What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-05-06 compared with 2020-11-05 · 174 added, 417 removed, 398 unchanged (60% of the section changed)

4 unchanged sentences

(unaudited and in thousands, except share and per share amounts)

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Current assets

53 unchanged sentences

5,000,000 shares authorized;

no shares issued at September 30, 2020, and December 31, 2019

no shares issued at March 31, 2021, and December 31, 2020

Common stock;

1 unchanged sentence

280,000,000 shares authorized;

140,525,055 shares issued at September 30, 2020, and December 31, 2019

140,525,055 shares issued at March 31, 2021, and December 31, 2020

Additional paid-in capital 670,018 682,431

Retained earnings 1,001,545 1,003,490

Treasury stock, at cost, 23,794,109 and 24,538,703 shares at September 30, 2020, and December 31, 2019, respectively

Treasury stock, at cost, 22,390,481 and 23,412,870 shares at March 31, 2021, and December 31, 2020, respectively

( 378,987 ) ( 387,581 )

7 unchanged sentences

(unaudited and in thousands, except per share amounts)

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

Software as a service and platform as a service

18 unchanged sentences

281,496 302,768

Operating income 31,182 55,318 49,037 21,343

Operating income (loss) 3,690 ( 11,283 )

Other income (expense)

3 unchanged sentences

( 1,382 ) ( 9,758 )

1,356 ( 2,369 ) ( 6,361 ) ( 2,879 )

Total other income (expense) ( 10,003 ) ( 24,029 )

Income (loss) before income taxes 22,540 36,950 7,219 ( 18,442 )

Income tax expense (benefit) 6,674 5,136 1,705 ( 30,018 )

Net income $ 15,866 $ 31,814 $ 5,514 $ 11,576

Income per common share

Loss before income taxes ( 6,313 ) ( 35,312 )

Income tax benefit ( 4,368 ) ( 10,885 )

Net loss $ ( 1,945 ) $ ( 24,427 )

Loss per common share

$ ( 0.02 ) $ ( 0.21 )

7 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(unaudited and in thousands)

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Net income $ 15,866 $ 31,814 $ 5,514 $ 11,576

Other comprehensive income (loss):

Three Months Ended March 31,

Net loss $ ( 1,945 ) $ ( 24,427 )

Other comprehensive loss:

Foreign currency translation adjustments

( 3,116 ) ( 6,169 )

Total other comprehensive income (loss) 1,842 ( 1,610 ) ( 4,909 ) ( 2,019 )

Comprehensive income

Total other comprehensive loss ( 3,116 ) ( 6,169 )

Comprehensive loss

$ ( 5,061 ) $ ( 30,596 )

4 unchanged sentences

(unaudited and in thousands, except share amounts)

Three Months Ended September 30, 2020

Common Stock Additional

Paid-in Capital Retained Earnings Treasury Stock Accumulated Other

Comprehensive Loss Total

Balance as of June 30, 2020 $ 702 $ 667,554 $ 920,478 $ ( 399,663 ) $ ( 98,334 ) $ 1,090,737

Net income — — 15,866 — — 15,866

Other comprehensive income — — — — 1,842 1,842

Stock-based compensation

— 8,061 — — — 8,061

Shares issued and forfeited, net, under stock plans

— 326 — 6,038 — 6,364

Repurchase of stock-based compensation awards for tax withholdings

— — — ( 26 ) — ( 26 )

Balance as of September 30, 2020 $ 702 $ 675,941 $ 936,344 $ ( 393,651 ) $ ( 96,492 ) $ 1,122,844

Three Months Ended September 30, 2019

Three Months Ended March 31, 2021

Common Stock Additional

Paid-in Capital Retained Earnings Treasury Stock Accumulated Other

Comprehensive Loss Total

Balance as of June 30, 2019 $ 702 $ 650,797 $ 843,530 $ ( 349,426 ) $ ( 93,026 ) $ 1,052,577

Net income — — 31,814 — — 31,814

Other comprehensive loss

— — — — ( 1,610 ) ( 1,610 )

Stock-based compensation

— 9,371 — — — 9,371

Shares issued and forfeited, net, under stock plans

— 485 — 1,299 — 1,784

Repurchase of 1,204,300 shares of common stock

— — — ( 34,986 ) — ( 34,986 )

Repurchase of stock-based compensation awards for tax withholdings

— — — ( 13 ) — ( 13 )

Balance as of September 30, 2019 $ 702 $ 660,653 $ 875,344 $ ( 383,126 ) $ ( 94,636 ) $ 1,058,937

The accompanying notes are an integral part of the condensed consolidated financial statements.

ACI WORLDWIDE, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(unaudited and in thousands, except share amounts)

Nine Months Ended September 30, 2020

Paid-in Capital

Retained Earnings

Treasury Stock

Accumulated Other

Retained Earnings Treasury Stock Accumulated Other

Comprehensive Loss

Balance as of December 31, 2020 $ 702 $ 682,431 $ 1,003,490 $ ( 387,581 ) $ ( 92,445 ) $ 1,206,597

Net income — — 5,514 — — 5,514

Net loss — — ( 1,945 ) — — ( 1,945 )

Other comprehensive loss — — — — ( 3,116 ) ( 3,116 )

3 unchanged sentences

— ( 19,116 ) — 22,800 — 3,684

Repurchase of 1,000,000 shares of common stock

— — — ( 28,881 ) — ( 28,881 )

Repurchase of stock-based compensation awards for tax withholdings

— — — ( 14,206 ) — ( 14,206 )

Balance as of September 30, 2020 $ 702 $ 675,941 $ 936,344 $ ( 393,651 ) $ ( 96,492 ) $ 1,122,844

Nine Months Ended September 30, 2019

Balance as of March 31, 2021 $ 702 $ 670,018 $ 1,001,545 $ ( 378,987 ) $ ( 95,561 ) $ 1,197,717

Three Months Ended March 31, 2020

Paid-in Capital

4 unchanged sentences

Balance as of December 31, 2019 $ 702 $ 667,658 $ 930,830 $ ( 377,639 ) $ ( 91,583 ) $ 1,129,968

Net income — — 11,576 — — 11,576

Net loss — — ( 24,427 ) — — ( 24,427 )

Other comprehensive loss

8 unchanged sentences

— — — ( 10,973 ) — ( 10,973 )

Balance as of September 30, 2019 $ 702 $ 660,653 $ 875,344 $ ( 383,126 ) $ ( 94,636 ) $ 1,058,937

Balance as of March 31, 2020 $ 702 $ 656,723 $ 906,403 $ ( 398,278 ) $ ( 97,752 ) $ 1,067,798

The accompanying notes are an integral part of the condensed consolidated financial statements.

3 unchanged sentences

(unaudited and in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

Net income $ 5,514 $ 11,576

Adjustments to reconcile net income to net cash flows from operating activities:

18,012 17,916

Net loss $ ( 1,945 ) $ ( 24,427 )

Adjustments to reconcile net loss to net cash flows from operating activities:

28,167 27,997

Amortization of operating lease right-of-use assets

14,145 10,877

Amortization of deferred debt issuance costs

2 unchanged sentences

Stock-based compensation expense

22,943 30,328

Changes in operating assets and liabilities, net of impact of acquisitions:

Changes in operating assets and liabilities:

76,135 48,699

2 unchanged sentences

Accrued employee compensation

Current income taxes

( 12,725 ) 6,985

Deferred revenue

14,361 ( 17,735 )

Other current and noncurrent assets and liabilities

7 unchanged sentences

( 8,053 ) ( 6,541 )

Acquisition of businesses, net of cash acquired

— ( 757,268 )

Net cash flows from investing activities

5 unchanged sentences

Repurchases of common stock

( 28,881 ) ( 35,617 )

Proceeds from revolving credit facility

30,000 280,000

Repayment of revolving credit facility

( 15,000 ) ( 39,000 )

Proceeds from term portion of credit agreement

Repayment of term portion of credit agreement

( 9,738 ) ( 9,737 )

Payments for debt issuance costs

Payments on or proceeds from other debt, net ( 3,600 ) ( 3,593 )

2 unchanged sentences

Effect of exchange rate fluctuations on cash

( 41 ) 11,201

Net increase (decrease) in cash and cash equivalents 18,990 ( 2,274 )

16 unchanged sentences

All intercompany balances and transactions have been eliminated.

