strategy is comprised of several key elements and is overseen by our Global Information Security team ("GIS"), which is incorporated into our Enterprise Risk Management ("ERM") function. The oversight of our cybersecurity risk is integrated into our ERM processes and procedures.
ITEM 1C. CYBERSECURITY Risk Management Strategy The oversight of our cybersecurity risk is integrated into our Enterprise Risk Management ("ERM") function and processes and procedures.
If triggered, our cybersecurity response team, which includes representatives from GIS, our business team, and executive leadership, as needed under the circumstances (the “Cyber Response Team”), is convened.
In the event of a reported potential cybersecurity incident, the Global Information Security team ("GIS") determines whether such incident triggers our cybersecurity threat evaluation and response plan (the “Response Plan”). If triggered, our cybersecurity response team, which includes representatives from GIS, our business team, and executive leadership, as needed under the circumstances (the “Cyber Response Team”), is convened.
Removed
Our CCO has over 30 years of experience in compliance program leadership and process design, risk management and financial services operations, including serving as Head of Compliance for several banking and financial services technology organizations including two other publicly traded companies. The Audit Committee oversees our cybersecurity strategy and risks.
Added
As of the date of this filing, we do not believe that any risks from cybersecurity threats, including as a result of past cybersecurity incidents, have had, or are reasonably likely to have, a material effect on our business strategy, results of operations or financial condition, but we cannot assure that our business strategy, results of operations and financial condition will not be materially affected in the future by cybersecurity risks or future cybersecurity incidents.
Added
Our CCO has served in various risk and compliance roles in both global and regulated entities within financial services technology organizations, along with serving as the Head of Enterprise Risk at ACI prior to being designated as CCO and has been with ACI since 2022.
Added
The CCO’s expertise focuses on designing, maturing, and embedding risk and compliance frameworks; credentials also include a Juris Doctor, a Masters of Business Administration with a focus in Finance and emphasis in consulting, and a Bachelors of Science in Business Administration. The Audit Committee oversees our cybersecurity strategy and risks.

Item 2. Properties

Properties — owned and leased real estate

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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.
Biggest changeAs of the end of 2024, we owned and leased a total of approximately 245,000 square feet of office and data center space in the United States and leased approximately 269,000 square feet of office and data center space outside the United States, primarily in India, Ireland, South Africa, Romania, and Singapore.

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. 23 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. 26 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, 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.
Biggest changeIssuer Purchases of Equity Securities The following table provides information regarding our repurchases of common stock during the three months ended December 31, 2024: 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, 2024 through October 31, 2024 (1) 63 $ 50.23 — November 1, 2024 through November 30, 2024 (1) 38,128 56.22 — December 1, 2024 through December 31, 2024 (1) 29,528 56.37 — Total 67,719 $ 372,528,000 (1) Pursuant to our 2020 Equity and Performance Incentive Plans, (the "2020 Incentive Plan"), we granted RSUs.
In 2005, our board approved a stock repurchase program authorizing us, as market and business conditions warrant, to acquire our common stock and periodically authorizes additional funds for the program, with the intention of using existing cash and cash equivalents to fund these repurchases.
In 2005, the board approved a stock repurchase program authorizing us, as market and business conditions warrant, to acquire our common stock and periodically authorizes additional funds for the program, with the intention of using existing cash and cash equivalents to fund these repurchases.
In March 2005, our board approved a plan under Rule 10b5-1 of the Securities Exchange Act of 1934 to facilitate the repurchase of shares of common stock under the existing stock repurchase program.
In March 2005, the board approved a plan under Rule 10b5-1 of the Securities Exchange Act of 1934 to facilitate the repurchase of shares of common stock under the existing stock repurchase program.
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.
This presentation assumes that $100 was invested in shares of the relevant issuers on December 31, 2019, 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.
Stock Performance Graph and Cumulative Total Return The following table shows a line-graph presentation comparing cumulative stockholder return on an indexed basis with a broad equity market index and either a nationally-recognized industry standard or an index of peer companies selected by us. We selected the S&P 500 Index and the S&P MidCap 400 Index for comparison.
Stock Performance Graph and Cumulative Total Return The following table shows a line-graph presentation comparing cumulative stockholder return on an indexed basis with a broad equity market index and either a nationally-recognized industry standard or an index of peer companies selected by us. We selected the S&P 500 Index and the S&P 600 Index for comparison.
