Press release:

Agricultural Bank of China Selects ACI Worldwide to Power its Payment Processing and Anti-Money Laundering Systems for U.S. Launch

ACI Money Transfer System and ACI Proactive Risk Manager Solutions Deliver Automation and Fraud Detection

Monday, July 30, 2012

NAPLES, FLA.—July 30, 2012— ACI Worldwide (NASDAQ: ACIW), a leading international provider of payments systems, shared details today of an agreement first reached earlier this year, with the Agricultural Bank of China (ABC), the third largest bank by total assets in the People’s Republic of China, to implement ACI Money Transfer System™ and ACI Proactive Risk Manager™ as its wholesale payment processing and anti-money laundering (AML) solution to facilitate its expansion into the U.S. market.

“ACI provides us with a complete and readily implemented solution for fully automated payment processing and fraud protection as we enter the U.S. market,” said Wei He, Vice President, Operation Department, Agricultural Bank of China. 

“The Agricultural Bank of China is one of the most dynamic, growing players in the banking industry and we are proud to be playing such a key role in its expansion in the United States,” said Ralph Dangelmaier, President, Global Markets and Services, ACI Worldwide. “I look forward to a long and mutually beneficial relationship between ACI and the Agricultural Bank of China.” 

Money Transfer System helps advanced payment management, execution and streamlined banking operations.  It is a single source solution which facilitates efficient processing within a highly configurable work flow.  Money Transfer System allows global processing needs to be centralized in a single location or distributed via a configurable network. In addition, the Enterprise Sanctions Filter of the solution provides a set of services which position banks to maintain continuous regulatory compliance.

Proactive Risk Manager is a comprehensive financial crime management solution to help card issuers, merchants, acquirers and financial institutions combat fraud and money-laundering schemes. It monitors cross-channel fraud, swiftly spots fraud trends and is able to protect against varying fraud types while also minimizing risk.  

© Copyright ACI Worldwide, Inc. 2012.

Press release:

ACI Worldwide, Inc. Reports Financial Results for the Quarter Ended June 30, 2012

Thursday, July 26, 2012

(NAPLES, FL — July 26, 2012) — ACI Worldwide, Inc. (NASDAQ:ACIW), a leading international provider of payment systems, today announced financial results for the period ended June 30, 2012. We will hold a conference call on July 26, 2012, at 8:30 a.m. EDT to discuss this information. Interested persons may also access a real-time audio broadcast of the teleconference at www.aciworldwide.com/investors.

“We are very satisfied with our integration efforts of S1 during the last quarter and a half. We delivered on the initial cost synergies of $33 million and are progressing against an additional $20 million in planned synergies related to facilities consolidation and IT infrastructure rationalization. We expect that this second phase of identified margin improvements will enable us to achieve a more profitable 2013 and beyond,” said Chief Executive Officer Philip Heasley. “Importantly, the quarter also included critical customer and industry events in June in which we unveiled our combined product roadmaps. Today ACI offers the most comprehensive suite of solutions to address the complex needs of the global payments marketplace,” continued Mr Heasley.

Download full second quarter 2012 release

OPERATING HIGHLIGHTS

• Reaffirmation of full year guidance for non-GAAP Operating Income and Adjusted EBITDA
• Q2 GAAP revenue impacted by foreign exchange, deferred revenue adjustment from purchase accounting and timing of go-live events
• S1 integration ahead of schedule
• Unveiled combined product roadmaps to market and customers
• Total acquisition-related cost synergies now identified at $53 million in savings; $48 million in annualized run rate savings to be achieved by end of 2012
• Repurchased approximately 962,000 shares for $38 million in the quarter
 

FINANCIAL SUMMARY

2012 Guidance 

We are reiterating our 2012 full year guidance for non-GAAP Operating Income and Adjusted EBITDA ranges of $99-104 million and $165-170 million respectively. We are revising our revenue range to reflect both foreign exchange movement year-to-date as well as incremental purchase accounting adjustments.  Hence, guidance for the calendar year is as follows: GAAP Revenue to achieve a range of $683-693 million, non-GAAP Operating Income of $99-104 million and Adjusted EBITDA of $165-170 million. Guidance for the year excludes $31 million of acquisition related fees; inclusive of $16 million of professional fees and transaction-related expenses largely incurred in the first quarter as well as $15 million of facilities and IT infrastructure related costs identified during the second quarter.

