ACI WORLDWIDE, INC. 10-K

ITEM 1. BUSINESS General ACI Worldwide, Inc. (“ACI”, “ACI Worldwide”, the “Company,” “we,” “us,” or “our”) is a Delaware corporation incorporated in November 1993 under the name ACI Holding, Inc. ACI is largely the successor to Applied Communications, Inc. and Applied Communications Inc. Limited, which we acquired from Tandem Computers Incorporated on December 31, 1993. On July 24, 2007, we changed our corporate name from “Transaction Systems Architects, Inc.” to “ACI Worldwide, Inc.” We have been marketing our products and services under the ACI Worldwide brand since 1993 and have gained significant market recognition under this brand name. We develop, market, install, and support a broad line of software products and solutions primarily focused on facilitating real-time digital payments. Our payment capabilities, technologies, and solutions are marketed under the ACI Worldwide brand name. 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. ACI's products 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. The authentication, authorization, switching, settlement, fraud-checking, and reconciliation of digital payments is a complex activity due to the large number of locations and variety of sources from which transactions can be generated, the large number of participants in the market, high transaction volumes, geographically dispersed networks, differing types of authorization, and varied reporting requirements. These activities are typically performed online and are conducted 24 hours a day, seven days a week. ACI combines a global perspective with local presence to tailor digital payment solutions for our customers. We believe that we have one of the most diverse and robust digital payment product portfolios in the industry with application software spanning the entire payments value chain. We also believe that our financial performance has been attributable to our ability to design and deliver quality products and solutions coupled with our ability to identify and successfully complete and integrate strategic acquisitions. Fiscal 2019 Acquisition Speedpay On May 9, 2019, we acquired E Commerce Group Products, Inc. ("ECG"), a subsidiary of The Western Union Company (“Western Union”), along with ECG's subsidiary, Speedpay, Inc. (collectively referred to as "Speedpay"). The combination of the Company and Speedpay's bill pay solutions serve more than 4,000 customers across the United States, bringing expanded reach in existing and complementary market segments such as consumer finance, insurance, healthcare, higher education, utilities, government, and mortgage. The acquisition of Speedpay increases the scale of our ACI On Demand ("AOD") platform business and allows the acceleration of platform innovation. Target Markets ACI’s comprehensive digital payment solutions serve three key markets: Banks and Intermediaries ACI provides payment solutions to large and mid-size banks globally for both retail banking, digital, and other payment services. 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 payments schemes and to quickly create differentiated products to meet consumer, business, and merchant demands. 3 Table of Contents ACI’s payment solutions support intermediaries, such as processors, networks, payment service providers (“PSPs”), and new financial technology entrants. 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.K. 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. 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. 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. 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, and mortgage 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. 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. Our strategic solution areas include the following: Issuing & Acquiring ACI offers comprehensive consumer payment solutions ranging from core payment engines to back-office support that enable banks and intermediaries to compete effectively in today’s real-time, open payments ecosystem. ACI ® Acquiring ™ is a merchant management system that helps acquirers offer merchants capabilities to deliver digital innovation, improve fraud prevention, and reduce interchange fees. ACI Issuing ™ is a digital payments issuing solution that helps issuers accelerate innovation, give customers new payment offerings and deliver cutting-edge security, with flexible cloud-based or on-premise deployments. ACI Enterprise Payments Platform ™ is a market-leading technology that provides payment players global payment processing and orchestration capabilities for all digital payments, including high- and low-value payments, real-time and alternative payments, and cards. 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. 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. 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. 