The graph above compares ACI Worldwide, Inc.’s annual percentage change in cumulative total return on common shares over the past five years with the cumulative total return of companies comprising the S&P 500 Index and the S&P MidCap 400 Index.
The graph above compares ACI Worldwide, Inc.’s annual percentage change in cumulative total return on common shares over the past five years with the cumulative total return of companies comprising the S&P 500 Index and the S&P 600 Index.
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.
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 24, 2025, there were 213 holders of record of our 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.
As of December 31, 2024, the maximum remaining amount authorized for purchase under the stock repurchase program was approximately $372.5 million. 27 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.
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.
Under each arrangement, shares are issued without direct cost to the employee. During the three months ended December 31, 2024, 204,636 shares of RSUs vested. We withheld 67,719 of these RSUs to pay the employees’ portion of the applicable minimum payroll withholding taxes.
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.
In June 2024, the board approved the repurchase of the Company's common stock for up to $400.0 million, in place of the remaining purchase amounts previously authorized.
Added
The S&P 600 Index will replace the S&P MidCap 400 Index going forward, as the Company is now included in the S&P 600 Index. The S&P MidCap 400 index has been included with data through 2024.

Item 7. Management's Discussion & Analysis

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

77 edited+18 added−25 removed81 unchanged
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.
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. 32 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, 2024 Compared to Year Ended December 31, 2023 2024 2023 Amount % of Total Revenue $ Change vs 2023 % Change vs 2023 Amount % of Total Revenue Revenues: Software as a service and platform as a service $ 897,979 56 % $ 48,832 6 % $ 849,147 59 % License 412,306 26 % 91,082 28 % 321,224 22 % Maintenance 190,763 12 % (14,305) (7) % 205,068 14 % Services 93,240 6 % 16,100 21 % 77,140 5 % Total revenues 1,594,288 100 % 141,709 10 % 1,452,579 100 % Operating expenses: Cost of revenue 791,783 50 % 72,572 10 % 719,211 50 % Research and development 146,677 9 % 5,919 4 % 140,758 10 % Selling and marketing 118,352 7 % (14,287) (11) % 132,639 9 % General and administrative 118,379 7 % 1,189 1 % 117,190 8 % Depreciation and amortization 110,962 7 % (11,411) (9) % 122,373 8 % Total operating expenses 1,286,153 80 % 53,982 4 % 1,232,171 85 % Operating income 308,135 20 % 87,727 40 % 220,408 15 % Other income (expense): Interest expense (72,471) (5) % 6,015 (8) % (78,486) (5) % Interest income 15,926 1 % 1,711 12 % 14,215 1 % Other, net (1,181) — % 7,329 (86) % (8,510) (1) % Total other income (expense) (57,726) (4) % 15,055 (21) % (72,781) (5) % Income before income taxes 250,409 16 % 102,782 70 % 147,627 10 % Income tax expense 47,291 3 % 21,173 81 % 26,118 2 % Net income $ 203,118 13 % $ 81,609 67 % $ 121,509 8 % Revenues Total revenue for the year ended December 31, 2024, increased $141.7 million, or 10%, as compared to the same period in 2023. • The impact of certain foreign currencies weakening against the U.S. dollar resulted in a $3.2 million decrease in total revenue during the year ended December 31, 2024, as compared to the same period in 2023. • Adjusted for the impact of foreign currency, total revenue for the year ended December 31, 2024, increased $144.9 million, or 10%, as compared to the same period in 2023. 33 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.
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.
If determined to be significant, the financing component is calculated using a rate that discounts the license fees to the cash selling price. 41 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.
Stock-Based Compensation On June 9, 2020, upon recommendation of our board, stockholders approved the ACI Worldwide, Inc. 2020 Equity and Incentive Compensation Plan (the “2020 Plan”).
Stock-Based Compensation On June 9, 2020, upon recommendation of the board, stockholders approved the ACI Worldwide, Inc. 2020 Equity and Incentive Compensation Plan (the “2020 Plan”).
ACI's broad software portfolio, experience, and strategic partnerships with Mastercard, Microsoft, and Mindgate Solutions continue to position us as a leader in real-time payments, helping to drive seamless connectivity, increased security, and end-to-end modernization for organizations throughout the world. Adoption of cloud technology .