Acquisition Synergies

Upon full implementation, ACI anticipates annualized savings of $53 million from the cost synergies effected. We expect to achieve an annualized run rate of $48 million in savings by the end of 2012 and attain an annualized run rate of $53 million in savings by the end of 2013. Year to date, ACI has spent $22.6 million on SG&A, Facilities and IT rationalization and anticipates spending a further $8.4 million on facilities and IT infrastructure exit costs during calendar year 2012.  

Sales  

Sales bookings in the quarter totaled $156.2 million. In the prior-year quarter sales bookings were $147.0 million. S1 contributed $39.2 million to sales in the quarter.  ACI organic sales variance is related to timing of large term extensions. Sales and projects were impacted during the quarter by customers waiting to make purchasing decisions pending the release of our combined product strategy that was unveiled in June. 

Backlog

Excluding negative foreign exchange translation of $23.5 million, 60-month backlog grew $12.8 million in the quarter. 60-month backlog as of June 30, 2012 was $2.306 billion.  12-month backlog decreased $12 million to $570 million as compared to $582 million at March 31, 2012. 12-month backlog was reduced by $6.2 million due to foreign exchange movements in the quarter.    

Revenue

GAAP revenue increased to $149.8 million or an increase of $36.4 million, or 32%, over prior-year quarter. The acquisition of S1 Corporation contributed $43.1 million of revenue in the second quarter. Organic revenue decreased as compared to prior-year quarter primarily due to the following factors: timing of non-recurring license and services revenue of approximately $10.0 million pushed out to the second half of the year as well as $3.0 million reduction due to foreign currency movements. Non-GAAP revenue increased $46.1 million, or 41%, over prior-year quarter. Non-GAAP revenue excludes the impact of $9.6 million of deferred revenue that would have been recognized in the normal course of business by S1 but was not recognized due to GAAP purchase accounting requirements.

Operating Expenses

Excluding $7.6 million of S1 acquisition related one-time expenses related for IT-related infrastructure exit costs and severance expense, operating expenses increased $47.1 million compared to the prior year quarter due to the addition of $45.0 million of S1 expenses inclusive of $4.0 million of intangibles amortization.   Total GAAP operating expenses for the quarter were $157.7 million. 

Operating Income/Loss

Consolidated GAAP operating loss was $7.9 million for the quarter.   Non-GAAP operating income decreased $1.0 million, or 10%, compared to the prior-year quarter. Non-GAAP operating income excludes the $9.6 million deferred revenue adjustment due to purchase accounting as well as the impact of $7.6 million of one-time expenses related to IT-related infrastructure exit costs and severance.

Adjusted EBITDA

Adjusted EBITDA increased to $25.7 million, an improvement of $5.8 million, or 29%, compared to the prior year quarter. Adjusted EBITDA excludes the impact of $9.6 million of deferred revenue that would have been recognized in the normal course of business by S1 but was not recognized due to GAAP purchase accounting requirements and $7.6 million of acquisition related one-time expenses. 

Liquidity

We had $149.6 million in cash on hand as of June 30, 2012.  The Company also paid $3.1 million in principal payments for the term credit facility during the second quarter 2012. During the second quarter, we repurchased 961,692 shares for $37.8 million. The remaining dollar value of shares authorized for purchase under the stock repurchase program was approximately $31.0 million.

Operating Free Cash Flow 

Operating free cash flow (“OFCF”) for the quarter was $(3.8) million, a decrease of $5.4 million as compared to the prior-year quarter.  

Other Expense

Other expense for the quarter was $3.0 million, a reduction of $3.1 million as compared to other income of $0.1 million in the prior-year quarter.  The variance was driven by higher interest expense of $2.5 million as well as negative foreign exchange variance of $0.6 million.     

Taxes

Income tax benefit in the quarter was $6.2 million, or a 57.1% effective tax rate, compared to income tax expense of $0.7 million, or a 6.7% rate, in the prior-year quarter.  The income tax benefit for the quarter ended June 30, 2012 was due to the beneficial impact of domestic losses at the U.S. tax rate offset by foreign income at lower tax rates.

Net Income (loss) and Diluted Earnings Per Share

Net loss for the quarter ended June 30, 2012 was $4.7 million, compared to net income of $9.8 million during the same period last year. 

Earnings (loss) per share for the quarter ended June 30, 2012 was $(0.12) per diluted share compared to $0.29 per diluted share during the same period last year.  Excluding the impact of $7.6 million of S1 acquisition related one-time expenses and the impact of $9.6 of million deferred revenue that would have been recognized in the normal course of business by S1 but was not recognized due to GAAP purchase accounting requirements, earnings per share was $0.16 per diluted share.

