☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
or
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
to
Delaware | 47-0772104 | ||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||
3520 Kraft Rd, | Suite 300 | Naples, | Florida | ||
(Address of principal executive
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Large accelerated filer | ☒ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |||
Emerging growth company | ☐ |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | |||
Common Stock, $0.005 par value | ACIW | Nasdaq Global Select Market |
TABLE OF CONTENTS | ||||||||
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PART II – OTHER INFORMATION | ||||||||
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September 30, | December 31, | |||||||
2018 | 2017 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 76,342 | $ | 69,710 | ||||
Receivables, net of allowances of $3,598 and $4,799, respectively | 279,641 | 262,845 | ||||||
Recoverable income taxes | 8,233 | 7,921 | ||||||
Prepaid expenses | 25,875 | 23,219 | ||||||
Other current assets | 23,244 | 58,126 | ||||||
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Total current assets | 413,335 | 421,821 | ||||||
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Noncurrent assets | ||||||||
Accrued receivables, net | 181,832 | — | ||||||
Property and equipment, net | 75,437 | 80,228 | ||||||
Software, net | 147,316 | 155,386 | ||||||
Goodwill | 909,691 | 909,691 | ||||||
Intangible assets, net | 174,057 | 191,281 | ||||||
Deferred income taxes, net | 28,179 | 66,749 | ||||||
Other noncurrent assets | 54,477 | 36,483 | ||||||
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TOTAL ASSETS | $ | 1,984,324 | $ | 1,861,639 | ||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 27,381 | $ | 34,718 | ||||
Employee compensation | 48,142 | 48,933 | ||||||
Current portion of long-term debt | 18,765 | 17,786 | ||||||
Deferred revenue | 93,668 | 107,543 | ||||||
Income taxes payable | 1,600 | 9,898 | ||||||
Other current liabilities | 60,075 | 102,904 | ||||||
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Total current liabilities | 249,631 | 321,782 | ||||||
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Noncurrent liabilities | ||||||||
Deferred revenue | 48,789 | 51,967 | ||||||
Long-term debt | 656,159 | 667,943 | ||||||
Deferred income taxes, net | 26,372 | 16,910 | ||||||
Other noncurrent liabilities | 40,435 | 38,440 | ||||||
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Total liabilities | 1,021,386 | 1,097,042 | ||||||
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Commitments and contingencies | ||||||||
Stockholders’ equity | ||||||||
Preferred stock; $0.01 par value; 5,000,000 shares authorized; no shares issued at September 30, 2018 and December 31, 2017 | — | — | ||||||
Common stock; $0.005 par value; 280,000,000 shares authorized; 140,525,055 shares issued at September 30, 2018 and December 31, 2017 | 702 | 702 | ||||||
Additionalpaid-in capital | 632,547 | 610,345 | ||||||
Retained earnings | 776,078 | 550,866 | ||||||
Treasury stock, at cost, 24,543,359 and 23,428,324 shares at September 30, 2018 and December 31, 2017, respectively | (357,923 | ) | (319,960 | ) | ||||
Accumulated other comprehensive loss | (88,466 | ) | (77,356 | ) | ||||
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Total stockholders’ equity | 962,938 | 764,597 | ||||||
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 1,984,324 | $ | 1,861,639 | ||||
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June 30, 2019 | December 31, 2018 | ||||||
ASSETS | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 139,396 | $ | 148,502 | |||
Receivables, net of allowances of $3,781 and $3,912, respectively | 286,393 | 348,182 | |||||
Settlement assets | 613,290 | 32,256 | |||||
Prepaid expenses | 30,645 | 23,277 | |||||
Other current assets | 52,259 | 14,260 | |||||
Total current assets | 1,121,983 | 566,477 | |||||
Noncurrent assets | |||||||
Accrued receivables, net | 177,513 | 189,010 | |||||
Property and equipment, net | 70,805 | 72,729 | |||||
Operating lease right-of-use assets | 62,316 | — | |||||
Software, net | 246,314 | 137,228 | |||||
Goodwill | 1,279,472 | 909,691 | |||||
Intangible assets, net | 374,908 | 168,127 | |||||
Deferred income taxes, net | 63,569 | 27,048 | |||||
Other noncurrent assets | 53,440 | 52,145 | |||||
TOTAL ASSETS | $ | 3,450,320 | $ | 2,122,455 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities | |||||||
Accounts payable | $ | 46,975 | $ | 39,602 | |||
Settlement liabilities | 589,742 | 31,605 | |||||
Employee compensation | 38,976 | 38,115 | |||||
Current portion of long-term debt | 34,089 | 20,767 | |||||
Deferred revenue | 79,311 | 104,843 | |||||
Other current liabilities | 81,156 | 61,688 | |||||
Total current liabilities | 870,249 | 296,620 | |||||
Noncurrent liabilities | |||||||
Deferred revenue | 59,122 | 51,292 | |||||
Long-term debt | 1,352,096 | 650,989 | |||||
Deferred income taxes, net | 23,243 | 31,715 | |||||
Operating lease liabilities | 50,550 | — | |||||
Other noncurrent liabilities | 42,483 | 43,608 | |||||
Total liabilities | 2,397,743 | 1,074,224 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity | |||||||
Preferred stock; $0.01 par value; 5,000,000 shares authorized; no shares issued at June 30, 2019, and December 31, 2018 | — | — | |||||
Common stock; $0.005 par value; 280,000,000 shares authorized; 140,525,055 shares issued at June 30, 2019, and December 31, 2018 | 702 | 702 | |||||
Additional paid-in capital | 650,797 | 632,235 | |||||
Retained earnings | 843,530 | 863,768 | |||||
Treasury stock, at cost, 23,840,186 and 24,401,694 shares at June 30, 2019, and December 31, 2018, respectively | (349,426 | ) | (355,857 | ) | |||
Accumulated other comprehensive loss | (93,026 | ) | (92,617 | ) | |||
Total stockholders’ equity | 1,052,577 | 1,048,231 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 3,450,320 | $ | 2,122,455 |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Revenues | ||||||||||||||||
Software as a service and platform as a service | $ | 104,519 | $ | 99,761 | $ | 322,399 | $ | 312,677 | ||||||||
License | 68,964 | 50,017 | 142,565 | 163,578 | ||||||||||||
Maintenance | 54,373 | 56,349 | 166,080 | 166,829 | ||||||||||||
Services | 17,669 | 19,608 | 58,786 | 54,712 | ||||||||||||
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Total revenues | 245,525 | 225,735 | 689,830 | 697,796 | ||||||||||||
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Operating expenses | ||||||||||||||||
Cost of revenue (1) | 102,473 | 107,393 | 326,070 | 336,293 | ||||||||||||
Research and development | 36,008 | 33,935 | 110,661 | 106,189 | ||||||||||||
Selling and marketing | 28,252 | 25,236 | 93,305 | 81,190 | ||||||||||||
General and administrative | 29,537 | 25,302 | 87,023 | 130,332 | ||||||||||||
Depreciation and amortization | 20,896 | 22,446 | 63,274 | 67,189 | ||||||||||||
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Total operating expenses | 217,166 | 214,312 | 680,333 | 721,193 | ||||||||||||
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Operating income (loss) | 28,359 | 11,423 | 9,497 | (23,397 | ) | |||||||||||
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Other income (expense) | ||||||||||||||||
Interest expense | (12,573 | ) | (9,374 | ) | (31,655 | ) | (30,198 | ) | ||||||||
Interest income | 2,763 | 165 | 8,249 | 421 | ||||||||||||
Other, net | (1,304 | ) | (1,059 | ) | (3,036 | ) | (2,176 | ) | ||||||||
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Total other income (expense) | (11,114 | ) | (10,268 | ) | (26,442 | ) | (31,953 | ) | ||||||||
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Income (loss) before income taxes | 17,245 | 1,155 | (16,945 | ) | (55,350 | ) | ||||||||||
Income tax expense (benefit) | 2,012 | (2,233 | ) | 1,824 | (27,321 | ) | ||||||||||
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Net income (loss) | $ | 15,233 | $ | 3,388 | $ | (18,769 | ) | $ | (28,029 | ) | ||||||
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Earnings (loss) per common share | ||||||||||||||||
Basic | $ | 0.13 | $ | 0.03 | $ | (0.16 | ) | $ | (0.24 | ) | ||||||
Diluted | $ | 0.13 | $ | 0.03 | $ | (0.16 | ) | $ | (0.24 | ) | ||||||
Weighted average common shares outstanding | ||||||||||||||||
Basic | 115,889 | 118,254 | 115,615 | 117,096 | ||||||||||||
Diluted | 117,492 | 119,743 | 115,615 | 117,096 |
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Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Revenues | |||||||||||||||
Software as a service and platform as a service | $ | 172,499 | $ | 113,600 | $ | 281,056 | $ | 217,880 | |||||||
License | 52,541 | 45,555 | 73,619 | 73,601 | |||||||||||
Maintenance | 51,922 | 55,048 | 107,033 | 111,707 | |||||||||||
Services | 20,656 | 20,792 | 41,765 | 41,117 | |||||||||||
Total revenues | 297,618 | 234,995 | 503,473 | 444,305 | |||||||||||
Operating expenses | |||||||||||||||
Cost of revenue (1) | 155,240 | 116,261 | 270,181 | 223,597 | |||||||||||
Research and development | 39,235 | 37,862 | 75,429 | 74,653 | |||||||||||
Selling and marketing | 32,962 | 33,160 | 62,392 | 65,053 | |||||||||||
General and administrative | 49,319 | 28,837 | 80,836 | 57,486 | |||||||||||
Depreciation and amortization | 26,744 | 21,033 | 48,610 | 42,378 | |||||||||||
Total operating expenses | 303,500 | 237,153 | 537,448 | 463,167 | |||||||||||
Operating loss | (5,882 | ) | (2,158 | ) | (33,975 | ) | (18,862 | ) | |||||||
Other income (expense) | |||||||||||||||
Interest expense | (15,323 | ) | (9,717 | ) | (26,937 | ) | (19,082 | ) | |||||||
Interest income | 2,997 | 2,742 | 6,030 | 5,486 | |||||||||||
Other, net | 1,402 | (1,677 | ) | (510 | ) | (1,732 | ) | ||||||||
Total other income (expense) | (10,924 | ) | (8,652 | ) | (21,417 | ) | (15,328 | ) | |||||||
Loss before income taxes | (16,806 | ) | (10,810 | ) | (55,392 | ) | (34,190 | ) | |||||||
Income tax expense (benefit) | (22,531 | ) | 3,764 | (35,154 | ) | (188 | ) | ||||||||
Net income (loss) | $ | 5,725 | $ | (14,574 | ) | $ | (20,238 | ) | $ | (34,002 | ) | ||||
Income (loss) per common share | |||||||||||||||
Basic | $ | 0.05 | $ | (0.13 | ) | $ | (0.17 | ) | $ | (0.29 | ) | ||||
Diluted | $ | 0.05 | $ | (0.13 | ) | $ | (0.17 | ) | $ | (0.29 | ) | ||||
Weighted average common shares outstanding | |||||||||||||||
Basic | 116,586 | 115,548 | 116,287 | 115,595 | |||||||||||
Diluted | 118,786 | 115,548 | 116,287 | 115,595 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net income (loss) | $ | 15,233 | $ | 3,388 | $ | (18,769 | ) | $ | (28,029 | ) | ||||||
Other comprehensive income (loss): | ||||||||||||||||
Foreign currency translation adjustments | (3,862 | ) | (594 | ) | (11,110 | ) | 14,526 | |||||||||
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Total other comprehensive income (loss) | (3,862 | ) | (594 | ) | (11,110 | ) | 14,526 | |||||||||
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Comprehensive income (loss) | $ | 11,371 | $ | 2,794 | $ | (29,879 | ) | $ | (13,503 | ) | ||||||
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Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net income (loss) | $ | 5,725 | $ | (14,574 | ) | $ | (20,238 | ) | $ | (34,002 | ) | ||||
Other comprehensive loss: | |||||||||||||||
Foreign currency translation adjustments | (1,730 | ) | (12,907 | ) | (409 | ) | (7,248 | ) | |||||||
Total other comprehensive loss | (1,730 | ) | (12,907 | ) | (409 | ) | (7,248 | ) | |||||||
Comprehensive income (loss) | $ | 3,995 | $ | (27,481 | ) | $ | (20,647 | ) | $ | (41,250 | ) |
STOCKHOLDERS’ EQUITY
For the Nine Months Ended September 30, | ||||||||
2018 | 2017 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (18,769 | ) | $ | (28,029 | ) | ||
Adjustments to reconcile net loss to net cash flows from operating activities: | ||||||||
Depreciation | 17,896 | 18,658 | ||||||
Amortization | 54,993 | 58,114 | ||||||
Amortization of deferred debt issuance costs | 3,881 | 3,537 | ||||||
Deferred income taxes | (7,139 | ) | (37,707 | ) | ||||
Stock-based compensation expense | 20,642 | 22,724 | ||||||
Other | 1,432 | 1,094 | ||||||
Changes in operating assets and liabilities | ||||||||
Receivables | 58,443 | 80,398 | ||||||
Accounts payable | (4,217 | ) | (11,610 | ) | ||||
Accrued employee compensation | 92 | (1,056 | ) | |||||
Current income taxes | (10,429 | ) | (10,161 | ) | ||||
Deferred revenue | (47 | ) | (1,248 | ) | ||||
Other current and noncurrent assets and liabilities | (16,316 | ) | (9,642 | ) | ||||
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Net cash flows from operating activities | 100,462 | 85,072 | ||||||
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Cash flows from investing activities: | ||||||||
Purchases of property and equipment | (16,434 | ) | (18,566 | ) | ||||
Purchases of software and distribution rights | (21,876 | ) | (21,328 | ) | ||||
Other | (1,467 | ) | — | |||||
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Net cash flows from investing activities | (39,777 | ) | (39,894 | ) | ||||
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Cash flows from financing activities: | ||||||||
Proceeds from issuance of common stock | 2,326 | 2,185 | ||||||
Proceeds from exercises of stock options | 18,405 | 10,284 | ||||||
Repurchase of restricted stock for tax withholdings | (2,588 | ) | (5,311 | ) | ||||
Repurchases of common stock | (54,527 | ) | — | |||||
Proceeds from senior notes | 400,000 | — | ||||||
Redemption of senior notes | (300,000 | ) | — | |||||
Proceeds from revolving credit facility | 109,000 | 42,000 | ||||||
Repayment of revolving credit facility | (111,000 | ) | (126,000 | ) | ||||
Proceeds from term portion of credit agreement | — | 415,000 | ||||||
Repayment of term portion of credit agreement | (105,332 | ) | (380,852 | ) | ||||
Payment of debt issuance costs | (7,253 | ) | (5,340 | ) | ||||
Payments on other debt and capital leases | (2,332 | ) | (9,286 | ) | ||||
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Net cash flows from financing activities | (53,301 | ) | (57,320 | ) | ||||
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Effect of exchange rate fluctuations on cash | (752 | ) | 4,319 | |||||
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Net increase (decrease) in cash and cash equivalents | 6,632 | (7,823 | ) | |||||
Cash and cash equivalents, beginning of period | 69,710 | 75,753 | ||||||
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Cash and cash equivalents, end of period | $ | 76,342 | $ | 67,930 | ||||
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Supplemental cash flow information | ||||||||
Income taxes paid | $ | 22,439 | $ | 24,693 | ||||
Interest paid | $ | 31,914 | $ | 31,762 |
