ACI Worldwide (ACIW) Q4 2008 earnings summary

Executive summary

• 2008 revenue was $417.7M, up 14.0% vs. FY2007 ended September 30; operating income rose to $21.7M from $2.4M, with net income of $10.6M vs. a $9.1M loss.

• Shift toward multi-year renewals and recurring monthly fees improved revenue visibility; monthly recurring fee income rose $17M YoY, while Q4 contract signings reached a record $189M.

Financial highlights

• Revenue increased $51.4M YoY, led by software license fees (+$19.7M), services (+$22.9M) and maintenance (+$8.8M).

• Operating expenses rose 8.8% to $395.9M, slower than revenue growth; R&D fell 11.9% to $45.9M, while maintenance and services costs increased 26.5%.

• Net foreign currency gains were $13.8M vs. a $1.9M loss in FY2007; interest-rate swap fair-value losses were $5.8M vs. $2.1M.

• Q4 2008 revenue was $109.2M, operating income $19.6M, net income $12.9M and diluted EPS $0.37; Q1 2008 had a $4.9M net loss.

Outlook and guidance

• 2009 priorities are improving margins and growing profitability, supported by disciplined deal scoping, implementation costing and expense management.

• An additional $3M–$5M of restructuring expense was expected in H1 2009; restructuring was targeted for completion by the end of H1.

• Growth opportunities cited include China, India, Latin America, SEPA-driven EMEA investment, and retailer and processor upgrades in the Americas.

• Management expected strong operating performance in 2009, while monitoring customer cost-cutting and banking-sector consolidation.