What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-04-30 compared with 2023-11-02 · 139 added, 243 removed, 441 unchanged (46% of the section changed)

4 unchanged sentences

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Current assets

53 unchanged sentences

5,000,000 shares authorized;

no shares issued at September 30, 2023, and December 31, 2022

no shares issued at March 31, 2024, and December 31, 2023

Common stock;

1 unchanged sentence

280,000,000 shares authorized;

140,525,055 shares issued at September 30, 2023, and December 31, 2022

140,525,055 shares issued at March 31, 2024, and December 31, 2023

Additional paid-in capital 714,936 712,994

Retained earnings 1,387,216 1,394,967

Treasury stock, at cost, 31,802,520 and 32,456,227 shares at September 30, 2023, and December 31, 2022, respectively

Treasury stock, at cost, 34,267,073 and 32,447,317 shares at March 31, 2024, and December 31, 2023, respectively

( 733,927 ) ( 674,896 )

7 unchanged sentences

(unaudited and in thousands, except per share amounts)

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Software as a service and platform as a service

18 unchanged sentences

306,459 314,028

Operating income

61,924 3,489 48,092 55,612

Operating income (loss) 9,560 ( 24,352 )

Other income (expense)

3 unchanged sentences

( 2,025 ) ( 3,395 )

1,084 41,545 ( 6,403 ) 45,801

Total other income (expense) ( 17,026 ) ( 18,782 )

Income (loss) before income taxes 46,663 33,693 ( 6,494 ) 73,604

Loss before income taxes

( 7,466 ) ( 43,134 )

Income tax expense (benefit)

Net income (loss) $ 37,911 $ 23,117 $ ( 1,107 ) $ 51,949

Income (loss) per common share

285 ( 10,826 )

Diluted $ 0.35 $ 0.20 $ ( 0.01 ) $ 0.45

$ ( 7,751 ) $ ( 32,308 )

Loss per common share

$ ( 0.07 ) $ ( 0.30 )

Weighted average common shares outstanding

1 unchanged sentence

Diluted 106,799 108,156

(1) The cost of revenue excludes charges for depreciation but includes amortization of purchased and developed software for resale.

(1) The cost of revenue excludes charges for depreciation and amortization.

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

3 unchanged sentences

(unaudited and in thousands)

Three Months Ended

September 30, Nine Months Ended

September 30,

Three Months Ended March 31,

$ ( 7,751 ) $ ( 32,308 )

Net income (loss) $ 37,911 $ 23,117 $ ( 1,107 ) $ 51,949

Other comprehensive income (loss):

Foreign currency translation adjustments

Total other comprehensive income (loss) ( 6,310 ) ( 13,459 ) 298 ( 28,179 )

Comprehensive income (loss) $ 31,601 $ 9,658 $ ( 809 ) $ 23,770

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 September 30, 2023

Common Stock Additional

Paid-in Capital Retained Earnings Treasury Stock Accumulated Other

Comprehensive Loss Total

Balance as of June 30, 2023 $ 702 $ 704,096 $ 1,234,440 $ ( 655,660 ) $ ( 111,052 ) $ 1,172,526

( 2,404 ) 3,618

Other comprehensive loss

— — — — ( 6,310 ) ( 6,310 )

Stock-based compensation

— 6,822 — — — 6,822

Shares issued and forfeited, net, under stock plans

— ( 2,412 ) — 3,381 — 969

Repurchase of stock-based compensation awards for tax withholdings

— — — ( 883 ) — ( 883 )

Balance as of September 30, 2023 $ 702 $ 708,506 $ 1,272,351 $ ( 653,162 ) $ ( 117,362 ) $ 1,211,035

Three Months Ended September 30, 2022

Common Stock Additional

Paid-in Capital Retained Earnings Treasury Stock Accumulated Other

Comprehensive Loss Total

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

Net income — — 23,117 — — 23,117

Other comprehensive loss — — — — ( 13,459 ) ( 13,459 )

Stock-based compensation

— 7,126 — — — 7,126

Shares issued and forfeited, net, under stock plans

— 63 — 1,250 — 1,313

Repurchase of 1,154,825 shares of common stock

— — — ( 28,227 ) — ( 28,227 )

Repurchase of stock-based compensation awards for tax withholdings

Total other comprehensive income (loss) ( 2,404 ) 3,618

Comprehensive loss

$ ( 10,155 ) $ ( 28,690 )