thousands, except share amounts)
Three Months Ended June 30, 2019 | |||||||||||||||||||||||
Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Total | ||||||||||||||||||
Balance as of March 31, 2019 | $ | 702 | $ | 636,960 | $ | 837,805 | $ | (351,587 | ) | $ | (91,296 | ) | $ | 1,032,584 | |||||||||
Net income | — | — | 5,725 | — | — | 5,725 | |||||||||||||||||
Other comprehensive loss | — | — | — | — | (1,730 | ) | (1,730 | ) | |||||||||||||||
Stock-based compensation | — | 14,372 | — | — | — | 14,372 | |||||||||||||||||
Shares issued and forfeited, net, under stock plans including income tax benefits | — | (535 | ) | — | 2,346 | — | 1,811 | ||||||||||||||||
Repurchase of restricted share awards and restricted share units for tax withholdings | — | — | — | (185 | ) | — | (185 | ) | |||||||||||||||
Balance as of June 30, 2019 | $ | 702 | $ | 650,797 | $ | 843,530 | $ | (349,426 | ) | $ | (93,026 | ) | $ | 1,052,577 | |||||||||
Three Months Ended June 30, 2018 | |||||||||||||||||||||||
Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Total | ||||||||||||||||||
Balance as of March 31, 2018 | $ | 702 | $ | 616,913 | $ | 775,419 | $ | (342,316 | ) | $ | (71,697 | ) | $ | 979,021 | |||||||||
Net loss | — | — | (14,574 | ) | — | — | (14,574 | ) | |||||||||||||||
Other comprehensive loss | — | — | — | — | (12,907 | ) | (12,907 | ) | |||||||||||||||
Stock-based compensation | — | 7,705 | — | — | — | 7,705 | |||||||||||||||||
Shares issued and forfeited, net, under stock plans including income tax benefits | — | 233 | — | 6,325 | — | 6,558 | |||||||||||||||||
Repurchase of 1,000,000 shares of common stock | — | — | — | (23,414 | ) | — | (23,414 | ) | |||||||||||||||
Repurchase of restricted share awards for tax withholdings | — | — | — | (1,674 | ) | — | (1,674 | ) | |||||||||||||||
Balance as of June 30, 2018 | $ | 702 | $ | 624,851 | $ | 760,845 | $ | (361,079 | ) | $ | (84,604 | ) | $ | 940,715 |
Six Months Ended June 30, 2019 | |||||||||||||||||||||||
Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Total | ||||||||||||||||||
Balance as of December 31, 2018 | $ | 702 | $ | 632,235 | $ | 863,768 | $ | (355,857 | ) | $ | (92,617 | ) | $ | 1,048,231 | |||||||||
Net loss | — | — | (20,238 | ) | — | — | (20,238 | ) | |||||||||||||||
Other comprehensive loss | — | — | — | — | (409 | ) | (409 | ) | |||||||||||||||
Stock-based compensation | — | 20,957 | — | — | — | 20,957 | |||||||||||||||||
Shares issued and forfeited, net, under stock plans including income tax benefits | — | (2,395 | ) | — | 9,871 | — | 7,476 | ||||||||||||||||
Repurchase of 23,802 shares of common stock | — | — | — | (631 | ) | — | (631 | ) | |||||||||||||||
Repurchase of restricted share awards and restricted share units for tax withholdings | — | — | — | (2,809 | ) | — | (2,809 | ) | |||||||||||||||
Balance as of June 30, 2019 | $ | 702 | $ | 650,797 | $ | 843,530 | $ | (349,426 | ) | $ | (93,026 | ) | $ | 1,052,577 | |||||||||
Six Months Ended June 30, 2018 | |||||||||||||||||||||||
Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Total | ||||||||||||||||||
Balance as of December 31, 2017 | $ | 702 | $ | 610,345 | $ | 550,866 | $ | (319,960 | ) | $ | (77,356 | ) | $ | 764,597 | |||||||||
Net loss | — | — | (34,002 | ) | — | — | (34,002 | ) | |||||||||||||||
Other comprehensive loss | — | — | — | — | (7,248 | ) | (7,248 | ) | |||||||||||||||
Stock-based compensation | — | 14,067 | — | — | — | 14,067 | |||||||||||||||||
Shares issued and forfeited, net, under stock plans including income tax benefits | — | 439 | — | 15,996 | — | 16,435 | |||||||||||||||||
Repurchase of 2,346,427 shares of common stock | — | — | — | (54,527 | ) | — | (54,527 | ) | |||||||||||||||
Repurchase of restricted share awards for tax withholdings | — | — | — | (2,588 | ) | — | (2,588 | ) | |||||||||||||||
Cumulative effect of accounting change, ASC 606 | — | — | 243,981 | — | — | 243,981 | |||||||||||||||||
Balance as of June 30, 2018 | $ | 702 | $ | 624,851 | $ | 760,845 | $ | (361,079 | ) | $ | (84,604 | ) | $ | 940,715 |
Six Months Ended June 30, | |||||||
2019 | 2018 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (20,238 | ) | $ | (34,002 | ) | |
Adjustments to reconcile net loss to net cash flows from operating activities: | |||||||
Depreciation | 11,831 | 11,875 | |||||
Amortization | 42,799 | 37,469 | |||||
Amortization of operating lease right-of-use assets | 7,029 | — | |||||
Amortization of deferred debt issuance costs | 1,683 | 1,445 | |||||
Deferred income taxes | (41,331 | ) | (3,044 | ) | |||
Stock-based compensation expense | 20,957 | 14,067 | |||||
Other | 1,533 | (248 | ) | ||||
Changes in operating assets and liabilities, net of impact of acquisitions: | |||||||
Receivables | 88,596 | 67,689 | |||||
Accounts payable | 1,294 | (3,658 | ) | ||||
Accrued employee compensation | (1,163 | ) | (5,805 | ) | |||
Current income taxes | (5,634 | ) | (7,243 | ) | |||
Deferred revenue | (17,981 | ) | 10,142 | ||||
Other current and noncurrent assets and liabilities | (32,510 | ) | (17,576 | ) | |||
Net cash flows from operating activities | 56,865 | 71,111 | |||||
Cash flows from investing activities: | |||||||
Purchases of property and equipment | (9,915 | ) | (11,108 | ) | |||
Purchases of software and distribution rights | (11,300 | ) | (16,776 | ) | |||
Acquisition of businesses, net of cash acquired | (758,546 | ) | — | ||||
Other | — | (1,467 | ) | ||||
Net cash flows from investing activities | (779,761 | ) | (29,351 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from issuance of common stock | 1,753 | 1,564 | |||||
Proceeds from exercises of stock options | 5,816 | 14,906 | |||||
Repurchase of restricted share awards and restricted share units for tax withholdings | (2,809 | ) | (2,588 | ) | |||
Repurchases of common stock | (631 | ) | (54,527 | ) | |||
Proceeds from revolving credit facility | 250,000 | 85,000 | |||||
Repayment of revolving credit facility | (15,000 | ) | (84,000 | ) | |||
Proceeds from term portion of credit agreement | 500,000 | — | |||||
Repayment of term portion of credit agreement | (9,424 | ) | (10,375 | ) | |||
Payments for debt issuance costs | (12,830 | ) | — | ||||
Payments on other debt | (2,220 | ) | (1,550 | ) | |||
Net cash flows from financing activities | 714,655 | (51,570 | ) | ||||
Effect of exchange rate fluctuations on cash | (865 | ) | (867 | ) | |||
Net decrease in cash and cash equivalents | (9,106 | ) | (10,677 | ) | |||
Cash and cash equivalents, beginning of period | 148,502 | 69,710 | |||||
Cash and cash equivalents, end of period | $ | 139,396 | $ | 59,033 | |||
Supplemental cash flow information | |||||||
Income taxes paid | $ | 15,476 | $ | 20,613 | |||
Interest paid | $ | 23,937 | $ | 17,297 |
Certain prior period amounts have been reclassified to conform to current year presentation. The Company reclassified $32.3 million from other current assets to settlement assets and $31.6 million from other current liabilities to settlement liabilities in the condensed consolidated balance sheet as of December 31, 2018.
June 30, 2019 | December 31, 2018 | ||||||
Operating lease liabilities | $ | 15,193 | $ | — | |||
Vendor financed licenses | 13,574 | 3,551 | |||||
Accrued interest | 9,660 | 8,407 | |||||
Royalties payable | 5,693 | 11,318 | |||||
Other | 37,036 | 38,412 | |||||
Total other current liabilities | $ | 81,156 | $ | 61,688 |
(in thousands) | September 30, 2018 | December 31, 2017 | ||||||
Settlement deposits | $ | 5,477 | $ | 22,282 | ||||
Settlement receivables | 11,462 | 30,063 | ||||||
Other | 6,305 | 5,781 | ||||||
|
|
|
| |||||
Total other current assets | $ | 23,244 | $ | 58,126 | ||||
|
|
|
|
(in thousands) | September 30, 2018 | December 31, 2017 | ||||||
Settlement payables | $ | 16,221 | $ | 48,953 | ||||
Accrued interest | 2,726 | 7,291 | ||||||
Vendor financed licenses | 5,973 | 1,862 | ||||||
Royalties payable | 7,148 | 9,264 | ||||||
Other | 28,007 | 35,534 | ||||||
|
|
|
| |||||
Total other current liabilities | $ | 60,075 | $ | 102,904 | ||||
|
|
|
|
Company’s balance sheet. The Company is entitled to interest earned on the fund balances. The collection of interest on these settlement accounts is considered in the Company’s determination of its fee structure for clients and represents a portion of the payment for services performed by the Company. The amount of settlement funds as of SeptemberJune 30, 20182019, and December 31, 2017 were $185.42018, was $203.2 million and $238.9$256.5 million, respectively.
2018, was $418.0 million and $395.0 million, respectively.
six months ended June 30, 2019, were as follows (in thousands):
ACI On Demand | ACI On Premise | Total | ||||||||||
Gross Balance, prior to December 31, 2018 | $ | 183,783 | $ | 773,340 | $ | 957,123 | ||||||
Total impairment prior to December 31, 2018 | — | (47,432 | ) | (47,432 | ) | |||||||
Balance, December 31, 2018 | 183,783 | 725,908 | 909,691 | |||||||||
Goodwill from acquisitions (1) | 369,781 | — | 369,781 | |||||||||
Balance, June 30, 2019 | $ | 553,564 | $ | 725,908 | $ | 1,279,472 |
(1) | Goodwill from acquisitions relates to the goodwill recorded for the acquisition of E Commerce Group Products, Inc. ("ECG"), along with ECG's subsidiary, Speedpay, Inc. (collectively referred to as "Speedpay") and Walletron, Inc. ("Walletron"), as discussed in Note 3, Acquisitions. The purchase price allocations for Speedpay and Walletron are preliminary as of June 30, 2019, and are subject to future changes during the maximum one-year measurement period. |
In August 2016, the FASB issued ASU2016-15,Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments, an update that addresses how certain cash receipts and cash payments are presented and classified in the statement of cash flows. Among the cash flow matters addressed in the update are payments for costs related to debt prepayments or extinguishments, payments related to settlement of certain types of debt instruments, payments of contingent consideration made after a business combination, proceeds from insurance claims and corporate-owned life insurance policies, and distributions received from equity method investees, among others. The amendments are applied using a retrospective transition method to each period presented, unless impracticable for specific cash flow matters, in which case the amendments would be applied prospectively as of the earliest date practicable. The Company adopted ASU2016-15 as of January 1, 2018. The adoption of ASU2016-15 was not material to the condensed consolidated statement of cash flows.
In October 2016, the FASB issued ASU2016-16,Intra-Entity Transfers of Assets Other than Inventory, to simplify the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. Previously, U.S. GAAP prohibited the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party. This prohibition on recognition was an exception to the principle of comprehensive recognition of current and deferred income taxes in U.S. GAAP. The limited amount of authoritative guidance about the exception led to diversity in practice and is a source of complexity in financial reporting, particularly for an intra-entity transfer of intellectual property. Under the amendments of ASU2016-16, an entity should recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. Consequently, this amendment eliminates the exception for an intra-entity transfer of an asset other than inventory. The amendments to this ASU should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company adopted ASU2016-16 as of January 1, 2018. The adoption of ASU2016-16 had no impact on the condensed consolidated balance sheet, results of operations, or statement of cash flows.
In August 2018, the FASB issued ASU2018-05,Intangibles—Goodwill andOther–Internal-Use Software: Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement (“ASU2018-05”). The purpose of the update was to reduce potential diversity in practice and provide specific guidance on how to account for implementation costs incurred in a cloud computing arrangement. ASU2018-05 applies the same guidance in ASC350-40,Intangibles – Goodwill and Other —Internal-Use Software (“ASC350-40”), to determine implementation costs to capitalize versus costs that are to be expensed as incurred. This ASU will be effective for fiscal years beginning after December 15, 2019, with early adoption permitted. The Company has elected to early adopt ASU2018-05 during the period ended September 30, 2018. The adoption had no impact on the condensed consolidated balance sheet, results of operations, or statement of cash flows.
Recently Issued Accounting Standards Not Yet Effective
In February 2016, the FASB issuedASU 2016-02, 2016-2, Leases (codified as “ASC 842”). ASC 842 requires a lesseelessees to recordrecognize right-of-use (“ROU”) assets and lease liabilities on the balance sheet the assets and liabilities for the rights and obligations created byall leases with lease terms of more than 12 months.unless, as a policy election, a lessee elects not to apply ASC 842 to short-term leases. In addition, this standard requires both lessees and lessors to disclose certain key information about lease transactions. This standard will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years; early adoption is permitted and modified retrospective application is currently required with optional practical expedients. The Company will adoptadopted ASC 842 as of theon January 1, 2019 (the effective date and is evaluating the use ofdate), using the optional transition method to not apply the new lease standard in the comparative periods presented and elected the “practical expedient package”, which permits the Company to not reassess prior conclusions about lease identification, lease classification, and initial direct costs. ASC 842 also provides practical expedients.
Theexpedients for the Company’s ongoing accounting including the combination of lease and non-lease components into a single lease component which the Company has established a cross-functional project teamelected to assess implementing changesapply to its systems, processes, and controls, in conjunction with a comprehensive reviewfacilities leases. As of existing lease agreements. TheJanuary 1, 2019, the Company expects the adoption of ASC 842 will have a material impact on its condensed consolidated balance sheet as its rights and obligations from its existing operating leases will be recognized on the balance sheet asROU assets and liabilities. Asoperating lease liabilities of September 30, 2018, the Company’s undiscounted minimum commitments under noncancelable operating leases was approximately $79.4 million. The Company does not expect the adoption$63.3 million and $68.6 million, respectively. Refer to Note 13, Leases, for further details.
