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Item 2. Management’s Discussion and Analysis

2024-08-01 compared with 2024-04-30 · 173 added, 74 removed, 258 unchanged (49% of the section changed)

15 unchanged sentences

The following discussion should be read together with our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and with our financial statements and related notes contained in this Form 10-Q.

Results for the three months ended March 31, 2024, are not necessarily indicative of results that may be attained in the future.

Results for the three and six months ended June 30, 2024, are not necessarily indicative of results that may be attained in the future.

Global Economy and Inflation

47 unchanged sentences

RfP offers secure messaging between consumers and billers or merchants, wherein a biller or merchant can request a payment from a consumer through the use of a trusted app, most likely a banking app.

RfP is primarily being implemented on top of real-time payments, which are continuing to grow and flourish as countries around the world develop and launch their real-time schemes as noted above.

RfP is primarily being implemented on top of real-time payments, which are continuing to grow and flourish as countries around the world develop and launch their real-time schemes as noted

ACI is in a unique position to deliver this overlay service given our real-time payments software, our relationships with banks, merchants, and billers, and global real-time connectivity.

28 unchanged sentences

In the event a significant revision to renewal assumptions is determined to be necessary, prior periods will be adjusted for comparability purposes.

The following table sets forth our 60-month backlog estimate, by reportable segment, as of March 31, 2024, and December 31, 2023 (in millions).

The following table sets forth our 60-month backlog estimate, by reportable segment, as of June 30, 2024, March 31, 2024, and December 31, 2023 (in millions).

Dollar amounts reflect foreign currency exchange rates as of each period end.

1 unchanged sentence

We believe this measure provides useful information to investors and others in understanding and evaluating our financial performance.

March 31, 2024 December 31, 2023

June 30, 2024 March 31, 2024 December 31, 2023

Banks $ 2,230 $ 2,235 $ 2,261

2 unchanged sentences

Total $ 6,368 $ 6,481 $ 6,520

March 31, 2024 December 31, 2023

June 30, 2024 March 31, 2024 December 31, 2023

Committed $ 2,362 $ 2,223 $ 2,178

10 unchanged sentences

The following table presents the condensed consolidated statements of operations, as well as the percentage relationship to total revenues for items included in our condensed consolidated statements of operations (in thousands):

Three Month Period Ended March 31, 2024 Compared to the Three Month Period Ended March 31, 2023

Three Months Ended March 31,

Three Month Period Ended June 30, 2024 Compared to the Three Month Period Ended June 30, 2023

Three Months Ended June 30,

Amount % of Total

12 unchanged sentences

Total operating expenses 319,778 85 % 6,973 2 % 312,805 97 %

Operating income (loss) 9,560 4 % 33,912 139 % (24,352) (9) %

Operating income

53,701 15 % 43,181 410 % 10,520 3 %

Other income (expense):

3 unchanged sentences

Total other income (expense) (13,362) (4) % 7,181 (35) % (20,543) (6) %

Loss before income taxes

Income (loss) before income taxes

40,339 11 % 50,362 502 % (10,023) (3) %

1 unchanged sentence

9,452 3 % 12,765 (385) % (3,313) (1) %

Total revenue for the three months ended March 31, 2024, increased $26.3 million, or 9%, as compared to the same period in 2023.

• The impact of foreign currencies strengthening against the U.S.

dollar resulted in a $0.2 million increase in total revenue during the three months ended March 31, 2024, as compared to the same period in 2023.

• Adjusted for the impact of foreign currency, total revenue for the three months ended March 31, 2024, increased $26.1 million, or 9%, as compared to the same period in 2023.

Net income (loss)

$ 30,887 8 % $ 37,597 560 % $ (6,710) (2) %

Total revenue for the three months ended June 30, 2024, increased $50.2 million, or 16%, as compared to the same period in 2023.

• The impact of foreign currencies weakening against the U.S.

dollar resulted in a $0.7 million decrease in total revenue during the three months ended June 30, 2024, as compared to the same period in 2023.

• Adjusted for the impact of foreign currency, total revenue for the three months ended June 30, 2024, increased $50.9 million, or 16%, as compared to the same period in 2023.

Software as a Service (“SaaS”) and Platform as a Service (“PaaS”) Revenue

5 unchanged sentences

All fees from SaaS and PaaS arrangements that do not qualify for treatment as a distinct performance obligation, which includes set-up fees, implementation or customization services, and product support services, are included in SaaS and PaaS revenue.