The condensed consolidated financial statements as of September 30, 2020, and for the three and nine months ended September 30, 2020 and 2019, are unaudited and reflect all adjustments of a normal recurring nature, which are, in the opinion of management, necessary for a fair presentation, in all material respects, of the financial position and operating results for the interim periods.

The condensed consolidated financial statements as of March 31, 2021, and for the three months ended March 31, 2021 and 2020, are unaudited and reflect all adjustments of a normal recurring nature, which are, in the opinion of management, necessary for a fair presentation, in all material respects, of the financial position and operating results for the interim periods.

The condensed consolidated balance sheet as of December 31, 2020, is derived from the audited financial statements.

The condensed consolidated financial statements contained herein should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2020, filed on February 25, 2021.

Results for the three and nine months ended September 30, 2020, are not necessarily indicative of results that may be attained in the future.

Results for the three months ended March 31, 2021, are not necessarily indicative of results that may be attained in the future.

The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States (“U.S.

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The components of other current liabilities are included in the following table (in thousands):

September 30, 2020 December 31, 2019

Operating lease liabilities $ 13,569 $ 15,049

March 31, 2021 December 31, 2020

Vendor financed licenses $ 13,772 $ 12,901

Operating lease liabilities 12,907 13,438

Royalties payable 3,387 3,959

17 unchanged sentences

The collection of interest on these settlement accounts is considered in the Company’s determination of its fee structure for clients and represents a portion of the payment for services performed by the Company.

The amount of settlement funds as of September 30, 2020, and December 31, 2019, was $ 164.5 million and $ 274.0 million, respectively.

The amount of settlement funds as of March 31, 2021, and December 31, 2020, was $ 174.0 million and $ 246.8 million, respectively.

The fair value of the Company’s Credit Agreement approximates the carrying value due to the floating interest rate (Level 2 of the fair value hierarchy).

The Company measures the fair value of its Senior Notes based on Level 2 inputs, which include quoted market prices and interest rate spreads of similar securities.

The fair value of the Company’s 5.750 % Senior Notes due 2026 (“2026 Notes”) was $ 423.0 million and $ 432.0 million as of September 30, 2020, and December 31, 2019, respectively.

The fair value of the Company’s 5.750 % Senior Notes due 2026 (“2026 Notes”) was $ 424.0 million and $ 424.5 million as of March 31, 2021, and December 31, 2020, respectively.

The fair values of cash and cash equivalents approximate the carrying values due to the short period of time to maturity (Level 2 of the fair value hierarchy).

In accordance with the Accounting Standards Codification (“ASC”) 350, Intangibles – Goodwill and Other, the Company assesses goodwill for impairment annually during the fourth quarter of its fiscal year using October 1 balances or when there is evidence that events or changes in circumstances indicate that the carrying amount of the asset may not be recovered.

The Company evaluates goodwill at the reporting unit level and has identified its reportable segments, ACI On Demand and ACI On Premise, as the reporting units.

Changes in the carrying amount of goodwill attributable to each reporting unit during the nine months ended September 30, 2020, were as follows (in thousands):

ACI On Demand ACI On Premise Total

Gross Balance, prior to December 31, 2019

$ 554,617 $ 773,340 $ 1,327,957

Total impairment prior to December 31, 2019

— ( 47,432 ) ( 47,432 )

Balance, December 31, 2019

554,617 725,908 1,280,525

Goodwill from acquisitions (1) ( 299 ) — ( 299 )

Balance, September 30, 2020

$ 554,318 $ 725,908 $ 1,280,226

(1) Goodwill from acquisitions relates to adjustments in the goodwill recorded for the acquisition of E Commerce Group Products, Inc.

("ECG"), along with ECG's subsidiary, Speedpay, Inc.

(collectively referred to as "Speedpay") and Walletron, Inc.

("Walletron"), as discussed in Note 3, Acquisition .

The Company evaluates goodwill at the reporting unit level and had previously identified ACI On Demand and ACI On Premise, the operating segments at the time, as the reporting units.

As of March 31, 2021, the Company's goodwill balance of $ 1.3 billion was allocated to these two reporting units, with $ 554.3 million allocated to ACI On Demand and $ 725.9 million allocated to ACI On Premise.

Recoverability of goodwill is measured using a discounted cash flow valuation model incorporating discount rates commensurate with the risks involved.

3 unchanged sentences

Based on a variety of factors, including the excess of the fair value over the carrying amount in the most recent impairment test, we determined that an additional quantitative impairment test was not required.

As discussed in Note 9, Segment Information , during the first quarter of 2021, the Company made a change in organizational structure to better align with its strategic direction.

This change in the Company’s operating segments will also result in a change in reporting units.

The Company is currently in the process of calculating the allocation of goodwill for the new reporting units, which are expected to coincide with the new operating segments - Banks, Merchants, and Billers.

Equity Method Investment

On July 23, 2019, the Company invested $ 18.3 million for a 30 % non-controlling financial interest in a payment technology and services company in India.

In July 2019, the Company invested $ 18.3 million for a 30 % non-controlling financial interest in a payment technology and services company in India.

The Company accounted for this investment using the equity method in accordance with ASC 323, Investments - Equity Method and Joint Ventures .

The Company records its share of earnings and losses in the investment on a one-quarter lag basis.

Accordingly, the Company recorded an investment of $ 18.8 million and $ 18.5 million, which is included in other noncurrent assets in the condensed consolidated balance sheet as of September 30, 2020, and December 31, 2019, respectively.

Effective January 1, 2020, Official Payments Corporation, a wholly owned subsidiary, changed its name to ACI Payments, Inc.

An amended and restated certificate of incorporation was filed with the state of Delaware to reflect the change.

The Official Payments Corporation name and corresponding trade name may continue to be used until all stationary and marketing materials are transitioned to ACI Payments, Inc.

Accordingly, the Company recorded an investment of $ 18.8 million and $ 19.3 million, which is included in other noncurrent assets in the condensed consolidated balance sheet as of March 31, 2021, and December 31, 2020, respectively.

New Accounting Standards Recently Adopted

In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-13, Financial Instruments – Credit Losses:

Measurement of Credit Losses on Financial Instruments, codified as ASC 326 .

Subsequent amendments to the guidance were issued as follows:

ASU 2018-19 in November 2018;

ASU 2019-04 in April 2019;

ASU 2019-05 in May 2019;

ASU's 2019-10 and 2019-11 in November 2019;

and ASU 2020-02 in February 2020.

This ASU provides financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date.

The amendments in ASU 2016-13 replace the incurred loss impairment methodology in current U.S.

GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.

The Company is required to use a forward-looking expected credit loss model for billed and accrued receivables.

The Company adopted ASU 2016-13 as of January 1, 2020.

The adoption of ASU 2016-13 did not have a material impact on the condensed consolidated financial statements.

In February 2020, the FASB issued ASU 2020-03, Codification Improvements to Financial Instruments , which clarifies or improves various financial instruments topics in the accounting standards codification to increase stakeholder awareness.

