What changed in this filing

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Item 1. Financial Statements

2021-11-04 compared with 2021-08-05 · 121 added, 115 removed, 552 unchanged (30% of the section changed)

4 unchanged sentences

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

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Current assets

53 unchanged sentences

5,000,000 shares authorized;

no shares issued at June 30, 2021, and December 31, 2020

no shares issued at September 30, 2021, and December 31, 2020

Common stock;

1 unchanged sentence

280,000,000 shares authorized;

140,525,055 shares issued at June 30, 2021, and December 31, 2020

140,525,055 shares issued at September 30, 2021, and December 31, 2020

Additional paid-in capital 683,044 682,431

Retained earnings 1,021,810 1,003,490

Treasury stock, at cost, 23,040,631 and 23,412,870 shares at June 30, 2021, and December 31, 2020, respectively

Treasury stock, at cost, 22,994,595 and 23,412,870 shares at September 30, 2021, and December 31, 2020, respectively

( 411,684 ) ( 387,581 )

7 unchanged sentences

(unaudited and in thousands, except per share amounts)

Three Months Ended June 30, Six Months Ended June 30,

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

2021 2020 2021 2020

27 unchanged sentences

Total other income (expense) ( 9,462 ) ( 8,642 ) ( 26,426 ) ( 41,818 )

Income (loss) before income taxes 8,463 19,991 2,150 ( 15,321 )

Income tax expense (benefit) 1,962 5,916 ( 2,406 ) ( 4,969 )

Net income (loss) $ 6,501 $ 14,075 $ 4,556 $ ( 10,352 )

Income (loss) per common share

Income before income taxes 18,517 22,540 20,667 7,219

Income tax expense 4,753 6,674 2,347 1,705

Net income $ 13,764 $ 15,866 $ 18,320 $ 5,514

Income per common share

$ 0.12 $ 0.14 $ 0.16 $ 0.05

9 unchanged sentences

(unaudited and in thousands)

Three Months Ended June 30, Six Months Ended June 30,

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

2021 2020 2021 2020

Net income (loss) $ 6,501 $ 14,075 $ 4,556 $ ( 10,352 )

Net income $ 13,764 $ 15,866 $ 18,320 $ 5,514

Other comprehensive income (loss):

2 unchanged sentences

Total other comprehensive income (loss) ( 4,223 ) 1,842 ( 5,873 ) ( 4,909 )

Comprehensive income (loss)

Comprehensive income

$ 9,541 $ 17,708 $ 12,447 $ 605

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(unaudited and in thousands, except share amounts)

Three Months Ended June 30, 2021

(unaudited and in thousands)

Three Months Ended September 30, 2021

Common Stock Additional

1 unchanged sentence

Comprehensive Loss Total

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

Balance as of June 30, 2021 $ 702 $ 676,399 $ 1,008,046 $ ( 412,492 ) $ ( 94,095 ) $ 1,178,560

Net income — — 13,764 — — 13,764

Other comprehensive income — — — — 1,466 1,466

Other comprehensive loss — — — — ( 4,223 ) ( 4,223 )

Stock-based compensation

2 unchanged sentences

— 278 — 845 — 1,123

Repurchase of 1,000,000 shares of common stock

— — — ( 39,411 ) — ( 39,411 )

Repurchase of stock-based compensation awards for tax withholdings

— — — ( 37 ) — ( 37 )

Balance as of June 30, 2021 $ 702 $ 676,399 $ 1,008,046 $ ( 412,492 ) $ ( 94,095 ) $ 1,178,560

Three Months Ended June 30, 2020

Balance as of September 30, 2021 $ 702 $ 683,044 $ 1,021,810 $ ( 411,684 ) $ ( 98,318 ) $ 1,195,554

Three Months Ended September 30, 2020

Common Stock Additional

1 unchanged sentence

Comprehensive Loss Total

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

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 loss

— — — — ( 582 ) ( 582 )

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

Stock-based compensation

4 unchanged sentences

— — — ( 26 ) — ( 26 )

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

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

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

3 unchanged sentences

(unaudited and in thousands, except share amounts)

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Common Stock Additional

13 unchanged sentences

— — — ( 14,833 ) — ( 14,833 )