ACI's broad software portfolio, experience, and strategic partnerships with Mastercard, Microsoft, Red Hat, and Mindgate Solutions continue to position us as a leader in real-time payments, helping to drive seamless connectivity, increased security, and end-to-end modernization for organizations throughout the world. Adoption of cloud technology .
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.
We believe these needs will be satisfied using cash flow generated by our operations, our cash and cash equivalents, and available borrowings under our revolving credit facility over the next 12 months and beyond. 38 Table of Contents Cash and cash equivalents consist of highly liquid investments with original maturities of three months or less.
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).
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. 39 Table of Contents Cash Flows The following table sets forth summary cash flow data for the periods indicated (in thousands).
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.
Regulators are beginning to litigate between consumers and financial institutions on the losses, and between remitting and receiving banks on the accountability. 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.
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.
Prior Year Results For discussion of 2023 compared to 2022, see Liquidity and Capital Resources in Part II, Item 7 of our annual report on Form 10-K for the year ended December 31, 2023. 40 Table of Contents Contractual Obligations Our largest contractual obligations as of December 31, 2024, 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. 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.
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. 42 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.
All revenue from SaaS and PaaS arrangements that does not qualify for treatment as a distinct performance obligation, which includes set-up fees, implementation or customization services, and product support services, are included in SaaS and PaaS revenue.
All fees from SaaS and PaaS arrangements that do not qualify for treatment as a distinct performance obligation, which includes set-up fees, implementation or customization services, and product support services, are included in SaaS and PaaS revenue.
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).
In the event a significant revision to renewal assumptions is determined to be necessary, prior periods will be adjusted for comparability purposes. 31 Table of Contents The following table sets forth our 60-month backlog estimate, by reportable segment, as of December 31, 2024; September 30, 2024; June 30, 2024; March 31, 2024; and December 31, 2023 (in millions).
As part of our process of determining current tax liability, we exercise judgment in evaluating positions we have taken in our tax returns. We periodically assess our tax exposures and establish, or adjust, estimated unrecognized benefits for probable assessments by taxing authorities, including the Internal Revenue Service, and various foreign and state authorities.
As part of our process of determining current tax liability, we exercise judgment in evaluating positions we have taken in our tax returns. We periodically assess our tax exposures and establish, or adjust, estimated unrecognized benefits for probable assessments by taxing authorities, including the 43 Table of Contents Internal Revenue Service, and various foreign and state authorities.
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.
Prior Year Results For discussion of 2023 compared to 2022, see Segment Results in Part II, Item 7 of our annual report on Form 10-K for the year ended December 31, 2023.
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.
Termination of the 2016 Incentive Plan did not affect any equity awards outstanding under the 2016 Incentive Plan or 2005 Incentive Plan. Performance share awards granted with a total shareholder return component ("TSRs") are shares that are earned, if at all, based upon achievement of performance goals over a specified period.
Our products and solutions are marketed under the ACI Worldwide brand and used globally by banks and intermediaries, merchants, and billers, such as third-party electronic payment processors, payment associations, switch interchanges, and a wide range of transaction-generating endpoints, including ATMs, merchant POS terminals, bank branches, mobile phones, tablets, corporations, and internet commerce sites.
Our products and solutions are marketed under the ACI Worldwide brand and used globally by banks of all sizes, central banks, intermediaries, merchants, and billers, such as third-party digital payment processors, payment associations, switch interchanges, and a wide range of transaction-generating endpoints, including ATMs, merchant POS terminals, bank branches, mobile phones, tablets, corporations, and internet commerce sites.
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 banks and intermediaries, merchants, and billers 29 Table of Contents 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 of December 31, 2023 and 2022, our goodwill was $1.2 billion.
As of December 31, 2024 and 2023, our goodwill was $1.2 billion.
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.
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 impact of foreign currencies weakening against the U.S. dollar resulted in a $1.0 million decrease in total operating expenses for the year ended December 31, 2024, as compared to the same period in 2023. • Adjusted for the impact of cost reduction strategies, significant transaction-related expenses, and foreign currency, total operating expenses for the year ended December 31, 2024, increased $73.6 million, or 6%, as compared to the same period in 2023. 35 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.
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.
As of December 31, 2024 and 2023, our intangible assets, excluding goodwill, net of accumulated amortization, were $165.4 million and $195.6 million, respectively. The determination of the value of such intangible assets requires management to make estimates and assumptions that affect the consolidated financial statements.
