What changed in this filing

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Item 1. Financial Statements

2022-08-04 compared with 2022-05-05 · 188 added, 107 removed, 478 unchanged (38% of the section changed)

4 unchanged sentences

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

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Current assets

53 unchanged sentences

5,000,000 shares authorized;

no shares issued at March 31, 2022, and December 31, 2021

no shares issued at June 30, 2022, and December 31, 2021

Common stock;

1 unchanged sentence

280,000,000 shares authorized;

140,525,055 shares issued at March 31, 2022, and December 31, 2021

140,525,055 shares issued at June 30, 2022, and December 31, 2021

Additional paid-in capital 690,574 688,313

Retained earnings 1,160,113 1,131,281

Treasury stock, at cost, 25,439,428 and 24,795,009 shares at March 31, 2022, and December 31, 2021, respectively

Treasury stock, at cost, 26,229,902 and 24,795,009 shares at June 30, 2022, and December 31, 2021, respectively

( 528,758 ) ( 475,972 )

7 unchanged sentences

(unaudited and in thousands, except per share amounts)

Three Months Ended March 31,

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

2022 2021 2022 2021

Software as a service and platform as a service

24 unchanged sentences

3,051 2,865 6,210 5,719

2,006 1,434 4,256 52

Total other income (expense) ( 6,727 ) ( 6,961 ) ( 12,212 ) ( 16,964 )

Income (loss) before income taxes 22,181 ( 6,313 )

Income before income taxes 17,730 8,463 39,911 2,150

Income tax expense (benefit) 4,388 1,962 11,079 ( 2,406 )

Net income (loss) $ 15,490 $ ( 1,945 )

Income (loss) per common share

$ 0.13 $ ( 0.02 )

Net income $ 13,342 $ 6,501 $ 28,832 $ 4,556

Income per common share

$ 0.12 $ 0.06 $ 0.25 $ 0.04

Diluted $ 0.12 $ 0.05 $ 0.25 $ 0.04

Weighted average common shares outstanding

7 unchanged sentences

(unaudited and in thousands)

Three Months Ended March 31,

Net income (loss) $ 15,490 $ ( 1,945 )

Other comprehensive loss:

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

2022 2021 2022 2021

Net income $ 13,342 $ 6,501 $ 28,832 $ 4,556

Other comprehensive income (loss):

Foreign currency translation adjustments ( 12,620 ) 1,466 ( 14,720 ) ( 1,650 )

Total other comprehensive income (loss) ( 12,620 ) 1,466 ( 14,720 ) ( 1,650 )

Comprehensive income $ 722 $ 7,967 $ 14,112 $ 2,906

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)

Three Months Ended June 30, 2022

Common Stock Additional

Paid-in Capital Retained Earnings Treasury Stock Accumulated Other

Comprehensive Loss Total

Balance as of March 31, 2022 $ 702 $ 685,354 $ 1,146,771 $ ( 506,513 ) $ ( 101,647 ) $ 1,224,667

Net income — — 13,342 — — 13,342

Other comprehensive loss — — — — ( 12,620 ) ( 12,620 )

Stock-based compensation

— 6,800 — — — 6,800

Total other comprehensive loss ( 2,100 ) ( 3,116 )

Comprehensive income (loss) $ 13,390 $ ( 5,061 )

Shares issued and forfeited, net, under stock plans

— ( 1,580 ) — 2,867 — 1,287

Repurchase of 924,240 shares of common stock

— — — ( 24,847 ) — ( 24,847 )

Repurchase of stock-based compensation awards for tax withholdings

— — — ( 265 ) — ( 265 )

Balance as of June 30, 2022 $ 702 $ 690,574 $ 1,160,113 $ ( 528,758 ) $ ( 114,267 ) $ 1,208,364

Three Months Ended June 30, 2021

Common Stock Additional

Paid-in Capital Retained Earnings Treasury Stock Accumulated Other

Comprehensive Loss Total

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

Net income — — 6,501 — — 6,501

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

Stock-based compensation

— 7,720 — — — 7,720

Shares issued and forfeited, net, under stock plans

— ( 1,339 ) — 6,496 — 5,157

Repurchase of 1,000,000 shares of common stock

— — — ( 39,411 ) — ( 39,411 )