Balance as of June 30, 2021 $ 702 $ 676,399 $ 1,008,046 $ ( 412,492 ) $ ( 94,095 ) $ 1,178,560

Six Months Ended June 30, 2020

Balance as of September 30, 2021 $ 702 $ 683,044 $ 1,021,810 $ ( 411,684 ) $ ( 98,318 ) $ 1,195,554

Nine Months Ended September 30, 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 loss — — ( 10,352 ) — — ( 10,352 )

Net income — — 5,514 — — 5,514

Other comprehensive loss

8 unchanged sentences

— — — ( 11,150 ) — ( 11,150 )

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

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

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

3 unchanged sentences

(unaudited and in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

Net income (loss) $ 4,556 $ ( 10,352 )

Adjustments to reconcile net income (loss) to net cash flows from operating activities:

Net income $ 18,320 $ 5,514

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

15,838 18,012

13 unchanged sentences

Deferred revenue

10,339 14,361

Other current and noncurrent assets and liabilities

24 unchanged sentences

Effect of exchange rate fluctuations on cash

( 388 ) 8,118

Net increase (decrease) in cash and cash equivalents ( 23,892 ) 12,447

16 unchanged sentences

All intercompany balances and transactions have been eliminated.

The condensed consolidated financial statements as of June 30, 2021, and for the three and six months ended June 30, 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 financial statements as of September 30, 2021, and for the three and nine months ended September 30, 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 six months ended June 30, 2021, are not necessarily indicative of results that may be attained in the future.

Results for the three and nine months ended September 30, 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.

12 unchanged sentences

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

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Vendor financed licenses $ 9,776 $ 12,901

5 unchanged sentences

The Company’s operating leases are included in operating lease right-of-use assets, other current liabilities, and operating lease liabilities.

During the six months ended June 30, 2021, the new corporate headquarters operating lease commenced.

During the nine months ended September 30, 2021, the new corporate headquarters operating lease commenced.

In recognition of this lease, an operating lease right of use asset of $ 12.9 million and an operating lease liability of $ 15.2 million was incurred.

These amounts are included within operating lease right-of-use assets and other current liabilities and operating lease liabilities in the condensed consolidated balance sheet as of June 30, 2021.

These amounts, less amortization and payments to date, are included within operating lease right-of-use assets and other current liabilities and operating lease liabilities in the condensed consolidated balance sheet as of September 30, 2021.

Settlement Assets and Liabilities

13 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 June 30, 2021, and December 31, 2020, was $ 208.3 million and $ 246.8 million, respectively.

The amount of settlement funds as of September 30, 2021, and December 31, 2020, was $ 196.0 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 $ 419.5 million and $ 424.5 million as of June 30, 2021, and December 31, 2020, respectively.

The fair value of the Company’s 5.750 % Senior Notes due 2026 (“2026 Notes”) was $ 420.0 million and $ 424.5 million as of September 30, 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 had previously identified ACI On Demand and ACI On Premise, the operating segments at the time, as the reporting units.

As of June 30, 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.

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 September 30, 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.

2 unchanged sentences

Given the adverse economic and market conditions caused by the COVID-19 pandemic, the Company considered a variety of qualitative factors to determine if an additional quantitative impairment test was required subsequent to our annual impairment test.

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.

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

2 unchanged sentences

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 $ 19.4 million and $ 19.3 million, which is included in other noncurrent assets in the condensed consolidated balance sheet as of June 30, 2021, and December 31, 2020, respectively.

Accordingly, the Company recorded an investment of $ 19.0 million and $ 19.3 million, which is included in other noncurrent assets in the condensed consolidated balance sheet as of September 30, 2021, and December 31, 2020, respectively.

New Accounting Standards Recently Adopted

1 unchanged sentence

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.

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

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

6 unchanged sentences

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

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Billed receivables $ 147,247 $ 179,177

5 unchanged sentences

Total receivables, net $ 496,012 $ 558,651

No customer accounted for more than 10% of the Company’s consolidated receivables balance as of June 30, 2021, or December 31, 2020.

No customer accounted for more than 10% of the Company’s consolidated receivables balance as of September 30, 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 ( 1,478 )

Balance, June 30, 2021

Balance, September 30, 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.