Weighted Average Shares Outstanding

Total diluted weighted average shares outstanding were 39.3 million for the quarter ended June 30, 2012 as compared to 34.3 million shares outstanding for the quarter ended June 30, 2011. The number of weighted average shares outstanding was increased by 5.8 million due to the issuance of shares related to the acquisition of S1 Corporation. 6.7 million options to purchase shares, restricted share awards, common stock warrants and contingently issuable shares were excluded from the diluted earnings per share computation as their effect would have been anti-dilutive.

Press release:

ACI Worldwide and Spectrum Partner to Deliver Advanced Fraud Prevention Using Mobile Alerts

ACI Mobile Alerting Detects Fraud Quickly and Efficiently Using Interactive SMS Messages

Monday, June 18, 2012

New York, NY—June 18, 2012— ACI Worldwide (NASDAQ: ACIW), a leading international provider of payment systems, announced today a global partnership with Spectrum Message Services Pty Ltd, to deliver ACI mobile alerting powered by Spectrum’s MoneyGuard product. The combined solution will add a critical layer of protection to financial institutions’ fraud systems by using the flexibility and convenience of interactive SMS messages to identify and stop fraud quickly.

Organizations utilizing ACI mobile alerting will be able to identify suspicious transactions in near real- time and send an SMS message to the customer containing details of the transaction such as location and amount. If that transaction is fraudulent the customer can respond with a simple ‘BLOCK’ message and the card can be frozen. This has the potential to stop fraud much sooner than current methods available while improving customer satisfaction by preventing cards from being blocked incorrectly by banks attempting to stop fraud themselves. The interactive nature of the system will help to improve customer service.

“Banks, processors and merchants are all vulnerable to the threat of mass data breaches,” said Craig Saks, vice president, Global Product Business Operations, ACI Worldwide. “Traditionally, these events were hard to detect as they were reliant on the fraud being reported by the customer days, weeks or even months after it was first noticed. The availability of this enhanced mobile alerting solution advances fraud detection and mitigation by allowing the customer to interact directly with the fraud detection system thus significantly shortening the time between when a suspicious activity occurs and when it is first reported.”

Customers can also ask to be automatically notified of transactions that meet pre-defined fraud prevention parameters such as international charges, transactions of more than a certain value or online charges. They can also use the tool and its mobile browser extensions, to request balance inquiries, change credit limits, change personal alert thresholds, or receive one time passwords. This gives the customer a simple, interactive channel to contact the bank at any time, from any place.

“SMS messages are proving to be a very popular method for banks to communicate with their customers,” said Gerard Vos, managing director of Spectrum Message Services. “They are unobtrusive and discreet, are very easy for people to respond to when needed and are faster than responding to a voice call. Members of the public are very aware of fraud, and view banks more favorably that are known to take fraud prevention, and customer service, seriously.”

Hungary’s OTP Bank has been using the MoneyGuard system for 12 years and pioneered the service when the bank was experiencing high fraud rates. Their fraud rates now are amongst the lowest in the world.

“Although SMS alerting began as an addition to a fraud monitoring system, MoneyGuard quickly became a valued customer service of the bank,” said Ákos Takáts, the Deputy CEO and Head of the IT and Bank Operations, OTP Bank.  “It was appreciated by the customers and became a valuable source of revenue for the bank.”

News release:

ACI Delivers Comprehensive Online Banking Solution for Associated Banc-Corp

Tuesday, May 29, 2012

New York, N.Y. — MAY 29, 2012 — ACI Worldwide (NASDAQ: ACIW), a leading international provider of payment systems, announced today that Associated Banc-Corp has chosen ACI Enterprise Banker™ to upgrade its online business banking offering. Associated Banc-Corp has more than 270 offices in Wisconsin, Illinois and Minnesota, serving more than one million customers with assets totaling $22 billion. The company will use Enterprise Banker to offer a flexible, yet robust, solution for the needs of a very diverse customer base.

“Choosing ACI and the Enterprise Banker solution provided our organization with a product that met all of our needs,” said Eldon Passey, head of commercial deposits and treasury management, Associated Banc-Corp. “The product comes from a trusted vendor with a proven record of accomplishment in our market. We sought a solution that could be adapted to meet the needs of our existing business customers, as well as supporting our plans for growth. We are confident that Enterprise Banker will allow us to meet the high customer satisfaction goals we have set for ourselves”

Enterprise Banker delivers the scalability the bank requires for continued growth. Associated Banc-Corp chose this solution because it could be implemented quickly, and provided the industry accepted standards believed necessary for its needs. Enterprise Banker allows financial institutions of all sizes to uniquely package products and services for different market segments, or even individual customers, from a single, flexible product base. The product offers a full range of functionality including: balance and transaction reporting,  ACH and wire transfer origination and reporting, cash concentration and tightly integrated third party applications such as bill pay and remote check deposit.