Repurchase of stock-based compensation awards for tax withholdings

— — — ( 590 ) — ( 590 )

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

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

3 unchanged sentences

(unaudited and in thousands, except share amounts)

Three Months Ended March 31, 2022

Six Months Ended June 30, 2022

Common Stock Additional

13 unchanged sentences

— — — ( 5,802 ) — ( 5,802 )

Balance as of March 31, 2022 $ 702 $ 685,354 $ 1,146,771 $ ( 506,513 ) $ ( 101,647 ) $ 1,224,667

Three Months Ended March 31, 2021

Balance as of June 30, 2022 $ 702 $ 690,574 $ 1,160,113 $ ( 528,758 ) $ ( 114,267 ) $ 1,208,364

Six Months Ended June 30, 2021

Paid-in Capital

4 unchanged sentences

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

Net loss — — ( 1,945 ) — — ( 1,945 )

Net income — — 4,556 — — 4,556

Other comprehensive loss

4 unchanged sentences

— ( 20,455 ) — 29,296 — 8,841

Repurchase of 1,000,000 shares of common stock

— — — ( 39,411 ) — ( 39,411 )

Repurchase of stock-based compensation awards for tax withholdings

— — — ( 14,796 ) — ( 14,796 )

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

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

3 unchanged sentences

(unaudited and in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

Net income (loss) $ 15,490 $ ( 1,945 )

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

Net income $ 28,832 $ 4,556

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

11,008 10,708

52,721 56,278

Amortization of operating lease right-of-use assets

3 unchanged sentences

Stock-based compensation expense

14,758 14,423

Changes in operating assets and liabilities:

( 14,040 ) 76,754

Accounts payable

19 unchanged sentences

Repurchases of common stock

( 62,707 ) ( 39,411 )

Proceeds from revolving credit facility

28 unchanged sentences

All intercompany balances and transactions have been eliminated.

The condensed consolidated financial statements as of March 31, 2022, and for the three months ended March 31, 2022 and 2021, 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 June 30, 2022, and for the three and six months ended June 30, 2022 and 2021, 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, 2021, 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, 2021, filed on February 24, 2022.

Results for the three months ended March 31, 2022, are not necessarily indicative of results that may be attained in the future.

Results for the three and six months ended June 30, 2022, 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.

6 unchanged sentences

A summary of the revisions to the previously reported balances are presented in the table below for comparative purposes (in thousands):

Three Months Ended March 31, 2021

Six Months Ended June 30, 2021

As reported Revision adjustment As revised

5 unchanged sentences

Net cash flows from financing activities ( 103,262 ) ( 78,081 ) ( 181,343 )

Net increase (decrease) in cash and cash equivalents $ 18,990 $ ( 71,630 ) $ ( 52,640 )

Net decrease in cash and cash equivalents $ ( 19,161 ) $ ( 81,312 ) $ ( 100,473 )

Cash and cash equivalents, including settlement deposits, beginning of period 165,374 100,008 265,382

2 unchanged sentences

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

March 31, 2022 December 31, 2021

Operating lease liabilities $ 12,226 $ 11,518

June 30, 2022 December 31, 2021

Vendor financed licenses $ 13,423 $ 12,521

Operating lease liabilities 11,738 11,518

Accrued interest 8,791 8,776

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 March 31, 2022, and December 31, 2021, was $ 198.1 million and $ 272.8 million, respectively.

The amount of settlement funds as of June 30, 2022, and December 31, 2021, was $ 227.2 million and $ 272.8 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 $ 411.5 million and $ 419.0 million as of March 31, 2022, and December 31, 2021, respectively.

The fair value of the Company’s 5.750 % Senior Notes due 2026 (“2026 Notes”) was $ 388.0 million and $ 419.0 million as of June 30, 2022, and December 31, 2021, 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).

1 unchanged sentence

The Company evaluates goodwill at the reporting unit level and has identified its operating segments, Banks, Merchants, and Billers, as the reporting units.