ASU 2020-03 was effective upon issuance and did not have a material impact on the condensed consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

The update provides optional guidance for a limited period of time to ease potential accounting impacts associated with transitioning away from reference rates that are expected to be discontinued, such as the London Interbank Offered Rate (“LIBOR”).

This guidance includes optional expedients and exceptions for applying U.S.

GAAP to transactions affected by reference rate reform if certain criteria are met.

ASU 2020-04 is effective for all entities as of March 12, 2020, through December 31, 2022, when the reference rate replacement activity is expected to be completed.

The adoption of ASU 2020-04 did not have an impact on the Company's condensed consolidated financial statements.

Recently Issued Accounting Standards Not Yet Effective

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):

In December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards update ("ASU") 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes , as part of its initiative to reduce complexity in accounting standards.

The amendments in this update simplify the accounting for income taxes by removing certain exceptions within ASC 740, as well as clarify and simplify other aspects of the accounting for income taxes to promote consistency among reporting entities.

ASU 2019-12 is effective for annual and interim periods beginning after December 15, 2020.

The Company is currently assessing the impact the adoption of ASU 2019-12 will have on its condensed consolidated financial statements.

ASU 2019-12 was effective for annual and interim periods beginning after December 15, 2020.

The adoption of ASU 2019-12 did not have a material impact on the Company's condensed consolidated financial statements.

In accordance with ASC 606, Revenue From Contracts With Customers , revenue is recognized upon transfer of control of promised products and/or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products and services.

Revenue is recognized net of any taxes collected from customers and subsequently remitted to governmental authorities.

See Note 10, Segment Information, for additional information, including disaggregation of revenue based on primary solution category and geographic location.

See Note 9, Segment Information, for additional information, including disaggregation of revenue based on primary solution category.

Total receivables represent amounts billed and amounts earned that are to be billed in the future (i.e., accrued receivables).

1 unchanged sentence

Total receivables, net is comprised of the following (in thousands):

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Billed receivables $ 132,644 $ 179,177

1 unchanged sentence

Billed receivables, net 129,306 175,265

Accrued receivables 380,300 399,302

Significant financing component ( 30,375 ) ( 35,569 )

Current accrued receivables, net 151,080 167,614

Long-term accrued receivables, net 199,590 215,772

Total accrued receivables, net 350,670 383,386

current accrued receivables 154,665 161,714

current significant financing component ( 10,625 ) ( 11,022 )

Total long-term accrued receivables, net 205,885 213,041

Total receivables, net $ 479,976 $ 558,651

No customer accounted for more than 10% of the Company’s consolidated receivables balance as of September 30, 2020, or December 31, 2019.

No customer accounted for more than 10% of the Company’s consolidated receivables balance as of March 31, 2021, or December 31, 2020.

Deferred revenue includes amounts due or received from customers for software licenses, maintenance, services, and/or SaaS and PaaS services in advance of recording the related revenue.

4 unchanged sentences

Foreign currency translation ( 497 )

Balance, September 30, 2020

Balance, March 31, 2021

Revenue allocated to remaining performance obligations represents contracted revenue that will be recognized in future periods, which is comprised of deferred revenue and amounts that will be invoiced and recognized as revenue in future periods.

1 unchanged sentence

• Revenue that will be recognized in future periods from capacity overages that are accounted for as a usage-based royalty.

• SaaS and PaaS revenue from variable consideration that will be recognized in accordance with the ‘right to invoice’ practical expedient.

• SaaS and PaaS revenue from variable consideration that will be recognized in accordance with the direct allocation method.

Revenue allocated to remaining performance obligations was $ 731.7 million as of September 30, 2020, of which the Company expects to recognize approximately 39 % over the next 12 months and the remainder thereafter.

During the three and nine months ended September 30, 2020 and 2019, revenue recognized by the Company from performance obligations satisfied in previous periods was not significant.

On May 9, 2019, the Company acquired Speedpay, a subsidiary of The Western Union Company (“Western Union”), for $ 754.1 million in cash, including working capital adjustments, pursuant to a Stock Purchase Agreement, among the Company, Western Union, and ACI Worldwide Corp., a wholly owned subsidiary of the Company.

The Company has included the financial results of Speedpay in the condensed consolidated financial statements from the date of acquisition.

The combination of the Company and Speedpay bill pay solutions serves more than 4,000 customers across the U.S., 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 increased the scale of the Company’s On Demand platform business and allows the acceleration of platform innovation through increased research and development and investment in ACI's On Demand platform infrastructure.

To fund the acquisition, the Company amended its existing Credit Agreement, dated February 24, 2017, for an additional $ 500.0 million senior secured term loan (“Delayed Draw Term Loan”), in addition to drawing $ 250.0 million on the available Revolving Credit Facility.

See Note 4, Debt , for terms of the Credit Agreement.

The remaining acquisition consideration was funded with cash on hand.

The Company expensed approximately $ 0.9 million and $ 22.2 million of costs related to the acquisition of Speedpay for the three and nine months ended September 30, 2019, respectively.

These costs, which consist primarily of investment bank, consulting, and legal fees, are included in general and administrative expenses in the accompanying condensed consolidated statements of operations.

Speedpay contributed approximately $ 80.3 million and $ 249.2 million in total revenue for the three and nine months ended September 30, 2020, respectively.

Due to integration activities, the Company is no longer able to separately identify the contribution to operating income generated from the acquisition of Speedpay for the three and nine months ended September 30, 2020.

Speedpay contributed approximately $ 87.7 million and $ 137.1 million in total revenue for the three and nine months ended September 30, 2019, respectively.

Speedpay contributed approximately $ 7.5 million and $ 15.2 million in total operating income for the three and nine months ended September 30, 2019, respectively.

In connection with the acquisition, the Company recorded the following amounts based upon its purchase price allocation as of September 30, 2020 (in thousands, except weighted average useful lives):

Amount Weighted Average Useful Lives

Current assets:

Cash and cash equivalents $ 135

Receivables, net of allowances 17,658

Settlement assets 239,604

Prepaid expenses 317

Other current assets 19,585

Total current assets acquired 277,299

Noncurrent assets:

Goodwill 366,508

Software 113,600 7 years

Customer relationships 208,500 15 years

Trademarks 10,900 5 years

Other noncurrent assets 3,745

Total assets acquired 980,552

Current liabilities:

Accounts payable 6,623

Settlement liabilities 212,892

Employee compensation 1,959

Other current liabilities 3,802

Total current liabilities acquired 225,276

Noncurrent liabilities:

Other noncurrent liabilities 1,219

Total liabilities acquired 226,495

Net assets acquired $ 754,057

During the nine months ended September 30, 2020, the Company made adjustments to the preliminary purchase price allocation as additional information became available for accounts payable.

These adjustments and any resulting adjustments to the statements of operations were not material to the Company’s previously reported operating results or financial position.

The Company's review of the purchase price allocation has been completed.

Factors contributing to the purchase price that resulted in the goodwill (which is tax deductible) include the acquisition of management, sales, and technology personnel with the skills to market new and existing products of the Company, enhanced product capabilities, complementary products, and customers.

Unaudited Pro Forma Financial Information

The pro forma financial information in the table below presents the combined results of operations for ACI and Speedpay as if the acquisition had occurred January 1, 2018.

The pro forma information is shown for illustrative purposes only and is not necessarily indicative of future results of operations of the Company or results of operations of the Company that would have actually occurred had the transaction been in effect for the periods presented.

This pro forma information is not intended to represent or be indicative of actual results had the acquisition occurred as of the beginning of each period, and does not reflect potential synergies, integration costs, or other such costs or savings.

