What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-07 compared with 2024-08-01 · 104 added, 117 removed, 314 unchanged (41% 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 and six months ended June 30, 2024, are not necessarily indicative of results that may be attained in the future.

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

Global Economy and Inflation

78 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 June 30, 2024, March 31, 2024, and December 31, 2023 (in millions).

The following table sets forth our 60-month backlog estimate, by reportable segment, as of September 30, 2024, 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.

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

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

Banks $ 2,291 $ 2,230 $ 2,235 $ 2,261

2 unchanged sentences

Total $ 6,443 $ 6,368 $ 6,481 $ 6,520

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

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

Committed $ 2,204 $ 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 June 30, 2024 Compared to the Three Month Period Ended June 30, 2023

Three Months Ended June 30,

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

Three Months Ended September 30,

Amount % of Total

19 unchanged sentences

Total other income (expense)

Income (loss) before income taxes

(15,308) (3) % (47) — % (15,261) (4) %

Income tax expense (benefit)

Income before income taxes

107,278 24 % 60,615 130 % 46,663 14 %

Net income (loss)

Income tax expense

25,851 6 % 17,099 195 % 8,752 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.

$ 81,427 18 % $ 43,516 115 % $ 37,911 12 %

Total revenue for the three months ended September 30, 2024, increased $88.7 million, or 24%, as compared to the same period in 2023.

• The impact of foreign currencies was not significant for the three months ended September 30, 2024, 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 $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.

SaaS and PaaS revenue increased $12.0 million, or 6%, during the three months ended September 30, 2024, as compared to the same period in 2023.

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

License Revenue

8 unchanged sentences

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 $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.

License revenue increased $77.8 million, or 98%, during the three months ended September 30, 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 September 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 $2.7 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.

Maintenance revenue decreased $4.4 million, or 8%, during the three months ended September 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 three months ended September 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 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.

Services revenue increased $3.4 million, or 17%, during the three months ended September 30, 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 September 30, 2024, as compared to the same period in 2023.

Operating Expenses

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.

Total operating expenses for the three months ended September 30, 2024, increased $28.1 million, or 9%, as compared to the same period in 2023.

• Total operating expenses for the three months ended September 30, 2024, included $5.6 million for cost reduction strategies and $0.3 million of other significant transaction-related expenses during the period, compared to $3.8 million for cost reduction strategies and $0.4 million of European data center migration expenses for the same period in 2023.

• The impact of foreign currencies was not significant for the three months ended September 30, 2024, as compared to the same period in 2023.

• Adjusted for the impact of cost reduction strategies and significant transaction-related expenses, total operating expenses for the three months ended September 30, 2024, increased $26.5 million, or 9%, 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 $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.

Cost of revenue increased $19.7 million, or 11%, during the three months ended September 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 $14.4 million and $1.6 million, respectively.

The remaining increase was due to higher personnel and related expenses of $3.4 million, including a $1.0 million increase in stock-based compensation expense.

The remaining increase was due to higher personnel and related expenses of $3.7 million.

Research and Development

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

R&D expense increased $3.9 million, or 12%, during the three months ended September 30, 2024, as compared to the same period in 2023.

• The increase was primarily due to higher personnel and related expenses of $3.8 million, including a $1.2 million increase in stock-based compensation expense.

Selling and Marketing

3 unchanged sentences

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

Selling and marketing expense decreased $0.8 million, or 3%, during the three months ended September 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 $0.6 million and $0.2 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 $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.

General and administrative expense increased $4.1 million, or 14%, during the three months ended September 30, 2024, as compared to the same period in 2023.

• General and administrative expenses for the three months ended September 30, 2024, included $1.2 million related to the closure of a facility and $0.3 million of other significant transaction-related expenses, compared to $3.8 million of expense for cost reduction strategies and $0.4 million of European data center migration expenses in the same period in 2023.

• Adjusted for the impact of significant transaction-related expenses, general and administrative expense increased $6.9 million, or 27%, for the three months ended September 30, 2024, as compared to the same period in 2023.

• The increase was primarily due to higher personnel and related expenses of $8.1 million, including a $2.8 million increase in stock-based compensation expense, partially offset by a $1.2 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 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.

Depreciation and amortization increased $1.1 million, or 3%, during the three months ended September 30, 2024, as compared to the same period in 2023.

• Depreciation and amortization for the three months ended September 30, 2024, included $4.4 million of accelerated depreciation related to the closure of a facility.

• Adjusted for the impact of the facility closure, depreciation and amortization decreased $3.3 million, or 11%, for the three months ended September 30, 2024, as compared to the same period in 2023.

• The decrease was primarily due to a $2.2 million decrease in depreciation due to prior facilities cost reduction activities, and a $1.1 million decrease in amortization for fully amortized software and intangibles acquired through acquisitions.