4 Table of Contents Omni-Commerce Payments ACI provides real-time, any-to-any payment capabilities globally in both card-present and card-not-present environments. ACI Omni Commerce ™ offers merchants a scalable, omni-channel payment processing platform with the flexibility to support in-store, online, and mobile payments, protected by advanced P2P encryption, tokenization, and fraud management capabilities. ACI Secure eCommerce ™ is a holistic platform that combines a powerful payments gateway, sophisticated real-time fraud prevention capabilities, advanced business intelligence tools, and access to an extensive global network of acquirers and alternative payment methods. Fraud and Risk Management ACI’s big data engine uses powerful analytics to deliver robust fraud prevention and detection capabilities to bank, intermediary, and merchant customers. ACI Fraud Management ™ for financial institutions offers banks and intermediaries a comprehensive, real-time approach to fraud management that uses a superior combination of machine learning, fraud and payments data, and advanced analytics to prevent fraud and reduce the burden of compliance. Our solution supports merchants with a comprehensive, real-time approach to fraud management that uses a superior combination of machine learning, fraud and payments data, advanced analytics and unprecedented consortium data to prevent fraud and reduce the burden of compliance. Digital Business Banking ACI offers banks advanced cash management capabilities in a multi-tenant, cloud-based platform. ACI Digital Business Banking ™ is a cloud-based digital banking platform with a vast application programming interface ("API") library and market-leading payments functionality that enables banks to reduce expenses and increase market share. Bill Payments ACI meets the bill payment needs of corporate customers across myriad industries through a range of electronic bill payment solutions that help companies raise consumer satisfaction while reducing costs. ACI Speedpay ® is an integrated suite of digital billing, payment, disbursement, and communication services that lowers the cost of presenting and accepting bill payments while delivering industry-leading security. On Premise or On Demand Software Delivery Options Our software solutions are offered to our customers through either a traditional term software license arrangement where the software is installed and operated on the customer premises or in a third-party public cloud environment (ACI On Premise ™ ), through an on-demand arrangement where the solution is maintained and delivered through the cloud via our global data centers (ACI On Demand ™ ), or a combination of the two. Solutions delivered through ACI’s on-demand cloud are available in either a single-tenant environment, known as a software as a service (“SaaS”) offering, or in a multi-tenant environment, known as a platform as a service (“PaaS”) offering. Pricing and payment terms depend on which solutions the customer requires and their transaction volumes. 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. 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, with whom we embed the partners’ technology in ACI products, host the partners’ software in ACI’s cloud as a part of our AOD offering, or jointly market solutions that include the products of the other company. Technology partners help us add value to our solutions, stay abreast of current market conditions and industry developments such as standards. Technology partner organizations include Diebold, Inc. (“Diebold”), NCR Corporation (“NCR”), Wincor-Nixdorf, VISA, Mastercard, and SWIFT. In addition, ACI has membership in or participates in the relevant committees of several industry associations, such as the International Organization for Standardization (“ISO”), Accredited Standards Committee ("ASC") X9, ATM Industry Association, Financial Services, Interactive Financial eXchange Forum (“IFX”), Nexo Standards, International Payments Framework Association (“IPFA”), U.K. Cards Association, Smart Card Alliance, and the 5 Table of Contents PCI Security Standards Council. These partnerships provide direction as it relates to the specifications that are used by the card schemes, and in some cases, manufacturers. These organizations typically look to ACI as a source of knowledge and experience to be shared in conjunction with creating and enhancing their standards. The benefit to ACI is in having the opportunity to influence these standards with concepts and ideas that will benefit the market, our customers, and ACI. 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. 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. We have alliances with our technology partners Amazon, HP, IBM, Microsoft Corporation, and Oracle USA, Inc. (“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. The following is a list of key product business partners: • Amazon • Apple Inc. • Arvato Financial solutions • Bank of America – CashPro Online • Biocatch • Black Knight Servicing Technologies, LLC • Cardinal Commerce • Chase Paymentech • Clickatel • Computershare Inc. • DataOceans, LLC • Diamond Communications Solutions • Elavon Inc. • Epic Systems Corporation • FairCom Corporation • Fifth Third Bank • Guidewire • Heirloom Computing • Hewlett-Packard Company (HP) • iData Incorporated • Ingenico Group • Integrated Research Limited • International Business Machines Corporation (IBM) • Intuit, Inc. • Jack Henry & Associates, Inc. • Kiosk 6 Table of Contents • Lean Software Services, Inc. • Limonetik • MAGTEK Inc. • Mastercard • Mi-Pay Limited • Micro Focus, Inc. • Microsoft Corporation • Monex Financial Services Limited • MTFX • N2N • Neustar, Inc. • Noggintech • Nordis Technologies • Opentext • Oracle USA, Inc. (Oracle) • Paragon Application Systems, Inc. • Pavreto • Pax Technologies • PayPal • Payworks GmbH • Perseuss - IATA • Rambus Company • Reliant Solutions • RSA Security LLC, the Security Division of Dell EMC Corporation • Safetrust pcProxPlus BLE • SAP America, Inc. • Semafone—Card Protect • ShopSite • Solutions by Text, LLC • Spectrum Message Services Pty Ltd • Stiftung