Balance as of September 30, 2022 $ 702 $ 697,763 $ 1,183,230 $ ( 555,753 ) $ ( 127,726 ) $ 1,198,216

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

3 unchanged sentences

(unaudited and in thousands, except share amounts)

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Common Stock Additional

3 unchanged sentences

Balance as of December 31, 2023 $ 702 $ 712,994 $ 1,394,967 $ ( 674,896 ) $ ( 109,470 ) $ 1,324,297

Net loss — — ( 7,751 ) — — ( 7,751 )

Other comprehensive loss

— — — — ( 2,404 ) ( 2,404 )

Other comprehensive income — — — — 298 298

Stock-based compensation

2 unchanged sentences

— ( 6,157 ) — 7,336 — 1,179

Repurchase of 2,060,433 shares of common stock

— — — ( 63,065 ) — ( 63,065 )

Repurchase of stock-based compensation awards for tax withholdings

— — — ( 3,302 ) — ( 3,302 )

Balance as of September 30, 2023 $ 702 $ 708,506 $ 1,272,351 $ ( 653,162 ) $ ( 117,362 ) $ 1,211,035

Nine Months Ended September 30, 2022

Balance as of March 31, 2024 $ 702 $ 714,936 $ 1,387,216 $ ( 733,927 ) $ ( 111,874 ) $ 1,257,053

Three Months Ended March 31, 2023

Paid-in Capital

4 unchanged sentences

Balance as of December 31, 2022 $ 702 $ 702,458 $ 1,273,458 $ ( 665,771 ) $ ( 117,660 ) $ 1,193,187

Net income — — 51,949 — — 51,949

Other comprehensive loss

— — ( 32,308 ) — — ( 32,308 )

Other comprehensive income

— — — — 3,618 3,618

Stock-based compensation

2 unchanged sentences

— ( 6,719 ) — 7,549 — 830

Repurchase of 3,210,313 shares of common stock

— — — ( 90,934 ) — ( 90,934 )

Repurchase of stock-based compensation awards for tax withholdings

— — — ( 3,001 ) — ( 3,001 )

Balance as of September 30, 2022 $ 702 $ 697,763 $ 1,183,230 $ ( 555,753 ) $ ( 127,726 ) $ 1,198,216

Balance as of March 31, 2023 $ 702 $ 701,040 $ 1,241,150 $ ( 661,223 ) $ ( 114,042 ) $ 1,167,627

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 (loss) $ ( 1,107 ) $ 51,949

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

$ ( 7,751 ) $ ( 32,308 )

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

23,978 25,408

5 unchanged sentences

( 1,311 ) ( 290 )

Gain on divestiture — ( 38,452 )

Changes in operating assets and liabilities:

127,269 88,960

Accounts payable

13 unchanged sentences

( 14,582 ) ( 6,481 )

Proceeds from divestiture — 100,139

Net cash flows from investing activities

9 unchanged sentences

( 152,000 ) ( 45,000 )

Proceeds from term portion of credit agreement

Repayment of term portion of credit agreement

( 529,073 ) ( 14,606 )

Payments on or proceeds from other debt, net ( 12,473 ) ( 10,106 )

Payments for debt issuance costs

Net increase (decrease) in settlement assets and liabilities

( 4,635 ) 20,084

Payments on or proceeds from other debt, net ( 2,694 ) ( 5,670 )

Net decrease in settlement assets and liabilities ( 18,933 ) ( 2,834 )

Net cash flows from financing activities

1 unchanged sentence

Effect of exchange rate fluctuations on cash 2,314 2,557

Net increase in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents ( 725 ) 13,560

Cash and cash equivalents, including settlement deposits, beginning of period 238,821 214,672

17 unchanged sentences

All intercompany balances and transactions have been eliminated.

The condensed consolidated financial statements as of September 30, 2023, and for the three and nine months ended September 30, 2023 and 2022, 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, 2024, and for the three months ended March 31, 2024 and 2023, 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, 2023, 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, 2022, filed on March 1, 2023.

Results for the three and nine months ended September 30, 2023, are not necessarily indicative of results that may be attained in the future.

Results for the three months ended March 31, 2024, 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.

4 unchanged sentences

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

September 30, 2023 December 31, 2022

Operating lease liabilities $ 9,659 $ 11,218

March 31, 2024 December 31, 2023

Vendor financed licenses $ 13,698 $ 12,702

Operating lease liabilities 9,538 9,348

Accrued interest 3,337 9,172

Royalties payable 2,536 3,726

Other 39,191 51,022

14 unchanged sentences

The Company is entitled to interest earned on the fund balances.

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, 2023, and December 31, 2022, was $ 278.4 million and $ 328.7 million, respectively.

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

The amount of settlement funds as of March 31, 2024, and December 31, 2023, was $ 173.4 million and $ 273.2 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 $ 388.0 million and $ 390.0 million as of September 30, 2023, and December 31, 2022, respectively.

The fair value of the Company’s 5.750 % Senior Notes due 2026 (“2026 Notes”) was $ 394.0 million and $ 398.5 million as of March 31, 2024, and December 31, 2023, 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 September 30, 2023, the Company's goodwill balance of $ 1.2 billion was allocated $ 671.7 million to Banks, $ 137.3 million to Merchants, and $ 417.0 million to Billers.

As of March 31, 2024, the Company's goodwill balance of $ 1.2 billion was allocated $ 671.7 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 $ 18.3 million and $ 17.9 million, which is included in other noncurrent assets in the condensed consolidated balance sheet as of September 30, 2023, and December 31, 2022, 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.

Accordingly, the Company recorded an investment of $ 18.3 million and $ 18.5 million, which is included in other noncurrent assets in the condensed consolidated balance sheet as of March 31, 2024, and December 31, 2023, respectively.

Recently Issued Accounting Standards Not Yet Effective

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

ASU 2023-07 is effective for annual periods beginning after December 15, 2023 and interim periods beginning after December 15, 2024, and early application is permitted.

The Company is currently assessing the impact the adoption of ASU 2023-07 will have on its segment reporting disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , to enhance the transparency and decision usefulness of income tax disclosures.

The amendments in this update will require disclosure of more disaggregated information about a reporting entity's effective tax rate reconciliation and income taxes paid.

ASU 2023-09 is effective for annual periods beginning after December 15, 2024, and early application is permitted for annual financial statements that have not yet been issued or made available for issuance.

The Company is currently assessing the impact the adoption of ASU 2023-09 will have on its income tax disclosures.

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 be entitled to in exchange for those products and services.

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

3 unchanged sentences

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Billed receivables $ 143,851 $ 250,423

5 unchanged sentences

Total receivables, net $ 635,311 $ 766,320

No customer accounted for more than 10% of the Company’s consolidated receivables balance as of September 30, 2023.

One customer accounted for 10.1 % of the Company's consolidated receivables balance as of December 31, 2022.

N o customer accounted for more than 10% of the Company’s consolidated receivables balance as of March 31, 2024 and December 31, 2023.

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 ( 892 )

Balance, September 30, 2023

Balance, March 31, 2024

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 $ 627.6 million as of September 30, 2023, of which the Company expects to recognize approximately 41 % over the next 12 months and the remainder thereafter.

During the three and nine months ended September 30, 2023, revenue recognized by the Company from performance obligations satisfied in previous periods was $ 23.3 million and $ 43.7 million, respectively.

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, including a net working capital adjustment.

The sale included employees and customer contracts as well as technology assets and intellectual property and closed on September 1, 2022.

The Company recognized a gain of $ 38.5 million on the sale during the three and nine months ended September 30, 2022.

During the nine months ended September 30, 2023, the Company recognized a loss for the final post-closing adjustment pursuant to the definitive agreement of $ 0.5 million .

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 September 30, 2023, the Company had $ 129.0 million, $ 539.2 million, and $ 400.0 million outstanding under its Revolving Credit Facility, Term Loans, and Senior Notes, respectively, with up to $ 368.2 million of unused borrowings under the Revolving Credit Facility portion of the Credit Agreement, as amended, and up to $ 2.8 million of unused borrowings under the Letter of Credit agreements.

Revenue allocated to remaining performance obligations was $ 672.8 million as of March 31, 2024, of which the Company expects to recognize approximately 49 % over the next 12 months and the remainder thereafter.

During the three months ended March 31, 2024 and 2023, revenue recognized by the Company from performance obligations satisfied in previous periods was not significant.

As of March 31, 2024, the Company had $ 136.0 million, $ 490.6 million, and $ 400.0 million outstanding under its Revolving Credit Facility, Term Loans, and Senior Notes, respectively, with up to $ 461.9 million of unused borrowings under the Revolving Credit Facility portion of the Credit Agreement, as amended, and up to $ 2.1 million of unused borrowings under Letter of Credit agreements.