Revenue Recognition
Contract Combination.The Company may execute more than one contract or agreement with a single customer. The separate contracts or agreements may be viewed as one combined arrangement or separate agreements for revenue recognition purposes. In order to reach appropriate conclusions regarding whether such agreements should be combined, the Company evaluates whether the agreements were negotiated as a package with a single commercial objective, whether the amount of consideration to be paid in one agreement depends on the price and/or performance of another agreement, or whether the product(s) or services promised in the agreements represent a single performance obligation. The conclusions reached can impact the allocation of the transaction price to each performance obligation and the timing of revenue recognition related to those arrangements.
Software as a Service (“SaaS”) and Platform as a Service (“PaaS”) Arrangements. The Company’s SaaS-based and PaaS-based arrangements, including implementation, support and other services, represent a single promise to provide continuous access (i.e. a stand-ready performance obligation) to its software solutions and their processing capabilities in the form of a service through one of the Company’s data centers. As each day of providing access to the software solution(s) is substantially the same and the customer simultaneously receives and consumes the benefits as access is provided, the Company’s single promise under its SaaS-based and PaaS-based arrangements is comprised of a series of distinct service periods. The Company’s SaaS-based and PaaS-based arrangements may include fixed consideration, variable consideration, or a combination of the two. Fixed consideration is recognized over the term of the arrangement or longer if the fixed consideration relates to a material right. A material right would be a separate performance obligation. The Company estimates the standalone selling price for a material right by reference to the services expected to be provided and the corresponding expected consideration. Variable consideration in these arrangements is typically a function of transaction volume or
another usage-based measure. Depending upon the structure of a particular arrangement, the Company: (1) allocates the variable amount to each distinct service period within the series and recognizes revenue as each distinct service period is performed (i.e. direct allocation), (2) estimates total variable consideration at contract inception (giving consideration to any constraints that may apply and updating the estimates as new information becomes available) and recognizes the total transaction price over the period to which it relates, or (3) applies the ‘right to invoice’ practical expedient and recognizes revenue based on the amount invoiced to the customer during the period.
License Arrangements. The Company’s software license arrangements provide the customer with the right to use functional intellectual property (as it exists at the point in time at which the license is granted) for the duration of the contract term. Implementation, support, and other services are typically considered distinct performance obligations when sold with a software license unless these services are determined to significantly modify the software.
Payment terms for the Company’s software license arrangements generally include fixed license and capacity fees that are payable up front or over time. These arrangements may also include incremental usage-based fees that are payable when the customer exceeds its contracted license capacity limits. The Company accounts for capacity overages as a usage-based royalty that is recognized when the usage occurs.
When a software license arrangement contains payment terms that are extended beyond one year, a significant financing component may exist. The significant financing component is calculated as the difference between the stated value and present value of the software license fees and is recognized as interest income over the extended payment period. The total fixed software license fee net of the significant financing component is recognized as revenue at the point in time when the software is transferred to the customer.
For those software license arrangements that include customer-specific acceptance provisions, such provisions are generally presumed to be substantive and the Company does not recognize revenue until the earlier of the receipt of a written customer acceptance, objective demonstration that the delivered product meets the customer-specific acceptance criteria, or the expiration of the acceptance period. The Company recognizes revenues on such arrangements upon the earlier of receipt of written acceptance or the first production use of the software by the customer.
For software license arrangements in which the Company acts as a distributor of another company’s product, and in certain circumstances, modifies or enhances the product, revenues are recorded on a gross basis. These include arrangements in which the Company takes control of the products and is responsible for providing the product or service. For software license arrangements in which the Company acts as a sales agent for another company’s product, revenues are recorded on a net basis. These include arrangements in which the Company does not take control of products and is not responsible for providing the product or service.
For software license arrangements in which the Company utilizes a third-party distributor or sales agent, the Company recognizes revenue upon transfer of control of the software license(s) to the third-party distributor or sales agent.
The Company’s software license arrangements typically provide the customer with a standard90-day assurance-type warranty. These warranties do not represent an additional performance obligation as services beyond assuring that the software license complies with agreed-upon specifications are not provided.
Software license arrangements typically include an initial post contract customer support (maintenance or “PCS”) term of one year with subsequent renewals for additional years within the initial license period. The Company’s promise to those customers who elect to purchase PCS represents a stand-ready performance obligation that is distinct from the license performance obligation and recognized over the PCS term.
The Company also provides various professional services to customers with software licenses. These include project management, software implementation, and software modification services. Revenues from arrangements to provide professional services are generally distinct from the other promises in the contract(s) and are recognized as the related services are performed. Consideration payable under these arrangements is either fixed fee or on atime-and-materials basis, which represents variable consideration that must be estimated using the most likely amount based on the range of hours expected to be incurred in providing the services.
The Company estimates the standalone selling price (“SSP”) for maintenance and professional services based on observable standalone sales. The Company applies the residual approach to estimate the SSP for software licenses.
Refer to Note 10,11, Segment Information, for further details, including disaggregation of revenue based on primary solution category and geographic location.
Significant Judgments
The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information.
The Company also applies judgment in determining the term of an arrangement when early termination rights are provided to the customer.
The Company’s software license arrangements with its customers often include multiple promises to transfer licensed software products and services. Determining whether the products and/or services are distinct performance obligations that should be accounted for separately may require significant judgment.
The Company’s SaaS and PaaS arrangements may include variable consideration in the form of usage-based fees. If the arrangement that includes variable consideration in the form of usage-based fees does not meet the allocation exception for variable consideration, the Company estimates the amount of variable consideration at the outset of the arrangement using either the expected value or most likely amount method, depending on the specifics of each arrangement. These estimates are constrained to the extent that it is probable that a significant reversal of incremental revenue will not occur and are updated each reporting period as additional information becomes available.
Judgment is used in determining: (1) whether the financing component in a software license agreement is significant and, if so, (2) the discount rate used in calculating the significant financing component. The Company assesses the significance of the financing component based on the ratio of license fees paid over time to total license fees. If determined to be significant, the financing component is calculated using a rate that discounts the license fees to the cash selling price.
Judgment is also used in assessing whether the extension of payment terms in a software license arrangement results in variable consideration and, if so, the amount to be included in the transaction price. The Company applies the portfolio approach to estimating the amount of variable consideration in these arrangements using the most likely amount method that is based on the Company’s historical collection experience under similar arrangements.
Significant judgment is required to determine the SSP for each performance obligation, the amount allocated to each performance obligation and whether it depicts the amount that the Company expects to receive in exchange for the related product and/or service. As the selling prices of the Company’s software licenses are highly variable, the Company estimates SSP of its software licenses using the residual approach when the software license is sold with other services and observable SSPs exist for the other services. The Company uses a range of amounts to estimate SSP for maintenance and services. These ranges are based on standalone sales and vary based on the type of service and geographic region. If the SSP of a performance obligation is not directly observable, the Company will maximize observable inputs to determine its SSP.
Contract Balances
Timing of revenue recognition may differ from the timing of invoicing to customers. The Company records an accrued receivable when revenue is recognized prior to invoicing and the Company’s right to consideration only requires the passage of time, or deferred revenue when revenue is recognized subsequent to invoicing.
September 30, | December 31, | |||||||
(in thousands) | 2018 | 2017 | ||||||
Billed Receivables | $ | 172,395 | $ | 240,137 | ||||
Allowance for doubtful accounts | (3,598 | ) | (4,799 | ) | ||||
|
|
|
| |||||
Billed Receivables, net | $ | 168,797 | $ | 235,338 | ||||
|
|
|
| |||||
Accrued receivables | 324,019 | 27,507 | ||||||
Significant financing component | (31,343 | ) | — | |||||
|
|
|
| |||||
Total accrued receivables, net | 292,676 | 27,507 | ||||||
Less current accrued receivables | 120,532 | 27,507 | ||||||
Less current significant financing component | (9,688 | ) | — | |||||
|
|
|
| |||||
Total long-term accrued receivables, net | $ | 181,832 | $ | — | ||||
|
|
|
| |||||
Total receivables, net | $ | 461,473 | $ | 262,845 | ||||
|
|
|
|
June 30, 2019 | December 31, 2018 | ||||||
Billed receivables | $ | 158,052 | $ | 239,275 | |||
Allowance for doubtful accounts | (3,781 | ) | (3,912 | ) | |||
Billed receivables, net | 154,271 | 235,363 | |||||
Accrued receivables | 341,417 | 336,858 | |||||
Significant financing component | (31,782 | ) | (35,029 | ) | |||
Total accrued receivables, net | 309,635 | 301,829 | |||||
Less: current accrued receivables | 142,248 | 123,053 | |||||
Less: current significant financing component | (10,126 | ) | (10,234 | ) | |||
Total long-term accrued receivables, net | 177,513 | 189,010 | |||||
Total receivables, net | $ | 463,906 | $ | 537,192 |
2018.
Changes in deferred revenue were as follows:
Deferred | ||||
(in thousands) | Revenue | |||
Balance, January 1, 2018 | $ | 145,344 | ||
Deferral of revenue | 145,573 | |||
Recognition of deferred revenue | (144,935 | ) | ||
Foreign currency translation | (3,525 | ) | ||
|
| |||
Balance, September 30, 2018 | $ | 142,457 | ||
|
|
follows (in thousands):
Balance, December 31, 2018 | $ | 156,135 | |
Deferral of revenue | 79,147 | ||
Recognition of deferred revenue | (97,104 | ) | |
Foreign currency translation | 255 | ||
Balance, June 30, 2019 | $ | 138,433 |
|
|
|
Costssignificant.
wholly owned subsidiary of the Company. The Company accountshas included the financial results of Speedpay in the condensed consolidated financial statements from the date of acquisition. The combination of the Company and Speedpay bill pay solutions serves more than 4,000 customers across the U.S., bringing expanded reach in existing and complementary market segments such as consumer finance, insurance, healthcare, higher education, utilities, government, and mortgage. The acquisition of Speedpay increases the scale of the Company’s On Demand platform business and allows the acceleration of platform innovation through increased research and development and investment in ACI On Demand's platform infrastructure.
cash on hand.
2019.
Financial Statement Effect of Applying ASC 606
As the modified retrospective transition method does not result in recast of the prior year financial statements, ASC 606 requiresconsideration paid by the Company to provide additional disclosures forcomplete the amount by which each financial statement line item is affected by adoption ofacquisition has been allocated preliminarily to the standardassets acquired and explanation of the reasons for significant changes.
The financial statement line items affected by adoption of ASC 606 are as follows:
September 30, 2018 | ||||||||||||
(in thousands) | As Reported | Without application of ASC 606 | Effect of Change Higher / (Lower) | |||||||||
Assets | ||||||||||||
Receivables, net of allowances | $ | 279,641 | $ | 202,829 | $ | 76,812 | ||||||
Recoverable income taxes | 8,233 | 6,711 | 1,522 | |||||||||
Prepaid expenses | 25,875 | 26,616 | (741 | ) | ||||||||
Other current assets | 23,244 | 22,844 | 400 | |||||||||
Accrued receivables, net | 181,832 | — | 181,832 | |||||||||
Deferred income taxes, net | 28,179 | 67,261 | (39,082 | ) | ||||||||
Other noncurrent assets | 54,477 | 40,275 | 14,202 | |||||||||
Liabilities | ||||||||||||
Deferred revenue | 93,668 | 108,162 | (14,494 | ) | ||||||||
Income taxes payable | 1,600 | 153 | 1,447 | |||||||||
Other current liabilities | 60,075 | 60,310 | (235 | ) | ||||||||
Deferred income taxes, net | 26,372 | 6,161 | 20,211 | |||||||||
Stockholders’ equity | ||||||||||||
Total stockholders’ equity | 962,938 | 734,925 | 228,013 |
For the Three Months Ended September 30, 2018 | ||||||||||||
(in thousands) | As Reported | Without application of ASC 606 | Effect of Change Higher / (Lower) | |||||||||
Revenues | ||||||||||||
Software as a service and platform as a service | $ | 104,519 | $ | 103,764 | $ | 755 | ||||||
License | 68,964 | 69,052 | (88 | ) | ||||||||
Maintenance | 54,373 | 54,659 | (286 | ) | ||||||||
Services | 17,669 | 18,184 | (515 | ) | ||||||||
Operating expenses | ||||||||||||
Selling and marketing | 28,252 | 26,397 | 1,855 | |||||||||
Other income (expense) | ||||||||||||
Interest income | 2,763 | 230 | 2,533 | |||||||||
Other, net | (1,304 | ) | (1,155 | ) | (149 | ) | ||||||
Income tax provision | ||||||||||||
Income tax expense (benefit) | 2,012 | 2,804 | (792 | ) |
For the Nine Months Ended September 30, 2018 | ||||||||||||
(in thousands) | As Reported | Without application of ASC 606 | Effect of Change Higher / (Lower) | |||||||||
Revenues | ||||||||||||
Software as a service and platform as a service | $ | 322,399 | $ | 321,897 | $ | 502 | ||||||
License | 142,565 | 163,788 | (21,223 | ) | ||||||||
Maintenance | 166,080 | 166,673 | (593 | ) | ||||||||
Services | 58,786 | 58,938 | (152 | ) | ||||||||
Operating expenses | ||||||||||||
Selling and marketing | 93,305 | 88,667 | 4,638 | |||||||||
Other income (expense) | ||||||||||||
Interest income | 8,249 | 601 | 7,648 | |||||||||
Other, net | (3,036 | ) | (2,495 | ) | (541 | ) | ||||||
Income tax provision | ||||||||||||
Income tax expense (benefit) | 1,824 | 5,371 | (3,547 | ) |
The following summarizes the significant changes resulting from the adoption of ASC 606 compared to if the Company had continued to recognize revenues under ASC985-605,Revenue Recognition: Software(ASC 605).
Receivables, Deferred Revenue, License Revenue, and Interest Income
The change in receivables, deferred revenue, license revenue, and interest income is due to a change in the timing and the amount of recognition for software license revenues under ASC 606.
Under ASC 605, the Company recognized revenueliabilities assumed based upon delivery provided (i) there is persuasive evidence of an arrangement, (ii) collection of the fee is considered probable, and (iii) the fee is fixed or determinable. For software license arrangements in which a significant portion of the fee is due more than 12 months after delivery or when payment terms are significantly beyond the Company’s standard business practice, the license fee is deemed not fixed or determinable. For software license arrangements in which the fee is not considered fixed or determinable, the license is recognized as revenue as payments become due and payable, provided all other conditions for revenue recognition have been met.
License revenue under ASC 605 includes revenue from software license arrangements with extended payment terms for which the due and payable pattern of recognition was applied and revenue from renewals of software license arrangements in the period during which the renewal is signed. Under ASC 606, license revenue from these software license arrangements with extended payment terms is accelerated (i.e. upfront recognition) and adjusted for the effects of the financing component, if significant. The significant financing component in these software license arrangements is recognized as interest income over the extended payment period. As many of these software license arrangements were activeestimated fair values as of the date the Company adopted ASC 606, the license fees are included in the Company’s cumulative adjustment to retained earnings. Revenue for license renewals is recognized when the customer can begin to use and benefit from the license, which is generally at the commencement of the license renewal period.