As of March 31, 2022, the Company's goodwill balance of $ 1.3 billion was allocated $ 725.9 million to Banks, $ 137.3 million to Merchants, and $ 417.0 million to Billers.

As of June 30, 2022, the Company's goodwill balance of $ 1.3 billion was allocated $ 725.9 million to Banks, $ 137.3 million to Merchants, and $ 417.0 million to Billers.

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

5 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 $ 18.9 million and $ 19.3 million, which is included in other noncurrent assets in the condensed consolidated balance sheet as of March 31, 2022, and December 31, 2021, respectively.

Accordingly, the Company recorded an investment of $ 18.5 million and $ 19.3 million, which is included in other noncurrent assets in the condensed consolidated balance sheet as of June 30, 2022, and December 31, 2021, respectively.

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.

4 unchanged sentences

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

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Billed receivables $ 166,163 $ 162,479

5 unchanged sentences

Total receivables, net $ 594,927 $ 596,569

One customer accounted for 13.8 % of the Company's consolidated receivables balance as of March 31, 2022 and December 31, 2021.

One customer accounted for 12.4 % and 13.8 % of the Company's consolidated receivables balance as of June 30, 2022 and December 31, 2021.

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 ( 3,689 )

Balance, March 31, 2022

Balance, June 30, 2022

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 $ 788.8 million as of March 31, 2022, of which the Company expects to recognize approximately 45 % over the next 12 months and the remainder thereafter.

During the three months ended March 31, 2022 and 2021, revenue recognized by the Company from performance obligations satisfied in previous periods was not significant.

As of March 31, 2022, the Company had $ 30.0 million, $ 668.4 million, and $ 400.0 million outstanding under its Revolving Credit Facility, Term Loans, and Senior Notes, respectively, with up to $ 468.5 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 $ 749.6 million as of June 30, 2022, of which the Company expects to recognize approximately 46 % over the next 12 months and the remainder thereafter.

During the three and six months ended June 30, 2022 and 2021, revenue recognized by the Company from performance obligations satisfied in previous periods was not significant.

Corporate Online Banking Solutions

On June 7, 2022, the Company announced a definitive agreement to divest its corporate online banking solutions related assets and liabilities to One Equity Partners ("OEP") for $ 100.0 million.

The sale includes employees and customer contracts as well as technology assets and intellectual property and is expected to close during the three months ending September 30, 2022.

The Company and OEP have also entered into a Transition Services Agreement ("TSA"), whereby the Company will continue to perform certain functions on OEP's behalf during a migration period not expected to exceed 18 months.

The TSA is meant to reimburse the Company for direct costs in order to provide such functions, which are no longer generating revenue for the Company.

As of June 30, 2022, the Company had $ 40.0 million, $ 656.9 million, and $ 400.0 million outstanding under its Revolving Credit Facility, Term Loans, 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.

3 unchanged sentences

entered into the Second Amended and Restated Credit Agreement (the “Credit Agreement”) with the lenders, and Bank of America, N.A., as administrative agent for the lenders, to amend and restate the Company's existing agreement, as amended, dated February 24, 2017.

On May 5, 2022, the Company and Bank of America entered into the LIBOR Transition Amendment (the "Amendment") that replaced the LIBOR reference rate with the Secured Overnight Financing Rate ("SOFR") reference rate.

No other terms or conditions of the Credit Agreement were changed as a result of the Amendment.

The Credit Agreement consists of (a) a five-year $ 500.0 million senior secured revolving credit facility (the “Revolving Credit Facility”), which includes sublimits for (1) the issuance of standby letters of credit and (2) swingline loans, (b) a five-year $ 279.0 million senior secured term loan facility (the "Initial Term Loan") and (c) a five-year $ 500.0 million Delayed Draw Term Loan (together with the Initial Term Loan, the "Term Loans", and together with the Initial Term Loan and the Revolving Credit Facility, the “Credit Facility”).

1 unchanged sentence

The Credit Facility will mature on April 5, 2024.