2 unchanged sentences

• 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 $ 804.2 million as of June 30, 2021, of which the Company expects to recognize approximately 53 % over the next 12 months and the remainder thereafter.

During the three and six months ended June 30, 2021 and 2020, revenue recognized by the Company from performance obligations satisfied in previous periods was not significant.

As of June 30, 2021, the Company had $ 25.0 million, $ 697.6 million, and $ 400.0 million outstanding under its Revolving Credit Facility, Term Loans, and Senior Notes, respectively, with up to $ 473.5 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.

Revenue allocated to remaining performance obligations was $ 871.2 million as of September 30, 2021, of which the Company expects to recognize approximately 55 % over the next 12 months and the remainder thereafter.

During the three and nine months ended September 30, 2021 and 2020, revenue recognized by the Company from performance obligations satisfied in previous periods was not significant.

As of September 30, 2021, the Company had $ 687.9 million and $ 400.0 million outstanding under its Term Loans and Senior Notes, respectively, with up to $ 498.5 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 June 30, 2021, was 2.10 %.

The interest rate in effect for the Credit Facility as of September 30, 2021, was 2.08 %.

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.

9 unchanged sentences

The 2026 Notes will mature on August 15, 2026.

Maturities on debt outstanding as of June 30, 2021, are as follows (in thousands):

Maturities on debt outstanding as of September 30, 2021, are as follows (in thousands):

Fiscal Year Ending December 31,

2 unchanged sentences

Total $ 1,087,898

As of June 30, 2021, and at all times during the period, the Company was in compliance with its financial debt covenants.

As of September 30, 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):

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Term loans $ 687,898 $ 717,110

13 unchanged sentences

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

As of June 30, 2021, there was $ 75.0 million available and no amount outstanding on the overdraft facility.

As of September 30, 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.

1 unchanged sentence

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 June 30, 2021, $ 4.6 million was outstanding on these agreements, of which $ 2.4 million and $ 2.2 million are included in other current liabilities and other noncurrent liabilities, respectively, in the condensed consolidated balance sheet.

As of September 30, 2021, $ 5.1 million was outstanding on these agreements, of which $ 2.9 million and $ 2.2 million are included in other current liabilities and other noncurrent liabilities, respectively, in the condensed consolidated balance sheet.

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

1 unchanged sentence

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):

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

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

3 unchanged sentences

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 June 30, 2021 and 2020, totaled $ 1.4 million and $ 2.1 million, respectively.

Software for resale amortization expense recorded during the six months ended June 30, 2021 and 2020, totaled $ 3.4 million and $ 4.0 million, respectively.

Software for resale amortization expense recorded during the three months ended September 30, 2021 and 2020, totaled $ 1.5 million and $ 2.1 million, respectively.

Software for resale amortization expense recorded during the nine months ended September 30, 2021 and 2020, totaled $ 4.9 million and $ 6.1 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 June 30, 2021 and 2020, totaled $ 17.4 million and $ 18.5 million, respectively.

Software for internal use amortization expense recorded during the six months ended June 30, 2021 and 2020, totaled $ 34.3 million and $ 35.2 million, respectively.

Software for internal use amortization expense recorded during the three months ended September 30, 2021 and 2020, totaled $ 17.5 million and $ 17.9 million, respectively.

Software for internal use amortization expense recorded during the nine months ended September 30, 2021 and 2020, totaled $ 51.8 million and $ 53.1 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):

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

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

2 unchanged sentences

Total other intangible assets $ 532,703 $ ( 240,044 ) $ 292,659 $ 536,504 $ ( 214,521 ) $ 321,983

Other intangible assets amortization expense recorded during both the three months ended June 30, 2021 and 2020, totaled $ 9.2 million.

Other intangible assets amortization expense recorded during both the six months ended June 30, 2021 and 2020, totaled $ 18.5 million.

Based on capitalized intangible assets as of June 30, 2021, estimated amortization expense amounts in future fiscal years are as follows (in thousands):

Other intangible assets amortization expense recorded during both the three months ended September 30, 2021 and 2020, totaled $ 9.3 million.

