ACI Worldwide, Inc. Reports Financial Results for the Quarter Ended March 31, 2019

ACI
Worldwide (NASDAQ: ACIW), a leading global provider of real-time electronic
payment and banking solutions, today announced financial
results for the quarter ended March 31, 2019.

“We are pleased to announce that the acquisition of Speedpay will close
today and we are updating our full year 2019 outlook,” commented Phil
Heasley, President and CEO, ACI Worldwide. “The addition of Speedpay is
strategically compelling and is expected to provide notable financial
benefits, including increases in recurring revenue and net adjusted
EBITDA margin in our On Demand business. We welcome the talented
Speedpay employees and valuable customers. Looking to the rest of 2019
and beyond, with a strong new bookings pipeline, our improving AOD
operations, and the addition of Speedpay, ACI is poised to capitalize
even more quickly on the growing global payment transaction opportunity.”

Q1 2019 FINANCIAL SUMMARY

In Q1 2019, new bookings were $70 million, which was down when compared
to our record bookings quarter in Q1 last year.

In Q1 2019, revenue was $206 million, versus $209 million in Q1 2018.
Net loss in the quarter was $26 million, versus a net loss of $19
million last year. Adjusted EBITDA was $8 million, versus $19 million in
Q1 2018.

In Q1 2019, revenue from ACI’s On Demand segment was $110 million, up 5%
from $104 million last year. On Demand segment net adjusted EBITDA
margin improved 600 basis points from last year. On Demand segment net
adjusted EBITDA margins are adjusted for pass through interchange
revenue of $45 million and $40 million, for Q1 2019 and Q1 2018,
respectively. ACI’s On Premise segment revenue was $96 million, versus
$105 million last year due to timing of nonrecurring license fees. On
Premise segment adjusted EBITDA margin was 29% in Q1 2019 versus 37% in
Q1 2018.

ACI ended Q1 2019 with a 12-month backlog of $813 million and a 60-month
backlog of $4.2 billion. After adjusting for foreign currency
fluctuations, our 12-month backlog increased $3 million and our 60-month
backlog decreased $22 million from Q4 2018.

Cash flows from operating activities in Q1 2019 were $42 million, versus
$45 million in Q1 2018. Adjusted operating free cash flow in Q1 2019 was
$35 million, versus $36 million in Q1 2018. ACI ended Q1 2019 with $176
million in cash on hand, up from $149 million in Q4 2018, and a debt
balance of $679 million. The company has $176 million remaining on its
share repurchase authorization.

GUIDANCE

We are updating our outlook for the full year 2019 and 2020 given the
contribution from Speedpay. We expect Speedpay to contribute between
$215 million and $220 million in revenue and between $50 million and $55
million in adjusted EBITDA to the remainder of 2019. We expect Speedpay
to contribute $90 million to $95 million in adjusted EBITDA in 2020. We
now expect 2019 total revenue to be between $1.315 billion and $1.345
billion and adjusted EBITDA to be in a range of $360 million to $380
million, which excludes between $30 million and $35 million in
significant transaction related expenses. This is up from our prior
guidance of $1.1 billion to $1.125 billion and $310 million to $325
million for revenue and adjusted EBITDA, respectively. We expect Q2 2019
revenue to be between $280 and $290 million. We continue to expect full
year 2019 new bookings growth to be in the upper single digits to low
double digits.

We now expect our 2020 adjusted EBITDA to be in a range of $425 million
to $445 million, up from the prior outlook of $335 million to $350
million.

CONFERENCE CALL TO DISCUSS FINANCIAL RESULTS AND OUTLOOK

Management will host a conference call at 8:30 am ET today to discuss
these results, the Speedpay acquisition, as well as 2019 and 2020
guidance. Interested persons may access a real-time audio broadcast of
the teleconference at http://investor.aciworldwide.com/
or use the following numbers for dial-in participation: US/Canada: (866)
914-7436, international: +1 (817) 385-9117. Please provide your name,
the conference name ACI Worldwide, Inc. and conference code 1270429.
There will be a replay of the call available for two weeks on (855)
859-2056 for US/Canada callers and +1 (404) 537-3406 for international
participants.