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.
SaaS and PaaS revenue increased $48.8 million, or 6%, during the year ended December 31, 2024, as compared to the same period in 2023. • The impact of certain foreign currencies strengthening against the U.S. dollar resulted in a $0.5 million increase in SaaS and PaaS revenue during the year ended December 31, 2024, as compared to the same period in 2023. • Adjusted for the impact of foreign currency, SaaS and PaaS revenue for the year ended December 31, 2024, increased $48.3 million, or 6%, as compared to the same period in 2023. • The increase was primarily due to higher transaction volumes during the year ended December 31, 2024, as compared to the same period in 2023, as well as new customer go-lives since December 31, 2023.
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.
Stock Repurchase Program The 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 June 2024, the board approved the repurchase of the Company's common stock of up to $400.0 million in place of the remaining purchase amounts previously authorized.
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.
Services revenue increased $16.1 million, or 21%, during the year ended December 31, 2024, as compared to the same period in 2023. • The impact of foreign currencies weakening against the U.S. dollar resulted in a $0.4 million decrease in services revenue during the year ended December 31, 2024, as compared to the same period in 2023. • Adjusted for the impact of foreign currency, services revenue for the year ended December 31, 2024, increased $16.5 million, or 21%, as compared to the same period in 2023. • The increase was primarily driven by the timing and magnitude of project-related work during the year ended December 31, 2024, as compared to the same period in 2023.
Key trends that currently impact our strategies and operations include: Increasing digital payment transaction volumes . The adoption of digital payments continues to accelerate, propelled by the digitization of cash, financial inclusion efforts of countries throughout the world, the Internet of Things, rapid growth of eCommerce and the adoption of real-time payments.
Key trends that currently impact our strategies and operations include: Increasing digital payment transaction volumes . The adoption of digital payments continues to accelerate, propelled by the digitization of cash, financial inclusion efforts of countries throughout the world, rapid growth of eCommerce, and the adoption of real-time payments enabling more people, governments, and businesses to embrace digital payments.
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.
As of December 31, 2024, we had $216.4 million of cash and cash equivalents, of which $116.1 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 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.
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, Revenue From Contracts with Customers ) 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.
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.
Years Ended December 31, 2024 2023 Net cash provided by (used in): Operating activities $ 358,748 $ 168,517 Investing activities (45,051) (37,777) Financing activities (288,197) (111,552) 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.
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.
Selling and marketing expense decreased $14.3 million, or 11%, during the year ended December 31, 2024, as compared to the same period in 2023. • The decrease was primarily due to lower personnel and related expenses and advertising and professional fees of $14.0 million and $0.3 million, respectively. 36 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.
Merchants from all industries, including grocers, fuel and convenience stores, are being tasked with delivering seamless experiences that include pay-in-aisle, kiosks, mobile app payments, QR code payments, eCommerce, traditional and mobile POS, buy online pickup in-store (BOPIS), and buy online return in-store (BORIS).
This trend has led to an increase in contactless payments, click and collect, and curbside collection. Merchants from all industries, including grocers, fuel and convenience stores, are being tasked with delivering seamless experiences that include pay-in-aisle, kiosks, mobile app payments, QR code payments, eCommerce, traditional and mobile POS, buy online pickup in-store (BOPIS), and buy online return in-store (BORIS).
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.
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.
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.
License revenue increased $91.1 million, or 28%, during the year ended December 31, 2024, as compared to the same period in 2023. • The impact of certain foreign currencies weakening against the U.S. dollar resulted in a $3.0 million decrease in license revenue during the year ended December 31, 2024, as compared to the same period in 2023. • Adjusted for the impact of foreign currency, license revenue for the year ended December 31, 2024, increased $94.1 million, or 30%, as compared to the same period in 2023. • The increase in license revenue was driven by license renewal timing as well as the relative size of new license and capacity events during the year ended December 31, 2024, as compared to the same period in 2023. 34 Table of Contents Maintenance Revenue Maintenance revenue includes standard and premium customer support and any post contract support fees received from customers for the provision of product support services.
The calculated fair value substantially exceeds the current carrying value for all reporting units. No reporting units were deemed to be at risk of failing Step 1 of the goodwill impairment test under ASC 350. Business Combinations We apply the provisions of ASC 805, Business Combinations , in the accounting for our acquisitions.