Certain pro forma adjustments have been made to net income for the three and nine months ended September 30, 2019, to give effect to estimated adjustments that remove the amortization expense on eliminated Speedpay historical identifiable intangible assets, add amortization expense for the value of acquired identified intangible assets (primarily acquired software, customer relationships, and trademarks), and add estimated interest expense on the Company’s additional Delayed Draw Term Loan and Revolving Credit Facility borrowings.

Additionally, certain transaction expenses that are a direct result of the acquisition have been excluded.

The three and nine months ended September 30, 2020, are not presented, as Speedpay is included in the Company's consolidated results for the entire periods.

The following is the unaudited summarized pro forma financial information (in thousands, except per share data):

Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019

Pro forma revenue $ 354,901 $ 983,037

Pro forma net income $ 32,513 $ 26,517

Pro forma income per share:

Basic $ 0.28 $ 0.23

Diluted $ 0.27 $ 0.22

On May 9, 2019, the Company also completed the acquisition of Walletron, which delivers patented mobile wallet technology.

The Company has included the financial results of Walletron in the condensed consolidated financial statements from the date of acquisition, which were not material.

As of September 30, 2020, the Company had $ 160.0 million, $ 726.8 million, and $ 400.0 million outstanding under its Revolving Credit Facility, Term Loan, and Senior Notes, respectively, with up to $ 338.5 million of unused borrowings under the Revolving Credit Facility portion of the Credit Agreement, as amended, and up to $ 1.5 million of unused borrowings under the Letter of Credit agreement.

• SaaS and PaaS revenue from variable consideration that will be recognized in accordance with the ‘right to invoice’ practical expedient or meets the allocation objective.

Revenue allocated to remaining performance obligations was $ 802.7 million as of March 31, 2021, of which the Company expects to recognize approximately 51 % over the next 12 months and the remainder thereafter.

During the three months ended March 31, 2021 and 2020, revenue recognized by the Company from performance obligations satisfied in previous periods was not significant.

As of March 31, 2021, the Company had $ 40.0 million, $ 707.4 million, and $ 400.0 million outstanding under its Revolving Credit Facility, Term Loan, and Senior Notes, respectively, with up to $ 458.5 million of unused borrowings under the Revolving Credit Facility portion of the Credit Agreement, as amended, and up to $ 1.5 million of unused borrowings under the Letter of Credit agreement.

The amount of unused borrowings actually available varies in accordance with the terms of the agreement.

11 unchanged sentences

Interest is due and payable monthly.

The interest rate in effect for the Credit Facility as of September 30, 2020, was 2.40 %.

The interest rate in effect for the Credit Facility as of March 31, 2021, was 2.11 %.

The Company is also required to pay (a) a commitment fee related to the unutilized commitments under the Revolving Credit Facility, payable quarterly in arrears, (b) letter of credit fees on the maximum amount available to be drawn under all outstanding letters of credit in an amount equal to the applicable margin on LIBOR rate borrowings under the Revolving Credit Facility on an annual basis, payable quarterly in arrears, and (c) customary fronting fees for the issuance of letters of credit fees and agency fees.

The Company’s obligations under the Credit Facility and cash management arrangements entered into with lenders under the Credit Facility (or affiliates thereof) and the obligations of the subsidiary guarantors are secured by first-priority security interests in substantially all assets of the Company and any guarantor, including 100 % of the capital stock of ACI Worldwide Corp.

and each domestic subsidiary of the Company, each domestic subsidiary of any guarantor, and 65 % of the voting capital stock of each foreign subsidiary of the Company that is directly owned by the Company or a guarantor, in each case subject to certain exclusions set forth in the credit documentation governing the Credit Facility.

The collateral agreement of the Credit Agreement, as amended, released the lien on certain assets of ACI Payments, Inc., our electronic bill presentment and payment affiliate, to allow ACI Payments, Inc.

to comply with certain eligible securities and unencumbered asset requirements related to money transmitter or transfer license rules and regulations.

The Credit Agreement contains a number of covenants that, among other things and subject to certain exceptions, restrict the Company’s and its subsidiaries' ability to:

create, incur, assume or suffer to exist any additional indebtedness;

create, incur, assume or suffer to exist any liens;

enter into agreements and other arrangements that include negative pledge clauses;

pay dividends on capital stock or redeem, repurchase or retire capital stock or subordinated indebtedness;

create restrictions on the payment of dividends or other distributions by subsidiaries;

make investments, loans, advances and acquisitions;

merge, consolidate or enter into any similar combination or sell assets, including equity interests of the subsidiaries;

enter into sale and leaseback transactions;

directly or indirectly engage in transactions with affiliates;

alter in any material respect the character or conduct of the business;

enter into amendments of or waivers under subordinated indebtedness, organizational documents, and certain other material agreements;

and hold certain assets and incur certain liabilities.

Letter of Credit

On August 12, 2020, the Company entered into a standby letter of credit (the “Letter of Credit”), under the terms of the Credit Agreement, for $ 1.5 million.

The Letter of Credit expires on July 31, 2021, with automatic renewals for twelve month periods thereafter.

The Letter of Credit reduces the maximum available borrowings under the Revolving Credit Facility to $ 498.5 million.

Upon expiration of the Letter of Credit, maximum borrowings will return to $ 500.0 million.

Expected Discontinuation of LIBOR

8 unchanged sentences

The 2026 Notes will mature on August 15, 2026.

Maturities on debt outstanding as of September 30, 2020, are as follows (in thousands):

Maturities on debt outstanding as of March 31, 2021, are as follows (in thousands):

Fiscal Year Ending December 31,

2 unchanged sentences

Total $ 1,147,373

The Credit Agreement and 2026 Notes contain certain customary affirmative covenants and negative covenants that limit or restrict, subject to certain exceptions, the incurrence of liens, indebtedness of subsidiaries, mergers, advances, investments, acquisitions, transactions with affiliates, change in nature of business, and the sale of the assets.

In addition, the Credit Agreement and 2026 Notes contain certain customary mandatory prepayment provisions.

The Company is also required to maintain a consolidated leverage ratio at or below a specified amount and an interest coverage ratio at or above a specified amount.

As specified in the Credit Agreement and 2026 Notes agreement, if certain events occur and continue, the Company may be required to repay all amounts outstanding under the Credit Facility and 2026 Notes.

As of September 30, 2020, and at all times during the period, the Company was in compliance with its financial debt covenants.

As of March 31, 2021, and at all times during the period, the Company was in compliance with its financial debt covenants.

Total debt is comprised of the following (in thousands):

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Term loans $ 707,373 $ 717,110

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In 2019, the Company and ACI Payments, Inc.

entered in to a $ 140.0 million uncommitted overdraft facility with Bank of America, N.A.

The overdraft facility bears interest at LIBOR plus 0.875 % based on the Company’s average outstanding balance and the frequency in which overdrafts occur.

entered in to an uncommitted overdraft facility with Bank of America, N.A.

The overdraft facility bears interest at the federal funds effective rate plus 2.250 % based on the Company’s average outstanding balance and the frequency in which overdrafts occur.

The overdraft facility acts as a secured loan under the terms of the Credit Agreement to provide an additional funding mechanism for timing differences that can occur in the bill payment settlement process.

Amounts outstanding on the overdraft facility are included in other current liabilities in the condensed consolidated balance sheet.

As of September 30, 2020, there was no amount outstanding on the overdraft facility.

As of December 31, 2019, there was $ 1.5 million outstanding on the overdraft facility.

As of March 31, 2021, there was $ 75.0 million available and no amount outstanding on the overdraft facility.

As of December 31, 2020, there was no amount outstanding on the overdraft facility.

The Company finances certain multi-year license agreements for internal-use software.