At the Company’s option, borrowings under the Credit Facility bear interest at an annual rate equal to, either (a) a base rate determined by reference to the highest of (1) the annual interest rate publicly announced by the administrative agent as its Prime Rate, (2) the federal funds effective rate plus 1/2 of 1%, or (3) a London Interbank Offered Rate (“LIBOR”) rate determined by reference to the costs of funds for U.S.

dollar deposits for a one-month interest period, adjusted for certain additional costs, plus 1 % or (b) a LIBOR rate determined by reference to the costs of funds for U.S.

At the Company’s option, borrowings under the Credit Facility bear interest at an annual rate equal to, either (a) a base rate determined by reference to the highest of (1) the annual interest rate publicly announced by the administrative agent as its Prime Rate, (2) the federal funds effective rate plus 1/2 of 1%, or (3) SOFR rate determined by reference to the costs of funds for U.S.

dollar deposits for a one-month interest period, adjusted for certain additional costs, plus 1 % or (b) a SOFR rate determined by reference to the costs of funds for U.S.

dollar deposits for the interest period relevant to such borrowings, adjusted for certain additional costs, plus an applicable margin.

Based on the calculation of the applicable consolidated total leverage ratio, the applicable margin for borrowings under the Credit Facility is between 0.25 % to 1.25 % with respect to base rate borrowings and between 1.25 % and 2.25 % with respect to LIBOR rate borrowings.

Interest is due and payable monthly.

The interest rate in effect for the Credit Facility as of March 31, 2022, was 2.20 %.

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.

Expected Discontinuation of LIBOR

The administrator of LIBOR announced it would cease publication of the U.S.

dollar LIBOR settings immediately following the LIBOR publication on June 30, 2023.

The Alternative Reference Rates Committee has proposed the Secured Overnight Financing Rate ("SOFR") as its recommended alternative to LIBOR, and the first publication of SOFR rates was released in April 2018.

The Company is evaluating the potential impact of the transition from LIBOR as an interest rate benchmark to other potential alternative reference rates, including SOFR.

The Company's Credit Agreement is currently indexed to U.S dollar LIBOR and the maturity date of the Credit Agreement extends beyond June 30, 2023.

The Credit Agreement contemplates the discontinuation of LIBOR and provides options for the Company in such an event.

The Company will continue to actively assess the related opportunities and risks involved in this transition.

The interest rate in effect for the Credit Facility as of June 30, 2022, was 3.37 %.

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 SOFR 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.

On August 21, 2018, the Company completed a $ 400.0 million offering of the 2026 Notes at an issue price of 100 % of the principal amount in a private placement for resale to qualified institutional buyers.

1 unchanged sentence

The 2026 Notes will mature on August 15, 2026.

Maturities on debt outstanding as of March 31, 2022, are as follows (in thousands):

Maturities on debt outstanding as of June 30, 2022, are as follows (in thousands):

Fiscal Year Ending December 31,

1 unchanged sentence

Total $ 1,096,941

As of March 31, 2022, and at all times during the period, the Company was in compliance with its financial debt covenants.

As of June 30, 2022, 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):

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Term loans $ 656,941 $ 678,160

13 unchanged sentences

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

As of March 31, 2022, there was $ 75.0 million available and no amount outstanding on the overdraft facility.

As of June 30, 2022, there was $ 75.0 million available and no amount outstanding on the overdraft facility.

As of December 31, 2021, 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 March 31, 2022, $ 2.3 million was outstanding on these agreements, all of which is included in other current liabilities in the condensed consolidated balance sheet.

During the six months ended June 30, 2022, the Company financed certain multi-year license agreements for internal-use software for $ 10.7 million, with annual payments through April 2024.

As of June 30, 2022, $ 9.5 million was outstanding on these and other license agreements previously entered into, of which $ 5.9 million and $ 3.6 million is included in other current liabilities and other noncurrent liabilities, respectively, in the condensed consolidated balance sheet.

As of December 31, 2021, $ 2.9 million was outstanding on these agreements, all of which is included in other current liabilities 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):

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

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

3 unchanged sentences

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, 2022 and 2021, totaled $ 16.7 million and $ 16.9 million, respectively.