The calculated fair value substantially exceeds the current carrying value for all reporting units. No reporting units were deemed to be at risk of failing Step 1 of the goodwill impairment test under ASC 350.
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.
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.
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 increased $1.2 million, or 1%, during the year ended December 31, 2024, as compared to the same period in 2023. • General and administrative expenses for the year ended December 31, 2024, included $4.3 million for cost reduction strategies and $1.0 million of other significant transaction-related expenses during the period.
Depending on specific circumstances, multiple overages or no overages may occur during the term of the agreement. Included in license revenue are license and capacity fees that are payable at the inception of the agreement or annually (initial license fees).
Depending on specific circumstances, multiple overages or no overages may occur during the term of the agreement. Included in license revenue are license and capacity fees that are payable at the inception of the agreement. License revenue also includes license and capacity fees payable annually, quarterly, or monthly due to negotiated customer payment terms.
Merchants Segment Adjusted EBITDA decreased $4.7 million for the year ended December 31, 2023, compared to the same period in 2022, primarily due to a $3.3 million decrease in revenue and a $1.4 million increase in cash operating expenses.
Merchants Segment Adjusted EBITDA increased $25.2 million for the year ended December 31, 2024, compared to the same period in 2023, primarily due to a $15.3 million increase in revenue and a $9.9 million decrease in cash operating expenses.
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.
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.
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.
Cost of revenue increased $72.6 million, or 10%, during the year ended December 31, 2024, as compared to the same period in 2023. • The impact of foreign currencies weakening against the U.S. dollar resulted in a $0.5 million decrease in cost of revenue during the year ended December 31, 2024, as compared to the same period in 2023. • Adjusted for the impact of foreign currency, cost of revenue increased $73.1 million, or 10%, for the year ended December 31, 2024, as compared to the same period in 2023. • The increase was primarily due to higher payment card interchange and processing fees and cloud computing fees of $48.2 million and $8.0 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.
R&D expense increased $5.9 million, or 4%, during the year ended December 31, 2024, as compared to the same period in 2023. • The impact of foreign currencies weakening against the U.S. dollar resulted in a $0.2 million decrease in R&D expense during the year ended December 31, 2024, as compared to the same period in 2023. • Adjusted for the impact of foreign currency, R&D expense increased $6.1 million, or 4%, during the year ended December 31, 2024, as compared to the same period in 2023. • The increase was primarily due to higher personnel and related expenses of $7.1 million, including a $4.2 million increase in stock-based compensation expense, partially offset by lower cloud computing and professional fees of $1.0 million.
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.
During the year ended December 31, 2024, we used cash of $45.1 million to purchase software, property, and equipment, as compared to $37.8 million during the same period in 2023.
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.
Billers Segment Adjusted EBITDA decreased $11.2 million for the year ended December 31, 2024, compared to the same period in 2023, primarily due to a $48.2 million increase in interchange and processing fees, partially offset by a $40.6 million increase in revenue.
We believe there is significant opportunity to provide merchants with the tools to deliver a seamless, secure, personalized experience that creates loyalty and satisfaction, and drives conversion rates while protecting consumer data and preventing fraud. Request for Payment (RfP). Markets across the world are introducing an innovative payments service called Request for Payment (RfP).
We believe there is significant opportunity to provide merchants with the tools to deliver a seamless, secure, personalized experience that creates loyalty and satisfaction, and drives conversion rates while protecting consumer data and preventing fraud. Open banking .
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.
Our primary uses of operating cash flows include employee expenditures, taxes, interest payments, and leased facilities. Cash flows provided by operating activities was $358.7 million for the year ended December 31, 2024, an increase of 113% compared to $168.5 million for the same period in 2023.
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.
The sale included employees and customer contracts as well as technology assets and intellectual property. 30 Table of Contents 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.
License revenue also includes license and capacity fees payable quarterly or monthly due to negotiated customer payment terms (monthly license fees). The Company recognizes revenue in advance of billings for software license arrangements with extended payment terms and adjusts for the effects of the financing component, if significant.
The Company recognizes revenue in advance of billings for software license arrangements with extended payment terms and adjusts for the effects of the financing component, if significant.
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.
ACI is also providing solutions centrally in Colombia and Peru. 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.
Several other factors related to our business may have a significant impact on our operating results from year to year. For example, the accounting rules governing the timing of revenue recognition are complex, and it can be difficult to estimate when we will recognize revenue generated by a given transaction.