Upon execution, these arrangements have been treated as a non-cash investing and financing activity for purposes of the condensed consolidated statements of cash flows.

As of September 30, 2020, $ 10.0 million was outstanding, of which $ 7.8 million and $ 2.2 million is included in other current liabilities and other noncurrent liabilities, respectively, in the condensed consolidated balance sheet.

As of December 31, 2019, $ 13.8 million was outstanding, of which $ 6.0 million and $ 7.8 million was included in other current liabilities and other noncurrent liabilities, respectively, in the condensed consolidated balance sheet.

As of March 31, 2021, and December 31, 2020, $ 7.8 million was outstanding on these agreements, of which $ 5.6 million and $ 2.2 million is included in other current liabilities and other noncurrent liabilities, respectively, in the condensed consolidated balance sheet.

Software and Other Intangible Assets

The carrying amount and accumulated amortization of the Company's software assets subject to amortization at each balance sheet date are as follows (in thousands):

March 31, 2021 December 31, 2020

Gross Carrying Amount Accumulated Amortization Net Balance Gross Carrying Amount Accumulated Amortization Net Balance

Software for resale $ 130,560 $ ( 125,683 ) $ 4,877 $ 130,261 $ ( 123,418 ) $ 6,843

Software for internal use 437,776 ( 251,713 ) 186,063 430,330 ( 240,717 ) 189,613

Total software $ 568,336 $ ( 377,396 ) $ 190,940 $ 560,591 $ ( 364,135 ) $ 196,456

Amortization of software for resale is computed using the greater of (a) the ratio of current gross revenues to the total of current and future gross revenues expected to be derived from the software or (b) the straight-line method over the remaining estimated useful life of generally five to ten years .

Software for resale amortization expense recorded during the three months ended March 31, 2021 and 2020, totaled $ 2.0 million and $ 1.9 million, respectively.

These software amortization expense amounts are reflected in cost of revenue in the condensed consolidated statements of operations.

Amortization of software for internal use is computed using the straight-line method over an estimated useful life of generally three to eight years .

Software for internal use amortization expense recorded during the three months ended March 31, 2021 and 2020, totaled $ 16.9 million and $ 16.7 million, respectively.

These software amortization expense amounts are reflected in depreciation and amortization in the condensed consolidated statements of operations.

The carrying amount and accumulated amortization of the Company’s other intangible assets subject to amortization at each balance sheet date are as follows (in thousands):

March 31, 2021 December 31, 2020

Gross Carrying Amount Accumulated Amortization Net Balance Gross Carrying Amount Accumulated Amortization Net Balance

Customer relationships $ 510,927 $ ( 205,786 ) $ 305,141 $ 512,389 $ ( 197,787 ) $ 314,602

Trademarks and trade names 23,994 ( 17,160 ) 6,834 24,115 ( 16,734 ) 7,381

Total other intangible assets $ 534,921 $ ( 222,946 ) $ 311,975 $ 536,504 $ ( 214,521 ) $ 321,983

Other intangible assets amortization expense recorded during both the three months ended March 31, 2021 and 2020, totaled $ 9.3 million.

Based on capitalized intangible assets as of March 31, 2021, estimated amortization expense amounts in future fiscal years are as follows (in thousands):

Fiscal Year Ending December 31, Software Amortization Other Intangible Assets Amortization

Remainder of 2021 $ 52,704 $ 27,741

2022 53,368 36,831

2023 35,986 36,497

2024 21,982 31,968

2025 19,167 23,359

Thereafter 7,733 155,579

Total $ 190,940 $ 311,975

Stock-Based Compensation Plans

Employee Stock Purchase Plan

Shares issued under the 2017 Employee Stock Purchase Plan during the nine months ended September 30, 2020 and 2019, totaled 114,709 and 92,765 , respectively.

2020 Equity and Incentive Compensation Plan

On June 9, 2020, upon recommendation of the Company’s board of directors (the “board”), stockholders approved the ACI Worldwide, Inc.

2020 Equity and Incentive Compensation Plan (the “2020 Plan”).

The 2020 Plan authorizes the board to provide for equity-based compensation in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, dividend equivalents, and certain other awards, including those denominated or payable in, or otherwise based on, the Company’s common stock ("awards").

The purpose of the 2020 Plan is to provide incentives and rewards for service and/or performance by providing awards to non-employee directors, officers, other employees, and certain consultants and other service providers of the Company and its subsidiaries.

Following the approval of the 2020 Plan, the 2016 Equity and Performance Incentive Plan (the “2016 Incentive Plan”) was terminated.

Termination of the 2016 Incentive Plan did not affect any equity awards outstanding under the 2016 Incentive Plan.

Subject to adjustment and share counting rules as described in the 2020 Plan, a total of 6,658,754 shares of common stock are available for awards granted under the 2020 Plan.

Shares underlying certain awards under the 2020 Plan, the Company’s 2005 Equity and Performance Incentive Plan (the "2005 Incentive Plan"), and the 2016 Incentive Plan (each including as amended or amended and restated) that are cancelled or forfeited, expire, are settled for cash, or are unearned after June 9, 2020, will again be available under the 2020 Plan.

The board generally will be able to amend the 2020 Plan, subject to stockholder approval in certain circumstances, as described in the 2020 Plan.

Shares issued under the 2017 Employee Stock Purchase Plan during the three months ended March 31, 2021 and 2020, totaled 27,117 and 31,794 , respectively.

Stock Options

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Exercised ( 144,285 ) 19.40

Forfeited ( 57,744 ) 19.08

Expired ( 6,090 ) 18.44

Outstanding as of September 30, 2020 2,514,153 $ 17.70 4.17 $ 21,206,451

Exercisable as of September 30, 2020 2,366,917 $ 17.55 4.34 $ 20,304,026

The total intrinsic value of stock options exercised during the nine months ended September 30, 2020 and 2019, was $ 14.3 million and $ 6.9 million, respectively.

There were no stock options granted during the nine months ended September 30, 2020 or 2019.

Outstanding as of March 31, 2021 2,042,226 $ 17.77 3.93 $ 41,422,807

Exercisable as of March 31, 2021 2,042,226 $ 17.77 3.93 $ 41,422,807

The total intrinsic value of stock options exercised during the three months ended March 31, 2021 and 2020, was $ 3.1 million and $ 0.3 million, respectively.

There were no stock options granted during the three months ended March 31, 2021 or 2020.

Long-term Incentive Program Performance Share Awards

A summary of nonvested long-term incentive program performance share awards (“LTIP performance shares”) is as follows:

Number of Shares

at Expected Attainment Weighted Average

Grant Date Fair Value

Nonvested as of December 31, 2019 669,469 $ 20.12

Vested ( 668,240 ) 20.12

Forfeited ( 5,368 ) 20.12

Change in attainment 4,139 20.12

Nonvested as of September 30, 2020 — $ —

During the nine months ended September 30, 2020, a total of 668,240 LTIPs vested.

The Company withheld 165,237 of those shares to pay the employees’ portion of the minimum payroll withholding taxes.

Restricted Share Awards

A summary of nonvested restricted share awards (“RSAs”) is as follows:

Shares Weighted Average

Grant Date Fair Value

Nonvested as of December 31, 2019 92,842 $ 20.13

Vested ( 88,913 ) 20.12

Forfeited ( 3,929 ) 20.35

Nonvested as of September 30, 2020 — $ —

During the nine months ended September 30, 2020, a total of 88,913 RSAs vested.

During the three months ended March 31, 2021, the Company modified the performance target for the remaining outstanding long-term incentive program performance shares ("LTIP performance shares") in consideration of the impact of the COVID-19 pandemic, resulting in additional stock-based compensation expense of approximately $ 0.4 million.