About ACI Worldwide
ACI Worldwide, the Universal
Payments (UP) company, powers electronic
payments for more than 5,100 organizations around the world. More
than 1,000 of the largest financial institutions and intermediaries, as
well as thousands of global merchants, rely on ACI to execute $14
trillion each day in payments and securities. In addition, myriad
organizations utilize our electronic
bill presentment and payment services. Through our comprehensive
suite of software solutions delivered on customers’ premises or through
ACI’s private
cloud, we provide real-time, immediate
payments capabilities and enable the industry’s most complete omni-channel
payments experience. To learn more about ACI, please visit www.aciworldwide.com.
You can also find us on Twitter @ACI_Worldwide.

© Copyright ACI Worldwide, Inc. 2019.

ACI, ACI Worldwide, ACI Payment Systems, the ACI logo and all ACI
product names are trademarks or registered trademarks of ACI Worldwide,
Inc., or one of its subsidiaries, in the United States, other countries
or both. Other parties’ trademarks referenced are the property of their
respective owners.

To supplement our financial results presented on a GAAP basis, we use
the non-GAAP measures indicated in the tables, which exclude significant
transaction-related expenses, as well as other significant non-cash
expenses such as depreciation, amortization and stock-based
compensation, that we believe are helpful in understanding our past
financial performance and our future results. The presentation of these
non-GAAP financial measures should be considered in addition to our GAAP
results and are not intended to be considered in isolation or as a
substitute for the financial information prepared and presented in
accordance with GAAP. Management generally compensates for limitations
in the use of non-GAAP financial measures by relying on comparable GAAP
financial measures and providing investors with a reconciliation of
non-GAAP financial measures only in addition to and in conjunction with
results presented in accordance with GAAP. We believe that these
non-GAAP financial measures reflect an additional way to view aspects of
our operations that, when viewed with our GAAP results, provide a more
complete understanding of factors and trends affecting our business.
Certain non-GAAP measures include:

• Adjusted EBITDA: net income plus income tax expense (benefit), net
  interest income (expense), net other income (expense), depreciation,
  amortization and stock-based compensation, as well as significant
  transaction-related expenses. Adjusted EBITDA should be considered in
  addition to, rather than as a substitute for, net income.
• Net Adjusted EBITDA Margin: Adjusted EBITDA divided by revenue net of
  pass through interchange revenue. Net Adjusted EBITDA Margin should be
  considered in addition to, rather than as a substitute for, net income.

ACI is also presenting adjusted operating free cash flow, which is
defined as net cash provided by operating activities and net after-tax
payments associated with significant transaction-related expenses, less
capital expenditures. Adjusted operating free cash flow is considered a
non-GAAP financial measure as defined by SEC Regulation G. We utilize
this non-GAAP financial measure, and believe it is useful to investors,
as an indicator of cash flow available for debt repayment and other
investing activities, such as capital investments and acquisitions. We
utilize adjusted operating free cash flow as a further indicator of
operating performance and for planning investment activities. Adjusted
operating free cash flow should be considered in addition to, rather
than as a substitute for, net cash provided by operating activities. A
limitation of adjusted operating free cash flow is that it does not
represent the total increase or decrease in the cash balance for the
period. This measure also does not exclude mandatory debt service
obligations and, therefore, does not represent the residual cash flow
available for discretionary expenditures. We believe that adjusted
operating free cash flow is useful to investors to provide disclosures
of our operating results on the same basis as that used by our
management.

ACI backlog includes estimates for SaaS and PaaS, license, maintenance,
and services specified in executed contracts but excluded from
contracted revenue that will be recognized in future periods, as well as
revenue from assumed contract renewals to the extent that we believe
recognition of the related revenue will occur within the corresponding
backlog period. We have historically included assumed renewals in
backlog estimates based upon automatic renewal provisions in the
executed contract and our historic experience with customer renewal
rates.