For example, the accounting rules governing the timing of revenue recognition are complex, and it can be difficult to estimate when we will recognize revenue generated by a given transaction.
Refer to Note 11, Income Taxes , to our Notes to Consolidated Financial Statements in Part IV, Item 15 of this Form 10-K for additional information.
Segment Results Refer to Note 10, Segment Information, to our Notes to Consolidated Financial Statements in Part IV, Item 15 of this Form 10-K for discussion on identification of operating segments.
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.
Maintenance revenue decreased $14.3 million, or 7%, during the year ended December 31, 2024, as compared to the same period in 2023. • The impact of foreign currencies weakening against the U.S. dollar resulted in a $0.2 million decrease in maintenance revenue during the year ended December 31, 2024, as compared to the same period in 2023. • Adjusted for the impact of foreign currency, maintenance revenue for the year ended December 31, 2024, decreased $14.1 million, or 7%, as compared to the same period in 2023. • The decrease was primarily driven by customers reducing premium customer support and maintenance on non-strategic products during the year ended December 31, 2024, as compared to the same period in 2023.
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.
Income Taxes The effective tax rates for the years ended December 31, 2024 and 2023, were approximately 19% and 18%, respectively. Our effective tax rates vary from our federal statutory rate due to operating in multiple foreign countries, each with its own tax laws and rates.
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.
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. • 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, 2024, as compared to the same period in 2023. • Adjusted for the impact of cost reduction strategies, significant transaction-related expenses, and foreign currency, general and administrative expense increased $24.4 million, or 28%, for the year ended December 31, 2024, as compared to the same period in 2023. • The increase was primarily due to higher personnel and related expenses of $22.2 million, including a $11.1 million increase in stock-based compensation expense.
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.
Other Income and Expense Interest expense for the year ended December 31, 2024, decreased $6.0 million, or 8%, as compared to the same period in 2023, primarily due to repayments on the Term Loan. Interest income includes the portion of software license fees paid by customers under extended payment terms that is attributed to the significant financing component.
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.
Operating Expenses Total operating expenses for the year ended December 31, 2024, increased $54.0 million, or 4%, as compared to the same period in 2023. • Total operating expenses for the year ended December 31, 2024, included $8.6 million for cost reduction strategies and $1.0 million of other significant transaction-related expenses during the period.
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.
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.
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.
ACI has recognized the industry's technical inflection point in the transition from traditional on-premises infrastructure to the private and public cloud, and we are supporting our customers' cloud strategies.
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.
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.
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.
These foreign tax laws and rates differ from those we apply to the income generated from our domestic operations. Of the foreign jurisdictions in which we operate, our December 31, 2024 and 2023 effective tax rates were most impacted by our operations in Ireland and the United Kingdom.
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.
As of December 31, 2024, only the earnings from our Indian foreign subsidiaries are indefinitely reinvested. We are also permanently reinvested in the outside book/tax basis differences related to foreign subsidiaries. These outside basis differences could reverse through the sale of foreign subsidiaries, as well as various other events, none of which are considered probable as of December 31, 2024.
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.
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. Adoption of real-time payments. Expectations from both consumers and businesses are continuing to drive the payments world to more real-time delivery.
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.
We repurchased 3,946,537 shares for $128.5 million under our stock repurchase program during the year ended December 31, 2024. Under the program to date, we have repurchased 62,867,837 shares for approximately $1.1 billion. As of December 31, 2024, the maximum remaining amount authorized for purchase under the stock repurchase program was approximately $372.5 million.
Up to 200% of the performance shares could be earned upon achievement of the performance goals, including the multiplier. For 2022 and 2021, we granted performance shares that are earned based upon the Company’s total shareholder return as compared to a group of peer companies over a three-year performance period. The award payout can range from 0% to 200%.
For 2022, performance share awards granted are earned, if at all, based upon the Company’s total shareholder return as compared to a group of peer companies over a three-year performance period. The award payout can range from 0% to 200%. To determine the grant date fair value of the TSRs, a Monte Carlo simulation model is used.
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.
The Company and OEP had also entered into a Transition Services Agreement ("TSA"), whereby the Company would continue to perform certain functions on OEP's behalf during a migration period which ended in 2024. The TSA was meant to reimburse the Company for direct costs in order to provide such functions, which are no longer generating revenue for the Company.