SIC • SWIFT • Symantec Corporation • Transunion • TSYS Acquiring Solutions • VISA • Vocalink Limited, a Mastercard company • Worldpay Inc. 7 Table of Contents Services We offer our customers a wide range of professional services, including analysis, design, development, implementation, integration, and training. Our service professionals generally perform the majority of the work associated with installing and integrating our software products. In addition, we work with a limited number of systems integration and services partners such as Accenture, LLC, Cognizant Technology Solutions Corporation, and Stanchion Payments Solution for staff augmentation and coordinated co-prime delivery where appropriate. We offer the following types of services for our customers: • Implementation Services. We utilize a standard methodology to deliver customer project implementations across all product lines and delivery options. Within the process, we provide customers with a variety of services, including solution scoping reviews, project planning, training, site preparation, installation, product configuration, product customization, testing and go-live support, and project management throughout the project lifecycle. Implementation services are typically priced according to the level of technical expertise required. • Product Support Services. These product-support-funded services are available to customers after a solution has been installed and are based on the relevant product support category. An extensive team of support analysts are available to assist customers. • Technical Services. Our technical services are provided to customers who have licensed one or more of our software products. Services offered include programming and programming support, day-to-day systems operations, network operations, help desk staffing, quality assurance testing, problem resolution, system design, and performance planning and review. Technical services are typically priced according to the level of technical expertise required. • Education Services . ACI courses include both theory and practical sessions to allow students to work though real business scenarios and put their newly learned skills to use. This hands-on approach ensures that the knowledge is retained and the student is more productive upon their return to the workplace. ACI’s education courses provide students with knowledge at all levels, to enhance and improve their understanding of ACI products. 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 can also provide tailored course materials for individual customers. Depending upon 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. When requested by a customer, the product support group can remotely access the customer’s systems on a real-time basis. This allows us to help diagnose issues, correct any problems, and enhance the continuous availability of a customer’s business-critical systems. We offer our customers three support options: Standard Customer Support. After software installation and project completion, we provide maintenance services to customers for a monthly product support fee. Maintenance services include: • New product releases (major, minor and patches) • 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 Enhanced Customer Support. This includes all features of Standard Customer Support plus the following: • Named technical account manager • Accelerated service levels • Consulting support 8 Table of Contents Premium Customer Support. Under the premium customer support option, referred to as the Premium Customer Support Program, each customer is assigned an experienced technician(s) to work with its system. The technician(s) typically performs functions such as: • Configuration and testing software fixes • Retrofitting custom software modifications (“CSMs”) into new software releases • Answering questions and resolving problems related to the customer’s implementation • Maintaining a detailed CSM history • Monitoring customer problems on ACI’s HELP24 ™ hotline database on a priority basis • Supplying onsite support, available upon demand • Performing an annual system review/health check and capacity planning exercise We provide new releases of our products on a periodic basis. New releases of our products, which often contain minor product enhancements, are typically provided at no additional fee for customers under standard customer support agreements. Agreements with our customers permit us to charge for substantial product enhancements that are not provided as part of the standard, enhanced, or premium customer support agreement. Competition The digital payments market is highly competitive and subject to rapid change. Competitive factors affecting the market for our products and services include product features, price, availability of customer support, ease of implementation, product and company reputation, and a commitment to continued investment in research and development. Our competitors vary by solution, geography, and market segment. Generally, our most significant competition comes from in-house information technology departments of existing and potential customers, as well as third-party digital payment processors (some of whom are our customers). Many of these companies are significantly larger than us and have significantly greater financial, technical, and marketing resources. 