Software for internal use amortization expense recorded during the three months ended June 30, 2022 and 2021, totaled $ 17.1 million and $ 17.4 million, respectively.

Software for internal use amortization expense recorded during the six months ended June 30, 2022 and 2021, totaled $ 33.8 million and $ 34.3 million, respectively.

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

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, 2022 and 2021, totaled $ 0.7 million and $ 2.0 million, respectively.

Software for resale amortization expense recorded during the three months ended June 30, 2021 totaled $ 1.4 million.

There was no software for resale amortization expense recorded during the three months ended June 30, 2022.

Software for resale amortization expense recorded during the six months ended June 30, 2022 and 2021, totaled $ 0.7 million and $ 3.4 million, respectively.

These software amortization expense amounts are reflected in cost of revenue 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, 2022 December 31, 2021

June 30, 2022 December 31, 2021

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

2 unchanged sentences

Total other intangible assets $ 523,613 $ ( 261,831 ) $ 261,782 $ 531,801 $ ( 248,797 ) $ 283,004

Other intangible assets amortization expense recorded during both the three months ended March 31, 2022 and 2021, totaled $ 9.2 million and $ 9.3 million, respectively.

Based on capitalized intangible assets as of March 31, 2022, estimated amortization expense amounts in future fiscal years are as follows (in thousands):

Other intangible assets amortization expense recorded during the three months ended June 30, 2022 and 2021, totaled $ 9.1 million and $ 9.2 million, respectively.

Other intangible assets amortization expense recorded during the six months ended June 30, 2022 and 2021, totaled $ 18.3 million and $ 18.5 million, respectively.

Based on capitalized intangible assets as of June 30, 2022, 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 three months ended March 31, 2022 and 2021, totaled 31,406 and 27,117 , respectively.

Shares issued under the 2017 Employee Stock Purchase Plan during the six months ended June 30, 2022 and 2021, totaled 70,242 and 55,486 , respectively.

Stock Options

7 unchanged sentences

Exercised ( 77,403 ) 18.04

Outstanding as of March 31, 2022 1,583,236 $ 18.44 3.12 $ 20,657,176

Exercisable as of March 31, 2022 1,583,236 $ 18.44 3.12 $ 20,657,176

The total intrinsic value of stock options exercised during the three months ended March 31, 2022 and 2021, was $ 0.9 million and $ 3.1 million, respectively.

There were no stock options granted during the three months ended March 31, 2022 or 2021.

Outstanding as of June 30, 2022 1,562,916 $ 18.44 2.59 $ 11,639,158

Exercisable as of June 30, 2022 1,562,916 $ 18.44 2.59 $ 11,639,158

The total intrinsic value of stock options exercised during the six months ended June 30, 2022 and 2021, was $ 1.1 million and $ 7.6 million, respectively.

There were no stock options granted during the six months ended June 30, 2022 or 2021.

Total Shareholder Return Awards

7 unchanged sentences

Change in payout rate ( 114,355 ) 45.92

Nonvested as of March 31, 2022 1,341,062 $ 39.79

During the three months ended March 31, 2022, a total of 212,210 TSRs awards granted in fiscal 2019 vested and achieved a payout rate of 65 % 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 June 30, 2022 1,214,598 $ 39.78

During the six months ended June 30, 2022, a total of 212,210 TSRs awards granted in fiscal 2019 vested and achieved a payout rate of 65 % 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 47,612 of those shares to pay the employees’ portion of the minimum payroll withholding taxes.

The fair value of TSRs granted during the three months ended March 31, 2022 and 2021, 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:

Three Months Ended March 31,

The fair value of TSRs granted during the six months ended June 30, 2022 and 2021, 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:

Six months ended June 30,

Expected life (years) 3.1 2.8

10 unchanged sentences

Forfeited ( 123,690 ) 32.76

Nonvested as of March 31, 2022 1,337,225 $ 33.00

During the three months ended March 31, 2022, a total of 356,079 RSUs vested.

Nonvested as of June 30, 2022 1,138,703 $ 32.62

During the six months ended June 30, 2022, a total of 440,275 RSUs vested.