Other intangible assets amortization expense recorded during both the nine months ended September 30, 2021 and 2020, totaled $ 27.8 million.

Based on capitalized intangible assets as of September 30, 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

8 unchanged sentences

Employee Stock Purchase Plan

Shares issued under the 2017 Employee Stock Purchase Plan during the six months ended June 30, 2021 and 2020, totaled 55,486 and 72,228 , respectively.

Shares issued under the 2017 Employee Stock Purchase Plan during the nine months ended September 30, 2021 and 2020, totaled 86,877 and 114,709 , respectively.

Stock Options

7 unchanged sentences

Exercised ( 380,676 ) 19.05

Outstanding as of June 30, 2021 1,817,408 $ 17.63 3.57 $ 35,460,553

Exercisable as of June 30, 2021 1,817,408 $ 17.63 3.57 $ 35,460,553

The total intrinsic value of stock options exercised during the six months ended June 30, 2021 and 2020, was $ 7.6 million and $ 10.5 million, respectively.

There were no stock options granted during the six months ended June 30, 2021 or 2020.

Outstanding as of September 30, 2021 1,805,835 $ 17.63 3.27 $ 23,662,370

Exercisable as of September 30, 2021 1,805,835 $ 17.63 3.27 $ 23,662,370

The total intrinsic value of stock options exercised during the nine months ended September 30, 2021 and 2020, was $ 7.8 million and $ 14.3 million, respectively.

There were no stock options granted during the nine months ended September 30, 2021 or 2020.

Long-term Incentive Program Performance Share Awards

During the six months ended June 30, 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 six months ended June 30, 2021, a total of 10,457 LTIP performance shares vested.

During the nine months ended September 30, 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 nine months ended September 30, 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.

8 unchanged sentences

Change in payout rate 391,294 31.31

Nonvested as of June 30, 2021 1,260,232 $ 40.11

During the six months ended June 30, 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.

Nonvested as of September 30, 2021 1,190,070 $ 40.10

During the nine months ended September 30, 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 six months ended June 30, 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:

Six Months Ended June 30,

The fair value of TSRs granted during the nine months ended September 30, 2021 and 2020, were estimated on the date of grant using the Monte Carlo simulation model, acceptable under ASC 718, Compensation - Stock Compensation , using the following weighted average assumptions:

Nine Months Ended September 30,

Expected life (years) 2.8 2.8

10 unchanged sentences

Forfeited ( 232,734 ) 30.54

Nonvested as of June 30, 2021 1,028,429 $ 33.59

During the six months ended June 30, 2021, a total of 518,350 RSUs vested.

Nonvested as of September 30, 2021 941,060 $ 33.69

During the nine months ended September 30, 2021, a total of 522,608 RSUs vested.

The Company withheld 155,031 of those shares to pay the employees’ portion of the minimum payroll withholding taxes.

As of June 30, 2021, there were unrecognized compensation costs of $ 29.9 million and $ 26.7 million related to nonvested RSUs and TSRs, respectively, which the Company expects to recognize over weighted average periods of 2.1 years and 2.2 years.

The Company recorded stock-based compensation expense recognized under ASC 718 for the three months ended June 30, 2021 and 2020, of $ 7.7 million and $ 7.9 million, respectively, with corresponding tax benefits of $ 1.2 million and $ 1.4 million, respectively.

The Company recorded stock-based compensation expense recognized under ASC 718 for the six months ended June 30, 2021 and 2020, of $ 14.4 million and $ 14.9 million, respectively, with corresponding tax benefits of $ 2.2 million and $ 2.8 million, respectively.

As of September 30, 2021, there were unrecognized compensation costs of $ 23.5 million and $ 21.3 million related to nonvested RSUs and TSRs, respectively, which the Company expects to recognize over weighted average periods of 1.9 years and 2.0 years, respectively.

The Company recorded stock-based compensation expense recognized under ASC 718 for the three months ended September 30, 2021 and 2020, of $ 6.4 million and $ 8.1 million, respectively, with corresponding tax benefits of $ 0.9 million and $ 1.4 million, respectively.