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 solution areas are Computer Sciences Corporation, Fidelity National Information Service, Inc. ("FIS"), Finastra, Fiserv, Inc. ("Fiserv"), NCR, OpenWay Group, and Total System Services, Inc. (Global Payments), 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, RS2, and TSYS. 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. Omni-Commerce Payments Competitors in the Omni-Commerce Payments solution area 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), First Data (Fiserv), GlobalCollect, Ingenico Group, NCR, Square, Inc., Tender Retail Inc., VeriFone Systems, Inc., and Worldpay Inc. (FIS). Fraud and Risk Management Principal competitors for our Fraud and Risk Management solution area 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 anti-money laundering. Digital Business Banking Principal competitors for our Digital Business Banking solution area are Bottomline Technologies, Finastra, FIS, Fiserv, Jack Henry & Associates, Inc., NCR, and Q2 Software, Inc. 9 Table of Contents Bill Payments The principal competitors for Bill Payment solutions 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. Research and Development Our product development efforts focus on new products and improved versions of existing products. We facilitate user group meetings to help us determine our product strategy, development plans, and aspects of customer support. The user groups are generally organized geographically or by product lines. We believe that the timely development of new applications and enhancements is essential to maintain our competitive position in the market. During the development of new products, we work closely with our customers and industry leaders to determine requirements. 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 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. 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 customers in a range of industries worldwide with billers, banks and intermediaries, and merchants comprising our largest industry segments. As of December 31, 2020, we serve more than 6,000 organizations, including 19 of the top 20 banks worldwide, as measured by asset size, and 80,000+ merchants directly and through payment service providers, as measured by revenue, in 95+ countries on six continents. No single customer accounted for more than 10% of our consolidated revenues for the years ended December 31, 2020, 2019, and 2018. No customer accounted for more than 10% of our consolidated receivables balance as of December 31, 2020 and 2019. Selling and Implementation Our primary method of distribution is direct sales by employees assigned to specific target segments. Headquartered in Naples, Florida, we have sales personnel in and outside the United States in numerous locations, including East Brunswick, Norcross, Omaha, and Waltham. In addition, we have sales offices located outside the United States in Auckland, Bahrain, Bangkok, Beijing, Bogota, Brussels, Buenos Aires, Cape Town, Dubai, Gouda, Johannesburg, Kuala Lumpur, Limerick, Madrid, Manila, Melbourne, Mexico City, Milan, Montevideo, Mumbai, Munich, Naples (Italy), Paris, Quito, Santiago, Sao Paulo, Shanghai, Singapore, Sulzbach, Sydney, Tokyo, Toronto, and Watford. We use distributors and referral partners to supplement our direct sales force in countries where it is more efficient and economical to do so. We generate a majority of our sales leads through existing relationships with vendors, direct marketing programs, customers and prospects, or through referrals. 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. Current international distributors, resellers, referral partners, and implementation partners (collectively, “Channel Partners”) for us during the year ended December 31, 2020, included: • AGS Technology Inc. (India) • ADSI International (Colombia/Venezuela/Caribbean) • Bayshore (China) • CAPSYS Technologies, LLC (Russia/Eastern Europe) • Channel Solutions Inc. (Philippines) • DataOne Asia Co., Ltd. (Thailand) 10 Table of Contents • Deda Group Business Solutions (Italy) • EFT Corporation (Sub-Saharan Africa) • Interswitch Ltd. (Sub-Saharan Africa) • JRI Inc. (Japan) • Korea Computer Inc (Korea) • Kuvasz (Chile) • Pactera (China) • P.T. Abhimata Persada (Indonesia) • Stanchion (South Africa) • STET (EU) • Stream IT Consulting Ltd. (Thailand) • Syscom Computer Co., Ltd. (Shenzhen) (China) • Syscom Computer Engineering Co. (Taiwan) • TIS Inc. (Japan) • Transaction Payment Solutions - Liquid Telecom (Sub-Saharan Africa) • Worldline (China) Omni-Commerce channel partners during the year ended December 31, 2020, included: • Altapay (Denmark) • Amadeus (Spain) • Barclaycard (United Kingdom) • Computop (Germany) • Easy Nolo S.P.A. (Italy) • Evo Payments (United States) • Ingenico Group (Netherlands) • Mastercard/Datacash (United Kingdom.) • Metrics Global (United States) • MNP Media Ltd. (United Kingdom) • Paysafe Group Plc (United States) • PayU South Africa (South Africa) • Planet Payments (United States) • Secure Trading (United Kingdom) • Simplepay (Australia) • VeriFone Systems, Inc. (United States and European Union) • Worldline Sweden AB (Sweden) Biller channel partners during the year ended December 31, 2020, included: • 3 Point Alliance • ACH Payment Solutions • Adirondack Solutions • API Outsourcing 11 Table of Contents • Clearwater Payments • County Information Resources Agency • Discover • Donald R. Frey & Co. • ECHO Health • Ellucian • Epic • Guidewire • MoneyGram • Nordis Technologies • Nortridge Software Company • Ontario Systems • Radiant 44 • RR Donnelley • Salepoint • Semafone • Shaw • Solutions by Text • SourceHOV • Thompson Reuters • Transactis (Mastercard) • TriZetto (Cognizant) • The Western Union Company 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 vendor’s 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 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. 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. 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. 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. 12 Table of Contents Government Regulation Certain of our solutions are subject to federal, state, and foreign regulations and requirements. Oversight by Banking Regulators. As a provider of payment services to banks and intermediaries, we are subject to regulatory oversight and examination by the Federal Financial Institutions Examination Council (“FFIEC”), an interagency body of the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the National Credit Union Administration and various state regulatory authorities as part of the Multi-Region Data Processing Servicer Program (“MDPS”). The MDPS program includes technology suppliers who provide mission critical applications for a large number of financial institutions that are regulated by multiple regulatory agencies. Periodic information technology examination assessments are performed using FFIEC interagency guidelines to identify potential risks that could adversely affect serviced financial institutions, determine compliance with applicable laws and regulations that affect the services provided to financial institutions and ensure the services we provide to financial institutions do not create systemic risk to the banking system or impact the safe and sound operation of the financial institutions we serve. In addition, independent auditors annually review several of our operations to provide reports on internal controls for our clients’ auditors and regulators. We are also subject to review under state and foreign laws and rules that regulate many of the same activities that are described above, including electronic data processing and back-office services for financial institutions and the use of consumer information. Money Transfer. ACI Payments, Inc., our EBPP affiliate, is registered as a Money Services Business. Accordingly, we are subject to the USA Patriot Act and reporting requirements of the Bank Secrecy Act and United.States ("U.S."). Treasury Regulations. These businesses may also be subject to certain state and local licensing requirements. The Financial Crimes Enforcement Network (“FinCEN”), state attorneys general, and other agencies have enforcement responsibility over laws relating to money laundering, currency transmission, and licensing. In addition, most states have enacted statutes that require entities engaged in money transmission to register as a money transmitter with that jurisdiction’s banking department. We have implemented policies, procedures, and internal controls that are designed to comply with all applicable anti-money laundering laws and regulations. ACI has also implemented policies, procedures, and internal controls that are designed to comply with the regulations and economic sanctions programs administered by the U.S. 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. Human Capital As of December 31, 2020, we had a total of 3,768 employees worldwide, with 1,733 employees in the Americas, 1,045 employees in Europe, the Middle East, and Africa ("EMEA"), and 990 employees in Asia Pacific. ACI emphasizes a diverse and inclusive workplace, with nearly 40 sites in over 30 countries. Globally, 35% of our employees are women and 33% of our executive team members 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. Employees have the ability to challenge themselves and continue to grow through various assignments, projects, and development programs. We strive to offer competitive salaries and benefits to all employees, and we continuously monitor salary ranges in our market areas. COVID-19 and Employee Safety During the COVID-19 pandemic, our primary focus has been on the safety and well-being of our employees and their families and business continuity. Our Crisis Management Team ("CMT") leads our global pandemic efforts, which include leveraging the advice and recommendations of the Centers for Disease Control ("CDC") and the World Health Organization ("WHO") to establish proper safety standards and procedures worldwide. Our CMT meets twice weekly to review our protocol, status of employee well-being, and adjust site practices based on new information or restrictions at the national or local level. The CMT frequently communicates these updates to the workforce. We encourage flexible work arrangements to ensure all associates feel comfortable, safe, and secure in their work environment. In cases where the offices are permitted to be open, employees attend on a voluntary basis and there are clear safety precautions and guidelines in place based on recommendations from the CDC and WHO. As the pandemic continues, the health and well-being of our workforce remains our top priority while we ensure business continuity and productivity while working from home. Retention Our voluntary regrettable turnover, or our turnover of high performers, through December 31, 2020 was 5.1%, 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. 13 Table of Contents Benefits We provide our global employees with competitive and comprehensive benefits to meet their needs and the needs of their dependents. In the United States, nearly all of our employees participate in our employee benefits programs that include: • Comprehensive health coverage for medical, vision, and dental care • Short term, long term, accident and disability insurance coverage • Flexible spending accounts for medical and dependent care expenses • Commuter expense reimbursement accounts • Retirement savings plans including 401(K) and deferred compensation plans • Access to 529 Plans for college savings • Adoption assistance • Employee discounts programs Some of these benefits are available to our employees outside the United States where applicable and permissible by law in addition to locally provided benefits. Globally, all employees have access to an employee assistance program which offers support to employees and their immediate family to address a range of personal needs and concerns in support of their well-being and mental health. To foster a stronger sense of ownership and align with the interests of our shareholders, participation in the employee stock purchase plan is available for eligible employees. Available Information Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”), are available free of charge on our website at www.aciworldwide.com as soon as reasonably practicable after we file such information electronically with the SEC. The information found on our website is not part of this or any other report we file with or furnish to the SEC. The public may read and copy any materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, Room 1580, NW, Washington DC 20549. 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 . Executive Officers of the Registrant As of February 25, 2021, our executive officers, their ages, and their positions were as follows: Name Age Position Odilon Almeida 59 President and Chief Executive Officer Scott W. Behrens 49 Executive Vice President, Chief Financial Officer Evanthia (Eve) C. Aretakis 61 Executive Vice President, Chief Revenue Officer Jeremy M. Wilmot 52 Executive Vice President, Chief Product Officer Dennis P. Byrnes 57 Executive Vice President, Chief Legal Officer, General Counsel, and Secretary Mr. Almeida was appointed President and Chief Executive Officer on March 9, 2020. Mr. Almeida has senior leadership experience spanning multiple industries and countries and two decades of payments experience. Prior to joining ACI, Mr. Almeida served as an operating partner at Advent International, one of the world's largest private equity funds. Mr. Almeida also spent 17 years at The Western Union Company, where he most recently served as the President of Global Money Transfer. Mr. Almeida is fluent in English, Spanish, and Portuguese, and he holds a bachelor’s degree in Civil Engineering from Centro Universitário Instituto Mauá de Tecnologia in São Paulo and a Master of Business Administration from Fundação Getulio Vargas in São Paulo. He extended his education at Harvard Business School, The Wharton School, and the International Institute of Management (IMD). 14 Table of Contents 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. 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. 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 from the University of Nebraska – Lincoln. Ms. Aretakis serves as Executive Vice President and Chief Revenue Officer. Previously, Ms. Aretakis led ACI's On Demand segment and Product Development group. Prior to joining ACI in 2016, Ms. Aretakis was Executive Vice President at Unify/Siemens Enterprise Communications. Her responsibilities included P&L management and accountability for software development, product management and manufacturing of the global product portfolio. She previously served as President of IP Network Solutions at Siemens, Unit President of the company’s U.S. carrier division, and as Executive Vice President at Unisphere Networks. Ms. Aretakis began her career as a Software Engineer for Texas Instruments and Raytheon. She transitioned to Product Management as she progressed into management roles of various business units. Ms. Aretakis holds a bachelor’s degree in Computer Science and Economics from Union College. Mr. Wilmot serves as Executive Vice President and Chief Product Officer. Prior to his current role, Mr. Wilmot held a number of senior leadership roles at ACI, including leading ACI's On Premise segment, Chief Marketing and Revenue Officer, Senior Vice President and Managing Director for the Americas, President for Asia Pacific and Regional Director for Western Europe and Africa. Prior to joining ACI in 1999, Mr. Wilmot worked for ICL (now Fujitsu) in several capacities, including as International Sales Manager for Financial Services. Mr. Wilmot holds a Bachelor of Arts in Business Studies from Oxford Brookes University in the United Kingdom and has completed the Advanced Management Program at INSEAD in France. Mr. Byrnes serves as Executive Vice President, Chief Legal Officer, General Counsel, and Secretary. He has served in that capacity since March 2011 and as General Counsel and Secretary since joining the Company in June 2003. Prior to joining ACI, Mr. Byrnes served as an attorney with Bank One Corporation’s technology group from 2002 to 2003; with Sterling Commerce from 1996 to 2002; and with Baker Hostetler from 1991 to 1996. Mr. Byrnes holds a JD from The Ohio State University College of Law, a Master of Business Administration from Xavier University, and a Bachelor of Science in Engineering from Case Western Reserve University.