“ACI strives to offer financial institutions like Associated Banc the tools needed to compete in a rapidly changing environment,” said Ralph Dangelmaier, president, Global Markets and Services, ACI Worldwide.  “The online channel continues to grow in importance. Organizations need to be able to manage all aspects of their banking activity through one secure portal and we are pleased that Associated has chosen ACI to ensure its business will continue to meet all the changes of a rapidly changing industry.”

Press release:

ACI Worldwide Rolls Out Enhanced Merchant Management Solution for Acquirer Banks

Company Releases Latest Version of ACI Acquirer and ACI Interchange

Thursday, May 24, 2012

New York, N.Y.—May 24, 2012— ACI Worldwide, Inc. (NASDAQ: ACIW), a leading international provider of payments solutions, announced today the release of the latest version of ACI Acquirer™, its comprehensive multi-currency system for managing merchant accounts, histories and settlements. The enhanced ACI Acquirer offers greater support for U.S. taxation requirements, enhanced interchange fee processing and expanded features for merchant settlement delay and deposit reserves.

ACI Acquirer enhancements are complemented by the launch of the newest version of ACI Interchange™, the company’s central monetary transaction manager for clearing card transactions. Both solutions ensure that acquiring banks and processors remain current with the latest regulatory developments in the U.S. market. This increases customers’ ability to operate seamlessly in today’s highly competitive merchant acquiring environment. ACI Issuer, ACI Acquirer and ACI Interchange are installed at more than 70 customers in North America, Europe and Asia.

Financial institutions require a merchant acquiring solution that offers flexibility as its premiere feature. The enhanced ACI Acquirer enables the most flexible pricing, transaction, service and merchant settlement options on the market today.  Some of the new features include:

• Improved functionality for U.S. including taxation calculation and reporting, support for NACHA payment file formats and industry compliance mandates.

• Enhancements which allow merchant acquirers to create highly differentiated merchant programs with unique methods for delayed or deferred settlement and merchant deposit reserve management

• Support for Discover card transaction clearing and settlement.

“The U.S. remains a very competitive and dynamic merchant acquiring market, subject to a number of essential regulatory requirements and changes in operating conditions,” said David Morem, Executive Vice President, Global Products and Maintenance, ACI Worldwide. “Merchant acquirers need a management solution which ensures ongoing compliance and competitive transaction price points as well as the ability to better compete in the market through overall pricing flexibility and customized settlement funding capabilities. That need is fulfilled by the latest releases of ACI Worldwide’s core merchant and card management solutions.”

In addition to ACI Acquirer and ACI Interchange; ACI’s portfolio of card and merchant management solutions also includes ACI Issuer™ for issuing and supporting all card types, and two complementary products, ACI Token Manager™, for EMV issuance, and ACI Payments Manager™ for reconciliation and settlement. Together these products provide an integrated, end-to-end solution for card transactions. Each offers highly advanced features that are compliant with all major international payment schemes, including Visa®, MasterCard®, American Express® and JCB®.

Contact details

Media Contacts

Rick Sheehy
P: 781-370-3643
Richard.Sheehy@aciworldwide.com

Notes to editors

About ACI Worldwide

ACI Worldwide powers electronic payments and banking for 1,650 financial institutions, retailers and processors around the world. Through our integrated suite of software products and hosted services, we deliver a broad range of solutions for electronic payments, transaction banking, mobile, branch, and voice banking, fraud detection and trade finance. To learn more about ACI and understand why we are trusted globally, please visitwww.aciworldwide.com. You can also find us atwww.paymentsinsights.com or on Twitter @ACI_Worldwide.

News release:

Global Study Identifies Impact of Smartphone Use on Mobile Banking and Payments

Research by ACI Worldwide and Aite Group Identifies Smartphonatics Responsible for Driving Mobile Banking and Payment Services Demand

Monday, May 14, 2012

New York, NY & Boston, MA — May 14, 2012 — A study of mobile banking and payment adoption rates in 14 countries by ACI Worldwide (NASDAQ: ACIW) and Aite Group has discovered a new category of consumer, known as Smartphonatics, that is driving the demand for mobile payments and banking. A Smartphonatic is someone who changes their shopping, financial and payment behavior as a result of owning a smartphone. The report identifies a stark difference between mobile adoption among Smartphonatics and other consumers: while 80 percent of Smartphonatics have used their smartphones for mobile banking only one-third of non-Smartphonatics report doing so. Similarly 70 percent of Smartphonatics have used their smartphones for mobile payments, less than a quarter of non-Smartphonatics have done so. 

The report asserts that Smartphonatics’ behavior is shaping consumers’ needs and requirements for mobile payment and banking solutions in today’s market, and sets the bar for how financial institutions and retailers will have to respond over the next five years to stay competitive. The full report is available for free download atwww.aciworldwide.com/mobile.

“Smartphonatics enthusiastically use their smartphones when they shop for products and services as well as when they interact with their banks,” said Ron Shevlin, senior analyst, Aite Group.  “They exist around the world and while they may be more concentrated in some countries it is quite clear they are an emerging consumer force. Smartphonatics are driving the adoption of mobile banking and payments and will be an agent for change.  Financial and retail institutions will need to adapt or risk being left behind.”

Smartphonatics vary by region and age: Smartphonatics more common in India and China than in the U.S. and Europe.

The report details specific geographic and demographic trends among this emerging market segment.  Principal findings include:

• Globally, nearly 25 percent of consumers can be classified as Smartphonatics.

• Identified Smartphonatics’ by country represent a country’s mobile maturity level: India has the highest percentage of identified Smartphonatics, at 60 percent, followed by South Africa (42 percent). The fewest are found in Germany (10 percent), France (8 percent) and Canada (7 percent). The United States ranks in the middle at 20 percent.

• Mobile banking adoption: India also ranks highest for mobile banking adoption at 76 percent, followed by China. Germany, with a 24 percent adoption rate, and Canada at 18 percent have the lowest rate of adoption.

• Mobile payment services: (i.e. use of the smartphone to make a payment in a shop or to another person) from surveyed countries ranges from two-thirds of respondents in China and India to only 15 percent usage reported by Canadian participants and 13 percent reported by the French.

• Smartphonatics are young: 36 percent of Gen Yers (between the ages of 20 and 31) are Smartphonatics as are nearly one-third of Gen Xers (ages 32 to 46).  The number drops significantly among both Baby Boomers (ages 47-65) at 18 percent and Seniors (66+) at six percent. 

Mobile will not replace traditional banking or payment systems
The study also determined that the emergence of Smartphonatics will not result in the demise of traditional banking or payment systems.  The findings indicate that while using a mobile device is the preferred method of payment and banking in many groups, it is not expected to be the only method. Smartphonatics are more willing than other consumers to experiment with different approaches to mobile payments and banking. Also, simply owning a smartphone does not make one a Smartphonatic.

“Consumers expect to shop and transact anywhere, at anytime making mobile the hottest area of opportunity for financial institutions, processors and retailers today,” said Ralph Dangelmaier, president, Global Markets and Services, ACI Worldwide.  “These organizations need to plan strategically for mobile as part of their overall channel strategy, alongside ATMs, POS, branch and online banking. The most successful companies are leveraging their existing banking and payments systems to implement innovative mobile services. That way, they can cut down costs and time to market for new mobile ventures.” 

Contact details

Rick Sheehy
+1-781-370-3643
richard.sheehy@aciworldwide.com

Notes to editors

MethodologyThis study consisted of an online survey of 4,200 consumers from 14 countries in three main geographic regions, the Americas, (North & South America), EMEA (Europe, Middle East & Africa) and APAC (Asia/Pacific).  For the purposes of the analysis, the data survey was weighted to represent the overall age distribution of each country’s population.  The study was conducted during Q1 of 2012.

About ACI WorldwideACI Worldwide powers electronic payments and banking for 1,650 financial institutions, retailers and processors around the world. Through our integrated suite of software products and hosted services, we deliver a broad range of solutions for electronic payments, transaction banking, mobile, branch, and voice banking, fraud detection and trade finance. To learn more about ACI and understand why we are trusted globally, please visitwww.aciworldwide.com. You can also find us atwww.paymentsinsights.com or on Twitter @ACI_Worldwide.

About Aite GroupAite Group is an independent research and advisory firm focused on business, technology and regulatory issues and their impact on the financial services industry. With expertise in banking, payments, securities, investments, and insurance, Aite Group’s analysts deliver comprehensive, actionable advice to key market participants in financial services.  Headquartered in Boston with a presence in Chicago, New York, San Francisco, London and Milan, Aite Group works with its clients as a partner, advisor and catalyst, challenging their basic assumptions and ensuring they remain at the forefront of industry trends.