The Company recorded stock-based compensation expense recognized under ASC 718 for the nine months ended September 30, 2021 and 2020, of $ 20.8 million and $ 22.9 million, respectively, with corresponding tax benefits of $ 3.1 million and $ 4.2 million, respectively.

Common Stock and Treasury Stock

1 unchanged sentence

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 $ 39.4 million during the six months ended June 30, 2021.

The Company repurchased 1,000,000 shares for $ 39.4 million during the nine months ended September 30, 2021.

Under the program to date, the Company has repurchased 47,357,495 shares for approximately $ 651.7 million.

As of June 30, 2021, the maximum remaining amount authorized for purchase under the stock repurchase program was $ 72.7 million.

Earnings (Loss) Per Share

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

Diluted earnings (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 earnings (loss) per share (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

As of September 30, 2021, the maximum remaining amount authorized for purchase under the stock repurchase program was $ 72.7 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,

2021 2020 2021 2020

3 unchanged sentences

Diluted weighted average shares outstanding 118,540 117,804 118,817 117,644

The diluted earnings per share computation excludes 1.3 million and 1.8 million options to purchase shares, RSUs, and contingently issuable shares during the three months ended June 30, 2021 and 2020, respectively, as their effect would be anti-dilutive.

The diluted earnings (loss) per share computation excludes 1.4 million and 6.1 million options to purchase shares, RSUs, and contingently issuable shares during the six months ended June 30, 2021 and 2020, respectively, as their effect would be anti-dilutive.

Common stock outstanding as of June 30, 2021, and December 31, 2020, was 117,484,424 and 117,112,185 , respectively.

The diluted earnings per share computation excludes 1.6 million and 1.5 million options to purchase shares, RSUs, and contingently issuable shares during the three months ended September 30, 2021 and 2020, respectively, as their effect would be anti-dilutive.

The diluted earnings per share computation excludes 1.5 million and 1.7 million options to purchase shares, RSUs, and contingently issuable shares during the nine months ended September 30, 2021 and 2020, respectively, as their effect would be anti-dilutive.

Common stock outstanding as of September 30, 2021, and December 31, 2020, was 117,530,460 and 117,112,185 , respectively.

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

Other, net was $ 1.4 million and $ 2.0 million of income for the three months ended June 30, 2021 and 2020, respectively.

Other, net was $ 0.1 million of income and $ 7.7 million of expense for the six months ended June 30, 2021 and 2020, respectively.

Other, net was $ 1.1 million of expense and $ 1.4 million of income for the three months ended September 30, 2021 and 2020, respectively.

Other, net was $ 1.0 million and $ 6.4 million of expense for the nine months ended September 30, 2021 and 2020, respectively.

Segment Information

24 unchanged sentences

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

Three Months Ended June 30, Six Months Ended June 30,

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

2021 2020 2021 2020

12 unchanged sentences

Other, net ( 1,088 ) 1,356 ( 1,036 ) ( 6,361 )

Income (loss) before income taxes $ 8,463 $ 19,991 $ 2,150 $ ( 15,321 )

Income before income taxes $ 18,517 $ 22,540 $ 20,667 $ 7,219

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 solution category for the Company’s reportable segments for the periods indicated (in thousands):

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Banks Merchants Billers Total

7 unchanged sentences

Total $ 131,744 $ 38,989 $ 146,181 $ 316,914

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

Banks Merchants Billers Total

7 unchanged sentences

Total $ 125,658 $ 40,761 $ 149,464 $ 315,883

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Banks Merchants Billers Total

7 unchanged sentences

Total $ 341,712 $ 115,083 $ 446,974 $ 903,769

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Banks Merchants Billers Total

8 unchanged sentences

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

Three Months Ended June 30, Six Months Ended June 30,

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

2021 2020 2021 2020

15 unchanged sentences

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

Three Months Ended June 30, Six Months Ended June 30,

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

2021 2020 2021 2020

3 unchanged sentences

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

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Long-lived Assets

2 unchanged sentences

Total $ 2,108,180 $ 2,174,513

No single customer accounted for more than 10% of the Company’s consolidated revenues during the three and six months ended June 30, 2021 and 2020.

No other country outside the United States accounted for more than 10% of the Company's consolidated revenues during the three and six months ended June 30, 2021 and 2020.