Other Current Assets, Other Noncurrent Assets,acquisition. The allocation of purchase price is based upon external valuation and Selling and Marketing
Under ASC 606, certain of the Company’s sales commissions meet the definition of incremental costs of obtaining a contract. Accordingly, these costs are capitalized and the expense is recognized as the related goods or services are transferred to the customer. Prior to the adoption of ASC 606, the Company recognized sales commission expenses as they were incurred.
Deferred Income Taxes, Net
The change in deferred income taxes is primarily due to the deferred tax effects resulting from the adjustment to retained earnings for the cumulative effect of applying ASC 606 to active contractsother analyses that have not been completed as of the adoption date.
date of this filing, including, but not limited to, certain tax matters, software, intangible assets, and accrued liabilities. Accordingly, the purchase price allocations are preliminary and are subject to future adjustments during the maximum one-year allocation period.
Amount | Weighted Average Useful Lives | |||||
Current assets: | ||||||
Cash and cash equivalents | $ | 135 | ||||
Receivables, net of allowances | 18,422 | |||||
Settlement assets | 239,604 | |||||
Prepaid expenses | 317 | |||||
Other current assets | 19,585 | |||||
Total current assets acquired | 278,063 | |||||
Noncurrent assets: | ||||||
Goodwill | 367,142 | |||||
Software | 113,600 | 7 years | ||||
Customer relationships | 208,500 | 15 years | ||||
Trademarks | 10,900 | 5 years | ||||
Other noncurrent assets | 3,745 | |||||
Total assets acquired | 981,950 | |||||
Current liabilities: | ||||||
Accounts payable | 6,743 | |||||
Settlement liabilities | 212,892 | |||||
Employee compensation | 1,959 | |||||
Other current liabilities | 3,802 | |||||
Total current liabilities acquired | 225,396 | |||||
Noncurrent liabilities: | ||||||
Other noncurrent liabilities | 1,219 | |||||
Total liabilities acquired | 226,615 | |||||
Net assets acquired | $ | 755,335 |
3.
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Pro forma revenue | $ | 334,077 | $ | 322,407 | $ | 628,136 | $ | 626,691 | |||||||
Pro forma net income (loss) | 15,249 | (7,382 | ) | (5,996 | ) | (13,595 | ) | ||||||||
Pro forma income (loss) per share: | |||||||||||||||
Basic | $ | 0.13 | $ | (0.06 | ) | $ | (0.05 | ) | $ | (0.12 | ) | ||||
Diluted | 0.13 | (0.06 | ) | (0.05 | ) | (0.12 | ) |
The loans under
BorrowingsCompany’s option, borrowings under the Credit Facility bear interest at aan annual rate per annum equal to, at the Company’s option, either (a) a base rate determined by reference to the highest of (1) the rate ofannual interest per annumrate publicly announced by the Administrative Agentadministrative agent as its Prime Rate, (2) the federal funds effective rate plus 1/2 of 1%, andor (3) a LIBORLondon Interbank Offered Rate (“LIBOR”) rate determined by reference to the costs of funds for U.S. dollar deposits for aone-month interest period, adjusted for certain additional costs, plus 1% or (b) a LIBOR rate determined by reference to the costs of funds for U.S. dollar deposits for the interest period relevant to such borrowingborrowings, adjusted for certain additional costs, in each case plus an applicable margin. The applicable margin for borrowings under the Credit Facility is, basedBased on the calculation of the applicable consolidated total leverage ratio, the applicable margin for borrowings under the Credit Facility is between 0.25% to 1.25% with respect to base rate borrowings and between 1.25% and 2.25% with respect to LIBOR rate borrowings. Interest is due and payable monthly. The interest rate in effect at Septemberas of June 30, 2018,2019, for the Credit Facility was 3.99%4.65%.
In addition to paying interest on the outstanding principal under the Credit Facility, the
The collateral agreement of the Credit Agreement, as amended, released the lien on certain assets of OPAY, our electronic bill presentment and payment affiliate, to allow OPAY to comply with certain eligible securities and unencumbered asset requirements related to money transmitter or transfer license rules and regulations.
The Credit Agreement also contains certain customary affirmative covenants and events of default. If an event of default, as specified in the Credit Agreement, shall occur and be continuing, the Company may be required to repay all amounts outstanding under the Credit Facility.
Interest will accrueaccrued from August 21, 2018. The 2026 Notes will mature on August 15, 2026. In connection with the issuance of the 2026 Notes, the Company incurred and paid
The Company used the net proceeds of the offering described above to redeem in full the Company’s outstanding 6.375% Senior Notes due 2020 (the “2020 Notes”), including accrued interest, and repaid a portion of the outstanding amount under the Term Credit Facility.
Maturities on long-term debt outstanding at September 30, 20182019, are as follows:
Fiscal year ending December 31, | ||||
(in thousands) | ||||
2018 | $ | 3,958 | ||
2019 | 23,747 | |||
2020 | 23,747 | |||
2021 | 31,662 | |||
2022 | 205,803 | |||
Thereafter | 400,000 | |||
|
| |||
Total | $ | 688,917 | ||
|
|
The Credit Agreement and 2026 Notes also contain certain customary mandatory prepayment provisions. If certain events, as specified in the Credit Agreement or 2026 Notes agreement, shall occur, the Company may be required to repay all or a portion of the amounts outstanding under the Credit Facility or 2026 Notes.
follows (in thousands):
Fiscal Year Ending December 31, | |||
Remainder of 2019 | $ | 19,475 | |
2020 | 38,950 | ||
2021 | 38,950 | ||
2022 | 50,431 | ||
2023 | 69,906 | ||
Thereafter | 1,192,823 | ||
Total | $ | 1,410,535 |
(in thousands) | As of September 30, 2018 | As of December 31, 2017 | ||||||
Term credit facility | $ | 288,917 | $ | 394,250 | ||||
Revolving credit facility | — | 2,000 | ||||||
5.750% Senior Notes, due August 2026 | 400,000 | — | ||||||
6.375% Senior Notes, due August 2020 | — | 300,000 | ||||||
Debt issuance costs | (13,993 | ) | (10,521 | ) | ||||
|
|
|
| |||||
Total debt | 674,924 | 685,729 | ||||||
Less current portion of term credit facility | 21,768 | 20,750 | ||||||
Less current portion of debt issuance costs | (3,003 | ) | (2,964 | ) | ||||
|
|
|
| |||||
Total long-term debt | $ | 656,159 | $ | 667,943 | ||||
|
|
|
|
June 30, 2019 | December 31, 2018 | ||||||
Term loans | $ | 775,535 | $ | 284,959 | |||
Revolving credit facility | 235,000 | — | |||||
5.750% Senior notes, due August 2026 | 400,000 | 400,000 | |||||
Debt issuance costs | (24,350 | ) | (13,203 | ) | |||
Total debt | 1,386,185 | 671,756 | |||||
Less: current portion of term loans | 38,950 | 23,747 | |||||
Less: current portion of debt issuance costs | (4,861 | ) | (2,980 | ) | |||
Total long-term debt | $ | 1,352,096 | $ | 650,989 |
On April 6, 2017, the Board of Directors approved
Stock-Based Payments
Number of Shares | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value of In-the- Money Options | |||||||||||||
Outstanding as of December 31, 2017 | 6,162,717 | $ | 16.83 | |||||||||||||
Granted | 170,455 | 23.36 | ||||||||||||||
Exercised | (1,262,994 | ) | 14.57 | |||||||||||||
Forfeited | (81,881 | ) | 18.62 | |||||||||||||
|
|
|
| |||||||||||||
Outstanding as of September 30, 2018 | 4,988,297 | $ | 17.60 | 6.30 | $ | 52,585,398 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Exercisable as of September 30, 2018 | 3,533,425 | $ | 16.84 | 5.64 | $ | 39,930,860 | ||||||||||
|
|
|
|
|
|
|
|
Number of Shares | Weighted Average Exercise Price ($) | Weighted Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value of In-the-Money Options ($) | |||||||||
Outstanding as of December 31, 2018 | 4,864,836 | $ | 17.76 | |||||||||
Exercised | (365,808 | ) | 15.90 | |||||||||
Forfeited | (3,496 | ) | 17.89 | |||||||||
Outstanding as of June 30, 2019 | 4,495,532 | $ | 17.91 | 5.77 | $ | 73,859,896 | ||||||
Exercisable as of June 30, 2019 | 3,951,380 | $ | 17.59 | 5.54 | $ | 66,188,229 |
There were no stock options granted during the six months ended June 30, 2019.
Nine Months Ended | Nine Months Ended | |||||||
September 30, 2018 | September 30, 2017 | |||||||
Expected life (years) | 5.6 | 5.6 | ||||||
Interest rate | 2.7 | % | 1.9 | % | ||||
Volatility | 26.4 | % | 29.4 | % | ||||
Dividend yield | — | — |
Six Months Ended June 30, 2018 | ||
Expected life (years) | 5.6 | |
Risk-free interest rate | 2.7 | % |
Expected volatility | 26.4 | % |
Expected dividend yield | — |
Nonvested LTIP Performance Shares | Number of Shares at Expected Attainment | Weighted- Average Grant Date Fair Value | ||||||
Nonvested as of December 31, 2017 | 1,125,035 | $ | 18.94 | |||||
Forfeited | (89,582 | ) | 19.24 | |||||
|
|
|
| |||||
Nonvested as of September 30, 2018 | 1,035,453 | $ | 18.92 | |||||
|
|
|
|
Number of Shares at Expected Attainment | Weighted Average Grant Date Fair Value | |||||
Nonvested as of December 31, 2018 | 540,697 | $ | 19.83 | |||
Forfeited | (16,319 | ) | 20.12 | |||
Change in attainment | 377,557 | 20.22 | ||||
Nonvested as of June 30, 2019 | 901,935 | $ | 19.99 |
Nonvested Restricted Share Awards | Number of Restricted Share Awards | Weighted-Average Grant Date Fair Value | ||||||
Nonvested as of December 31, 2017 | 503,237 | $ | 20.63 | |||||
Vested | (231,473 | ) | 21.20 | |||||
Forfeited | (47,411 | ) | 19.88 | |||||
|
|
|
| |||||
Nonvested as of September 30, 2018 | 224,353 | $ | 20.18 | |||||
|
|
|
|
Number of Shares | Weighted Average Grant Date Fair Value | |||||
Nonvested as of December 31, 2018 | 213,337 | $ | 20.21 | |||
Vested | (104,763 | ) | 20.21 | |||
Forfeited | (9,068 | ) | 20.12 | |||
Nonvested as of June 30, 2019 | 99,506 | $ | 20.21 |
Performance-Based Restricted Share
Number of Shares | Weighted Average Grant Date Fair Value | |||||
Nonvested as of December 31, 2018 | 718,931 | $ | 29.25 | |||
Granted | 436,674 | 47.90 | ||||
Forfeited | (18,050 | ) | 36.06 | |||
Nonvested as of June 30, 2019 | 1,137,555 | $ | 36.30 |
Six Months Ended June 30, | |||||
2019 | 2018 | ||||
Expected life (years) | 2.8 | 2.9 | |||
Risk-free interest rate | 2.5 | % | 2.4 | % | |
Expected volatility | 29.3 | % | 28.0 | % | |
Expected dividend yield | — | — |
Nonvested Performance-Based Restricted Share Awards | Number of Performance-Based Restricted Share Awards | Weighted-Average Grant Date Fair Value | ||||||
Nonvested as of December 31, 2017 | 173,636 | $ | 24.41 | |||||
Vested | (173,636 | ) | 24.41 | |||||
|
|
|
| |||||
Nonvested as of September 30, 2018 | — | $ | — | |||||
|
|
|
|
Number of Shares | Weighted Average Grant Date Fair Value | |||||
Nonvested as of December 31, 2018 | 651,045 | $ | 23.82 | |||
Granted | 679,480 | 33.06 | ||||
Vested | (257,982 | ) | 24.13 | |||
Forfeited | (22,465 | ) | 26.60 | |||
Nonvested as of June 30, 2019 | 1,050,078 | $ | 29.66 |
Total Shareholder Return Awards
During the nine months ended September 30, 2018 and 2017, the Company granted total shareholder return (“TSR”) awards, pursuant to the 2016 Equity and Performance Incentive Plan. TSRs are performance shares that are earned, if at all, based upon the Company’s total shareholder return as compared to a group of peer companies over a three-year performance period. The award payout can range from 0% to 200%. In order to determine the grant date fair value of the TSRs, a Monte Carlo simulation model is used. The Company recognizes compensation expense for TSRs over a three-year performance period based on the grant date fair value.
The grant date fair value of the TSRs was estimated using the following weighted-average assumptions:
Nine Months Ended | Nine Months Ended | |||||||
September 30, 2018 | September 30, 2017 | |||||||
Expected life (years) | 2.9 | 2.9 | ||||||
Interest rate | 2.4 | % | 1.5 | % | ||||
Volatility | 28.0 | % | 26.5 | % | ||||
Dividend Yield | — | — |
A summary of nonvested TSRs outstanding as of September 30, 2018, and changes during the period are as follows:
Nonvested Total Shareholder Return Awards | Number of Shares at Expected Attainment | Weighted- Average Grant Date Fair Value | ||||||
Nonvested as of December 31, 2017 | 143,649 | $ | 24.37 | |||||
Granted | 541,214 | 31.31 | ||||||
Forfeited | (33,970 | ) | 29.90 | |||||
|
|
|
| |||||
Nonvested as of September 30, 2018 | 650,893 | $ | 29.85 | |||||
|
|
|
|
Restricted Share Units
During the nine months ended September 30, 2018, the Company granted restricted share units (“RSUs”) awards, pursuant to the 2016 Equity and Performance Incentive Plan. The awards generally have requisite service periods of three years and vest in increments of 33% on the anniversary of the grant dates. Under each arrangement, stock is issued without direct cost to the employee on the vesting date. The Company estimates the fair value of the RSUs based upon the market price of the Company’s stock at the date of grant. The Company recognizes compensation expense for RSUs on a straight-line basis over the requisite service period.
A summary of nonvested RSUs as of September 30, 2018, and changes during the period are as follows:
Nonvested Restricted Share Units | Number of Restricted Share Units | Weighted- Average Grant Date Fair Value | ||||||
Nonvested as of December 31, 2017 | — | $ | — | |||||
Granted | 714,123 | 23.81 | ||||||
Vested | (10,000 | ) | 25.72 | |||||
Forfeited | (38,739 | ) | 23.36 | |||||
|
|
|
| |||||
Nonvested as of September 30, 2018 | 665,384 | $ | 23.81 | |||||
|
|
|
|
During the nine months ended September 30, 2018, a total of 10,000 RSU shares vested.
At September
At December 31, 2017,2019, software net book value totaled $155.4$246.3 million, net of $230.7$275.6 million of accumulated amortization. Included in this net book value amount is software marketed for external saleresale of $40.9 million. The remaining$21.5 million and software net book value of $114.5 million is comprised of various software that has been acquired or developed for internal use.
Quarterly amortizationuse of $224.8 million.