Our products are sold and supported directly and through distribution networks covering three geographic regions – the Americas, EMEA, and Asia Pacific. Each region has its own globally coordinated sales force, supplemented with local independent reseller and/or distributor networks.
Each region has its own globally coordinated sales force, supplemented with local independent reseller and/or distributor networks.
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.
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 received net proceeds of $105.0 million on the Revolving Credit Facility, proceeds of $8.2 million from the exercise of stock options and the issuance of common stock under our 2017 Employee Stock Purchase Plan, as amended, and $26.8 million from settlement assets and liabilities due to processing timing.
We received proceeds of $9.2 million from the exercise of stock options and the issuance of common stock under our 2017 Employee Stock Purchase Plan, as amended. 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.
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.
December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 Banks $ 2,368 $ 2,291 $ 2,230 $ 2,235 $ 2,261 Merchants 734 757 740 741 754 Billers 3,604 3,395 3,398 3,505 3,505 Total $ 6,706 $ 6,443 $ 6,368 $ 6,481 $ 6,520 December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 Committed $ 2,413 $ 2,204 $ 2,362 $ 2,223 $ 2,178 Renewal 4,293 4,239 4,006 4,258 4,342 Total $ 6,706 $ 6,443 $ 6,368 $ 6,481 $ 6,520 Estimates of future financial results require substantial judgment and are based on several assumptions, as described above.
We continue to see opportunity for our advanced machine learning and network intelligence capabilities to stop criminals and enable frictionless legitimate business. Omni-commerce. Shoppers are increasingly browsing, buying, and returning items across channels, including in-store, online, and mobile. COVID-19 accelerated this trend, leading to an increase in contactless payments, click and collect, and curbside collection.
We continue to evolve our advanced machine learning and network intelligence capabilities to stop criminals and enable frictionless, legitimate business. Meanwhile, with payments intelligence, organizations can integrate intelligent services to enhance consumer relationships while achieving precise, real-time fraud and risk mitigation capabilities. Omni-commerce. Shoppers are increasingly browsing, buying, and returning items across channels, including in-store, online, and mobile.
For 2023, performance awards granted are earned over a specified period that must not be less than one year and is typically a three-year performance period, based upon achievement of performance goals related to (i) net revenue growth and (ii) net adjusted EBITDA margin over the performance period as determined by the Company with a total shareholder return multiplier up to plus or minus 20%.
The awards have operating performance goals that include (i) adjusted EBITDA metrics and (ii) revenue growth rates as determined by the Company with a TSR multiplier up to plus or minus 20%. Up to 200% of the performance shares could be earned upon achievement of the performance goals, including the multiplier.
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.
Refer to Note 11, Income Taxes , to our Notes to Consolidated Financial Statements in Part IV, Item 15 of this Form 10-K for additional information. 37 Table of Contents Prior Year Results For discussion of the year ended December 31, 2023, compared to the year ended December 31, 2022, see Results of Operations in Part II, Item 7 of our annual report on Form 10-K for the year ended December 31, 2023.
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.
The following is selected financial data for our reportable segments for the periods indicated (in thousands): Years Ended December 31, 2024 2023 Revenues Banks $ 701,860 $ 616,051 Merchants 165,910 150,616 Billers 726,518 685,912 Total revenue $ 1,594,288 $ 1,452,579 Segment Adjusted EBITDA Banks $ 425,519 $ 355,489 Merchants 69,548 44,345 Billers 131,187 142,343 Depreciation and amortization (110,962) (122,373) Stock-based compensation expense (41,281) (24,547) Corporate and unallocated expenses (165,876) (174,849) Interest, net (56,545) (64,271) Other, net (1,181) (8,510) Income before income taxes $ 250,409 $ 147,627 Banks Segment Adjusted EBITDA increased $70.0 million for the year ended December 31, 2024, compared to the same period in 2023, primarily due to a $85.8 million increase in revenue primarily related to an increase in license revenues, partially offset by a $15.8 million increase in cash operating expense.
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.
Available Liquidity The following table sets forth our available liquidity for the periods indicated (in thousands): December 31, 2024 2023 Cash and cash equivalents $ 216,394 $ 164,239 Availability under revolving credit facility 528,100 373,900 Total liquidity $ 744,494 $ 538,139 The increase in total liquidity is primarily attributable to the $100.0 million increase in the maximum amount available under the revolving credit facility and cash flows generated from operations.