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

Credit Agreement

On April 5, 2019, the Company and its wholly-owned subsidiaries, ACI Worldwide Corp.

and ACI Payments, Inc.

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.

On April 28, 2023, the Company and Bank of America entered into the 2023 Extension Amendment to extend the term of the Credit Facility one year to April 5, 2025.

All other terms remained the same.

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”).

The Credit Agreement also allows the Company to request optional incremental term loans and increases in the revolving commitment.

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 SOFR rate borrowings.

On February 26, 2024, ACI Worldwide, Inc.

(the “Company”) entered into a Refinance Amendment (the “Amendment”) to the Second Amended and Restated Credit Agreement, dated as of April 5, 2019 (as amended, restated, supplemented or otherwise modified from time to time, including by the Amendment, the “Credit Agreement”) among the Company, the subsidiary borrowers from time to time party thereto, the lenders from time to time party thereto, Bank of America, N.A., as administrative agent and a lender, BofA Securities, Inc., PNC Capital Markets LLC, Wells Fargo Securities, LLC, and TD Securities (USA) LLC, as Joint Lead Arrangers and Joint Bookrunners, and the other financial institutions party thereto.

The Amendment (i) provides a senior secured term loan facility (the “Term Loan Facility”) in an aggregate principal amount of $ 500 million, (ii) provides a senior secured revolving credit facility (the “Revolving Loan Facility” and together with the Term Loan Facility, the “Credit Facilities”) of up to $ 600 million, and (iii) extends the maturity date of the Facilities to February 26, 2029 (the “Maturity Date”), provided that if any of the Company’s 5.750 % Senior Notes due 2026 are outstanding on the date that is 91 days before the maturity thereof (the “Springing Maturity Date”), and the Company does not have sufficient liquidity as of such date, the Maturity Date will be the Springing Maturity Date.

The Revolving Loan Facility includes a $ 35 million sublimit for the issuance of standby letters of credit and a $ 20 million sublimit for swingline loans.

Amounts repaid under the Revolving Facility may be reborrowed.

Borrowings under the Credit Facilities bear interest at a rate equal to, at borrower's option, either (A) a base rate determined by reference to the highest of (1) the rate of interest per annum publicly announced by Bank of America as its prime rate, (2) the federal funds effective rate plus 0.5 %, (3) term SOFR plus 1 %, and (4) 1 % or (B) term SOFR for applicable interest period relevant to such borrowing, in each case plus an applicable margin.

The applicable margin for borrowings under the Credit Facilities is, based on the calculation of the applicable consolidated total leverage ratio, between 0.5 % to 1.5 % with respect to base rate borrowings and between 1.5 % and 2.5 % with respect to term SOFR rate borrowings.

Interest is due and payable monthly.

The interest rate in effect for the Credit Facility as of September 30, 2023, was 7.42 %.

The interest rate in effect for the Credit Facility as of March 31, 2024, was 7.43 %.

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.

The Company’s subsidiaries, ACI Worldwide Corp.

and ACI Payments, Inc.

are co-borrowers under the Credit Agreement.

The obligations of the borrowers under the Credit Facilities and the obligations of the Company and its subsidiaries under cash management arrangements entered into with lenders under the Credit Facilities (or affiliates thereof) are jointly and severally guaranteed by the Company and all of its existing and future material domestic subsidiaries, subject to certain exclusions.

The obligations of the borrowers in respect of the Credit Facilities are secured by first-priority security interests in substantially all assets of the borrowers, including 100 % of the capital stock of each domestic subsidiary of the borrower and 65 % of the voting capital stock of each foreign subsidiary that is directly owned by a borrower, in each case subject to certain exclusions set forth in the Credit Agreement.

The Credit Agreement contains customary negative covenants that, among other things, restrict the Company’s ability to incur additional indebtedness, grant additional liens, and make certain acquisitions, investments, asset dispositions, and restricted payments.

In addition, the Credit Agreement contains financial covenants that require the Company to maintain, as of the end of any fiscal quarter, (i) a consolidated total net leverage ratio of less than or equal to 4.25 to 1.00, (ii) a consolidated senior secured net leverage ratio of less than or equal to 3.75 to 1.00, and (iii) a minimum consolidated interest coverage ratio of greater than or equal to 3.00 to 1.00, in each case subject to certain exclusions as set forth in the Credit Agreement.

The Credit Agreement also contains certain customary affirmative covenants and events of default.

If an event of default, as specified in the Credit Agreement, shall occur and be continuing, the Company may be required to repay all amounts outstanding under the Credit Facilities.

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 September 30, 2023, are as follows (in thousands):

Maturities on debt outstanding as of March 31, 2024, are as follows (in thousands):

Fiscal Year Ending December 31,

Remainder of 2024 $ 28,125

Thereafter 448,500

Total $ 1,026,625

As of September 30, 2023, and at all times during the period, the Company was in compliance with its financial debt covenants.

As of March 31, 2024, 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, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Term loans $ 490,625 $ 519,698

13 unchanged sentences

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

As of September 30, 2023, there was $ 75.0 million available and no amount outstanding on the overdraft facility.

As of March 31, 2024, there was $ 75.0 million available and no amount outstanding on the overdraft facility.

As of December 31, 2023, 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, 2023, $ 3.6 million was outstanding on these agreements, all of which is included in other current liabilities in the condensed consolidated balance sheet.

As of December 31, 2022, $ 9.3 million was outstanding on these agreements, of which $ 5.8 million and $ 3.5 million is included in other current liabilities and other noncurrent liabilities, respectively.

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

As of March 31, 2024 and December 31, 2023, $ 3.6 million was outstanding on these agreements, all of which is included in other current liabilities 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):

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

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

1 unchanged sentence

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 September 30, 2023 and 2022, totaled $ 16.3 million and $ 17.3 million, respectively.

Software for internal use amortization expense recorded during the nine months ended September 30, 2023 and 2022, totaled $ 49.3 million and $ 51.1 million, respectively.

Software for internal use amortization expense recorded during the three months ended March 31, 2024 and 2023, totaled $ 15.5 million and $ 17.0 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 was 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 nine months ended September 30, 2022 totaled $ 0.7 million.

Software for resale was fully amortized during the first quarter of 2022 and, therefore, there was no amortization expense recorded during the three months ended September 30, 2022, or the three and nine months ended September 30, 2023.

The software amortization expense amount was 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):

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

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

2 unchanged sentences

Total other intangible assets $ 468,017 $ ( 281,235 ) $ 186,782 $ 469,553 $ ( 273,907 ) $ 195,646

Other intangible assets amortization expense recorded during the three months ended September 30, 2023 and 2022, totaled $ 8.5 million and $ 8.8 million, respectively.

Other intangible assets amortization expense recorded during the nine months ended September 30, 2023 and 2022, totaled $ 25.4 million and $ 27.1 million, respectively.

Based on capitalized intangible assets as of September 30, 2023, estimated amortization expense amounts in future fiscal years are as follows (in thousands):

Other intangible assets amortization expense recorded during the three months ended March 31, 2024 and 2023, totaled $ 8.5 million and $ 8.4 million, respectively.

Based on capitalized intangible assets as of March 31, 2024, 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 nine months ended September 30, 2023 and 2022, totaled 101,565 and 108,149 , respectively.

Shares issued under the 2017 Employee Stock Purchase Plan during the three months ended March 31, 2024 and 2023, totaled 27,550 and 31,639 , respectively.

Stock Options

7 unchanged sentences

Exercised ( 25,513 ) 18.62

Expired ( 4,614 ) 19.63

Outstanding as of September 30, 2023 1,052,513 $ 18.98 1.90 $ 8,419,789

Exercisable as of September 30, 2023 1,052,513 $ 18.98 1.90 $ 8,419,789

The total intrinsic value of stock options exercised during the nine months ended September 30, 2023 and 2022, was $ 0.9 million and $ 1.1 million, respectively.

There were no stock options granted during the nine months ended September 30, 2023 or 2022.

Outstanding as of March 31, 2024 847,999 $ 18.76 1.76 $ 10,040,262

Exercisable as of March 31, 2024 847,999 $ 18.76 1.76 $ 10,040,262

The total intrinsic value of stock options exercised during the three months ended March 31, 2024 and 2023, was $ 0.3 million and less than $ 0.1 million, respectively.

There were no stock options granted during the three months ended March 31, 2024 or 2023.

Performance Share Awards

During the nine months ended September 30, 2023, pursuant to the Company's 2020 Equity and Incentive Compensation Plan, the Company granted performance share awards with a total shareholder return multiplier.

These performance awards are earned based upon achievement, over a specified period that must not be less than one year and is typically a three-year performance period, of performance goals related to (i) net revenue growth and (ii) net adjusted EBITDA margin over the performance period as determined by the Company with a TSR multiplier up to plus or minus 20 %.

During the three months ended March 31, 2024, pursuant to the Company's 2020 Equity and Incentive Compensation Plan, the Company granted performance share awards with a total shareholder return component ("TSRs").

These performance share awards are earned, if at all, based upon achievement, over a specified period that must not be less than one year and is typically a three-year performance period.

The awards have operating performance goals that include (i) adjusted EBITDA metrics and (ii) revenue growth rates as determined by the Company with a TSR multiplier up to plus or minus 20 %.

Up to 200 % of the performance shares could be earned upon achievement of the performance goals, including the multiplier.

On a quarterly basis, management evaluates the probability that the threshold performance goals will be achieved, if at all, and the anticipated level of attainment to determine the amount of compensation expense to record in the consolidated financial statements.

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

A summary of nonvested TSRs is as follows:

Shares Weighted Average

4 unchanged sentences

Change in payout rate ( 203,945 ) 50.60

Nonvested as of September 30, 2023 682,148 $ 40.62

In the first quarter of 2023, the TSRs granted in 2020 were earned by the employees.

Nonvested as of March 31, 2024 1,022,348 $ 35.10

As of March 31, 2024, the TSRs granted in 2021 were earned by the employees.

However, the performance goals were not met and no shares were issued.

The fair value of TSRs granted during the nine months ended September 30, 2023 and 2022, 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,

The fair value of TSRs granted during the three months ended March 31, 2024, 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, 2024

Expected life (years) 2.7

2 unchanged sentences

Expected dividend yield —

There were no TSRs granted during the three months ended March 31, 2023.

Restricted Share Units

6 unchanged sentences

Forfeited ( 31,893 ) 26.90

Nonvested as of September 30, 2023 1,654,477 $ 26.66

During the nine months ended September 30, 2023, a total of 553,490 RSUs vested.

Nonvested as of March 31, 2024 2,493,642 $ 28.84

During the three months ended March 31, 2024, a total of 292,250 RSUs vested.

The Company withheld 104,573 of those shares to pay the employees’ portion of the minimum payroll withholding taxes.

As of September 30, 2023, there were unrecognized compensation costs of $ 36.4 million and $ 10.0 million related to nonvested RSUs and TSRs, respectively, which the Company expects to recognize over weighted average periods of 2.3 years and 1.8 years, respectively.

The Company recorded stock-based compensation expense recognized under ASC 718 for the three months ended September 30, 2023 and 2022, of $ 6.8 million and $ 7.1 million, respectively, with corresponding tax benefits of $ 1.2 million and $ 1.0 million, respectively.

The Company recorded stock-based compensation expense recognized under ASC 718 for the nine months ended September 30, 2023 and 2022, of $ 17.5 million and $ 21.9 million, respectively, with corresponding tax benefits of $ 3.2 million and $ 3.0 million , respectively.

As of March 31, 2024, there was unrecognized compensation expense of $ 65.3 million related to RSUs and $ 25.1 million related to TSRs, which the Company expects to recognize over a weighted average period of 2.5 years and 2.4 years, respectively.

The Company recorded stock-based compensation expense recognized under ASC 718 for the three months ended March 31, 2024 and 2023, of $ 8.1 million and $ 5.3 million, respectively, with corresponding tax benefits of $ 1.4 million and $ 0.9 million, respectively.

Common Stock and Treasury Stock

In 2005, the board approved a stock repurchase program authorizing the Company, as market and business conditions warrant, to acquire its common stock and periodically authorize additional funds for the program.

On February 24, 2023, 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 did no t repurchase any shares under the program during the nine months ended September 30, 2023.

Under the program to date, the Company has repurchased 57,981,733 shares for approximately $ 926.2 million.

As of September 30, 2023, the maximum remaining amount authorized for purchase under the stock repurchase program was $ 200.0 million.

In February 2023, 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 2,060,433 shares for $ 63.1 million during the three months ended March 31, 2024.

Under the program to date, the Company has repurchased 60,981,733 shares for approximately $ 1.0 billion.

As of March 31, 2024, the maximum remaining amount authorized for purchase under the stock repurchase program was $ 109.3 million.

Earnings (Loss) Per Share

1 unchanged sentence

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 per share (in thousands):

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

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:

2 unchanged sentences

Diluted weighted average shares outstanding 106,799 108,156

The diluted earnings (loss) per share computation excludes 2.0 million options to purchase shares, RSUs, and contingently issuable shares during both the three months ended September 30, 2023 and 2022, as their effect would be anti-dilutive.

The diluted earnings (loss) per share computation excludes 3.2 million and 2.0 million options to purchase shares, RSUs, and contingently issuable shares during the nine months ended September 30, 2023 and 2022, respectively, as their effect would be anti-dilutive.

Common stock outstanding as of September 30, 2023, and December 31, 2022, was 108,722,535 and 108,068,828 , respectively.

Other, net is primarily comprised of foreign currency transaction gains and losses and, for the three and nine months ended September 30, 2022, the $ 38.5 million gain on the divestiture.

Other, net was $ 1.1 million and $ 41.5 million of income for the three months ended September 30, 2023 and 2022, respectively.

Other, net was $ 6.4 million of expense and $ 45.8 million of income for the nine months ended September 30, 2023 and 2022, respectively.

The diluted loss per share computation excludes 4.4 million and 2.5 million options to purchase shares, RSUs, and contingently issuable shares during the three months ended March 31, 2024 and 2023, respectively, as their effect would be anti-dilutive.

Common stock outstanding as of March 31, 2024, and December 31, 2023, was 106,257,982 and 108,077,738 , respectively.

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

Other, net was $ 2.0 million and $ 3.4 million of expense for the three months ended March 31, 2024 and 2023, respectively.

Segment Information

12 unchanged sentences

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.

Revenue is attributed to the reportable segments based upon customer.

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

7 unchanged sentences

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,

2023 2022 2023 2022

Three Months Ended March 31,

Banks $ 105,429 $ 88,040

11 unchanged sentences

Other, net ( 2,025 ) ( 3,395 )

Income (loss) before income taxes $ 46,663 $ 33,693 $ ( 6,494 ) $ 73,604

Loss before income taxes

$ ( 7,466 ) $ ( 43,134 )

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 September 30, 2023

Banks Merchants Billers Total

Primary Solution Categories

Bill Payments $ — $ — $ 171,064 $ 171,064

Digital Business Banking 702 — — 702

Merchant Payments — 36,267 — 36,267

Fraud Management 16,543 — — 16,543

Real-Time Payments 26,374 — — 26,374

Issuing and Acquiring 112,065 — — 112,065

Total $ 155,684 $ 36,267 $ 171,064 $ 363,015

Three Months Ended September 30, 2022

Banks Merchants Billers Total

Primary Solution Categories

Bill Payments $ — $ — $ 153,543 $ 153,543

Digital Business Banking 9,001 — — 9,001

Merchant Payments — 35,609 — 35,609

Fraud Management 14,840 — — 14,840

Real-Time Payments 24,904 — — 24,904

Issuing and Acquiring 68,694 — — 68,694

Total $ 117,439 $ 35,609 $ 153,543 $ 306,591

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Banks Merchants Billers Total

1 unchanged sentence

Bill Payments $ — $ — $ 174,862 $ 174,862

Digital Business Banking 2,293 — — 2,293

Merchant Payments — 35,728 — 35,728

3 unchanged sentences

Total $ 105,429 $ 35,728 $ 174,862 $ 316,019

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

Banks Merchants Billers Total

1 unchanged sentence

Bill Payments $ — $ — $ 166,855 $ 166,855

Digital Business Banking 34,586 — — 34,586

Merchant Payments — 34,781 — 34,781

3 unchanged sentences

Total $ 88,040 $ 34,781 $ 166,855 $ 289,676

As discussed in Note 3, Divestiture , the Company divested its corporate online banking solution assets, which were included in

the Digital Business Banking solution category.

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Software as a service and platform as a service $ 10,518 $ 9,249

9 unchanged sentences

Software as a service and platform as a service $ 174,862 $ 166,831

License — — — —

Maintenance — 24

Services — — — —

Total $ 174,862 $ 166,855

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

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Three Months Ended March 31,

United States $ 228,107 $ 201,269

2 unchanged sentences

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Long-lived Assets

2 unchanged sentences

Total $ 1,945,582 $ 1,979,595

No single customer accounted for more than 10% of the Company’s consolidated revenues during the three and nine months ended September 30, 2023 and 2022.

No other country outside the United States accounted for more than 10% of the Company's consolidated revenues during the nine months ended September 30, 2023 and 2022.

For the three and nine months ended September 30, 2023, the Company's effective tax rate was 19 % and 83 %, respectively.

The Company reported a tax charge on pretax income for the three months ended September 30, 2023 and a tax benefit on pretax loss for the nine months ended September 30, 2023, with foreign entities recognizing earnings of $ 47.9 million and $ 64.9 million, respectively.

For the three and nine months ended September 30, 2022, the Company's effective tax rate was 31 % and 29 %, respectively.

The Company reported tax expense on pretax income for both the three and nine months ended September 30, 2022, with foreign entities recognizing earnings of $ 28.7 million and $ 87.0 million, respectively.

On July 21, 2023, the Internal Revenue Service issued Notice 2023-55 providing guidance to taxpayers in determining whether a foreign tax is eligible for a U.S.

foreign tax credit for tax years 2022 and 2023 effectively delaying the application of an unfavorable foreign tax credit regulation until 2024.

As a result of this guidance, the Company recorded a tax benefit of $ 6.0 million during the three months ended September 30, 2023.

No single customer accounted for more than 10% of the Company’s consolidated revenues during the three months ended March 31, 2024 and 2023.

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, 2024 and 2023.

For the three months ended March 31, 2024, the Company's effective tax rate was negative 4 %.

The Company reported a tax charge on an overall pretax loss, with foreign entities reporting losses of $ 11.1 million.

The effective tax rate for the three months ended March 31, 2024, was negatively impacted by excess tax limitations on stock-based compensation expense.

For the three months ended March 31, 2023, the Company's effective tax rate was 25 %.

The Company's foreign entities reported losses of $ 7.2 million for the three months ended March 31, 2023.

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.

2 unchanged sentences

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, 2023, and December 31, 2022, the amount of unrecognized tax benefits for uncertain tax positions was $ 22.7 million and $ 26.4 million, respectively, excluding related liabilities for interest and penalties of $ 0.6 million.

The Organization for Economic Co-operation and Development Inclusive Framework on Base Erosion and Profit Shifting released Pillar Two Model Rules (“Pillar Two”) for a global minimum tax.

Many countries have enacted certain aspects of the Pillar Two framework with effective dates in 2024.

Entities operating in countries where Pillar Two has been enacted are required to estimate Pillar Two top-up tax obligations beginning in the first quarter of 2024.

For the three months ended March 31, 2024, the Company did not have material Pillar Two top-up tax obligations impacting the Company’s estimated annual effective tax rate.

The Company will continue to evaluate the impact of proposed and enacted legislation as new guidance becomes available.

As of March 31, 2024, and December 31, 2023, the amount of unrecognized tax benefits for uncertain tax positions was $ 20.9 million, excluding related liabilities for interest and penalties of $ 0.5 million.

The Company believes it is reasonably possible that the total amount of unrecognized tax benefits will decrease within the next 12 months by approximately $ 2.2 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 into the ACH network during a test of the Company's payment processing system.

The Company took immediate corrective action and issued reversing ACH files, restoring affected accounts.

The Company was 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 Company settled these lawsuits by establishing a $ 5.0 million fund out of which payments will be made to class members and for attorneys’ fees and administrative costs.

The $ 5.0 million was funded from insurance.

Additional funds totaling $ 1.5 million could be required to be established under certain circumstances.

The inadvertent ACH file transmission also gave rise to investigations by the U.S.

Consumer Financial Protection Bureau (the "CFPB") and state attorneys general in all 50 states, the District of Columbia, and certain U.S.

territories as well as money transmission regulators in most of those jurisdictions.

The Company settled the CFPB investigation for $ 25.0 million plus various undertakings.

Payment was made to the CFPB and funds received from the insurance carriers during the three months ended September 30, 2023.

Subsequent to September 30, 2023, the Company settled with the state money transmission regulators and attorneys general for a total of $ 20.0 million plus various undertakings.

Funds for the state and money transmission regulator settlements were previously received from the insurance carriers and deposited into an escrow account.

The Company believes that the CPFB and state undertakings will not adversely affect it.

The Company’s customer commenced an action for damages as a result of this event.

The customer action remains pending and the Company presently intends to vigorously defend it.

The Company expects that insurance will fund payments and costs associated with the defense of the customer action, and other claims that may be asserted against it, subject to the policy limits and other terms of the applicable policies.

Funds received from or expected to be received from insurance carriers are generally subject to the respective carriers' reservation of rights.

The Company is from time to time subject to other claims, litigation and investigations.

While the Company believes that none of the currently pending matters is reasonably likely to have material adverse effect on it, there can be no assurance with respect thereto or future matters.

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