Other Income and Expense

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 expense for the three months ended September 30, 2024, decreased $1.5 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 June 30, 2024, increased $0.5 million, or 14%, as compared to the same period in 2023.

Interest income for the three months ended September 30, 2024, increased $0.4 million, or 11%, as compared to the same period in 2023.

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

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.

Other, net was $0.8 million of expense and $1.1 million of income for the three months ended September 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.

1 unchanged sentence

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

Six Months Ended June 30,

Nine Month Period Ended September 30, 2024 Compared to the Nine Month Period Ended September 30, 2023

Nine Months Ended September 30,

Amount % of Total

12 unchanged sentences

Total operating expenses 955,403 83 % 27,479 3 % 927,924 95 %

Operating income (loss)

Operating income

185,847 17 % 137,755 286 % 48,092 5 %

7 unchanged sentences

Net income (loss) $ 104,563 10 % $ 105,670 9,546 % $ (1,107) — %

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

Total revenue for the nine months ended September 30, 2024, increased $165.2 million, or 17%, 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.

dollar resulted in a $0.4 million decrease in total revenue during the nine months ended September 30, 2024, as compared to the same period in 2023.

• Adjusted for the impact of foreign currency, total revenue for the nine months ended September 30, 2024, increased $165.6 million, or 17%, 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.

SaaS and PaaS revenue increased $48.5 million, or 8%, during the nine months ended September 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.

dollar resulted in $0.5 million increase in SaaS and PaaS revenue during the nine months ended September 30, 2024, as compared to the same period in 2023.

• Adjusted for the impact of foreign currency, SaaS and PaaS revenue for the nine months ended September 30, 2024, increased $48.0 million, or 8%, as compared to the same period in 2023.

• The increase was primarily driven by new customer go-lives since September 30, 2023, and higher transaction volumes during the nine months ended September 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.

License revenue increased $110.3 million, or 77%, during the nine months ended September 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.

dollar resulted in a $0.5 million decrease in license revenue during the nine months ended September 30, 2024, as compared to the same period in 2023.

• Adjusted for the impact of foreign currency, license revenue for the nine months ended September 30, 2024, increased $110.8 million, or 78%, 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 nine months ended September 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.

Maintenance revenue decreased $9.4 million, or 6%, during the nine months ended September 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 nine months ended September 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.

Services revenue increased $15.8 million, or 29%, during the nine months ended September 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.

dollar resulted in a $0.3 million decrease in services revenue during the nine months ended September 30, 2024, as compared to the same period in 2023.

• Adjusted for the impact of foreign currency, services revenue for the nine months ended September 30, 2024, increased $16.1 million, or 30%, as compared to the same period in 2023.

• The increase was primarily driven by the timing and magnitude of project-related work during the nine months ended September 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.

Total operating expenses for the nine months ended September 30, 2024 increased $27.5 million, or 3%, as compared to the same period in 2023.

• Total operating expenses for the nine months ended September 30, 2024, included $8.6 million for cost reduction strategies and $1.0 million of other significant transaction-related expenses during the period, compared to $19.7 million for cost reduction strategies, $2.6 million of significant transaction-related expenses, $1.8 million for CEO transition, and $2.6 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.

dollar resulted in a $0.3 million decrease in total operating expenses for the nine months ended September 30, 2024, as compared to the same period in 2023.

• Adjusted for the impact of cost reduction strategies, significant transaction-related expenses, and foreign currency, total operating expenses for the nine months ended September 30, 2024, increased $44.9 million, or 5%, 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.

Cost of revenue increased $54.2 million, or 10%, during the nine months ended September 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.

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

• Adjusted for the impact of foreign currency, cost of revenue increased $54.5 million, or 10%, for the nine months ended September 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 $38.6 million and $6.2 million, respectively.

1 unchanged sentence

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.

R&D expense increased $1.9 million, or 2%, during the nine months ended September 30, 2024, as compared to the same period in 2023.

• The increase was primarily due to higher personnel and related expenses of $3.3 million, including a $2.9 million increase in stock-based compensation expense, partially offset by lower cloud computing and professional fees of $1.4 million.

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.

Selling and marketing expense decreased $14.2 million, or 14%, during the nine months ended September 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 $12.0 million and $2.2 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.

General and administrative expense decreased $7.7 million, or 8%, during the nine months ended September 30, 2024, as compared to the same period in 2023.

• General and administrative expenses for the nine months ended September 30, 2024, included $4.3 million for cost reduction strategies and $1.0 million of other significant transaction-related expenses during the period, compared to $19.7 million for cost reduction strategies, $2.6 million of significant transaction-related expenses, $1.8 million for CEO transition, and $2.6 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 $13.7 million, or 21%, for the nine months ended September 30, 2024, as compared to the same period in 2023.

• The increase was primarily due to higher personnel and related expenses of $16.9 million, including a $6.8 million increase in stock-based compensation expense, partially offset by a $3.2 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.

Depreciation and amortization decreased $6.7 million, or 7%, during the nine months ended September 30, 2024, as compared to the same period in 2023.

• Depreciation and amortization for the nine months ended September 30, 2024, included $4.4 million of accelerated depreciation related to the closure of a facility.

• Adjusted for the impact of the facility closure, depreciation and amortization decreased $11.1 million, or 12%, for the nine months ended September 30, 2024, as compared to the same period in 2023.

• The decrease was primarily due to a $8.1 million decrease in depreciation due to prior facilities cost reduction activities, and a $3.0 million decrease in amortization for fully amortized software and intangibles 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.

Interest expense for the nine months ended September 30, 2024, decreased $2.8 million, or 5%, as compared to the same period in 2023, primarily due to repayments on the Term Loan.

Interest income for the nine months ended September 30, 2024, increased $1.4 million, or 13%, 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.

Other, net was $1.7 million and $6.4 million of expense for the nine months ended September 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.

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

13 unchanged sentences

Income (loss) before income taxes $ 107,278 $ 46,663 $ 140,151 $ (6,494)

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.

Banks Segment Adjusted EBITDA increased $62.9 million for the three months ended September 30, 2024, compared to the same period in 2023, due to a $66.3 million increase in revenue primarily related to an increase in license revenues, partially offset by a $3.4 million increase in cash operating expense.

Merchants Segment Adjusted EBITDA increased $16.4 million for the three months ended September 30, 2024, compared to the same period in 2023, due to a $13.9 million increase in revenue and a $2.5 million decrease in cash operating expense.

Billers Segment Adjusted EBITDA decreased $8.3 million for the three months ended September 30, 2024, compared to the same period in 2023, due to a $16.8 million increase in cash operating expense primarily for payment card interchange and other processing fees, partially offset by a $8.5 million increase in revenue.

Banks Segment Adjusted EBITDA increased $107.5 million for the nine months ended September 30, 2024, compared to the same period in 2023, due to a $109.9 million increase in revenue primarily related to an increase in license and capacity revenue, partially offset by a $2.4 million increase in cash operating expense.

Merchants Segment Adjusted EBITDA increased $26.0 million for the nine months ended September 30, 2024, compared to the same period in 2023, due to a $16.3 million increase in revenue and a $9.7 million decrease in cash operating expense.

Billers Segment Adjusted EBITDA decreased $1.0 million for the nine months ended September 30, 2024, compared to the same period in 2023, due to a $40.0 million increase in cash operating expense primarily for payment card interchange and other processing fees, partially offset by a $39.0 million increase in revenue.

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

As of September 30, 2024, we had $177.9 million of cash and cash equivalents, of which $68.2 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 June 30, 2024, only the earnings in our Indian foreign subsidiaries are indefinitely reinvested.

As of September 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 June 30, 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 September 30, 2024.

Available Liquidity

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

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Cash and cash equivalents $ 177,860 $ 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 June 30, 2024, the full $75.0 million was available.

As of September 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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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.

We repurchased 3,946,537 shares for $128.7 million under the program during the nine months ended September 30, 2024.

Under the program to date, we have repurchased 62,867,837 shares for approximately $1.1 billion.

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

As of September 30, 2024, the maximum remaining amount authorized for purchase under the stock repurchase program was approximately $372.3 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):

Six Months Ended

Nine Months Ended

September 30,

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 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.

Cash flows provided by operating activities were $149.5 million higher for the nine months ended September 30, 2024, compared to the same period in 2023.

Our operating cash flows for the current quarter increased primarily due to $20.8 million less in income tax payments, as well as cash flows generated from $104.6 million in net income for the nine months ended September 30, 2024, as compared to a $1.1 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 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.

During the first nine months of 2024, we used cash of $31.6 million to purchase software, property, and equipment, as compared to $30.5 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 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 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.

During the first nine months of 2024, we repaid a net $47.8 million on the Term Loan under the Amendment, $9.3 million of other debt payments, and $5.1 million of debt issuance costs.

In addition, we used $127.7 million to repurchase common stock and $9.3 million for the repurchase of stock-based compensation awards for tax withholdings.

We received net proceeds of $7.0 million on the Revolving Credit Facility, proceeds of $4.1 million from the exercise of stock options and the issuance of common stock under our 2017 Employee Stock Purchase Plan, as amended, and $17.7 million for settlement assets and liabilities due to processing timing.

During the first nine months of 2023, we repaid $53.6 million on the Term Loan, $12.5 million of other debt payments, and $2.2 million of debt issuance costs.

In addition, we used $4.2 million for the repurchase of stock-based compensation awards for tax withholdings, and $4.6 million for settlement assets and liabilities due to processing timing.

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Contractual Obligations and Commercial Commitments

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.

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

During the nine months ended September 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