For the three and six months ended June 30, 2021, the Company's effective tax rate was 23 % and ( 112 )%, respectively.

The Company reported tax expense on pretax income for the three months ended June 30, 2021, and a tax benefit on pretax income for the six months ended June 30, 2021, with foreign entities recognizing earnings of $ 10.2 million and $ 9.6 million, respectively.

The effective tax rate for the three and six months ended June 30, 2021, was positively impacted by excess tax benefits on equity-based compensation.

For the three and six months ended June 30, 2020, the Company's effective tax rate was 30 % and 32 %, respectively.

The Company reported tax expense on pretax income for the three months ended June 30, 2020 and a tax benefit on a pretax loss for the six months ended June 30, 2020, with foreign entities recognizing earnings of $ 10.7 million and losses of $ 3.7 million, respectively.

The effective tax rate for the three months ended June 30, 2020, was negatively impacted by state income tax charges on a domestic profit.

The effective tax rate for the six months ended June 30, 2020, was positively impacted by excess tax benefits on equity-based compensation and state income tax benefits on a domestic loss.

No single customer accounted for more than 10% of the Company’s consolidated revenues during the three and nine months ended September 30, 2021 and 2020.

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, 2021 and 2020.

For the three and nine months ended September 30, 2021, the Company's effective tax rate was 26 % and 11 %, respectively.

The Company reported tax expense on pretax income for both the three and nine months ended September 30, 2021, with foreign entities recognizing earnings of $ 18.1 million and $ 27.7 million, respectively.

The effective tax rate for the three months ended September 30, 2021, was negatively impacted by excess tax expense on equity-based compensation.

The effective tax rate for the nine months ended September 30, 2021, was positively impacted by excess tax benefits on equity-based compensation.

For the three and nine months ended September 30, 2020, the Company's effective tax rate was 30 % and 24 %, respectively.

The Company reported tax expense on pretax income for both the three and nine months ended September 30, 2020, with foreign entities recognizing earnings of $ 23.4 million and losses of $ 19.7 million, 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.

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.

The Company’s effective tax rate could also fluctuate due to changes in the valuation of its deferred tax assets or liabilities, or by changes in tax laws, regulations, accounting principles, or interpretations thereof.

In addition, the Company is occasionally subject to examination of its income tax returns by tax authorities in the jurisdictions it operates.

In addition, the Company is occasionally subject to examination of its income tax returns by tax authorities in the jurisdictions in which it operates.

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 June 30, 2021, and December 31, 2020, the amount of unrecognized tax benefits for uncertain tax positions was $ 24.6 million and $ 24.3 million, respectively, excluding related liabilities for interest and penalties of $ 1.3 million and $ 1.2 million as of June 30, 2021, and December 31, 2020, respectively.

As of September 30, 2021, and December 31, 2020, the amount of unrecognized tax benefits for uncertain tax positions was $ 25.8 million and $ 24.3 million, respectively, excluding related liabilities for interest and penalties of $ 1.3 million and $ 1.2 million as of September 30, 2021, and December 31, 2020, respectively.

The Company believes it is reasonably possible that the total amount of unrecognized tax benefits will decrease within the next 12 months by approximately $ 3.5 million, due to the settlement of various audits and the expiration of statutes of limitation.

Commitments and Contingencies

Legal Proceedings

In April 2021, ACH files associated with one of the Company's mortgage servicing customers were inadvertently transmitted to a processing bank during a test of its ACH file production system.

Reversal ACH files were promptly issued, restoring affected accounts.

The Company has been contacted by the U.S.

Consumer Finance Protection Bureau and various state consumer protection and regulatory agencies about this incident, and is cooperating in their investigations, which could result in fines or penalties that could be material.

In addition, the Company has been named as a defendant in seven class action lawsuits filed in various federal courts purportedly on behalf of consumers whose mortgage accounts were affected.

The complaints vary, but generally allege violations of federal and state consumer protection and other laws and claim that the Company is obligated to pay statutory and other damages.

The Company intends to vigorously defend these cases.

Defending such cases could be time-consuming and costly, and failure to successfully defend the Company in any or all of these cases could have a material effect.

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