ACI Worldwide (ACIW) Q4 2005 earnings summary

Executive summary

• FY05 revenue grew 7% to $313.2M and operating income rose 18% to $64.5M; net income was $43.2M, down from $46.7M in FY04.

• Electronic payment volumes, aging payment platforms, open-systems adoption, fraud prevention and smart-card rollouts supported demand; the business served 820 customers in 84 countries.

• Three business units were combined under one operating structure after year-end; the reorganization is intended to improve focus, efficiency and integrated solution delivery.

Financial highlights

• FY05 revenue was $313.2M, up 7.0% YoY; software license fees were $168.4M, maintenance $93.5M and services $51.3M.

• Operating income increased to $64.5M from $54.8M; net income was $43.2M versus $46.7M, while basic EPS was $1.15 versus $1.26.

• Q4 FY05 revenue was $79.0M, operating income $11.1M, net income $9.1M and diluted EPS $0.24.

• Operating cash flow was $53.2M; cash, cash equivalents and marketable securities totaled $156.5M at Sept. 30, 2005.

Outlook and guidance

• FY06 S2 acquisition expected to be accretive through expense reductions, normalized maintenance fees and continued marketing of acquired products.

• FY06 R&D spending planned to increase, supporting BASE24-es, Proactive Risk Manager and Smart Chip Manager; acquisitions remain part of the growth strategy.

• Reorganization expected to generate $5.8M–$6.0M in first-year pretax savings and $6.4M–$6.7M annually thereafter; $2.1M–$2.8M of FY06 restructuring costs expected.

• Restructuring expected to be substantially complete by FY06 year-end; a Software as a Service unit was formed to offer service-based access to solutions.