During the three months ended March 31, 2021, a total of 10,457 LTIP performance shares vested.

The Company withheld 4,527 of those shares to pay the employees’ portion of the minimum payroll withholding taxes.

Total Shareholder Return Awards

During the nine months ended September 30, 2020 and 2019, pursuant to the 2016 Incentive Plan, the Company granted total shareholder return awards (“TSRs”).

TSRs are performance shares that are earned, if at all, based upon the Company’s total shareholder return as compared to a group of peer companies over a three-year performance period.

The award payout can range from 0 % to 200 %.

To determine the grant date fair value of the TSRs, a Monte Carlo simulation model is used.

The Company recognizes compensation expense for the TSRs over a three-year performance period based on the grant date fair value.

A summary of nonvested TSRs is as follows:

A summary of nonvested total shareholder return awards ("TSRs") is as follows:

Shares Weighted Average

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Change in payout rate 391,294 31.31

Nonvested as of September 30, 2020 1,441,802 $ 34.56

During the nine months ended September 30, 2020, a total of 199,413 TSRs awards granted in fiscal 2017 vested and achieved a payout rate of 93 % based on the Company's total shareholder return as compared to a group of peer companies over a three-year performance period.

Nonvested as of March 31, 2021 1,314,346 $ 40.07

During the three months ended March 31, 2021, a total of 782,588 TSRs awards granted in fiscal 2018 vested and achieved a payout rate of 200 % based on the Company's total shareholder return as compared to a group of peer companies over a three-year performance period.

The Company withheld 205,373 of those shares to pay the employees’ portion of the minimum payroll withholding taxes.

The fair value of TSRs granted during the nine months ended September 30, 2020 and 2019, were estimated on the date of grant using the Monte Carlo simulation model, acceptable under ASC 718, using the following weighted average assumptions:

Nine Months Ended September 30,

The fair value of TSRs granted during the three months ended March 31, 2021 and 2020, were estimated on the date of grant using the Monte Carlo simulation model, acceptable under ASC 718, using the following weighted average assumptions:

Three Months Ended March 31,

Expected life (years) 2.8 2.8

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Restricted Share Units

During the nine months ended September 30, 2020 and 2019, pursuant to the 2020 Plan and the 2016 Incentive Plan, respectively, the Company granted restricted share unit awards (“RSUs”).

RSUs generally have requisite service periods of three years and vest in increments of 33 % on the anniversary of the grant dates.

RSUs granted to our board vest one year from grant or as of the next annual shareholders meeting, whichever is earlier.

Under each arrangement, RSUs are issued without direct cost to the employee on the vesting date.

The Company estimates the fair value of the RSUs based upon the market price of the Company’s stock at the date of grant.

The Company recognizes compensation expense for RSUs on a straight-line basis over the requisite service period.

A summary of nonvested RSUs is as follows:

A summary of nonvested restricted share unit awards ("RSUs") is as follows:

Shares Weighted Average

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Forfeited ( 88,114 ) 26.84

Nonvested as of September 30, 2020 1,292,062 $ 27.55

During the nine months ended September 30, 2020, a total of 403,865 RSUs vested.

Nonvested as of March 31, 2021 1,103,575 $ 32.84

During the three months ended March 31, 2021, a total of 406,542 RSUs vested.

The Company withheld 138,700 of those shares to pay the employees’ portion of the minimum payroll withholding taxes.

As of September 30, 2020, there were unrecognized compensation costs of $ 26.1 million related to nonvested RSUs, $ 23.5 million related to nonvested TSRs, and less than $ 0.1 million related to nonvested stock options, which the Company expects to recognize over weighted average periods of 1.9 years, 1.7 years, and 0.4 years, respectively.

The Company recorded stock-based compensation expense recognized under ASC 718 for the three months ended September 30, 2020 and 2019, of $ 8.1 million and $ 9.3 million, respectively, with corresponding tax benefits of $ 1.4 million and $ 1.5 million, respectively.

The Company recorded stock-based compensation expense recognized under ASC 718 for the nine months ended September 30, 2020 and 2019, of $ 22.9 million and $ 30.3 million, respectively, with the corresponding tax benefits of $ 4.2 million and $ 5.5 million, respectively.

Software and Other Intangible Assets

The carrying amount and accumulated amortization of the Company's software assets subject to amortization at each balance sheet date are as follows (in thousands):

September 30, 2020 December 31, 2019

Gross Carrying Amount Accumulated Amortization Net Balance Gross Carrying Amount Accumulated Amortization Net Balance

Software for resale $ 138,017 $ ( 127,535 ) $ 10,482 $ 138,823 $ ( 122,061 ) $ 16,762

Software for internal use 424,054 ( 230,297 ) 193,757 400,065 ( 182,310 ) 217,755

Total software $ 562,071 $ ( 357,832 ) $ 204,239 $ 538,888 $ ( 304,371 ) $ 234,517

Software for resale amortization expense recorded during the three months ended September 30, 2020 and 2019, totaled $ 2.1 million and $ 2.8 million, respectively.

Software for resale amortization expense recorded during the nine months ended September 30, 2020 and 2019, totaled $ 6.1 million and $ 8.8 million, respectively.

These software amortization expense amounts are reflected in cost of revenue in the condensed consolidated statements of operations.

Amortization of software for internal use is computed using the straight-line method over an estimated useful life of generally one to ten years .

Software for internal use amortization expense recorded during the three months ended September 30, 2020 and 2019, totaled $ 17.9 million and $ 15.7 million, respectively.

Software for internal use amortization expense recorded during the nine months ended September 30, 2020 and 2019, totaled $ 53.1 million and $ 39.4 million, respectively.

These software amortization expense amounts are reflected in depreciation and amortization in the condensed consolidated statements of operations.

The carrying amount and accumulated amortization of the Company’s other intangible assets subject to amortization at each balance sheet date are as follows (in thousands):

September 30, 2020 December 31, 2019

Gross Carrying Amount Accumulated Amortization Net Balance Gross Carrying Amount Accumulated Amortization Net Balance

Customer relationships $ 506,270 $ ( 185,981 ) $ 320,289 $ 507,785 $ ( 160,775 ) $ 347,010

Trademarks and trade names 27,385 ( 19,417 ) 7,968 27,312 ( 17,353 ) 9,959

Total other intangible assets $ 533,655 $ ( 205,398 ) $ 328,257 $ 535,097 $ ( 178,128 ) $ 356,969

Other intangible assets amortization expense recorded during the three months ended September 30, 2020 and 2019, totaled $ 9.3 million and $ 9.4 million, respectively.

Other intangible assets amortization expense recorded during the nine months ended September 30, 2020 and 2019, totaled $ 27.8 million and $ 22.5 million, respectively.

Based on capitalized intangible assets as of September 30, 2020, estimated amortization expense amounts in future fiscal years are as follows (in thousands):

Fiscal Year Ending December 31, Software Amortization Other Intangible Assets Amortization

Remainder of 2020 $ 18,476 $ 9,199

2021 64,445 36,632

2022 45,825 36,483

2023 29,267 36,168

2024 20,160 31,713

Thereafter 26,066 178,062

Total $ 204,239 $ 328,257

As of March 31, 2021, there were unrecognized compensation costs of $ 32.4 million and $ 32.3 million related to nonvested RSUs and TSRs, respectively, which the Company expects to recognize over weighted average periods of 2.4 years.

The Company recorded stock-based compensation expense recognized under ASC 718 for the three months ended March 31, 2021 and 2020, of $ 6.7 million and $ 7.0 million, respectively, with corresponding tax benefits of $ 1.0 million and $ 1.4 million, respectively.