SaaS and PaaS revenue increased $10.8 million, or 5%, during the three months ended March 31, 2024, as compared to the same period in 2023.

• The impact of foreign currencies strengthening against the U.S.

dollar resulted in a $0.3 million increase in SaaS and PaaS revenue during the three months ended March 31, 2024, as compared to the same period in 2023.

• Adjusted for the impact of foreign currency, SaaS and PaaS revenue for the three months ended March 31, 2024, increased $10.5 million, or 5%, as compared to the same period in 2023.

• The increase was primarily driven by new customer go-lives since March 31, 2023, and higher transaction volumes during the three months ended March 31, 2024, as compared to the same period in 2023.

SaaS and PaaS revenue increased $25.7 million, or 12%, during the three months ended June 30, 2024, as compared to the same period in 2023.

• The increase was primarily driven by new customer go-lives since June 30, 2023, and higher transaction volumes during the three months ended June 30, 2024, as compared to the same period in 2023.

License Revenue

5 unchanged sentences

Depending on specific circumstances, multiple overages or no overages may occur during the term of the agreement.

Included in license revenue are license and capacity fees that are payable at the inception of the agreement or annually (initial license fees).

License revenue also includes license and capacity fees payable quarterly or monthly due to negotiated customer payment terms (monthly license fees).

Included in license revenue are license and capacity fees that are payable at the inception of the agreement.

License revenue also includes license and capacity fees payable annually, quarterly, or monthly due to negotiated customer payment terms.

The Company recognizes revenue in advance of billings for software license arrangements with extended payment terms and adjusts for the effects of the financing component, if significant.

License revenue increased $11.6 million, or 64%, during the three months ended March 31, 2024, as compared to the same period in 2023.

• The increase was driven by license renewal timing as well as the relative size of new license and capacity events during the three months ended March 31, 2024, as compared to the same period in 2023.

License revenue increased $20.9 million, or 47%, during the three months ended June 30, 2024, as compared to the same period in 2023.

• The impact of certain foreign currencies weakening against the U.S.

dollar resulted in a $0.3 million decrease in license revenue during the three months ended June 30, 2024, as compared to the same period in 2023.

• Adjusted for the impact of foreign currency, license revenue for the three months ended June 30, 2024, increased $21.2 million, or 48%, as compared to the same period in 2023.

• The increase was driven by license renewal timing as well as the relative size of new license and capacity events during the three months ended June 30, 2024, as compared to the same period in 2023.

Maintenance Revenue

Maintenance revenue includes standard, enhanced, and premium customer support and any post contract support fees received from customers for the provision of product support services.

Maintenance revenue decreased $2.3 million, or 5%, during the three months ended March 31, 2024, as compared to the same period in 2023.

• The decrease was primarily driven by customers reducing premium customer support and maintenance on non-strategic products during the three months ended March 31, 2024, as compared to the same period in 2023.

Maintenance revenue decreased $2.7 million, or 5%, during the three months ended June 30, 2024, as compared to the same period in 2023.

• The impact of foreign currencies weakening against the U.S.

dollar resulted in a $0.2 million decrease in maintenance revenue during the three months ended June 30, 2024, as compared to the same period in 2023.

• Adjusted for the impact of foreign currency, maintenance revenue for the three months ended June 30, 2024, decreased $2.5 million or 5%, as compared to the same period in 2023.

• The decrease was primarily driven by customers reducing premium customer support and maintenance on non-strategic products during the three months ended June 30, 2024, as compared to the same period in 2023.

Services Revenue

3 unchanged sentences

These services include new customer implementations as well as existing customer migrations to new products or new releases of existing products.

Services revenue increased $6.2 million, or 38%, during the three months ended March 31, 2024, as compared to the same period in 2023.

• The increase was primarily driven by the timing and magnitude of project-related work during the three months ended March 31, 2024, as compared to the same period in 2023.

Services revenue increased $6.2 million, or 35%, during the three months ended June 30, 2024, as compared to the same period in 2023.

• The impact of foreign currencies weakening against the U.S.

dollar resulted in a $0.2 million decrease in services revenue during the three months ended June 30, 2024, as compared to the same period in 2023.

• Adjusted for the impact of foreign currency, services revenue for the three months ended June 30, 2024, increased $6.4 million or 37%, as compared to the same period in 2023.

• The increase was primarily driven by the timing and magnitude of project-related work during the three months ended June 30, 2024, as compared to the same period in 2023.

Operating Expenses

Total operating expenses for the three months ended March 31, 2024, decreased $7.6 million, or 2%, as compared to the same period in 2023.

• Total operating expenses for the three months ended March 31, 2024, included $2.6 million for cost reduction strategies and $0.3 million of other significant transaction-related expenses during the period, compared to $8.3 million for cost reduction strategies, $2.0 million of significant transaction-related expenses, $1.1 million for CEO transition, and $1.0 million of European data center migration expenses for the same period in 2023.

• The impact of foreign currencies strengthening against the U.S.

dollar resulted in a $0.4 million increase in total operating expenses during the three months ended March 31, 2024, compared to the same period in 2023.

• Adjusted for significant transaction-related expenses and foreign currency, total operating expenses for the three months ended March 31, 2024, increased $1.5 million, or 1%, compared to the same period in 2023.

Total operating expenses for the three months ended June 30, 2024, increased $7.0 million, or 2%, as compared to the same period in 2023.

• Total operating expenses for the three months ended June 30, 2024, included $0.4 million for cost reduction strategies and $0.4 million of other significant transaction-related expenses during the period, compared to $7.6 million for cost reduction strategies, $0.5 million of significant transaction-related expenses, $0.7 million for CEO transition, and $1.2 million of European data center migration expenses for the same period in 2023.

• The impact of foreign currencies weakening against the U.S.

dollar resulted in a $0.7 million decrease in total operating expenses during the three months ended June 30, 2024, as compared to the same period in 2023.

• Adjusted for the impact of significant transaction-related expenses and foreign currency, total operating expenses for the three months ended June 30, 2024, increased $16.9 million, or 6%, as compared to the same period in 2023.

Cost of Revenue

4 unchanged sentences

Such efforts include project management, delivery, product customization and implementation, installation support, consulting, configuration, and on-site support.

Cost of revenue increased $12.6 million, or 7%, during the three months ended March 31, 2024, compared to the same period in 2023.

Cost of revenue increased $21.9 million, or 12%, during the three months ended June 30, 2024, as compared to the same period in 2023.

• The impact of foreign currencies weakening against the U.S.

dollar resulted in a $0.3 million decrease in cost of revenue during the three months ended June 30, 2024, as compared to the same period in 2023.

• Adjusted for the impact of foreign currency, cost of revenue increased $22.2 million, or 12%, for the three months ended June 30, 2024, as compared to the same period in 2023.

• The increase was primarily due to higher payment card interchange and processing fees and cloud computing fees of $18.1 million and $0.7 million, respectively.

2 unchanged sentences

Research and development (“R&D”) expenses are primarily human resource costs related to the creation of new products, improvements made to existing products as well as compatibility with new operating system releases and generations of hardware.

R&D expense decreased $2.1 million, or 6%, during the three months ended March 31, 2024, as compared to the same period in 2023.

• The decrease was primarily due to lower professional fees and personnel and related expenses of $1.3 million and $0.8 million, respectively.

R&D expense increased $0.1 million during the three months ended June 30, 2024, as compared to the same period in 2023.

Selling and Marketing

Selling and marketing includes both the costs related to selling our products to current and prospective customers as well as the costs related to promoting the Company, its products and the research efforts required to measure customers’ future needs and satisfaction levels.

Selling costs are primarily the human resource and travel costs related to the effort expended to license our

products and services to current and potential clients within defined territories and/or industries as well as the management of the overall relationship with customer accounts.

Selling costs are primarily the human resource and travel costs related to the effort expended to license our products and services to current and potential clients within defined territories and/or industries as well as the management of the overall relationship with customer accounts.

Selling costs also include the costs associated with assisting distributors in their efforts to sell our products and services in their respective local markets.

Marketing costs include costs incurred to promote the Company and its products, perform or acquire market research to help the Company better understand impending changes in customer demand for and of our products, and the costs associated with measuring customers’ opinions toward the Company, our products and personnel.

Selling and marketing expense decreased $8.7 million, or 25%, during the three months ended March 31, 2024, as compared to the same period in 2023.

• The impact of foreign currencies strengthening against the U.S.

dollar resulted in a $0.2 million increase in selling and marketing expense during the three months ended March 31, 2024, as compared to the same period in 2023.

• Adjusted for the impact of foreign currency, selling and marketing expense decreased $8.9 million, or 25%, for the three months ended March 31, 2024, as compared to the same period in 2023.

Selling and marketing expense decreased $4.7 million, or 14%, during the three months ended June 30, 2024, as compared to the same period in 2023.

• The decrease was primarily due to lower personnel and related expenses and advertising and professional fees of $4.0 million and $0.7 million, respectively.

1 unchanged sentence

General and administrative expenses are primarily human resource costs including executive salaries and benefits, personnel administration costs, and the costs of corporate support functions such as legal, administrative, human resources, and finance and accounting.

General and administrative expense decreased $5.4 million, or 17%, during the three months ended March 31, 2024, as compared to the same period in 2023.

• General and administrative expenses for the three months ended March 31, 2024, included $2.6 million for cost reduction strategies and $0.3 million of other expenses, compared to $8.3 million for cost reduction strategies, $2.0 million of significant transaction-related expenses, $1.1 million for CEO transitions, and $1.0 million of European data center migration expenses for the same period in 2023.

• The impact of foreign currencies strengthening against the U.S.

dollar resulted in a $0.2 million increase in general and administrative expense during the three months ended March 31, 2024, as compared to the same period in 2023.

• Adjusted for the impact of significant transaction-related expenses and foreign currency, general and administrative expense increased $4.0 million, or 21%, for the three months ended March 31, 2024, as compared to the same period in 2023.

• The increase was primarily due to higher personnel and related expenses, including a $1.1 million increase in stock-based compensation expense.

General and administrative expense decreased $6.5 million, or 21%, during the three months ended June 30, 2024, as compared to the same period in 2023.

• General and administrative expenses for the three months ended June 30, 2024, included $0.4 million for cost reduction strategies and $0.4 million of other significant transaction-related expenses during the period, compared to $7.6 million for cost reduction strategies, $0.5 million of significant transaction-related expenses, $0.7 million for CEO transition, and $1.2 million of European data center migration expenses in the same period in 2023.

• The impact of foreign currencies weakening against the U.S.

dollar resulted in a $0.2 million decrease in general and administrative expense during the three months ended June 30, 2024, as compared to the same period in 2023.

• Adjusted for the impact of significant transaction-related expenses and foreign currency, general and administrative expense increased $2.9 million, or 14%, for the three months ended June 30, 2024, as compared to the same period in 2023.

• The increase was primarily due to higher personnel and related expenses of $4.7 million, including a $2.8 million increase in stock-based compensation expense, partially offset by a $1.8 million decrease in professional and other legal fees.

Depreciation and Amortization

Depreciation and amortization decreased $3.9 million, or 12%, during the three months ended March 31, 2024, as compared to the same period in 2023.

• The decrease was primarily due to a $2.5 million decrease in depreciation due to prior facilities cost reduction activities and $1.4 million decrease in amortization for fully amortized software acquired through acquisitions.

Depreciation and amortization decreased $3.9 million, or 12%, during the three months ended June 30, 2024, as compared to the same period in 2023.

• The decrease was primarily due to a $3.4 million decrease in depreciation due to prior facilities cost reduction activities, and a $0.5 million decrease in amortization for fully amortized software acquired through acquisitions.

Other Income and Expense

Interest expense for the three months ended March 31, 2024, was flat compared to the same period in 2023.

Interest expense for the three months ended June 30, 2024, decreased $1.4 million, or 7%, as compared to the same period in 2023, primarily due to repayments on the Term Loan.

Interest income includes the portion of software license fees paid by customers under extended payment terms that is attributed to the significant financing component.

Interest income for the three months ended March 31, 2024, increased $0.5 million, or 14%, as compared to the same period in 2023.

Interest income for the three months ended June 30, 2024, increased $0.5 million, or 14%, as compared to the same period in 2023.

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.

Other, net was $1.2 million of income and $4.1 million of expense for the three months ended June 30, 2024 and 2023, respectively.

See Note 10, Income Taxes, to our unaudited condensed consolidated financial statements in Part I of this Form 10-Q for additional information.

RESULTS OF OPERATIONS

Six Month Period Ended June 30, 2024 Compared to the Six Month Period Ended June 30, 2023

Six Months Ended June 30,

Amount % of Total

Revenue $ Change vs 2023 % Change vs 2023 Amount % of Total

Software as a service and platform as a service $ 451,131 65 % $ 36,525 9 % $ 414,606 67 %

License 95,555 14 % 32,553 52 % 63,002 10 %

Maintenance 96,487 14 % (5,007) (5) % 101,494 17 %

Services 46,325 7 % 12,426 37 % 33,899 6 %

Total revenues 689,498 100 % 76,497 12 % 613,001 100 %

Operating expenses:

Cost of revenue 394,345 57 % 34,448 10 % 359,897 59 %

Research and development 70,403 10 % (1,980) (3) % 72,383 12 %

Selling and marketing 55,301 8 % (13,423) (20) % 68,724 11 %

General and administrative 50,993 7 % (11,861) (19) % 62,854 10 %

Depreciation and amortization 55,195 8 % (7,780) (12) % 62,975 10 %

Total operating expenses 626,237 90 % (596) — % 626,833 102 %

Operating income (loss)

63,261 10 % 77,093 557 % (13,832) (2) %

Other income (expense):

Interest expense (37,481) (5) % 1,320 (3) % (38,801) (6) %

Interest income 7,962 1 % 999 14 % 6,963 1 %

Other, net (869) — % 6,618 (88) % (7,487) (1) %

Total other income (expense) (30,388) (4) % 8,937 (23) % (39,325) (6) %

Income (loss) before income taxes 32,873 6 % 86,030 162 % (53,157) (8) %

Income tax expense (benefit) 9,737 1 % 23,876 (169) % (14,139) (2) %

Net income (loss) $ 23,136 5 % $ 62,154 159 % $ (39,018) (6) %

Total revenue for the six months ended June 30, 2024, increased $76.5 million, or 12%, as compared to the same period in 2023.

• The impact of certain foreign currencies weakening against the U.S.

dollar resulted in a $0.5 million decrease in total revenue during the six months ended June 30, 2024, as compared to the same period in 2023.

• Adjusted for the impact of foreign currency, total revenue for the six months ended June 30, 2024, increased $77.0 million, or 13%, as compared to the same period in 2023.

Software as a Service (“SaaS”) and Platform as a Service (“PaaS”) Revenue

SaaS and PaaS revenue increased $36.5 million, or 9%, during the six months ended June 30, 2024, as compared to the same period in 2023.

• The impact of certain foreign currencies strengthening against the U.S.

dollar resulted in $0.3 million increase in SaaS and PaaS revenue during the six months ended June 30, 2024, as compared to the same period in 2023.

• Adjusted for the impact of foreign currency, SaaS and PaaS revenue for the six months ended June 30, 2024, increased $36.2 million, or 9%, as compared to the same period in 2023.

• The increase was primarily driven by new customer go-lives since June 30, 2023, and higher transaction volumes during the six months ended June 30, 2024, as compared to the same period in 2023.

License Revenue

License revenue increased $32.6 million, or 52%, during the six months ended June 30, 2024, as compared to the same period in 2023.

• The impact of certain foreign currencies weakening against the U.S.

dollar resulted in a $0.2 million decrease in license revenue during the six months ended June 30, 2024, as compared to the same period in 2023.

• Adjusted for the impact of foreign currency, license revenue for the six months ended June 30, 2024, increased $32.8 million, or 52%, as compared to the same period in 2023.

• The increase was driven by license renewal timing as well as the relative size of new license and capacity events during the six months ended June 30, 2024, as compared to the same period in 2023.

Maintenance Revenue

Maintenance revenue decreased $5.0 million, or 5%, during the six months ended June 30, 2024, as compared to the same period in 2023.

• The decrease was primarily driven by customers reducing premium customer support and maintenance on non-strategic products during the six months ended June 30, 2024, as compared to the same period in 2023.

Services Revenue

Services revenue increased $12.4 million, or 37%, during the six months ended June 30, 2024, as compared to the same period in 2023.

• The impact of certain foreign currencies weakening against the U.S.

dollar resulted in a $0.4 million decrease in services revenue during the six months ended June 30, 2024, as compared to the same period in 2023.

• Adjusted for the impact of foreign currency, services revenue for the six months ended June 30, 2024, increased $12.8 million, or 38%, as compared to the same period in 2023.

• The increase was primarily driven by the timing and magnitude of project-related work during the six months ended June 30, 2024, as compared to the same period in 2023.

Operating Expenses

Total operating expenses for the six months ended June 30, 2024 decreased $0.6 million, as compared to the same period in 2023.

• Total operating expenses for the six months ended June 30, 2024, included $3.0 million for cost reduction strategies and $0.7 million of other significant transaction-related expenses during the period, compared to $15.9 million for cost reduction strategies, $2.6 million of significant transaction-related expenses, $1.8 million for CEO transition, and $2.2 million of European data center migration expenses for the same period in 2023.

• The impact of certain foreign currencies weakening against the U.S.

dollar resulted in a $0.2 million decrease in total operating expenses for the six months ended June 30, 2024, as compared to the same period in 2023.

• Adjusted for the impact of significant transaction-related expenses and foreign currency, total operating expenses for the six months ended June 30, 2024, increased $18.4 million, or 3%, as compared to the same period in 2023.

Cost of Revenue

Cost of revenue increased $34.4 million, or 10%, during the six months ended June 30, 2024, as compared to the same period in 2023.

• The impact of certain foreign currencies weakening against the U.S.

dollar resulted in a $0.3 million decrease in cost of revenue during the six months ended June 30, 2024, as compared to the same period in 2023.

• Adjusted for the impact of foreign currency, cost of revenue increased $34.7 million, or 10%, for the six months ended June 30, 2024, as compared to the same period in 2023.

• The increase was primarily due to higher payment card interchange and processing fees and cloud computing fees of $24.3 million and $4.7 million, respectively.

The remaining increase was due to higher personnel and related expenses of $5.7 million, including a $1.9 million increase in stock-based compensation expense.

Research and Development

R&D expense decreased $2.0 million, or 3%, during the six months ended June 30, 2024, as compared to the same period in 2023.

• The impact of certain foreign currencies weakening against the U.S.

dollar resulted in a $0.2 million decrease in R&D expense during the six months ended June 30, 2024, as compared to the same period in 2023.

• Adjusted for the impact of foreign currency, R&D expense decreased $1.8 million, or 2%, for the six months ended June 30, 2024, as compared to the same period in 2023.

• The decrease was primarily due to lower professional fees and personnel and related expenses of $1.4 million and $0.4 million, respectively.

Selling and Marketing

Selling and marketing expense decreased $13.4 million, or 20%, during the six months ended June 30, 2024, as compared to the same period in 2023.

• The decrease was primarily due to lower personnel and related expenses and advertising and professional fees of $11.4 million and $2.0 million, respectively.

General and Administrative

General and administrative expense decreased $11.9 million, or 19%, during the six months ended June 30, 2024, as compared to the same period in 2023.

• General and administrative expenses for the six months ended June 30, 2024, included $3.0 million for cost reduction strategies and $0.7 million of other significant transaction-related expenses during the period, compared to $15.9 million for cost reduction strategies, $2.6 million of significant transaction-related expenses, $1.8 million for CEO transition, and $2.2 million of European data center migration expenses during the same period in 2023.

• Adjusted for the impact of significant transaction-related expenses, general and administrative expense increased $6.9 million, or 17%, for the six months ended June 30, 2024, as compared to the same period in 2023.

• The increase was primarily due to higher personnel and related expenses of $8.8 million, including a $4.0 million increase in stock-based compensation expense, partially offset by a $1.9 million decrease in professional and other legal fees.

Depreciation and Amortization

Depreciation and amortization decreased $7.8 million, or 12%, during the six months ended June 30, 2024, as compared to the same period in 2023.

• The decrease was primarily due to a $5.9 million decrease in depreciation due to prior facilities cost reduction activities, and a $1.9 million decrease in amortization for fully amortized software acquired through acquisitions.

Other Income and Expense

Interest expense for the six months ended June 30, 2024, decreased $1.3 million, or 3%, as compared to the same period in 2023, primarily due to repayments on the Term Loan.

Interest income for the six months ended June 30, 2024, increased $1.0 million, or 14%, as compared to the same period in 2023.

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

Other, net was $0.9 million and $7.5 million of expense for the six months ended June 30, 2024 and 2023, respectively.

See Note 10, Income Taxes, to our unaudited condensed consolidated financial statements in Part I of this Form 10-Q for additional information.

Segment Results

1 unchanged sentence

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

Three Months Ended March 31,

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Banks $ 143,649 $ 117,507 $ 249,078 $ 205,547

11 unchanged sentences

Other, net 1,156 (4,092) (869) (7,487)

Loss before income taxes

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

Banks Segment Adjusted EBITDA increased $17.0 million for the three months ended March 31, 2024, compared to the same period in 2023, due to a $17.4 million increase in revenue primarily due to an increase in license and services revenues, partially offset by a $0.4 million increase in cash operating expense.

Merchants Segment Adjusted EBITDA increased $4.1 million for the three months ended March 31, 2024, compared to the same period in 2023, due to a $0.9 million increase in revenue, and a $3.2 million decrease in cash operating expense.

Billers Segment Adjusted EBITDA increased $1.1 million for the three months ended March 31, 2024, compared to the same period in 2023, due to a $8.0 million increase in revenue, partially offset by a $6.9 million increase in cash operating expense, primarily payment card interchange and processing fees.

Income (loss) before income taxes $ 40,339 $ (10,023) $ 32,873 $ (53,157)

Banks Segment Adjusted EBITDA increased $27.6 million for the three months ended June 30, 2024, compared to the same period in 2023, due to a $26.1 million increase in revenue primarily related to an increase in license revenues, and a $1.5 million decrease in cash operating expense.

Merchants Segment Adjusted EBITDA increased $5.5 million for the three months ended June 30, 2024, compared to the same period in 2023, due to a $4.0 million decrease in cash operating expense and a $1.5 million increase in revenue.

Billers Segment Adjusted EBITDA increased $6.2 million for the three months ended June 30, 2024, compared to the same period in 2023, due to a $22.5 million increase in revenue, partially offset by a $16.3 million increase in cash operating expense, primarily for payment card interchange and other processing fees.

Banks Segment Adjusted EBITDA increased $44.5 million for the six months ended June 30, 2024, compared to the same period in 2023, due to a $43.5 million increase in revenue primarily related to an increase in license revenue and a $1.0 million decrease in cash operating expense.

Merchants Segment Adjusted EBITDA increased $9.6 million for the six months ended June 30, 2024, compared to the same period in 2023, due to a $7.1 million decrease in cash operating expense and a $2.5 million increase in revenue.

Billers Segment Adjusted EBITDA increased $7.3 million for the six months ended June 30, 2024, compared to the same period in 2023, due to a $30.5 million increase in revenue, partially offset by a $23.2 million increase in cash operating expense, primarily for payment card interchange and other processing fees.

Liquidity and Capital Resources

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Cash and cash equivalents consist of highly liquid investments with original maturities of three months or less.

As of March 31, 2024, we had $183.4 million of cash and cash equivalents, of which $69.2 million was held by our foreign subsidiaries.

As of June 30, 2024, we had $157.0 million of cash and cash equivalents, of which $61.0 million was held by our foreign subsidiaries.

If these funds were needed for our operations in the United States, we may potentially be required to accrue and pay foreign and U.S.

state income taxes to repatriate these funds.

As of March 31, 2024, only the earnings in our Indian foreign subsidiaries are indefinitely reinvested.

The earnings of all other foreign entities are no longer indefinitely reinvested.

As of June 30, 2024, only the earnings in our Indian foreign subsidiaries are indefinitely reinvested.

We are also permanently reinvested for outside book/tax basis difference related to foreign subsidiaries.

These outside basis differences could reverse through sales of the foreign subsidiaries, as well as various other events, none of which are considered probable as of March 31, 2024.

These outside basis differences could reverse through sales of the foreign subsidiaries, as well as various other events, none of which are considered probable as of June 30, 2024.

Available Liquidity

The following table sets forth our available liquidity for the dates indicated (in thousands):

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Cash and cash equivalents $ 156,983 $ 164,239

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

As of March 31, 2024, the full $75.0 million was available.

As of June 30, 2024, the full $75.0 million was available.

On February 26, 2024, we 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”) with ACI Worldwide Corp and ACI Payments, Inc.

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

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.

We repurchased 2,060,433 shares for $63.1 million under the program during the three months ended March 31, 2024.

In June 2024, the board approved the repurchase of the Company's common stock of up to $400.0 million in place of the remaining purchase amounts previously authorized.

We repurchased 3,743,220 shares for $120.7 million under the program during the six months ended June 30, 2024.

Under the program to date, we have repurchased 62,664,520 shares for approximately $1.1 billion.

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

As of June 30, 2024, the maximum remaining amount authorized for purchase under the stock repurchase program was approximately $380.3 million.

See Note 6, Common Stock and Treasury Stock, to our unaudited condensed consolidated financial statements in Part I of this Form 10-Q for additional information.

The following table sets forth summarized cash flow data for the periods indicated (in thousands):

Three Months Ended March 31,

Six Months Ended

Net cash provided by (used by):

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Our primary uses of operating cash flows include employee expenditures, taxes, interest payments, and leased facilities.

Cash flows provided by operating activities of $123.2 million were $83.2 million higher for the three months ended March 31, 2024, compared to $40.1 million for the same period in 2023.

Our operating cash flows for the current quarter increased primarily due to $38.3 million more in customer receipt collections on higher prior year-end receivable balances, $14.7 million less in income tax payments, as well as a $24.6 million lower net loss for the three months ended March 31, 2024, compared to the same period in 2023.

Cash flows provided by operating activities were $120.8 million higher for the six months ended June 30, 2024, compared to the same period in 2023.

Our operating cash flows for the current quarter increased primarily due to $17.7 million more in customer receipt collections on higher prior year-end receivable balances, $19.2 million less in income tax payments, as well as cash flows generated from $23.1 million in net income for the six months ended June 30, 2024, as compared to a $39.0 million net loss for the same period in 2023.

Our cash flow from operating activities can fluctuate from period to period due to several factors, including:

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The changes in cash flows from investing activities primarily relate to the timing of our purchases and investments in capital and other assets, including strategic acquisitions, that support our growth.

During the first three months of 2024, we used cash of $17.8 million to purchase software, property, and equipment, as compared to $8.7 million during the same period in 2023.

During the first six months of 2024, we used cash of $24.0 million to purchase software, property, and equipment, as compared to $19.6 million during the same period in 2023.

Cash Flows from Financing Activities

The changes in cash flows from financing activities primarily relate to borrowings and repayments related to our debt instruments and other debt, stock repurchases, and net proceeds related to employee stock programs.

During the first three months of 2024, we repaid a net $29.1 million on the Term Loan under the Amendment, $2.7 million of other debt payments, and $5.1 million of debt issuance costs.

During the first six months of 2024, we repaid a net $38.4 million on the Term Loan under the Amendment, $8.7 million of other debt payments, and $5.1 million of debt issuance costs.

In addition, we used $119.7 million to repurchase common stock, $6.3 million for the repurchase of stock-based compensation awards for tax withholdings, and $6.2 million for settlement assets and liabilities due to processing timing.

We received net proceeds of $12.0 million on the Revolving Credit Facility, and proceeds of $2.1 million from the exercise of stock options and the issuance of common stock under our 2017 Employee Stock Purchase Plan, as amended.

During the first three months of 2023, we repaid $14.6 million on the Term Loans and $5.7 million of other debt payments.

During the first six months of 2023, we repaid $34.1 million on the Term Loan, $11.8 million of other debt payments, and $2.2 million of debt issuance costs.

In addition, we used $3.3 million for the repurchase of stock-based compensation awards for tax withholdings, and $24.1 million for settlement assets and liabilities due to processing timing.

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Contractual Obligations and Commercial Commitments

For the three months ended March 31, 2024, there have been no material changes to the contractual obligations and commercial commitments disclosed in Item 7 of our Form 10-K for the fiscal year ended December 31, 2023.

For the six months ended June 30, 2024, there have been no material changes to the contractual obligations and commercial commitments disclosed in Item 7 of our Form 10-K for the fiscal year ended December 31, 2023.

Critical Accounting Estimates

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• Accounting for Income Taxes

During the three months ended March 31, 2024, there were no significant changes to our critical accounting policies and estimates.

During the six months ended June 30, 2024, there were no significant changes to our critical accounting policies and estimates.

Please refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in Part II, Item 7 of our Annual Report on Form 10-K for our fiscal year ended December 31, 2023, for a more complete discussion of our critical accounting policies and estimates.

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 2. Management’s Discussion and Analysis