ACI Worldwide (ACIW) Q4 2010 earnings summary

Executive summary

• 2010 marked a return to growth, with recurring monthly revenue up 8% to 68% of total revenue and operating income up 29% YoY.

• 60-month backlog rose $54 million to $1.6 billion; approximately $463 million of $525 million in sales came from existing customers.

• Sales momentum broadened internationally and into retail, with a first global-account customer and EMEA sales up 59%.

Financial highlights

• FY2010 revenue was $418.4 million, up 3.1% YoY; net income was $27.2 million versus $19.6 million in 2009.

• Operating income increased to $53.6 million from $41.6 million; diluted EPS was $0.80 versus $0.57.

• Operating cash flow rose to $81.3 million from $44.2 million, primarily on stronger receivables collections and higher net income.

• Revenue mix shifted: monthly license fees rose 44.2% to $102.8 million, while initial license fees fell 25.8% to $61.7 million.

Outlook and guidance

• FY2011 revenue growth was expected to be slightly higher than 2010, with a similar improvement in operating income metrics.

• Further operating margin gains were targeted through expense control; continued R&D investment and global-account opportunities remained priorities.

• 12-month backlog reached $381 million at Dec. 31, 2010, including $301 million recurring and $80 million non-recurring revenue estimates.