ACI Worldwide (ACIW) Q4 FY25 earnings call: guidance and Q&A

Can you elaborate on the building blocks for the 2026 revenue guidance, particularly the expected acceleration in the back half of the year, and what gives you confidence in these drivers?

Management explained that the 7-9% growth guidance for 2026 is balanced across both Payment Software and Biller segments. High visibility is attributed to the recurring revenue model, renewal fee phasing, and implementation schedules of deals signed in 2025. The second-half weighting is consistent with historical seasonality and the timing of revenue recognition for renewals and new implementations.

“We have, as you mentioned, given our high recurring revenue model, we'sve got great visibility in this guidance looking at this year. And as you think about the first half versus the second half, a lot of that's going to do with the renewal fees phasing we see in that visibility and as we see the implementations and the new bookings and such that we've signed this year.”

asked by Jeffrey Cantwell · answered by Robert Leibrock

The midpoint of 2026 guidance implies a slight compression in adjusted EBITDA margin. Can you explain the reasons behind this, considering past margin expansion?

Management clarified that while 2025 saw 100 basis points of margin expansion, 2026 will involve repurposing investments into new platforms like Connetic and Speedpay One. The company doubled its investment in Connetic in 2025 by reprioritizing resources. The guidance reflects continued cost discipline while strategically reinvesting in high-return initiatives, with a prudent approach to guidance.

“The guide on EBITDA is -- on a growth basis is about 6% to 9% as well. So both kind of straddling at high single-digit range. As you think underneath of it, we expanded about 100 basis points of margin in 2025. That's, I think, about 300 basis points in 2024. We're showing the operating leverage. And if I look at this past year, 2025 is going to play out -- or 2026 will play out similar to 2025, where we're re-purposing these investments for our new platforms like Connetic and Speedpay One.”

asked by Jeffrey Cantwell · answered by Robert Leibrock

Can you provide an update on the Connetic pipeline, especially regarding the significance of new signings and the focus on mid-tier financial institutions?

Tom Warsop stated that Connetic is the fastest-growing portion of their overall pipeline. He noted that they started actively selling in Q1 last year and are pleased with the traction. They are expanding functionality, with the card portion launching soon. Significantly, about two-thirds of the 2026 potential closes for Connetic are with mid-tier financial institutions, a new and rapidly growing target segment for ACI.

“Connetic is the fastest-growing portion of our overall pipeline by a significant margin. And that's exactly what we expected. It's exactly what we want. And another important point is we did start -- you mentioned, I think you said a limited use case. It was a very important use case for a European bank was the first signing that we had.”

asked by George Sutton · answered by Thomas Warsop

From a penetration perspective, what stage are we currently in regarding real-time payments adoption?

Tom Warsop characterized the real-time payments market as being in its "early days" or on an "early hole" in a golf analogy. He highlighted ACI's success in securing wins globally and growing transactions, with the real-time payments business growing about 8% in 2025, but emphasized that overall adoption and volumes are still in relatively early innings.

“I think we're still pretty early in the cycle. We've done a good job at ACI over the last 3 or 4 years of planting flags on the real-time payment side. As I mentioned, we had all the different flavors of real-time payments wins. We had some really important implementations, for example, in Colombia that I specifically mentioned.”

asked by George Sutton · answered by Thomas Warsop

Are there any changes in the uplift seen upon renewals, considering past tailwinds like CPI, pricing, and volumes, and how does this contribute to the building blocks for 2026 and 2027?

Management confirmed that they continue to see very strong performance and upside in uplift upon renewals, driven by effective cross-sell, upsell, and pricing strategies. They are not observing any downside. Bobby Leibrock detailed the drivers for the Biller segment (high retention, new logos, transactions, pricing, value-added services) and the Payment Software segment (retention, transactions, respectable pricing, early innings for real-time payments/fraud/Connetic, and new logos).

“We continue to see very strong performance in that area. We're extremely good at driving cross-sell, upsell, price and which -- all of which contribute to that uplift on renewal. So we're very good at it. We expect -- we're not seeing -- we're seeing upside there, not downside.”

asked by Charles Nabhan · answered by Thomas Warsop

Regarding strategic M&A, are there any particular areas of interest you could point to for inorganic growth?

Tom Warsop identified two primary areas for opportunistic M&A: accelerating Connetic development, likely through technology acquisitions, and geographic expansion to fill existing market gaps. He emphasized a strong focus on Connetic acceleration. Bobby Leibrock added that M&A would be pursued within their targeted 2x leverage range, alongside significant share repurchases.

“There are 2 main areas where we're focused, and we will be opportunistic on this. We're not -- this is not something where we're out there every day seeking something to buy. But there are a couple of areas. One would be an ability to accelerate what we're doing with Connetic... Number two, would be if we can -- if we found something that would enable us to expand geographically.”

asked by Charles Nabhan · answered by Thomas Warsop