The Company withheld 131,923 of those shares to pay the employees’ portion of the minimum payroll withholding taxes.

As of March 31, 2022, there were unrecognized compensation costs of $ 39.6 million and $ 36.1 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, 2022 and 2021, of $ 8.0 million and $ 6.7 million, respectively, with corresponding tax benefits of $ 1.1 million and $ 1.0 million, respectively.

As of June 30, 2022, there were unrecognized compensation costs of $ 31.3 million and $ 28.6 million related to nonvested RSUs and TSRs, respectively, which the Company expects to recognize over a weighted average period of 2.2 years.

The Company recorded stock-based compensation expense recognized under ASC 718 for the three months ended June 30, 2022 and 2021, of $ 6.8 million and $ 7.7 million, respectively, with corresponding tax benefits of $ 0.9 million and $ 1.2 million, respectively.

The Company recorded stock-based compensation expense recognized under ASC 718 for the six months ended June 30, 2022 and 2021, of $ 14.8 million and $ 14.4 million, respectively, with corresponding tax benefits of $ 2.1 million and $ 2.2 million, respectively.

Common Stock and Treasury Stock

1 unchanged sentence

In December 2021, the board approved the repurchase of the Company's common stock of up to $ 250.0 million, in place of the remaining purchase amounts previously authorized.

The Company repurchased 1,131,248 shares for $ 37.9 million during the three months ended March 31, 2022.

The Company repurchased 2,055,488 shares for $ 62.7 million during the six months ended June 30, 2022.

Under the program to date, the Company has repurchased 51,412,983 shares for approximately $ 782.4 million.

As of March 31, 2022, the maximum remaining amount authorized for purchase under the stock repurchase program was $ 178.4 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 March 31,

As of June 30, 2022, the maximum remaining amount authorized for purchase under the stock repurchase program was $ 153.6 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 June 30, Six Months Ended June 30,

2022 2021 2022 2021

Weighted average shares outstanding:

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Diluted weighted average shares outstanding 115,205 119,010 115,649 118,958

The diluted earnings (loss) per share computation excludes 1.8 million and 4.5 million options to purchase shares, RSUs, and contingently issuable shares during the three months ended March 31, 2022 and 2021, respectively, as their effect would be anti-dilutive.

Common stock outstanding as of March 31, 2022, and December 31, 2021, was 115,085,627 and 115,730,046 , respectively.

The diluted earnings per share computation excludes 2.2 million and 1.3 million options to purchase shares, RSUs, and contingently issuable shares during the three months ended June 30, 2022 and 2021, respectively, as their effect would be anti-dilutive.

The diluted earnings per share computation excludes 2.0 million and 1.4 million options to purchase shares, RSUs, and contingently issuable shares during the six months ended June 30, 2022 and 2021, respectively, as their effect would be anti-dilutive.

Common stock outstanding as of June 30, 2022, and December 31, 2021, was 114,295,153 and 115,730,046 , respectively.

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

Other, net was $ 2.3 million of income and $ 1.4 million of expense for the three months ended March 31, 2022 and 2021, respectively .

Other, net was $ 2.0 million and $ 1.4 million of income for the three months ended June 30, 2022 and 2021, respectively.

Other, net was $ 4.3 million and $ 0.1 million of income for the six months ended June 30, 2022 and 2021, respectively.

Segment Information

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

Three Months Ended March 31,

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

2022 2021 2022 2021

Banks $ 141,946 $ 114,051 $ 274,144 $ 209,968

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Other, net 2,006 1,434 4,256 52

Income (loss) before income taxes $ 22,181 $ ( 6,313 )

Income before income taxes $ 17,730 $ 8,463 $ 39,911 $ 2,150

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 March 31, 2022

Three Months Ended June 30, 2022

Banks Merchants Billers Total

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Total $ 141,946 $ 36,534 $ 161,945 $ 340,425

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

Banks Merchants Billers Total

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Total $ 114,051 $ 37,424 $ 150,194 $ 301,669