Backlog is considered a non-GAAP financial measure as defined by SEC
Regulation G. Our 60-month backlog estimates are derived using the
following key assumptions:

• License arrangements are assumed to renew at the end of their
  committed term or under the renewal option stated in the contract at a
  rate consistent with historical experience. If the license arrangement
  includes extended payment terms, the renewal estimate is adjusted for
  the effects of a significant financing component.
• Maintenance fees are assumed to exist for the duration of the license
  term for those contracts in which the committed maintenance term is
  less than the committed license term.
• SaaS and PaaS arrangements are assumed to renew at the end of their
  committed term at a rate consistent with our historical experiences.
• Foreign currency exchange rates are assumed to remain constant over
  the 60-month backlog period for those contracts stated in currencies
  other than the U.S. dollar.
• Our pricing policies and practices are assumed to remain constant over
  the 60-month backlog period.

Estimates of future financial results are inherently unreliable. Our
backlog estimates require substantial judgment and are based on a number
of assumptions as described above. These assumptions may turn out to be
inaccurate or wrong, including, but not limited to, reasons outside of
management’s control. For example, our customers may attempt to
renegotiate or terminate their contracts for a number of reasons,
including mergers, changes in their financial condition, or general
changes in economic conditions in the customer’s industry or geographic
location, or we may experience delays in the development or delivery of
products or services specified in customer contracts which may cause the
actual renewal rates and amounts to differ from historical experiences.
Changes in foreign currency exchange rates may also impact the amount of
revenue actually recognized in future periods. Accordingly, there can be
no assurance that contracts included in backlog estimates will actually
generate the specified revenue or that the actual revenue will be
generated within the corresponding 60-month period.

Backlog estimates should be considered in addition to, rather than as a
substitute for, reported revenue and contracted but not recognized
revenue (including deferred revenue).

Forward-Looking Statements

This press release contains forward-looking statements based on current
expectations that involve a number of risks and uncertainties.
Generally, forward-looking statements do not relate strictly to
historical or current facts and may include words or phrases such as
“believes,” “will,” “expects,” “anticipates,” “intends,” and words and
phrases of similar impact. The forward-looking statements are made
pursuant to safe harbor provisions of the Private Securities Litigation
Reform Act of 1995.

Forward-looking statements in this press release include, but are not
limited to, statements regarding: (i) expectations that the addition of
Speedpay is strategically compelling and is expected to provide notable
financial benefits, including increases in recurring revenue and net
adjusted EBITDA margin in our On Demand business; (ii) expectations
regarding a strong new bookings pipeline, improving AOD operations, the
addition of Speedpay and the positioning to capitalize even more quickly
on the growing global payment transaction opportunity; (iii)
expectations regarding revenue, adjusted EBITDA, and new bookings growth
in 2019; (iv) expectations regarding revenue in Q2 2019; (v) and
expectations regarding our 2020 EBITDA target.

All of the foregoing forward-looking statements are expressly qualified
by the risk factors discussed in our filings with the Securities and
Exchange Commission. Such factors include, but are not limited to,
increased competition, the success of our Universal Payments strategy,
demand for our products, restrictions and other financial covenants in
our debt agreements, consolidations and failures in the financial
services industry, customer reluctance to switch to a new vendor, the
accuracy of management’s backlog estimates, the maturity of certain
products, failure to obtain renewals of customer contracts or to obtain
such renewals on favorable terms, delay or cancellation of customer
projects or inaccurate project completion estimates, volatility and
disruption of the capital and credit markets and adverse changes in the
global economy, our existing levels of debt, impairment of our goodwill
or intangible assets, litigation, future acquisitions, strategic
partnerships and investments, the complexity of our products and
services and the risk that they may contain hidden defects or be
subjected to security breaches or viruses, compliance of our products
with applicable legislation, governmental regulations and industry
standards, our ability to protect customer information from security
breaches or attacks, our compliance with privacy regulations, our
ability to adequately defend our intellectual property, exposure to
credit or operating risks arising from certain payment funding methods,
the cyclical nature of our revenue and earnings and the accuracy of
forecasts due to the concentration of revenue-generating activity during
the final weeks of each quarter, business interruptions or failure of
our information technology and communication systems, our offshore
software development activities, risks from operating internationally,
including fluctuations in currency exchange rates, exposure to unknown
tax liabilities, volatility in our stock price, and potential claims
associated with our sale and transition of our CFS assets and
liabilities. For a detailed discussion of these risk factors, parties
that are relying on the forward-looking statements should review our
filings with the Securities and Exchange Commission, including our most
recently filed Annual Report on Form 10-K and our Quarterly Reports on
Form 10-Q.

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