Quarterly amortization
(in thousands) | September 30, 2018 | December 31, 2017 | ||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Balance | Gross Carrying Amount | Accumulated Amortization | Net Balance | |||||||||||||||||||
Customer relationships | $ | 300,782 | $ | (128,367 | ) | $ | 172,415 | $ | 305,218 | $ | (116,677 | ) | $ | 188,541 | ||||||||||
Trademarks and tradenames | 16,450 | (14,808 | ) | 1,642 | 16,646 | (13,906 | ) | 2,740 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
$ | 317,232 | $ | (143,175 | ) | $ | 174,057 | $ | 321,864 | $ | (130,583 | ) | $ | 191,281 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
follows (in thousands):
June 30, 2019 | December 31, 2018 | ||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Balance | Gross Carrying Amount | Accumulated Amortization | Net Balance | ||||||||||||||||||
Customer relationships | $ | 506,831 | $ | (143,307 | ) | $ | 363,524 | $ | 297,991 | $ | (131,187 | ) | $ | 166,804 | |||||||||
Trademarks and tradenames | 27,253 | (15,869 | ) | 11,384 | 16,348 | (15,025 | ) | 1,323 | |||||||||||||||
Total other intangible assets | $ | 534,084 | $ | (159,176 | ) | $ | 374,908 | $ | 314,339 | $ | (146,212 | ) | $ | 168,127 |
Fiscal Year Ending December 31, | Software Amortization | Other Intangible Assets Amortization | ||||||
(in thousands) | ||||||||
Remainder of 2018 | $ | 13,724 | $ | 4,670 | ||||
2019 | 47,416 | 18,325 | ||||||
2020 | 37,964 | 17,438 | ||||||
2021 | 24,930 | 16,939 | ||||||
2022 | 11,957 | 16,789 | ||||||
2023 | 6,306 | 16,478 | ||||||
Thereafter | 5,019 | 83,418 | ||||||
|
|
|
| |||||
Total | $ | 147,316 | $ | 174,057 | ||||
|
|
|
|
6.
Fiscal Year Ending December 31, | Software | Other Intangible Assets | ||||||
Remainder of 2019 | $ | 35,197 | $ | 18,830 | ||||
2020 | 62,338 | 37,046 | ||||||
2021 | 49,336 | 36,555 | ||||||
2022 | 31,603 | 36,409 | ||||||
2023 | 23,123 | 36,107 | ||||||
Thereafter | 44,717 | 209,961 | ||||||
Total | $ | 246,314 | $ | 374,908 |
The components
(in thousands) | Facility Closures | |||
Balance, December 31, 2017 | $ | 5,945 | ||
Amounts paid during the period | (1,342 | ) | ||
Foreign currency translation | (48 | ) | ||
|
| |||
Balance, September 30, 2018 | $ | 4,555 | ||
|
|
facility closures liability is as follows (in thousands):
Balance, December 31, 2018 | $ | 4,127 | |
Amounts paid during the period | (777 | ) | |
Foreign currency translation adjustments | 2 | ||
Balance, June 30, 2019 | $ | 3,352 |
7. 2019.
remaining purchase amounts previously authorized.
8. $176.0 million.
RSUs.
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic weighted average shares outstanding | 115,889 | 118,254 | 115,615 | 117,096 | ||||||||||||
Add: Dilutive effect of stock options | 1,603 | 1,489 | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Diluted weighted average shares outstanding | 117,492 | 119,743 | 115,615 | 117,096 | ||||||||||||
|
|
|
|
|
|
|
|
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||
Weighted average shares outstanding: | |||||||||||
Basic weighted average shares outstanding | 116,586 | 115,548 | 116,287 | 115,595 | |||||||
Add: Dilutive effect of stock options and RSUs | 2,200 | — | — | — | |||||||
Diluted weighted average shares outstanding | 118,786 | 115,548 | 116,287 | 115,595 |
9.
is comprised of foreign currency transaction gains of $1.4 million and losses of $1.7 million for the three months ended June 30, 2019 and 2018, respectively. Other, net is comprised of foreign currency transaction losses of $1.3$0.5 million and $1.1$1.7 million for the threesix months ended SeptemberJune 30, 2019 and 2018, and 2017, respectively. Other is comprised of foreign currency transaction losses of $3.0 million and $2.2 million for the nine months ended September 30, 2018 and 2017, respectively.
10.
ACI On Premise serves customers who manage their software on site. These on premiseon-premise customers use the Company’s software to develop sophisticated solutions, which are often part of a larger system located and managed at the customer specified site. These customers require a level of control and flexibility that ACI On Premise solutions can offer, and they have the resources and expertise to take a lead role in managing these solutions.
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2018 | September 30, 2017 | September 30, 2018 | September 30, 2017 | |||||||||||||
Revenue | ||||||||||||||||
ACI On Premise | $ | 141,006 | $ | 126,006 | $ | 367,431 | $ | 385,108 | ||||||||
ACI On Demand | 104,519 | 99,729 | 322,399 | 312,688 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total revenue | $ | 245,525 | $ | 225,735 | $ | 689,830 | $ | 697,796 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Segment Adjusted EBITDA | ||||||||||||||||
ACI On Premise | $ | 77,819 | $ | 65,138 | $ | 171,477 | $ | 196,060 | ||||||||
ACI On Demand | 3,270 | (1,241 | ) | (4,327 | ) | (8,794 | ) | |||||||||
Depreciation and amortization | (23,545 | ) | (25,553 | ) | (72,889 | ) | (76,772 | ) | ||||||||
Stock-based compensation | (6,575 | ) | (8,084 | ) | (20,642 | ) | (22,724 | ) | ||||||||
Corporate and unallocated expenses | (22,610 | ) | (18,837 | ) | (64,122 | ) | (111,167 | ) | ||||||||
Interest, net | (9,810 | ) | (9,209 | ) | (23,406 | ) | (29,777 | ) | ||||||||
Other, net | (1,304 | ) | (1,059 | ) | (3,036 | ) | (2,176 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Income (loss) before income taxes | $ | 17,245 | $ | 1,155 | $ | (16,945 | ) | $ | (55,350 | ) | ||||||
|
|
|
|
|
|
|
| |||||||||
Depreciation and amortization | ||||||||||||||||
ACI On Premise | $ | 2,772 | $ | 3,321 | $ | 8,596 | $ | 9,915 | ||||||||
ACI On Demand | 7,906 | 8,576 | 23,468 | 25,973 | ||||||||||||
Corporate | 12,867 | 13,656 | 40,825 | 40,884 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total depreciation and amortization | $ | 23,545 | $ | 25,553 | $ | 72,889 | $ | 76,772 | ||||||||
|
|
|
|
|
|
|
|
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Revenue | |||||||||||||||
ACI On Premise | $ | 125,119 | $ | 121,395 | $ | 221,126 | $ | 226,425 | |||||||
ACI On Demand | 172,499 | 113,600 | 282,347 | 217,880 | |||||||||||
Total revenue | $ | 297,618 | $ | 234,995 | $ | 503,473 | $ | 444,305 | |||||||
Segment Adjusted EBITDA | |||||||||||||||
ACI On Premise | $ | 57,069 | $ | 54,760 | $ | 85,337 | $ | 93,658 | |||||||
ACI On Demand | 17,340 | (3,364 | ) | 17,078 | (7,597 | ) | |||||||||
Depreciation and amortization | (29,778 | ) | (24,351 | ) | (54,630 | ) | (49,344 | ) | |||||||
Stock-based compensation expense | (14,372 | ) | (7,705 | ) | (20,957 | ) | (14,067 | ) | |||||||
Corporate and unallocated expenses | (36,141 | ) | (21,498 | ) | (60,803 | ) | (41,512 | ) | |||||||
Interest, net | (12,326 | ) | (6,975 | ) | (20,907 | ) | (13,596 | ) | |||||||
Other, net | 1,402 | (1,677 | ) | (510 | ) | (1,732 | ) | ||||||||
Loss before income taxes | $ | (16,806 | ) | $ | (10,810 | ) | $ | (55,392 | ) | $ | (34,190 | ) | |||
Depreciation and amortization | |||||||||||||||
ACI On Premise | $ | 3,019 | $ | 2,849 | $ | 6,049 | $ | 5,824 | |||||||
ACI On Demand | 8,489 | 7,826 | 16,051 | 15,562 | |||||||||||
Corporate | 18,270 | 13,676 | 32,530 | 27,958 | |||||||||||
Total depreciation and amortization | $ | 29,778 | $ | 24,351 | $ | 54,630 | $ | 49,344 | |||||||
Stock-based compensation expense | |||||||||||||||
ACI On Premise | $ | 2,051 | $ | 1,838 | $ | 4,007 | $ | 3,305 | |||||||
ACI On Demand | 2,214 | 1,834 | 4,165 | 3,297 | |||||||||||
Corporate | 10,107 | 4,033 | 12,785 | 7,465 | |||||||||||
Total stock-based compensation expense | $ | 14,372 | $ | 7,705 | $ | 20,957 | $ | 14,067 |
Three Months Ended September 30, 2018 | Three Months Ended September 30, 2017 | |||||||||||||||||||||||
(in thousands) | ACI On Premise | ACI On Demand | Total | ACI On Premise | ACI On Demand | Total | ||||||||||||||||||
Primary Geographic Markets | ||||||||||||||||||||||||
Americas - United States | $ | 26,022 | $ | 88,401 | $ | 114,423 | $ | 36,189 | $ | 84,669 | $ | 120,858 | ||||||||||||
Americas - Other | 16,709 | 2,409 | 19,118 | 16,874 | 2,314 | 19,188 | ||||||||||||||||||
EMEA | 80,738 | 12,385 | 93,123 | 47,919 | 12,104 | 60,023 | ||||||||||||||||||
Asia Pacific | 17,537 | 1,324 | 18,861 | 25,024 | 642 | 25,666 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 141,006 | $ | 104,519 | $ | 245,525 | $ | 126,006 | $ | 99,729 | $ | 225,735 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Primary Solution Categories | ||||||||||||||||||||||||
Bill Payments | $ | — | $ | 64,134 | $ | 64,134 | $ | — | $ | 62,328 | $ | 62,328 | ||||||||||||
Digital Channels/Online | 7,499 | 9,327 | 16,826 | 13,403 | 11,555 | 24,958 | ||||||||||||||||||
Merchant Payments | 6,216 | 18,052 | 24,268 | 6,423 | 12,458 | 18,881 | ||||||||||||||||||
Payments Risk Management | 7,259 | 11,068 | 18,327 | 10,887 | 11,192 | 22,079 | ||||||||||||||||||
Real Time Payments | 23,704 | 540 | 24,244 | 11,745 | 520 | 12,265 | ||||||||||||||||||
Retail Payments | 96,328 | 1,398 | 97,726 | 83,548 | 1,676 | 85,224 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 141,006 | $ | 104,519 | $ | 245,525 | $ | 126,006 | $ | 99,729 | $ | 225,735 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2018 | Nine Months Ended September 30, 2017 | |||||||||||||||||||||||
(in thousands) | ACI On Premise | ACI On Demand | Total | ACI On Premise | ACI On Demand | Total | ||||||||||||||||||
Primary Geographic Markets | ||||||||||||||||||||||||
Americas - United States | $ | 82,280 | $ | 275,171 | $ | 357,451 | $ | 118,311 | $ | 268,125 | $ | 386,436 | ||||||||||||
Americas - Other | 45,269 | 7,077 | 52,346 | 44,591 | 7,168 | 51,759 | ||||||||||||||||||
EMEA | 181,913 | 36,819 | 218,732 | 166,379 | 35,554 | 201,933 | ||||||||||||||||||
Asia Pacific | 57,969 | 3,332 | 61,301 | 55,827 | 1,841 | 57,668 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 367,431 | $ | 322,399 | $ | 689,830 | $ | 385,108 | $ | 312,688 | $ | 697,796 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Primary Solution Categories | ||||||||||||||||||||||||
Bill Payments | $ | — | $ | 204,673 | $ | 204,673 | $ | — | $ | 201,259 | $ | 201,259 | ||||||||||||
Digital Channels/Online | 27,779 | 30,281 | 58,060 | 36,118 | 33,771 | 69,889 | ||||||||||||||||||
Merchant Payments | 16,476 | 44,423 | 60,899 | 20,175 | 35,816 | 55,991 | ||||||||||||||||||
Payments Risk Management | 25,711 | 34,524 | 60,235 | 22,855 | 33,604 | 56,459 | ||||||||||||||||||
Real Time Payments | 53,086 | 1,474 | 54,560 | 35,195 | 2,418 | 37,613 | ||||||||||||||||||
Retail Payments | 244,379 | 7,024 | 251,403 | 270,765 | 5,820 | 276,585 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 367,431 | | $ | 322,399 | | $ | 689,830 | | $ | 385,108 | | $ | 312,688 | | $ | 697,796 | | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | ||||||||||||||||||||||
ACI On Premise | ACI On Demand | Total | ACI On Premise | ACI On Demand | Total | ||||||||||||||||||
Primary Geographic Markets | |||||||||||||||||||||||
Americas - United States | $ | 35,696 | $ | 155,825 | $ | 191,521 | $ | 25,394 | $ | 97,825 | $ | 123,219 | |||||||||||
Americas - Other | 12,413 | 2,107 | 14,520 | 11,776 | 2,348 | 14,124 | |||||||||||||||||
EMEA | 52,155 | 12,492 | 64,647 | 62,489 | 12,425 | 74,914 | |||||||||||||||||
Asia Pacific | 24,855 | 2,075 | 26,930 | 21,736 | 1,002 | 22,738 | |||||||||||||||||
Total | $ | 125,119 | $ | 172,499 | $ | 297,618 | $ | 121,395 | $ | 113,600 | $ | 234,995 | |||||||||||
Primary Solution Categories | |||||||||||||||||||||||
Bill Payments | $ | — | $ | 125,339 | $ | 125,339 | $ | — | $ | 74,371 | $ | 74,371 | |||||||||||
Digital Channels | 9,444 | 18,011 | 27,455 | 8,917 | 10,310 | 19,227 | |||||||||||||||||
Merchant Payments | 7,637 | 17,942 | 25,579 | 5,308 | 15,411 | 20,719 | |||||||||||||||||
Payments Intelligence | 6,504 | 8,874 | 15,378 | 7,974 | 10,247 | 18,221 | |||||||||||||||||
Real-Time Payments | 21,809 | 907 | 22,716 | 15,741 | 484 | 16,225 | |||||||||||||||||
Retail Payments | 79,725 | 1,426 | 81,151 | 83,455 | 2,777 | 86,232 | |||||||||||||||||
Total | $ | 125,119 | $ | 172,499 | $ | 297,618 | $ | 121,395 | $ | 113,600 | $ | 234,995 |
Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | ||||||||||||||||||||||
ACI On Premise | ACI On Demand | Total | ACI On Premise | ACI On Demand | Total | ||||||||||||||||||
Primary Geographic Markets | |||||||||||||||||||||||
Americas - United States | $ | 62,118 | $ | 248,861 | $ | 310,979 | $ | 56,258 | $ | 186,770 | $ | 243,028 | |||||||||||
Americas - Other | 23,358 | 4,850 | 28,208 | 28,560 | 4,668 | 33,228 | |||||||||||||||||
EMEA | 94,606 | 24,560 | 119,166 | 101,175 | 24,434 | 125,609 | |||||||||||||||||
Asia Pacific | 41,044 | 4,076 | 45,120 | 40,432 | 2,008 | 42,440 | |||||||||||||||||
Total | $ | 221,126 | $ | 282,347 | $ | 503,473 | $ | 226,425 | $ | 217,880 | $ | 444,305 | |||||||||||
Primary Solution Categories | |||||||||||||||||||||||
Bill Payments | $ | — | $ | 194,306 | $ | 194,306 | $ | — | $ | 140,539 | $ | 140,539 | |||||||||||
Digital Channels | 18,169 | 27,799 | 45,968 | 20,280 | 20,954 | 41,234 | |||||||||||||||||
Merchant Payments | 12,659 | 37,281 | 49,940 | 10,383 | 28,957 | 39,340 | |||||||||||||||||
Payments Intelligence | 13,541 | 17,855 | 31,396 | 18,329 | 20,870 | 39,199 | |||||||||||||||||
Real-Time Payments | 36,524 | 1,525 | 38,049 | 29,382 | 934 | 30,316 | |||||||||||||||||
Retail Payments | 140,233 | 3,581 | 143,814 | 148,051 | 5,626 | 153,677 | |||||||||||||||||
Total | $ | 221,126 | $ | 282,347 | $ | 503,473 | $ | 226,425 | $ | 217,880 | $ | 444,305 |
(in thousands) | September 30, 2018 | December 31, 2017 | ||||||
Long lived assets | ||||||||
United States | $ | 834,386 | $ | 759,513 | ||||
Other | 708,424 | 613,556 | ||||||
|
|
|
| |||||
$ | 1,542,810 | $ | 1,373,069 | |||||
|
|
|
|
(in thousands):
June 30, 2019 | December 31, 2018 | ||||||
Long-lived Assets | |||||||
United States | $ | 1,538,730 | $ | 811,435 | |||
Other | 726,038 | 717,495 | |||||
Total | $ | 2,264,768 | $ | 1,528,930 |
On December 22, 2017, the Tax Cuts and Jobs Act (“Tax Act”) was signed into U.S. Law. In December 2017, the Securities and Exchange Commission staff issued Staff Accounting Bulletin No. 118,Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”), which allows the Company to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. As of September 30, 2018, the Company has not completed its accounting for the tax effects of the enactment of the Tax Act; however, in certain cases, specifically as follows, the Company made a reasonable estimate of (i) the effects on its existing deferred tax balances and (ii) the effects of theone-time mandatory repatriation tax. The Company recognized a provisional tax expense of $35.9 million in the year ended December 31, 2017 associated with the items it could reasonably estimate. For the nine months ended September 30, 2018, the Company made an adjustment to its estimate related to executive compensation which resulted in $2.8 million of tax benefit. Due the timing of the release of the Tax Act, the complexity of the Tax Act and regulatory guidance that has recently been released and additional guidance expected to be released, the Company is still analyzing the Tax Act and refining its calculations, which could potentially impact the measurement of its income tax balances. The Company expects to complete its analysis within the measurement period in accordance with SAB 118.