Three Months Ended March 31,

Six Months Ended June 30, 2022

Banks Merchants Billers Total

Primary Solution Categories

Bill Payments $ — $ — $ 311,825 $ 311,825

Digital Business Banking 25,585 — — 25,585

Merchant Payments — 77,536 — 77,536

Fraud Management 15,329 — — 15,329

Real-Time Payments 46,139 — — 46,139

Issuing and Acquiring 187,091 — — 187,091

Total $ 274,144 $ 77,536 $ 311,825 $ 663,505

Six Months Ended June 30, 2021

Banks Merchants Billers Total

Primary Solution Categories

Bill Payments $ — $ — $ 300,793 $ 300,793

Digital Business Banking 30,792 — — 30,792

Merchant Payments — 76,094 — 76,094

Fraud Management 16,681 — — 16,681

Real-Time Payments 30,896 — — 30,896

Issuing and Acquiring 131,599 — — 131,599

Total $ 209,968 $ 76,094 $ 300,793 $ 586,855

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

2022 2021 2022 2021

Software as a service and platform as a service $ 13,985 $ 14,482 $ 27,937 $ 28,761

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Software as a service and platform as a service $ 161,935 $ 150,114 $ 311,778 $ 300,538

License — — — 94

Maintenance 10 80 47 161

Services — — — —

Total $ 161,945 $ 150,194 $ 311,825 $ 300,793

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

Three Months Ended March 31,

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

2022 2021 2022 2021

United States $ 209,459 $ 195,830 $ 408,774 $ 387,807

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

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Long-lived Assets

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Total $ 2,118,981 $ 2,170,529

No single customer accounted for more than 10% of the Company’s consolidated revenues during the three months ended March 31, 2022 and 2021.

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, 2022 and 2021.

For the three months ended March 31, 2022, the Company's effective tax rate was 30 %.

The Company’s foreign entities reported profits of $ 30.9 million for the three months ended March 31, 2022.

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

The Company reported a tax benefit on 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.

No single customer accounted for more than 10% of the Company’s consolidated revenues during the three and six months ended June 30, 2022 and 2021.

No other country outside the United States accounted for more than 10% of the Company's consolidated revenues during the six months ended June 30, 2022 and 2021.

For the three and six months ended June 30, 2022, the Company's effective tax rate was 25 % and 28 %, respectively.

The Company reported tax expense on pretax income for both the three and six months ended June 30, 2022, with foreign entities recognizing earnings of $ 27.4 million and $ 58.3 million, respectively.

The effective tax rate for the three and six months ended June 30, 2022, was negatively impacted by excess tax expense on equity-based compensation.

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.

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 March 31, 2022, and December 31, 2021, the amount of unrecognized tax benefits for uncertain tax positions was $ 24.3 million and $ 24.5 million, respectively, excluding related liabilities for interest and penalties of $ 1.1 million as of March 31, 2022, and December 31, 2021.

As of June 30, 2022, and December 31, 2021, the amount of unrecognized tax benefits for uncertain tax positions was $ 24.1 million and $ 24.5 million, respectively, excluding related liabilities for interest and penalties of $ 1.0 million and $ 1.1 million as of June 30, 2022, and December 31, 2021, 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 $ 6.1 million, due to the settlement of various audits and the expiration of statutes of limitation.

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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 and injunctive remedies that could be burdensome and costly to implement.

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.

Consumer Financial Protection Bureau and various state regulatory agencies contacted the Company about this incident and the Company has furnished information to these authorities and is cooperating in their investigations.

These investigations could result in material fines, penalties, and statutory damages as well as burdensome and costly injunctive remedies.

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 by the inadvertent ACH file transmission.

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

The Company has entered into an agreement to settle all of these lawsuits.

The agreement, which is subject to court approval and other conditions, involves the establishment of (i) a $ 5.0 million fund out of which payments would be made to class members and for attorneys’ fees and administrative costs, plus (ii) additional funds totaling $ 1.5 million that could be required to be established in certain circumstances.

There can be no assurance that the conditions to settlement will be satisfied.

The Company has asserted claims for insurance coverage with respect to potential losses associated with this matter.

There can be no assurance as to the amount of insurance that may be available.

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