During 2022, we used the proceeds from the divestiture to partially fund repayments of $85.4 million on the Term Loans and $12.1 million of other debt payments. In addition, we used $206.5 million to repurchase common stock and $7.0 million for the repurchase of stock-based compensation awards for tax withholdings.
In addition, we used $127.7 million to repurchase common stock, $13.1 million for the repurchase of stock-based compensation awards for tax withholdings, and $25.5 million for settlement assets and liabilities due to processing timing.
Adoption of real-time payments. Expectations from both consumers and businesses are continuing to drive the payments world to more real-time delivery. This is bolstered by the new data-rich ISO 20022 messaging format, which is delivering greater value to banks and their customers.
This is bolstered by the new data-rich ISO 20022 messaging format prevalent in account-to-account payments, which is delivering greater value to banks and their customers and has now been rolled out across the world and continues to see adoption with local schemes, such as FedWire, planned for 2025.
The accelerated adoption of real-time payments increases the urgency for industry-wide collaboration against fraud.
The accelerated adoption of real-time payments, fraudsters leveraging artificial intelligence, and the ramping up of mandates increase the urgency for industry-wide collaboration to mitigate fraud with precision and achieve operational excellence.
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.
Interest income for the year ended December 31, 2024, increased $1.7 million, or 12%, as compared to the same period in 2023. Other, net is primarily comprised of foreign currency transaction gains and losses. Other, net was $1.2 million and $8.5 million of expense for the years ended December 31, 2024 and 2023, respectively.
We are seeing global players with existing schemes working to expand capacity in anticipation of volume growth and new payment types. Mature markets, including India, the United Kingdom, Australia, Malaysia, Singapore, Thailand, and the Nordics, continue to accelerate innovation, especially in terms of overlay services and cross-border connectivity.
We are seeing global players with existing schemes working to expand capacity in anticipation of volume growth and new payment types. Domestic schemes such as Unified Payments Interface ("UPI") in India and others are being made available to their citizens for cross-border transactions when abroad.
RfP is primarily being implemented on top of real-time payments, which are continuing to grow and flourish as countries around the world develop and launch their real-time schemes as noted above. ACI is in a unique position to deliver this overlay service given our real-time payments software, our relationships with banks, merchants, and billers, and global real-time connectivity.
ACI is in a unique position to deliver service that takes advantage of our real-time payments software, our relationships with banks, merchants, and billers, and global connectivity. Several other factors related to our business may have a significant impact on our operating results from year to year.
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.
As the threat of sophisticated fraud becomes a greater concern for remitting and receiving institutions, consumers are challenged with increased friction to prevent illegitimate access of genuine accounts or funds to protect the consumer trust and confidence, while achieving their strategic objectives.
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview ACI Worldwide powers digital payments for more than 6,000 organizations around the world. More than 1,000 of the largest banks and intermediaries, as well as thousands of global merchants, rely on ACI to execute $14 trillion each day in payments and securities.
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview ACI Worldwide, an innovator in global payments technology, delivers software solutions that power intelligent payments orchestration in real time so banks, merchants, and billers can drive growth, while continuously modernizing their payment infrastructures, simply and securely.
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In addition, myriad organizations utilize our electronic bill presentment and payment services. Through our comprehensive suite of software solutions delivered on customers’ premises, through the public cloud or through ACI’s private cloud, we provide real-time, immediate payments capabilities and enable the industry’s most complete omni-channel payments experience.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+1 added−0 removed5 unchanged
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.
Biggest changeWe had approximately $0.9 billion of debt outstanding at December 31, 2024, with $532.5 million outstanding under our Credit Facility and $400.0 million in 2026 Notes. Our Credit Facility has a floating rate, which was 6.21% at December 31, 2024. Our 2026 Notes are fixed-rate long-term debt obligations with a 5.750% interest rate.
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.
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, 2024.
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.
If we maintained similar cash investments for a period of one year based on our cash investments and interest rates at December 31, 2024, a hypothetical ten percent increase or decrease in effective interest rates would increase or decrease interest income by $0.3 million annually.
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.
A hypothetical ten percent increase or decrease in effective interest rates would increase or decrease interest expense related to the Credit Facility by approximately $3.3 million. 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. ITEM 9.
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CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 44 Table of Contents

Other ACIW 10-K year-over-year comparisons