Common Stock and Treasury Stock

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In February 2018, the board approved the repurchase of the Company's common stock of up to $ 200.0 million, in place of the remaining purchase amounts previously authorized.

The Company repurchased 1,000,000 shares for $ 28.9 million under the program during the nine months ended September 30, 2020.

There were no shares repurchased during the three months ended March 31, 2021.

Under the program to date, the Company has repurchased 46,357,495 shares for approximately $ 612.3 million.

As of September 30, 2020, the maximum remaining amount authorized for purchase under the stock repurchase program was $ 112.1 million.

Earnings Per Share

Basic earnings per share is computed in accordance with ASC 260, Earnings Per Share , based on weighted average outstanding common shares.

Diluted earnings per share is computed based on basic weighted average outstanding common shares adjusted for the dilutive effect of stock options, RSUs, and certain contingently issuable shares for which performance targets have been achieved.

The following table reconciles the weighted average share amounts used to compute both basic and diluted earnings per share (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

As of March 31, 2021, the maximum remaining amount authorized for purchase under the stock repurchase program was $ 112.1 million.

Loss Per Share

Basic loss per share is computed in accordance with ASC 260, Earnings Per Share , based on weighted average outstanding common shares.

Diluted loss per share is computed based on basic weighted average outstanding common shares adjusted for the dilutive effect of stock options, RSUs, and certain contingently issuable shares for which performance targets have been achieved.

The following table reconciles the weighted average share amounts used to compute both basic and diluted loss per share (in thousands):

Three Months Ended March 31,

Weighted average shares outstanding:

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Diluted weighted average shares outstanding 117,491 116,006

The diluted earnings per share computation excludes 1.5 million and 2.1 million options to purchase shares, RSUs, and contingently issuable shares during the three months ended September 30, 2020 and 2019, respectively, as their effect would be anti-dilutive.

The diluted earnings per share computation excludes 1.7 million and 2.1 million options to purchase shares, RSUs, and contingently issuable shares during the nine months ended September 30, 2020 and 2019, respectively, as their effect would be anti-dilutive.

Common stock outstanding as of September 30, 2020, and December 31, 2019, was 116,730,946 and 115,986,352 , respectively.

The diluted loss per share computation excludes 4.5 million and 6.7 million options to purchase shares, RSUs, and contingently issuable shares during the three months ended March 31, 2021 and 2020, respectively, as their effect would be anti-dilutive.

Common stock outstanding as of March 31, 2021, and December 31, 2020, was 118,134,574 and 117,112,185 , respectively.

Other, net is primarily comprised of foreign currency transaction gains and losses.

Other, net was $ 1.4 million of income and $ 2.4 million of expense for the three months ended September 30, 2020 and 2019, respectively.

Other, net was $ 6.4 million and $ 2.9 million of expense for the nine months ended September 30, 2020 and 2019, respectively.

Other, net was $ 1.4 million and $ 9.8 million of expense for the three months ended March 31, 2021 and 2020, respectively.

Segment Information

The Company reports financial performance based on its segments, ACI On Demand and ACI On Premise, and analyzes Segment Adjusted EBITDA as a measure of segment profitability.

The Company’s Chief Executive Officer is also the chief operating decision maker (“CODM”).

In January 2021, the Company made a change in organizational structure to align with its strategic direction.

As a result of this change, the Company reassessed its segment reporting structure due to changes in how the Company's chief operating decision maker ("CODM") assesses the Company's performance and allocates resources.

Beginning in the first quarter of 2021, the Company reports financial performance based on its new operating segments, Banks, Merchants, and Billers, and analyzes Segment Adjusted EBITDA as a measure of segment profitability.

The Company’s Chief Executive Officer is also the CODM.

The CODM, together with other senior management personnel, focus their review on consolidated financial information and the allocation of resources based on operating results, including revenues and Segment Adjusted EBITDA, for each segment, separate from Corporate operations.

ACI On Demand serves the needs of banks, merchants, and billers who use payments to facilitate their core business.

These on-demand solutions are maintained and delivered through the cloud via our global data centers and are available in either a single-tenant environment for SaaS offerings, or in a multi-tenant environment for PaaS offerings.

ACI On Premise serves customers who manage their software on site or through a third-party public cloud environment.

These on-premise customers use the Company’s software to develop sophisticated solutions, which are often part of a larger system located and managed at the customer specified site.

These customers require a level of control and flexibility that ACI On Premise solutions can offer, and they have the resources and expertise to take a lead role in managing these solutions.

Revenue is attributed to the reportable segments based upon the product sold and mechanism for delivery to the customer.

No operating segments have been aggregated to form the reportable segments.

ACI provides payment solutions to large and mid-size banks globally for retail banking, real time, digital, and other payment services.

These 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, they 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.

ACI’s support of merchants globally includes Tier 1 and Tier 2 merchants, online-only merchants and the payment service providers, independent selling organizations, value-added resellers, and acquirers who service them.

These customers operate in a variety of verticals, including general merchandise, grocery, hospitality, dining, transportation, and others.

The Company's solutions provide merchants with a secure, omni-channel payments platform that gives them independence from third-party payment providers.

They also offer secure solutions to online-only merchants that provide consumers with a convenient and seamless way to shop.

Within the billers 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.

The 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.

Revenue is attributed to the reportable segments based upon the customer.

Expenses are attributed to the reportable segments in one of three methods:

(1) direct costs of the segment, (2) labor costs that can be attributed based upon time tracking for individual products, or (3) costs that are allocated.

Allocated costs are generally marketing and sales related activities as well as information technology and facilities related expense for which multiple segments benefit.

The Company also allocates certain depreciation costs to the segments.

(1) direct costs of the segment, (2) labor costs that can be attributed based upon time tracking for individual projects, or (3) costs that are allocated.

Allocated costs are generally marketing and sales related activities.

Segment Adjusted EBITDA is the measure reported to the CODM for purposes of making decisions on allocating resources and assessing the performance of the Company’s segments, and, therefore, Segment Adjusted EBITDA is presented in conformity with ASC 280, Segment Reporting.

Segment Adjusted EBITDA is defined as earnings (loss) from operations before interest,

income tax expense (benefit), depreciation and amortization (“EBITDA”) adjusted to exclude stock-based compensation, and net other income (expense).

Corporate and unallocated expenses consist of the corporate overhead costs that are not allocated to reportable segments.

These overhead costs relate to human resources, finance, legal, accounting, merger and acquisition activity, and other costs that are not considered when management evaluates segment performance.

Segment Adjusted EBITDA is defined as earnings (loss) from operations before interest, income tax expense (benefit), depreciation and amortization (“EBITDA”) adjusted to exclude net other income (expense).

Corporate and unallocated expenses includes global facilities and information technology costs and long-term product roadmap expenses in addition to corporate overhead costs that are not allocated to reportable segments.

The overhead costs relate to human resources, finance, legal, accounting, and merger and acquisition activity.

These costs along with depreciation and amortization and stock-based compensation are not considered when management evaluates segment performance.