At September 30, 2018, the Company has not yet determined its policy election with respect to whether to record deferred taxes for basis differences expected to reverse as a result of the Global IntangibleLow-Taxed Income (“GILTI”) provisions in future periods or use the period cost method. The Company has recorded $5.0 million of tax expense in the nine months ended September 30, 2018 for the current impact of the GILTI provisions.
expense of approximately $18.5 million. The Company reported areleased the valuation allowance following the acquisition of Speedpay and has determined that it is more likely than not that it will be able to utilize the foreign tax benefit for the three months ended September 30, 2017 while reporting a pretax profit for the same period. The resulting effective tax rate is a negative 193%. credits in future years due to additional income provided by Speedpay.
taxes resulting from the current GILTI tax, partially offset by equity compensation tax benefits.
The
2018.
During
Three Months Ended June 30, 2019 | Six Months Ended June 30, 2019 | ||||||
Operating lease cost | $ | 4,287 | $ | 8,323 | |||
Variable lease cost | 760 | 1,746 | |||||
Sublease income | (141 | ) | (280 | ) | |||
Total lease cost | $ | 4,906 | $ | 9,789 |
Three Months Ended June 30, 2019 | Six Months Ended June 30, 2019 | ||||||
Cash paid for amounts included in the measurement of lease liabilities: | |||||||
Operating cash flows from operating leases | $ | 4,849 | $ | 10,260 | |||
Right-of-use assets obtained in exchange for new lease obligations: | |||||||
Operating leases | $ | 4,984 | $ | 6,202 |
June 30, 2019 | |||
Assets: | |||
Operating lease right-of-use assets | $ | 62,316 | |
Liabilities: | |||
Other current liabilities | $ | 15,193 | |
Operating lease liabilities | 50,550 | ||
Total operating lease liabilities | $ | 65,743 | |
Weighted average remaining operating lease term (years) | 6.78 | ||
Weighted average operating lease discount rate | 4.07 | % |
Fiscal Year Ending December 31, | |||
Remainder of 2019 | $ | 8,605 | |
2020 | 16,547 | ||
2021 | 11,956 | ||
2022 | 9,130 | ||
2023 | 7,474 | ||
Thereafter | 21,554 | ||
Total lease payments | 75,266 | ||
Less: imputed interest | 9,523 | ||
Total lease liability | $ | 65,743 |
Fiscal Year Ending December 31, | |||
2019 | $ | 16,925 | |
2020 | 14,212 | ||
2021 | 10,538 | ||
2022 | 8,178 | ||
2023 | 6,529 | ||
Thereafter | 21,196 | ||
Total minimum lease payments | $ | 77,578 |
12. Accumulated Other Comprehensive Loss
Activity within accumulated other comprehensive loss for the nine months ended September 30, 2018 and 2017, which consists of foreign currency translation adjustments, were as follows:
(in thousands) | Accumulated other comprehensive loss | |||
Balance at December 31, 2017 | $ | (77,356 | ) | |
Other comprehensive loss | (11,110 | ) | ||
|
| |||
Balance at September 30, 2018 | $ | (88,466 | ) | |
|
| |||
Accumulated other comprehensive loss | ||||
Balance at December 31, 2016 | $ | (94,100 | ) | |
Other comprehensive income | 14,526 | |||
|
| |||
Balance at September 30, 2017 | $ | (79,574 | ) | |
|
|
increased competition;Item
the performance of our strategic products, Universal Payments solutions;
demand for our products;
consolidations and failures in the financial services industry;
customer reluctance to switch to a new vendor;
the migration or failure to migrate customers to software as a service (“SaaS”) and platform as a service (“PaaS”) solutions;
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;
the complexity of our products and services and the risk that they may contain hidden defects;
compliance of our products with applicable legislation, governmental regulations, and industry standards;
our compliance with privacy regulations;
being subject to security breaches or viruses;
our ability to adequately protect our intellectual property;
increasing intellectual property rights litigation;
certain payment funding methods expose us to the credit and/or operating risk of our clients;
business interruptions or failure of our information technology and communication systems;
our offshore software development activities;
operating internationally;
global economic conditions impact on demand for our products and services;
volatility and disruption of the capital and credit markets and adverse changes in the global economy;
attracting and retaining employees;
potential future litigation;
our sale of Community Financial Services (“CFS”) assets and liabilities to Fiserv, Inc. (“Fiserv”), including potential claims arising under the transaction agreement, the transition services agreement or with respect to retained liabilities;
future acquisitions, strategic partnerships, and investments;
risk of difficulties integrating E Commerce Group Products, Inc. and its subsidiary, Speedpay, Inc. (collectively referred to as "Speedpay"), which may cause us to fail to realize anticipated benefits of the acquisition;
restrictions and other financial covenants in our credit facility;
difficulty meeting our debt service requirements;
the accuracy of our backlog estimates;
exposure to unknown tax liabilities;
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; and
volatility in our stock price.
Committed Backlog, which includes (1) contracted revenue that will be recognized in future periods (contracted but not recognized) from software license fees, maintenance fees, services fees, and SaaS and PaaS fees specified in executed contracts (including estimates of variable consideration if required under ASC 606) and included in the transaction price for those contracts, which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods and (2) estimated future revenues from software license fees, maintenance fees, services fees, and SaaS and PaaS fees specified in executed contracts.
Renewal Backlog, which includes estimated future revenues from assumed contract renewals to the extent that we believe recognition of the related revenue will occur within the corresponding backlog period.
The adoption of ASC 606 resulted in the following key changes to backlog:
The introduction of a U.S. GAAP requirement to measure and disclose revenue allocated to remaining performance obligations.
A shift in license revenue from Committed Backlog to Renewal Backlog due to the acceleration of license revenue recognition and a corresponding change in the renewal assumptions used to estimate Renewal Backlog.
An adjustment to the amount of license revenue included in Renewal Backlog due to the introduction of the significant financing component concept.
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.
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 the60-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 the60-month backlog period.
Anticipated increases in transaction, account, or processing volumes in customer systems.
Optional annual uplifts or inflationary increases in recurring fees.
Services engagements, other than SaaS and PaaS arrangements, are not assumed to renew over the60-month backlog period.
The potential impact of mergerconsolidation activity within our markets and/or customers.
As Reported | Without application of ASC 606 | As Reported | Without application of ASC 606 | As Reported | Without application of ASC 606 | |||||||||||||||||||||||
September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | |||||||||||||||||||||||||
ACI On Premise | $ | 1,775 | $ | 1,645 | $ | 1,830 | $ | 1,681 | $ | 1,874 | $ | 1,709 | $ | 1,700 | ||||||||||||||
ACI On Demand | 2,401 | 2,400 | 2,472 | 2,472 | 2,513 | 2,512 | 2,404 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | $ | 4,176 | $ | 4,045 | $ | 4,302 | $ | 4,153 | $ | 4,387 | $ | 4,221 | $ | 4,104 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
As Reported | Without application of ASC 606 | As Reported | Without application of ASC 606 | As Reported | Without application of ASC 606 | |||||||||||||||||||||||
September 30, 2018 | June 30, 2018 | March 31, 2018 | December 31, 2017 | |||||||||||||||||||||||||
Committed | $ | 1,760 | $ | 2,015 | $ | 1,769 | $ | 2,022 | $ | 1,879 | $ | 2,138 | $ | 2,062 | ||||||||||||||
Renewal | 2,416 | 2,030 | 2,533 | 2,131 | 2,508 | 2,083 | 2,042 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | $ | 4,176 | $ | 4,045 | $ | 4,302 | $ | 4,153 | $ | 4,387 | $ | 4,221 | $ | 4,104 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2019 | March 31, 2019 | December 31, 2018 | |||||||||
ACI On Premise | $ | 1,880 | $ | 1,861 | $ | 1,875 | |||||
ACI On Demand | 3,813 | 2,290 | 2,299 | ||||||||
Total | $ | 5,693 | $ | 4,151 | $ | 4,174 | |||||
June 30, 2019 | March 31, 2019 | December 31, 2018 | |||||||||
Committed | $ | 2,105 | $ | 1,734 | $ | 1,832 | |||||
Renewal | 3,588 | 2,417 | 2,342 | ||||||||
Total | $ | 5,693 | $ | 4,151 | $ | 4,174 |
Three Months Ended September 30, | ||||||||||||||||||||||||
2018 | 2017 | |||||||||||||||||||||||
Amount | % of Total Revenue | $ Change vs 2017 | % Change vs 2017 | Amount | % of Total Revenue | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Software as a service and platform as a service | $ | 104,519 | 43 | % | $ | 4,758 | 5 | % | $ | 99,761 | 44 | % | ||||||||||||
License | 68,964 | 28 | % | 18,947 | 38 | % | 50,017 | 22 | % | |||||||||||||||
Maintenance | 54,373 | 22 | % | (1,976 | ) | -4 | % | 56,349 | 25 | % | ||||||||||||||
Services | 17,669 | 7 | % | (1,939 | ) | -10 | % | 19,608 | 9 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total revenues | 245,525 | 100 | % | 19,790 | 9 | % | 225,735 | 100 | % | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Cost of revenue | 102,473 | 42 | % | (4,920 | ) | -5 | % | 107,393 | 48 | % | ||||||||||||||
Research and development | 36,008 | 15 | % | 2,073 | 6 | % | 33,935 | 15 | % | |||||||||||||||
Selling and marketing | 28,252 | 12 | % | 3,016 | 12 | % | 25,236 | 11 | % | |||||||||||||||
General and administrative | 29,537 | 12 | % | 4,235 | 17 | % | 25,302 | 11 | % | |||||||||||||||
Depreciation and amortization | 20,896 | 9 | % | (1,550 | ) | -7 | % | 22,446 | 10 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total operating expenses | 217,166 | 88 | % | 2,854 | 1 | % | 214,312 | 95 | % | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Operating income | 28,359 | 12 | % | 16,936 | 148 | % | 11,423 | 5 | % | |||||||||||||||
Other income (expense): | ||||||||||||||||||||||||
Interest expense | (12,573 | ) | -5 | % | (3,199 | ) | 34 | % | (9,374 | ) | -4 | % | ||||||||||||
Interest income | 2,763 | 1 | % | 2,598 | 1575 | % | 165 | 0 | % | |||||||||||||||
Other, net | (1,304 | ) | -1 | % | (245 | ) | 23 | % | (1,059 | ) | 0 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total other income (expense) | (11,114 | ) | -5 | % | (846 | ) | 8 | % | (10,268 | ) | -5 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Income before income taxes | 17,245 | 7 | % | 16,090 | 1393 | % | 1,155 | 1 | % | |||||||||||||||
Income tax expense (benefit) | 2,012 | 1 | % | 4,245 | -190 | % | (2,233 | ) | -1 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net income | $ | 15,233 | 6 | % | $ | 11,845 | 350 | % | $ | 3,388 | 2 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Three-Month
2018
Three Months Ended June 30, | ||||||||||||||||||||
2019 | 2018 | |||||||||||||||||||
Amount | % of Total Revenue | $ Change vs 2018 | % Change vs 2018 | Amount | % of Total Revenue | |||||||||||||||
Revenues: | ||||||||||||||||||||
Software as a service and platform as a service | $ | 172,499 | 58 | % | $ | 58,899 | 52 | % | $ | 113,600 | 48 | % | ||||||||
License | 52,541 | 18 | % | 6,986 | 15 | % | 45,555 | 19 | % | |||||||||||
Maintenance | 51,922 | 17 | % | (3,126 | ) | (6 | )% | 55,048 | 23 | % | ||||||||||
Services | 20,656 | 7 | % | (136 | ) | (1 | )% | 20,792 | 9 | % | ||||||||||
Total revenues | 297,618 | 100 | % | 62,623 | 27 | % | 234,995 | 100 | % | |||||||||||
Operating expenses: | ||||||||||||||||||||
Cost of revenue | 155,240 | 52 | % | 38,979 | 34 | % | 116,261 | 49 | % | |||||||||||
Research and development | 39,235 | 13 | % | 1,373 | 4 | % | 37,862 | 16 | % | |||||||||||
Selling and marketing | 32,962 | 11 | % | (198 | ) | (1 | )% | 33,160 | 14 | % | ||||||||||
General and administrative | 49,319 | 17 | % | 20,482 | 71 | % | 28,837 | 12 | % | |||||||||||
Depreciation and amortization | 26,744 | 9 | % | 5,711 | 27 | % | 21,033 | 9 | % | |||||||||||
Total operating expenses | 303,500 | 102 | % | 66,347 | 28 | % | 237,153 | 101 | % | |||||||||||
Operating loss | (5,882 | ) | (2 | )% | (3,724 | ) | 173 | % | (2,158 | ) | (1 | )% | ||||||||
Other income (expense): | ||||||||||||||||||||
Interest expense | (15,323 | ) | (5 | )% | (5,606 | ) | 58 | % | (9,717 | ) | (4 | )% | ||||||||
Interest income | 2,997 | 1 | % | 255 | 9 | % | 2,742 | 1 | % | |||||||||||
Other, net | 1,402 | — | % | 3,079 | (184 | )% | (1,677 | ) | (1 | )% | ||||||||||
Total other income (expense) | (10,924 | ) | (4 | )% | (2,272 | ) | 26 | % | (8,652 | ) | (4 | )% | ||||||||
Loss before income taxes | (16,806 | ) | (6 | )% | (5,996 | ) | 55 | % | (10,810 | ) | (5 | )% | ||||||||
Income tax expense (benefit) | (22,531 | ) | (8 | )% | (26,295 | ) | (699 | )% | 3,764 | 2 | % | |||||||||
Net income (loss) | $ | 5,725 | 2 | % | $ | 20,299 | (139 | )% | $ | (14,574 | ) | (6 | )% |
The application2018, of ASC 606 resulted in a $0.1which $49.3 million, decrease in total revenue foror 21%, was due to the three months ended September 30, 2018. acquisition of Speedpay.
2018.
2018, of which $8.6 million and $1.8 million is attributable to acceleration of recurring revenue associated with customer-related consolidation activity and new customers adopting our SaaS and PaaS offerings and existing customers adding new functionality or increasing transaction volumes, respectively.
Total licensefinancing component, if significant.
2018.
2018.
2018.
2018.
The application2018, of ASC 606 resulted in a $1.9which $41.8 million, increase in totalor 18%, and $16.6 million, or 7%, was due to the acquisition of Speedpay and significant transaction and integration-related expenses associated with the acquisition of Speedpay, respectively.
weakening against the U.S. dollar. Excluding the impact of applying ASC 606the acquisition of Speedpay, significant acquisition and integration-related expenses, and foreign currency, total operating expenses for the three months ended SeptemberJune 30, 2018,2019, increased $3.0$12.2 million, or 1%5%, compared to the same period in 20172018, primarily becausedue to higher cost of higherrevenue, general and administrative, research and development, selling and marketing,depreciation and general and administrativeamortization expenses, partially offset by lower cost of revenueselling and depreciation and amortization expenses.
marketing.
promotions expense.
2018.
rates.
2018.
was $1.7 million.
Nine-Month
Nine Months Ended September 30, | ||||||||||||||||||||||||
2018 | 2017 | |||||||||||||||||||||||
Amount | % of Total Revenue | $ Change vs 2017 | % Change vs 2017 | Amount | % of Total Revenue | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Software as a service and platform as a service | $ | 322,399 | 47 | % | $ | 9,722 | 3 | % | $ | 312,677 | 45 | % | ||||||||||||
License | 142,565 | 21 | % | (21,013 | ) | -13 | % | 163,578 | 23 | % | ||||||||||||||
Maintenance | 166,080 | 24 | % | (749 | ) | 0 | % | 166,829 | 24 | % | ||||||||||||||
Services | 58,786 | 9 | % | 4,074 | 7 | % | 54,712 | 8 | % | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total revenues | 689,830 | 100 | % | (7,966 | ) | -1 | % | 697,796 | 100 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Cost of revenue | 326,070 | 47 | % | (10,223 | ) | -3 | % | 336,293 | 48 | % | ||||||||||||||
Research and development | 110,661 | 16 | % | 4,472 | 4 | % | 106,189 | 15 | % | |||||||||||||||
Selling and marketing | 93,305 | 14 | % | 12,115 | 15 | % | 81,190 | 12 | % | |||||||||||||||
General and administrative | 87,023 | 13 | % | (43,309 | ) | -33 | % | 130,332 | 19 | % | ||||||||||||||
Depreciation and amortization | 63,274 | 9 | % | (3,915 | ) | -6 | % | 67,189 | 10 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total operating expenses | 680,333 | 99 | % | (40,860 | ) | -6 | % | 721,193 | 103 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Operating income (loss) | 9,497 | 1 | % | 32,894 | -141 | % | (23,397 | ) | -3 | % | ||||||||||||||
Other income (expense): | ||||||||||||||||||||||||
Interest expense | (31,655 | ) | -5 | % | (1,457 | ) | 5 | % | (30,198 | ) | -4 | % | ||||||||||||
Interest income | 8,249 | 1 | % | 7,828 | 1859 | % | 421 | 0 | % | |||||||||||||||
Other, net | (3,036 | ) | 0 | % | (860 | ) | 40 | % | (2,176 | ) | 0 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total other income (expense) | (26,442 | ) | -4 | % | 5,511 | -17 | % | (31,953 | ) | -5 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Loss before income taxes | (16,945 | ) | -2 | % | 38,405 | -69 | % | (55,350 | ) | -8 | % | |||||||||||||
Income tax expense (benefit) | 1,824 | 0 | % | 29,145 | -107 | % | (27,321 | ) | -4 | % | ||||||||||||||
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| |||||||||||||
Net loss | $ | (18,769 | ) | -3 | % | $ | 9,260 | -33 | % | $ | (28,029 | ) | -4 | % | ||||||||||
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2018
Six Months Ended June 30, | ||||||||||||||||||||
2019 | 2018 | |||||||||||||||||||
Amount | % of Total Revenue | $ Change vs 2018 | % Change vs 2018 | Amount | % of Total Revenue | |||||||||||||||
Revenues: | ||||||||||||||||||||
Software as a service and platform as a service | $ | 281,056 | 56 | % | $ | 63,176 | 29 | % | $ | 217,880 | 49 | % | ||||||||
License | 73,619 | 15 | % | 18 | — | % | 73,601 | 17 | % | |||||||||||
Maintenance | 107,033 | 21 | % | (4,674 | ) | (4 | )% | 111,707 | 25 | % | ||||||||||
Services | 41,765 | 8 | % | 648 | 2 | % | 41,117 | 9 | % | |||||||||||
Total revenues | 503,473 | 100 | % | 59,168 | 13 | % | 444,305 | 100 | % | |||||||||||
Operating expenses: | ||||||||||||||||||||
Cost of revenue | 270,181 | 54 | % | 46,584 | 21 | % | 223,597 | 50 | % | |||||||||||
Research and development | 75,429 | 15 | % | 776 | 1 | % | 74,653 | 17 | % | |||||||||||
Selling and marketing | 62,392 | 12 | % | (2,661 | ) | (4 | )% | 65,053 | 15 | % | ||||||||||
General and administrative | 80,836 | 16 | % | 23,350 | 41 | % | 57,486 | 13 | % | |||||||||||
Depreciation and amortization | 48,610 | 10 | % | 6,232 | 15 | % | 42,378 | 10 | % | |||||||||||
Total operating expenses | 537,448 | 107 | % | 74,281 | 16 | % | 463,167 | 104 | % | |||||||||||
Operating loss | (33,975 | ) | (7 | )% | (15,113 | ) | 80 | % | (18,862 | ) | (4 | )% | ||||||||
Other income (expense): | ||||||||||||||||||||
Interest expense | (26,937 | ) | (5 | )% | (7,855 | ) | 41 | % | (19,082 | ) | (4 | )% | ||||||||
Interest income | 6,030 | 1 | % | 544 | 10 | % | 5,486 | 1 | % | |||||||||||
Other, net | (510 | ) | — | % | 1,222 | (71 | )% | (1,732 | ) | — | % | |||||||||
Total other income (expense) | (21,417 | ) | (4 | )% | (6,089 | ) | 40 | % | (15,328 | ) | (3 | )% | ||||||||
Loss before income taxes | (55,392 | ) | (11 | )% | (21,202 | ) | 62 | % | (34,190 | ) | (8 | )% | ||||||||
Income tax benefit | (35,154 | ) | (7 | )% | (34,966 | ) | 18,599 | % | (188 | ) | — | % | ||||||||
Net loss | $ | (20,238 | ) | (4 | )% | $ | 13,764 | (40 | )% | $ | (34,002 | ) | (8 | )% |
The application2018, of ASC 606 resulted in a $21.5which $49.3 million, decrease in total revenue for the nine months ended September 30, 2018, which is primarilyor 11%, was due to the differences in the timing and amountacquisition of revenue recognition for software license fees. Speedpay.
2018.
transaction volumes, respectively.
Total license
2018.
Services Revenue
Services revenue increased $4.1 million, or 7%, during the nine months ended September 30, 2018, as compared to the same period in 2017. Total services revenue was $0.5 million higher for the nine months ended September 30, 2018, as compared to the same period in 2017 due to the impact of foreign currencies strengthening against the U.S. dollar. Excluding the impact of applying ASC 606 and foreign currency, total services revenue for the nine months ended September 30, 2018, increased $3.7 million, or 7%, compared to the same period in 2017.
Operating Expenses
Total operating expenses for the nine months ended September 30, 2018 decreased $40.9 million, or 6%, as compared to the same period in 2017.
For the nine months ended September 30, 2017, there was $46.7 million of expense recorded in relation to the Baldwin Hackett & Meeks, Inc. (“BHMI”) judgment. The application of ASC 606 resulted in a $4.7 million increase in total operating expenses for the nine months ended September 30, 2018, compared to the same period in 2017, which is primarily due to differences in the timing of expense recognition for sales commissions. Total operating expenses were $6.1 million higher for the nine months ended September 30, 2018, compared to the same period in 2017 due to the impact of foreign currencies strengthening against the U.S. dollar. Excluding the impact of the BHMI judgment, the impact of applying ASC 606 and foreign currency, operating expenses decreased $5.0 million, or 1%, for the nine months ended September 30, 2018, primarily because of lower cost of revenue, general and administrative expenses, and depreciation and amortization expenses, partially offset by higher sales and marketing expenses and research and development expenses.
Cost of Revenue
Cost of revenue decreased $10.2 million, or 3%, during the nine months ended September 30, 2018, compared to the same period in 2017. Cost of revenue was $2.0 million higher due to the impact of foreign currencies strengtheningweakening against the U.S. dollar. Excluding the impact of foreign currency, cost ofmaintenance revenue for the six months ended June 30, 2019, decreased $12.2$1.8 million, or 4%2%, forcompared to the ninesame period in 2018.
Research and Development
R&D expense increased $4.5 million, or 4%, duringfor the ninesix months ended SeptemberJune 30, 2018,2019, as compared to the same period in 2017. R&D expense was $1.1 million higher2018 due to the impact of foreign currencies strengtheningweakening against the U.S. dollar. Excluding the impact of foreign currency, R&D expenseservices revenue for the six months ended June 30, 2019, increased $3.4$1.7 million, or 3%4%, compared to the same period in 2018.
expenses.
General and Administrative
General and administrative expense decreased $43.3 million, or 33%, during the nine months ended September 30, 2018, as compared to the same period in 2017. For the nine months ended September 30, 2017, there was $46.7 million of expense recorded in relation to the BHMI judgment. General and administrative expense was $0.9 million higher for the nine months ended September 30, 2018, as compared to the same period in 2017 due to the impact of foreign currencies strengtheningweakening against the U.S. dollar. Excluding the impact of the BHMI judgmentacquisition of Speedpay and foreign currency, selling and marketing expense decreased $2.1 million, or 3%, for the six months ended June 30, 2019, as compared to the same period in 2018, due to a decrease in advertising and promotions expense.
2018.
Interest incomefirst quarter of 2019. Excluding the impact of interest expense related to royalty payments, interest expense for the ninesix months ended SeptemberJune 30, 20182019, increased $7.8$6.1 million, or 32%, as compared to the same period in 2017, which is primarily due2018.
same period in 2018.
The Company reports
The Company’s
offerings.
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2018 | September 30, 2017 | September 30, 2018 | September 30, 2017 | |||||||||||||
Revenue | ||||||||||||||||
ACI On Premise | $ | 141,006 | $ | 126,006 | $ | 367,431 | $ | 385,108 | ||||||||
ACI On Demand | 104,519 | 99,729 | 322,399 | 312,688 | ||||||||||||
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| |||||||||
Total revenue | $ | 245,525 | $ | 225,735 | $ | 689,830 | $ | 697,796 | ||||||||
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|
|
| |||||||||
Segment Adjusted EBITDA | ||||||||||||||||
ACI On Premise | $ | 77,819 | $ | 65,138 | $ | 171,477 | $ | 196,060 | ||||||||
ACI On Demand | 3,270 | (1,241 | ) | (4,327 | ) | (8,794 | ) | |||||||||
Depreciation and amortization | (23,545 | ) | (25,553 | ) | (72,889 | ) | (76,772 | ) | ||||||||
Stock-based compensation | (6,575 | ) | (8,084 | ) | (20,642 | ) | (22,724 | ) | ||||||||
Corporate and unallocated expenses | (22,610 | ) | (18,837 | ) | (64,122 | ) | (111,167 | ) | ||||||||
Interest, net | (9,810 | ) | (9,209 | ) | (23,406 | ) | (29,777 | ) | ||||||||
Other, net | (1,304 | ) | (1,059 | ) | (3,036 | ) | (2,176 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Loss before income taxes | $ | 17,245 | $ | 1,155 | $ | (16,945 | ) | $ | (55,350 | ) | ||||||
|
|
|
|
|
|
|
| |||||||||
Depreciation and amortization | ||||||||||||||||
ACI On Premise | $ | 2,772 | $ | 3,321 | $ | 8,596 | $ | 9,915 | ||||||||
ACI On Demand | 7,906 | 8,576 | 23,468 | 25,973 | ||||||||||||
Corporate | 12,867 | 13,656 | 40,825 | 40,884 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total depreciation and amortization | $ | 23,545 | $ | 25,553 | $ | 72,889 | $ | 76,772 | ||||||||
|
|
|
|
|
|
|
|
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Revenue | |||||||||||||||
ACI On Premise | $ | 125,119 | $ | 121,395 | $ | 221,126 | $ | 226,425 | |||||||
ACI On Demand | 172,499 | 113,600 | 282,347 | 217,880 | |||||||||||
Total revenue | $ | 297,618 | $ | 234,995 | $ | 503,473 | $ | 444,305 | |||||||
Segment Adjusted EBITDA | |||||||||||||||
ACI On Premise | 57,069 | 54,760 | 85,337 | 93,658 | |||||||||||
ACI On Demand | 17,340 | (3,364 | ) | 17,078 | (7,597 | ) | |||||||||
Depreciation and amortization | (29,778 | ) | (24,351 | ) | (54,630 | ) | (49,344 | ) | |||||||
Stock-based compensation expense | (14,372 | ) | (7,705 | ) | (20,957 | ) | (14,067 | ) | |||||||
Corporate and unallocated expenses | (36,141 | ) | (21,498 | ) | (60,803 | ) | (41,512 | ) | |||||||
Interest, net | (12,326 | ) | (6,975 | ) | (20,907 | ) | (13,596 | ) | |||||||
Other, net | 1,402 | (1,677 | ) | (510 | ) | (1,732 | ) | ||||||||
Loss before income taxes | $ | (16,806 | ) | $ | (10,810 | ) | $ | (55,392 | ) | $ | (34,190 | ) | |||
Depreciation and amortization | |||||||||||||||
ACI On Premise | $ | 3,019 | $ | 2,849 | $ | 6,049 | $ | 5,824 | |||||||
ACI On Demand | 8,489 | 7,826 | 16,051 | 15,562 | |||||||||||
Corporate | 18,270 | 13,676 | 32,530 | 27,958 | |||||||||||
Total depreciation and amortization | $ | 29,778 | $ | 24,351 | $ | 54,630 | $ | 49,344 | |||||||
Stock-based compensation expense | |||||||||||||||
ACI On Premise | $ | 2,051 | $ | 1,838 | $ | 4,007 | $ | 3,305 | |||||||
ACI On Demand | 2,214 | 1,834 | 4,165 | 3,297 | |||||||||||
Corporate | 10,107 | 4,033 | 12,785 | 7,465 | |||||||||||
Total stock-based compensation expense | $ | 14,372 | $ | 7,705 | $ | 20,957 | $ | 14,067 |
revenue.
decrease in revenue and a $3.0 million increase in operating expenses.
the acquisition of Speedpay. Excluding the impact of the acquisition of Speedpay, ACI On Demand Segment Adjusted EBITDA increased $4.5 for the nine months ended September 30, 2018, compared to the same period in 2017$8.7 million, primarily due to a $9.7 million increase in revenuesrevenue.
As of September 30, | As of December 31, | |||||||
2018 | 2017 | |||||||
Cash and cash equivalents | $ | 76,342 | $ | 69,710 | ||||
Availability under Revolving Credit Facility | 500,000 | 498,000 | ||||||
|
|
|
| |||||
Total liquidity | $ | 576,342 | $ | 567,710 | ||||
|
|
|
|
June 30, 2019 | December 31, 2018 | ||||||
Cash and cash equivalents | $ | 139,396 | $ | 148,502 | |||
Availability under revolving credit facility | 265,000 | 500,000 | |||||
Total liquidity | $ | 404,396 | $ | 648,502 |
Nine Months Ended September 30, | ||||||||
(in thousands) | 2018 | 2017 | ||||||
Net cash provided by (used by): | ||||||||
Operating activities | $ | 100,462 | $ | 85,072 | ||||
Investing activities | (39,777 | ) | (39,894 | ) | ||||
Financing activities | (53,301 | ) | (57,320 | ) |
periods indicated (in thousands):
Six Months Ended June 30, | |||||||
2019 | 2018 | ||||||
Net cash provided by (used by): | |||||||
Operating activities | $ | 56,865 | $ | 71,111 | |||
Investing activities | (779,761 | ) | (29,351 | ) | |||
Financing activities | 714,655 | (51,570 | ) |
2018.
(the “Credit Agreement”) to amend and restate our existing agreement, dated February 24, 2017. The Credit Agreement consists of (a) a five-year $500.0 million senior secured revolving credit facility (the “Revolving Credit Facility”), (b) a five-year $279.0 million senior secured term loan facility (the “Initial Term Loan”), and (c) a five-year $500.0 million senior secured term loan facility (the “Delayed Draw Term Loan”, together with the Initial Term Loan, the "Term Loans", and together with the Initial Term Loan and the Revolving Credit Facility, the “Credit Facility”).
Senior Notes
On August 21, 2018, the Company completed a As of June 30, 2019, we also had $400.0 million offeringoutstanding of 5.750% Senior Notes due 2026 (the “2026 Notes”) at an issue price. Refer to Note 4, Debt, to our unaudited condensed consolidated financial statements in Part I of 100% of the principal amount in a private placementthis Form 10-Q for resale to qualified institutional buyers. The 2026 Notes bear interest at a rate of 5.750% per year, payable semi-annually in arrears on February 15 and August 15 of each year, commencing on February 15, 2019. Interest will accrue from August 21, 2018. The 2026 Notes will mature on August 15, 2026.
The Company used the net proceeds of the offering described above to redeem in full the Company’s outstanding 6.375% Senior Notes due 2020 (the “2020 Notes”), including accrued interest, and repaid a portion of the outstanding amount under the Term Credit Facility.
additional information.
The Companyremaining purchase amounts previously authorized.
approximately $176.0 million.
Payments due by Period | ||||||||||||||||||||
(in thousands) | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | |||||||||||||||
Contractual Obligations | ||||||||||||||||||||
2026 Senior Notes | $ | 400,000 | $ | — | $ | — | $ | — | $ | 400,000 | ||||||||||
Senior Notes Interest (1) | 172,500 | 23,000 | 46,000 | 46,000 | 57,500 | |||||||||||||||
Financed internally used software (2) | 11,563 | 4,688 | 4,688 | 2,187 | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | 584,063 | $ | 27,688 | $ | 50,688 | $ | 48,187 | $ | 457,500 | ||||||||||
|
|
|
|
|
|
|
|
|
|
Payments Due by Period | ||||||||||||||||||||
Total | Less than 1 Year | 1-3 Years | 3-5 Years | More than 5 Years | ||||||||||||||||
Term loan | $ | 775,535 | $ | 38,950 | $ | 79,644 | $ | 656,941 | $ | — | ||||||||||
Term loan interest (1) | 152,542 | 35,401 | 65,366 | 51,775 | — | |||||||||||||||
Revolving credit facility | 235,000 | — | — | 235,000 | — | |||||||||||||||
Revolving credit facility interest (2) | 52,035 | 10,955 | 21,909 | 19,171 | — | |||||||||||||||
Financed internal-use software (3) | 19,795 | 11,634 | 8,161 | — | — | |||||||||||||||
Total | $ | 1,234,907 | $ | 96,940 | $ | 175,080 | $ | 962,887 | $ | — |
(1) | Based |
(2) | Based on Revolving Credit Facility debt outstanding and interest rate in effect at June 30, 2019, of 4.65%. |
(3) | During the |
Revenue Recognition
Allowance for Doubtful Accounts
Business Combinations
Intangible Assets and Goodwill
Stock-Based Compensation
Accounting for Income Taxes
2019. as it executes integration activities.Itemninesix months ended SeptemberJune 30, 2018.2019. We conduct business in all parts of the world and are thereby exposed to market risks related to fluctuations in foreign currency exchange rates. The U.S. dollar is the single largest currency in which our revenue contracts are denominated. Thus, anyAny decline in the value of local foreign currencies against the U.S. dollar results in our products and services being more expensive to a potential foreign customer, and incustomer. In those instances where our goods and services have already been sold, receivables may result in the receivables beingbe more difficult to collect. Additionally, any decline in the value of the U.S. dollar in jurisdictions where the revenue contracts are denominated in U.S. dollars and operating expenses are incurred in the local currency, any decline in the value of the U.S. dollarWe atAt times, we enter into revenue contracts that are denominated in the country’s local currency, principallyprimarily in Australia, Canada, the United Kingdom, and other European countries. This practice serves as a natural hedge to finance the local currency expenses incurred in those locations. We have not entered into any foreign currency hedging transactions. We do not purchase or hold any derivative financial instruments for the purpose of speculation or arbitrage.BasedIf we maintained similar cash investments for a period of one year based on our cash investments and interest rates on these investments at SeptemberJune 30, 2018, and if we maintained this level of similar cash investments for a period of one year,2019, a hypothetical ten percent increase or decrease in effective interest rates would increase or decrease interest income by less thanapproximately $0.1 million annually.$688.9 million$1.4 billion of debt outstanding at Septemberas of June 30, 2018,2019, with $400 million in Senior Notes and $288.9 million$1.0 billion outstanding under our Credit Facility.Facility and $400.0 million in 2026 Senior Notes. Our SeniorCredit Facility has a floating interest rate, which was 4.65% as of June 30, 2019. Our 2026 Notes are fixed-rate long-term debt obligations with a 5.750% interest rate. Our Credit Facility has a floating rate which was 3.99% at September 30, 2018. The potential increase (decrease) in interest expense for the Credit Facility from aA hypothetical ten percent increase (decrease)or decrease in effective interest rates would beincrease or decrease interest expense related to the Credit Facility by approximately $1.2$4.7 million.Our management, of and with the participation of the Chief Executive Officer and Chief Financial Officer, performed an evaluation of the effectiveness of our disclosure controls and procedures (as defined inRules 13a-15(e) and15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report, September 30, 2018.report. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’sour disclosure controls and procedures are effective as of SeptemberJune 30, 2018.The Company adopted ASC 606,Revenue from Contracts with Customers,on January 1, 2018, which required management to make changespoliciesresults of operations, cash flows, and processesfinancial position from the date of the acquisition through June 30, 2019, and believe the internal controls and procedures of Speedpay have a material effect on our internal control over financial reporting. See Note 3, Acquisition, to implement new or modify existingour unaudited condensed consolidated financial statements included in Part 1 of this Form 10-Q for discussion of the acquisition and related financial data.during the quarter ended March 31, 2018. This included modifications to our existing internal controls over contract reviews and new controls related to the enhanced disclosure requirements.have beenwere no additional changes during our quarter ended September 30, 2018, in our internal control over financial reporting (as defined in Rules13a-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially effect, our internal control over financial reporting.
Our management, under the supervision of and with the participation of the Chief Executive Officer and Chief Financial Officer evaluated any change in the Company’s internal control over financial reporting (as defined in Rules13a-15(f) under the Exchange Act) during the Company’s quarter ended SeptemberJune 30, 2018, and determined that there were no other changes in the Company’s internal control over financial reporting2019, that have materially affected, or are reasonably likely to materially affect, the Company’sour internal control over financial reporting.
Item
Item2017.2018, other than as disclosed below. Additional risks and uncertainties, including risks and uncertainties not presently known to us, or that we currently deem immaterial, could also have an adverse effect on our business, financial condition and/or results of operations.
Period July 1, 2018 through July 31, 2018 August 1, 2018 through August 31, 2018 September 1, 2018 through September 30, 2018 Total 2019:Itemthe Company’sour repurchases of its common stock during the ninethree months ended SeptemberJune 30, 2018: Total Number
of Shares
Purchased Average Price
Paid per Share Total Number of
Shares
Purchased as
Part of Publicly
Announced
Program Approximate
Dollar Value of
Shares that May
Yet Be
Purchased
Under the
Program — $ — — $ 176,587,000 — — — 176,587,000 — — — 176,587,000 — $ — — Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program April 1, 2019 through April 30, 2019 502 (1) $ 33.96 — $ 175,956,000 May 1, 2019 through May 31, 2019 — — — 175,956,000 June 1, 2019 through June 30, 2019 5,120 (1) 32.71 — 175,956,000 Total 5,622 $ 32.82 — (1) Pursuant to our 2005 Incentive Plan, we granted RSAs and RSUs. Under each arrangement, shares are issued without direct cost to the employee. During the three months ended June 30, 2019, 90,429 shares of the RSAs and RSUs vested. We withheld 5,622 of those shares to pay the employees’ portion of the applicable payroll taxes. fiscal 2005, we announced that our Board of Directors (the “Board”)board approved a stock repurchase program authorizing us, from time to time as market and business conditions warrant, to acquire our common stock and that we intended to useperiodically authorize additional funds for the program, with the intention of using existing cash and cash equivalents to fund these repurchases. Periodically the Board authorizes additional funds for the program. In February 2018, the Boardboard approved the repurchase of the Company's common stock for up to $200.0 million, forin place of the stock repurchase program. Theremaining purchase amounts previously authorized. As of June 30, 2019, the maximum remaining amount authorized for purchase under the stock repurchase program was $176.6 million as of September 30, 2018. approximately $176.0 million.thatwe will be repurchased by us.repurchase. Repurchased shares are returned to the status of authorized but unissued shares of common stock. In March 2005, our Board of Directorsboard approved a plan under Rule10b5-1 of the Securities Exchange Act of 1934 to facilitate the repurchase of shares of common stock under the existing stock repurchase program. Under our Rule10b5-1 plan, we have delegated authority over the timing and amount of repurchases to an independent broker who does not have access to inside information about the Company. Rule10b5-1 allows us, through the independent broker, to purchase shares at times when we ordinarily would not be in the market because of self-imposed trading blackout periods, such as the time immediately preceding the end of the fiscal quarter through a period of three business days following our quarterly earnings release.
ItemExhibit No. Description 2.01 (1) 3.01 (2) 3.02 (3) 4.01 (4) Form of Common Stock Certificate (P) 10.01 (5) 10.02 (6) 10.03 (7) 10.04 (8) 10.05 (9) 31.01 31.02 32.01 * 32.02 * 101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. 101.SCH XBRL Taxonomy Extension Schema 101.CAL XBRL Taxonomy Extension Calculation Linkbase 101.LAB XBRL Taxonomy Extension Label Linkbase 101.PRE XBRL Taxonomy Extension Presentation Linkbase 101.DEF XBRL Taxonomy Extension Definition Linkbase Exhibit No. Description3.01 (1)2013 Amended and Restated Certificate of Incorporation of the Company3.02 (2)4.01 (3)Form of Common Stock Certificate (P)4.02 (4)4.03Form of 5.750% Senior Notes due 2026 (included as Exhibit A to Exhibit 4.02)31.0131.0232.01* 32.02*101.INSXBRL Instance Document101.SCHXBRL Taxonomy Extension Schema101.CALXBRL Taxonomy Extension Calculation Linkbase101.LABXBRL Taxonomy Extension Label Linkbase101.PREXBRL Taxonomy Extension Presentation Linkbase101.DEFXBRL Taxonomy Extension Definition Linkbase
This certification is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Company specifically incorporates it by reference. |
(P) | Paper Exhibit |
| |
(1) | Incorporated herein by reference to Exhibit 2.1 to the registrant’s quarterly report on Form 10-Q for the period ended March 31, 2019. |
(2) | Incorporated herein by reference to Exhibit 3.1 to the registrant’s current report on Form8-K filed August 17, 2017. |
(3) | Incorporated herein by reference to Exhibit 3.1 to the registrant’s current report on Form8-K filed February 27, 2017. |
(4) | Incorporated herein by reference to Exhibit 4.01 to the registrant’s Registration StatementNo. 33-88292 on FormS-1. |
(5) | Incorporated herein by reference to Exhibit |
(6) | Incorporated herein by reference to Exhibit 10.2 to the registrant’s current report on Form 8-K filed March 8, 2019. |
(7) | Incorporated herein by reference to Exhibit 10.3 to the registrant’s current report on Form 8-K filed March 8, 2019. |
(8) | Incorporated herein by reference to Exhibit 10.4 to the registrant’s current report on Form 8-K filed March 8, 2019. |
(9) | Incorporated herein by reference to Exhibit 10.1 to the registrant’s current report on Form 8-K filed April 11, 2019. |
ACI WORLDWIDE, INC. (Registrant) | ||||||
| ||||||
Date: | 2019 | By: | /s/ SCOTT W. BEHRENS | |||
Scott W. Behrens | ||||||
Officer and Chief Accounting Officer |