ACI Worldwide’s Banking Revenues Gain 42% as Company Sees Accelerating SaaS Demand

ACI Worldwide’s third-quarter earnings results released Thursday (Nov. 2) showed a boost to the top line, underpinned by its bank segment as financial institutions seek to modernize their operations and ready for real-time payments.

During a conference call with analysts, CEO Thomas Warsop noted that revenues were up 21% year on year, to $363 million.

Recurring revenues gained 10%, excluding the impact of foreign exchange, and total bookings gathered 20% year on year.

Demand From Banks Across All Tiers

Warsop said there was continued strength in the banking sector, where revenues surged 42%, and recurring revenues gained 13%

“We are seeing accelerating [Software-as-a-Service (SaaS)] demand,” with existing and new banking customers, he said. Overall SaaS and Platform-as-a-Service sales were $211.4 million, compared to $195.5 million last year.

While ACI Worldwide and its products and services have been well entrenched with the largest banks — those with assets above $250 billion — he noted that demand and interest is also being seen in the next tier of FIs, measured with asset bases of between $50 billion to $250 billion.

The smaller institutions, he said, are seeking to “challenge the largest banks with next-generation payments orchestration” and real-time payments functionality.

“These institutions are interested in what we can provide,” said Warsop, who added that “they are interested in the SaaS delivery model.”

Elsewhere, management detailed that Biller revenues were up 11% year on year, driven by new customer onboarding. The company is also seeing increased traction with its Interchange Improvement program and artificial intelligence-enhanced fraud solutions.

Chief Financial Officer Scott Behrens said on the call that headed into 2024, the company expects to see “strength” in recurring revenues, and the company has guided to 7% to  9% top-line growth in 2024.

The stock was up 3% in intraday trading Thursday morning.

Readying for Real-Time Payments

During a question-and-answer session with analysts, Behrens said that recurring revenues will be a “base layer” of growth.

Asked on the call about the potential that lies ahead for real-time payments, Warsop said that ACI Worldwide is “continuing to see growth in every region … a lot of people are interested, and I am interested, in FedNow volumes.”

Although at present, FedNow® Service-related real-time payment volumes are low — and that’s not a surprise, the CEO said — the company is seeing a “pipeline” of FIs that are coming on board to handle FedNow. There are now 100 FIs in the U.S., that can do so having embraced ACI’s real-time payments-related offerings.

Warsop also said that there has been an increase in use related to The Clearing House’s RTP Network. Biller-related real-time payments demand, said Warsop, will materialize across a variety of use cases.

“It’s a big opportunity,” Warsop said on the call about real-time payments in general, “but it requires adoption across a multiyear journey … we can fulfill that demand over the coming years, and it’s all part of the modernization journey that we have talked about for a long time.”