The following is selected financial data for the Company’s reportable segments for the periods indicated (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

ACI On Demand $ 190,369 $ 192,952 $ 563,892 $ 475,299

ACI On Premise 125,514 161,949 343,386 383,075

Three Months Ended March 31,

Banks $ 95,917 $ 105,821

Merchants 38,670 31,795

Billers 150,599 153,869

Total revenue $ 285,186 $ 291,485

Segment Adjusted EBITDA

ACI On Demand $ 33,204 $ 18,561 $ 89,396 $ 35,639

ACI On Premise 69,553 99,553 159,555 184,890

Banks $ 37,195 $ 42,436

Merchants 14,725 6,418

Billers 34,021 30,234

Depreciation and amortization ( 33,583 ) ( 33,822 )

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Other, net ( 1,382 ) ( 9,758 )

Income (loss) before income taxes $ 22,540 $ 36,950 $ 7,219 $ ( 18,442 )

Depreciation and amortization

ACI On Demand $ 10,227 $ 9,059 $ 30,411 $ 25,110

ACI On Premise 3,312 2,963 9,849 9,012

Corporate 21,951 21,891 64,744 54,421

Total depreciation and amortization $ 35,490 $ 33,913 $ 105,004 $ 88,543

Stock-based compensation expense

ACI On Demand $ 2,255 $ 2,389 $ 6,554 $ 6,554

ACI On Premise 2,259 2,227 6,568 6,234

Corporate 3,547 4,755 9,821 17,540

Total stock-based compensation expense $ 8,061 $ 9,371 $ 22,943 $ 30,328

Loss before income taxes $ ( 6,313 ) $ ( 35,312 )

Assets are not allocated to segments, and the Company’s CODM does not evaluate operating segments using discrete asset information.

The following is revenue by primary geographic market and primary solution category for the Company’s reportable segments for the periods indicated (in thousands):

Three Months Ended September 30, 2020 Three Months Ended September 30, 2019

ACI On Demand ACI On Premise Total ACI On Demand ACI On Premise Total

Primary Geographic Markets

Americas - United States $ 170,817 $ 28,392 $ 199,209 $ 176,172 $ 53,986 $ 230,158

Americas - Other 2,750 12,264 15,014 2,268 22,879 25,147

EMEA 14,564 64,748 79,312 12,191 72,662 84,853

Asia Pacific 2,238 20,110 22,348 2,321 12,422 14,743

Total $ 190,369 $ 125,514 $ 315,883 $ 192,952 $ 161,949 $ 354,901

The following is revenue by primary solution category for the Company’s reportable segments for the periods indicated (in thousands):

Three Months Ended March 31, 2021

Banks Merchants Billers Total

Primary Solution Categories

Bill Payments $ — $ — $ 150,599 $ 150,599

Digital Channels 8,583 5,890 14,473 8,480 6,791 15,271

Digital Business Banking 15,092 — — 15,092

Merchant Payments — 38,670 — 38,670

Payments Intelligence 9,037 8,849 17,886 8,759 13,623 22,382

Fraud Management 6,224 — — 6,224

Real-Time Payments 13,185 — — 13,185

Retail Payments 1,838 90,217 92,055 1,862 117,605 119,467

Total $ 190,369 $ 125,514 $ 315,883 $ 192,952 $ 161,949 $ 354,901

Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019

ACI On Demand ACI On Premise Total ACI On Demand ACI On Premise Total

Primary Geographic Markets

Americas - United States $ 505,191 $ 106,192 $ 611,383 $ 425,033 $ 116,104 $ 541,137

Americas - Other 8,402 31,455 39,857 7,118 46,237 53,355

EMEA 42,006 148,129 190,135 36,751 167,268 204,019

Asia Pacific 8,293 57,610 65,903 6,397 53,466 59,863

Issuing and Acquiring 61,416 — — 61,416

Total $ 95,917 $ 38,670 $ 150,599 $ 285,186

Three Months Ended March 31, 2020

Banks Merchants Billers Total

Primary Solution Categories

Bill Payments $ — $ — $ 153,869 $ 153,869

Digital Channels 24,304 21,224 45,528 36,280 24,960 61,240

Digital Business Banking 15,828 — — 15,828

Merchant Payments — 31,795 — 31,795

Payments Intelligence 29,902 16,904 46,806 26,614 27,164 53,778

Fraud Management 6,270 — — 6,270

Real-Time Payments 18,236 — — 18,236

Retail Payments 5,539 232,747 238,286 5,441 257,839 263,280

Issuing and Acquiring 65,487 — — 65,487

Total $ 105,821 $ 31,795 $ 153,869 $ 291,485

The following is the Company's revenue by geographic location for the periods indicated (in thousands):

Three Months Ended March 31,

United States $ 191,977 $ 204,793

Other 93,209 86,692

Total $ 285,186 $ 291,485

The following is the Company’s long-lived assets by geographic location for the periods indicated (in thousands):

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Long-lived Assets

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Total $ 2,140,179 $ 2,174,513

No single customer accounted for more than 10% of the Company’s consolidated revenues during the three and nine months ended September 30, 2020 and 2019.

No other country outside the United States accounted for more than 10% of the Company's consolidated revenues during the three and nine months ended September 30, 2020 and 2019.

For the three and nine months ended September 30, 2020, the Company's effective tax rate was 30 % and 24 %, respectively, with the Company reporting tax expense on pretax income.

The Company’s foreign entities recognized earnings of $ 23.4 million and $ 19.7 million for the three and nine months ended September 30, 2020, respectively.

The effective tax rate for the three and nine months ended September 30, 2020, was negatively impacted by a change in tax rates in certain countries.

For the three and nine months ended September 30, 2019, the Company's effective tax rate was 14 % and 163 %, respectively.

The Company reported a tax charge on pretax income for the three months ended September 30, 2019, and a tax benefit on pretax loss for the nine months ended September 30, 2019.

The Company’s foreign entities recognized earnings of $ 16.6 million and $ 21.5 million for the three and nine months ended September 30, 2019, respectively.

The effective tax rate for the three months ended September 30, 2019, was positively impacted by the release of an uncertain tax position due to the statute of limitations expiration.

The effective tax rate for the nine months ended September 30, 2019, was positively impacted by state income tax benefits on a domestic loss.

In addition, the Company released a majority of its valuation allowance established against its U.S.

foreign tax credit deferred tax asset, resulting in a non-cash benefit to income tax expense of approximately $ 18.5 million.

The Company released the valuation allowance following the acquisition of Speedpay, determining it would more likely than not be able to utilize the foreign tax credits in future years due to additional income provided by Speedpay.

No single customer accounted for more than 10% of the Company’s consolidated revenues during the three months ended March 31, 2021 and 2020.

No other country outside the United States accounted for more than 10% of the Company's consolidated revenues during the three months ended March 31, 2021 and 2020.

For the three months ended March 31, 2021, the Company's effective tax rate was 69 %.

The Company reported a tax benefit on an overall pretax loss, with foreign entities reporting losses of $ 0.6 million.

The effective tax rate for the three months ended March 31, 2021, was positively impacted by excess tax benefits on stock-based compensation.

For the three months ended March 31, 2020, the Company's effective tax rate was 31 %.

The Company reported a tax benefit on overall pretax loss, with foreign entities reporting losses of $ 14.4 million.

The effective tax rate for the three months ended March 31, 2020, was positively impacted by excess tax benefits on stock-based compensation and state income tax benefits on a domestic loss.

The Company’s effective tax rate could fluctuate on a quarterly basis due to the occurrence of significant and unusual or infrequent items, such as vesting of stock-based compensation or foreign currency gains and losses.

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The Company regularly assesses the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of its provision for income taxes.

As of September 30, 2020, and December 31, 2019, the amount of unrecognized tax benefits for uncertain tax positions was $ 30.1 million and $ 29.0 million, respectively, excluding related liabilities for interest and penalties of $ 1.2 million as of September 30, 2020, and December 31, 2019.

As of March 31, 2021, and December 31, 2020, the amount of unrecognized tax benefits for uncertain tax positions was $ 24.7 million and $ 24.3 million, respectively, excluding related liabilities for interest and penalties of $ 1.2 million as of March 31, 2021, and December 31, 2020.

The Company believes it is reasonably possible that the total amount of unrecognized tax benefits will decrease within the next 12 months by approximately $ 3.6 million, due to the settlement of various audits and the expiration of statutes of limitation.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements