ACI Worldwide Inc.

05/07/2026 | Press release | Distributed by Public on 05/07/2026 12:28

Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
This report contains forward-looking statements based on current expectations that involve a number of risks and uncertainties. Generally, forward-looking statements do not relate strictly to historical or current facts and may include words or phrases such as "believes," "will," "expects," "anticipates," "intends," and words and phrases of similar impact. The forward-looking statements are made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended.
Forward-looking statements in this report include, but are not limited to, statements regarding future operations, business strategy, business environment, key trends, and, in each case, statements related to expected financial and other benefits. Many of these factors will be important in determining our actual future results. Any or all of the forward-looking statements in this report may turn out to be incorrect. They may be based on inaccurate assumptions or may not account for known or unknown risks and uncertainties. Consequently, no forward-looking statement can be guaranteed. Actual future results may vary materially from those expressed or implied in any forward-looking statements, and our business, financial condition and results of operations could be materially and adversely affected. In addition, we disclaim any obligation to update any forward-looking statements after the date of this report, except as required by law.
All forward-looking statements in this report are expressly qualified by the risk factors discussed in our filings with the Securities and Exchange Commission ("SEC"). The cautionary statements in this report expressly qualify all of our forward-looking statements. Factors that could cause actual results to differ from those expressed or implied in the forward-looking statements include, but are not limited to, those discussed in our Risk Factors in Part 1, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, and in Part 2, Item 1A of this Form 10-Q.
The following discussion should be read together with our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, and with our financial statements and related notes contained in this Form 10-Q. Results for the three months ended March 31, 2026, are not necessarily indicative of results that may be attained in the future.
Overview
ACI Worldwide delivers transformative software solutions that power intelligent payments orchestration in real time so banks, merchants, and billers can drive growth, while continuously modernizing their payment infrastructures, simply and securely. With 50 years of trusted payments expertise, we combine our global footprint with a local presence to offer enhanced payment experiences to stay ahead of constantly changing payment challenges and opportunities.
Our products are sold and supported directly and through distribution networks covering three geographic regions - the Americas; Europe, Middle East, and Africa ("EMEA"); and Asia Pacific. Each region has its own globally coordinated sales force, supplemented with local independent resellers and/or distributor networks. Our products and solutions are marketed under the ACI Worldwide brand and used globally by banks of all sizes, central banks, intermediaries, merchants, and billers, such as third-party electronic payment processors, payment associations, switch interchanges, and a wide range of transaction-generating endpoints, including ATMs, merchant point-of-sale ("POS") terminals, bank branches, mobile phones, tablets, corporations, and internet commerce sites.
We derive a majority of our revenues from domestic operations and believe we have large opportunities for growth in international markets, as well as continued expansion domestically in the United States. We also continue to maintain centers of expertise in Timisoara, Romania, and Pune and Bangalore in India, as well as key operational centers such as in Cape Town, South Africa and in multiple locations in the United States.
Our business and operating results are influenced by trends such as information technology spending levels, the growth rate of digital payments, mandated regulatory changes, and changes in the number and type of customers in the financial services industry, as well as economic growth, and purchasing habits.
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Key trends that currently impact our strategies and operations include:
Increasing digital payment transaction volumes. The adoption of digital payments continues to accelerate, driven by the increased adoption of instant payments and other financial inclusion efforts of countries throughout the world, with countries such as India, Brazil, Indonesia, Malaysia, and most recently Colombia, growing dramatically. Contactless payments adoption for in-person payments was thrust forward in response to the COVID-19 pandemic, and that usage has not abated. ACI leverages growth in transaction volumes through the licensing of payment technologies to banks and intermediaries seeking to take advantage of that growth, supporting 44 global payment schemes and providing the central infrastructure to 11 central banks directly operating the scheme using ACI software. With the launch of ACI Connetic, our comprehensive cloud-native payments hub solution available as a SaaS solution, participating in this growth is now accessible to banks of all sizes, significantly increasing ACI's addressable market for software solutions.
ISO 20022 and enhanced payment standards. In 2024 and 2025, banks and processors across the globe achieved major milestones with the certification and go-live of ISO 20022 compliance across the major wires networks, including Fedwire, Swift, CHAPS, and CHIPS. ACI solutions were instrumental in this new initiative, regularly processing more than two-thirds of Fedwire payments traffic and approximately 15% of Swift payments traffic globally. These go-live events were highly consequential in financial services globally, and with the enhanced data standards described, the financial system stands to be easier to secure and provide much richer analytics.
Adoption of cloud technology. ACI has recognized the industry's technical inflection point as financial institutions transition from traditional on-premises infrastructure to private and public cloud environments, and we are actively supporting our customers' cloud strategies. Cloud technology enables the financial services ecosystem to reduce technical risk, accelerate innovation, improve time-to-market for new revenue-generating solutions, and enhance scalability, resiliency, and long-term operating economics. As banks, intermediaries, merchants, and billers modernize their systems to take advantage of these capabilities, our ongoing investments and partnerships allow us to deliver cloud benefits today while maintaining ACI's core strengths in performance, resiliency, and scalability. In addition, cloud-native, multi-tenant SaaS solutions expand our reach to smaller institutions by providing scalable, easy-to-integrate offerings at accessible price points. Building on these foundations, ACI Connetic-our fully cloud-native banking platform launched in 2025-advances this strategy by conforming fully to Cloud Native Computing Foundation principles and by being deployable across public cloud environments such as Microsoft Azure and Amazon Web Services, as well as customers' private clouds. Working closely with key hardware and software partners including IBM and Red Hat, we ensure ACI Connetic can operate at scale in public, private, and multi-cloud deployments, supporting the needs of the largest global banks and processors, particularly in highly regulated markets where concentration risk and data sovereignty considerations drive deployment strategy.
Payments Intelligence and Artificial Intelligence. The accelerated adoption of real-time payments and new risks associated with AI agents driving new exploits increases the urgency for industry-wide collaboration against fraud. As the threat of scams becomes a greater concern for remitting and receiving institutions, consumers are challenged with increased friction to prevent account take-over and criminals successfully persuading consumers to push transactions themselves, inadvertently, to mule accounts they have full control of, created with fake or synthetic identity, or simply "borrowed" with or without consent of the legit account holders. While AI will be used to accelerate vulnerabilities, it can also be used to automate financial protection, including but not limited to recognition of synthetic identities and automated remediation. Banks and intermediaries, merchants, and billers are pursuing solutions to mitigate their risks while improving their customer experience, protecting their margins, and securing their revenue streams, especially with their new products and offerings. We continue to see opportunities for AI and other advanced analytics capabilities to stop fraudulent behavior and enable frictionless customer experiences.
The GENIUS Act and stablecoins. With the passage of the 2025 GENIUS Act in the United States, stablecoins gained international attention and prominence. As a leading software provider of solutions to move value around the world, ACI already plays a significant role in enabling stablecoin workflows as fiat currency funds are transferred to and from issuers and stablecoins are minted and burned. We recognize the importance of stablecoins to global value transfer, especially cross-border transfers, and ACI Connetic at its core design is the ideal platform for initiating, managing, and receiving those transfers. As customers are evaluating payment hubs, we expect that ACI Connetic and our strategy for stablecoin support will be well-received in the market.
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Several other factors related to our business may have a significant impact on our operating results from year to year. For example, the accounting rules governing the timing of revenue recognition are complex, and it can be difficult to estimate when we will recognize revenue generated by a given transaction. Factors such as creditworthiness of the customer and timing of transfer of control or acceptance of our products may cause revenues related to sales generated in one period to be deferred and recognized in later periods. For arrangements in which services revenue is deferred, related direct and incremental costs may also be deferred. Additionally, while the majority of our contracts are denominated in the U.S. dollar, a substantial portion of our sales are made, and some of our expenses are incurred, in the local currency of countries other than the United States. Fluctuations in currency exchange rates in a given period may result in the recognition of gains or losses for that period.
We continue to seek ways to grow through organic sources, partnerships, alliances, and acquisitions. We continually look for potential acquisitions designed to improve our solutions' breadth or provide access to new markets. As part of our acquisition strategy, we seek acquisition candidates that are strategic, capable of being integrated into our operating environment, and accretive to our financial performance.
Backlog
Backlog is comprised of:
•Committed Backlog, which includes (1) contracted revenue that will be recognized in future periods (contracted but not recognized) from software license fees, maintenance fees, service fees, and SaaS and PaaS fees specified in executed contracts (including estimates of variable consideration if required under ASC 606, Revenue From Contracts with Customers) 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 we believe recognition of the related revenue will occur within the corresponding backlog period.
Our backlog estimates assume renewals based upon automatic renewal provisions in the executed contract and our historic experience with customer renewal rates.
Our 60-month backlog estimates are derived using the following key assumptions:
•License arrangements are assumed to renew at the end of their committed term or under the renewal option stated in the contract at a rate consistent with historical experience. If the license arrangement includes extended payment terms, the renewal estimate is adjusted for the effects of a significant financing component.
•Maintenance fees are assumed to exist for the duration of the license term for those contracts in which the committed maintenance term is less than the committed license term.
•SaaS and PaaS arrangements are assumed to renew at the end of their committed term at a rate consistent with our historical experiences.
•Foreign currency exchange rates are assumed to remain constant over the 60-month backlog period for those contracts stated in currencies other than the U.S. dollar.
•Our pricing policies and practices are assumed to remain constant over the 60-month backlog period.
In computing our 60-month backlog estimate, the following items are specifically not taken into account:
•Anticipated increases in transaction, account, or processing volumes by our customers.
•Optional annual uplifts or inflationary increases in recurring fees.
•Services engagements, other than SaaS and PaaS arrangements, are not assumed to renew over the 60-month backlog period.
•The potential impact of consolidation activity within our markets and/or customers.
We review our customer renewal experience on an annual basis. The impact of this review and subsequent updates may result in a revision to the renewal assumptions used in computing the 60-month backlog estimates. In the event a significant revision to renewal assumptions is determined to be necessary, prior periods will be adjusted for comparability purposes.
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The following table sets forth our 60-month backlog estimate, by reportable segment, as of March 31, 2026, and December 31, 2025 (in millions). Dollar amounts reflect foreign currency exchange rates as of each period end. This is a non-GAAP financial measure being presented to provide comparability across accounting periods. We believe this measure provides useful information to investors and others in understanding and evaluating our financial performance.
March 31, 2026 December 31, 2025
Payment Software $ 3,363 $ 3,372
Biller 3,926 3,887
Total $ 7,289 $ 7,259
March 31, 2026 December 31, 2025
Committed $ 2,244 $ 2,304
Renewal 5,045 4,955
Total $ 7,289 $ 7,259
Estimates of future financial results require substantial judgment and are based on several assumptions, as described above. These assumptions may turn out to be inaccurate or wrong for reasons outside of management's control. For example, our customers may attempt to renegotiate or terminate their contracts for many reasons, including mergers, changes in their financial condition, or general changes in economic conditions in the customer's industry or geographic location. We may also experience delays in the development or delivery of products or services specified in customer contracts, which may cause the actual renewal rates and amounts to differ from historical experiences. Changes in foreign currency exchange rates may also impact the amount of revenue recognized in future periods. Accordingly, there can be no assurance that amounts included in backlog estimates will generate the specified revenues or that the actual revenues will be generated within the corresponding 60-month period. Additionally, because certain components of Committed Backlog and all of Renewal Backlog estimates are operating metrics, the estimates are not required to be subject to the same level of internal review or controls as contracted but not recognized Committed Backlog.
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RESULTS OF OPERATIONS
The following table presents the condensed consolidated statements of operations, as well as the percentage relationship to total revenues for items included in our condensed consolidated statements of operations (in thousands):
Three Month Period Ended March 31, 2026 Compared to the Three Month Period Ended March 31, 2025
Three Months Ended March 31,
2026 2025
Amount % of Total
Revenue 		$ Change vs 2025 % Change vs 2025 Amount % of Total
Revenue
Revenues:
Software as a service and platform as a service $ 261,957 62 % $ 24,874 10 % $ 237,083 60 %
License 88,041 20 % 3,548 4 % 84,493 22 %
Maintenance 50,918 12 % 2,276 5 % 48,642 12 %
Services 24,833 6 % 486 2 % 24,347 6 %
Total revenues 425,749 100 % 31,184 8 % 394,565 100 %
Operating expenses:
Cost of revenue 228,459 54 % 15,081 7 % 213,378 54 %
Research and development 44,092 10 % 5,184 13 % 38,908 10 %
Selling and marketing 30,236 7 % (1,950) (6) % 32,186 8 %
General and administrative 40,216 9 % 12,624 46 % 27,592 7 %
Depreciation and amortization 25,256 6 % 1,271 5 % 23,985 6 %
Total operating expenses 368,259 86 % 32,210 10 % 336,049 85 %
Operating income
57,490 14 % (1,026) (2) % 58,516 15 %
Other income (expense):
Interest expense (12,198) (3) % 2,485 (17) % (14,683) (4) %
Interest income 3,606 1 % (458) (11) % 4,064 1 %
Other, net 1,526 - % (22,214) (94) % 23,740 6 %
Total other income (expense) (7,066) (2) % (20,187) (154) % 13,121 3 %
Income before income taxes
50,424 12 % (21,213) (30) % 71,637 18 %
Income tax expense
12,118 3 % (649) (5) % 12,767 3 %
Net income
$ 38,306 9 % $ (20,564) (35) % $ 58,870 15 %
Revenues
Total revenue for the three months ended March 31, 2026, increased $31.2 million, or 8%, as compared to the same period in 2025.
•The impact of foreign currencies strengthening against the U.S. dollar resulted in a $7.7 million increase in total revenue during the three months ended March 31, 2026, as compared to the same period in 2025.
•Adjusted for the impact of foreign currency, total revenue for the three months ended March 31, 2026, increased $23.5 million, or 6%, as compared to the same period in 2025.
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Software as a Service ("SaaS") and Platform as a Service ("PaaS") Revenue
The Company's SaaS arrangements allow customers to use certain software solutions (without taking possession of the software) in a multi-tenant or single-tenant cloud environment on a subscription basis. The Company's PaaS arrangements allow customers to use certain software solutions (without taking possession of the software) in a multi-tenant cloud environment on a subscription or consumption basis. Included in SaaS and PaaS revenue are fees paid by our customers for use of our Biller solutions. Biller-related fees may be paid by our clients or directly by their customers and may be a percentage of the underlying transaction amount, a fixed fee per executed transaction or a monthly fee for each customer enrolled. SaaS and PaaS costs include payment card interchange fees, the amounts payable to banks and payment card processing fees, which are included in cost of revenue in the condensed consolidated statements of operations. All fees from SaaS and PaaS arrangements that do not qualify for treatment as a distinct performance obligation, which includes set-up fees, implementation or customization services, and product support services, are included in SaaS and PaaS revenue.
SaaS and PaaS revenue increased $24.9 million, or 10%, during the three months ended March 31, 2026, as compared to the same period in 2025.
•The impact of foreign currencies strengthening against the U.S. dollar resulted in a $1.5 million increase in SaaS and PaaS revenue during the three months ended March 31, 2026, as compared to the same period in 2025.
•Adjusted for the impact of foreign currency, SaaS and PaaS revenue for the three months ended March 31, 2026, increased $23.4 million, or 10%, as compared to the same period in 2025.
•The increase was primarily driven by new customer go-lives since March 31, 2025, and higher transaction volumes during the three months ended March 31, 2026, as compared to the same period in 2025.
License Revenue
Customers purchase the right to license ACI software under multi-year, time-based software license arrangements that vary in length but are generally five years. Under these arrangements the software is installed at the customer's location (i.e. on-premise). Within these agreements are specified capacity limits typically based on customer transaction volume. ACI employs measurement tools that monitor the number of transactions processed by customers and if contractually specified limits are exceeded, additional fees are charged for the overage. Capacity overages may occur at varying times throughout the term of the agreement depending on the product, the size of the customer, and the significance of customer transaction volume growth. Depending on specific circumstances, multiple overages or no overages may occur during the term of the agreement.
Included in license revenue are license and capacity fees that are payable at the inception of the agreement. License revenue also includes license and capacity fees payable annually, quarterly, or monthly due to negotiated customer payment terms. The Company recognizes revenue in advance of billings for software license arrangements with extended payment terms and adjusts for the effects of the financing component, if significant.
License revenue increased $3.5 million, or 4%, during the three months ended March 31, 2026, as compared to the same period in 2025.
•The impact of foreign currencies strengthening against the U.S. dollar resulted in a $3.7 million increase in license revenue during the three months ended March 31, 2026, as compared to the same period in 2025.
•Adjusted for the impact of foreign currency, license revenue for the three months ended March 31, 2026, decreased $0.2 million, as compared to the same period in 2025.
Maintenance Revenue
Maintenance revenue includes standard and premium customer support and any post contract support fees received from customers for the provision of product support services.
Maintenance revenue increased $2.3 million, or 5%, during the three months ended March 31, 2026, as compared to the same period in 2025.
•The impact of foreign currencies strengthening against the U.S. dollar resulted in a $1.5 million increase in maintenance revenue during the three months ended March 31, 2026, as compared to the same period in 2025.
•Adjusted for the impact of foreign currency, maintenance revenue for the three months ended March 31, 2026, increased $0.8 million, or 2%, as compared to the same period in 2025.
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Services Revenue
Services revenue includes fees earned through implementation services and other professional services. Implementation services include product installations, product configurations, and custom software modifications ("CSMs"). Other professional services include business consultancy, technical consultancy, on-site support services, product education, and testing services. These services include new customer implementations as well as existing customer migrations to new products or new releases of existing products.
Services revenue increased $0.5 million, or 2%, during the three months ended March 31, 2026, as compared to the same period in 2025.
•The impact of foreign currencies strengthening against the U.S. dollar resulted in a $1.0 million increase in services revenue during the three months ended March 31, 2026, as compared to the same period in 2025.
•Adjusted for the impact of foreign currency, services revenue for the three months ended March 31, 2026, decreased $0.5 million, or 2%, as compared to the same period in 2025.
Operating Expenses
Total operating expenses for the three months ended March 31, 2026, increased $32.2 million, or 10%, as compared to the same period in 2025.
•Total operating expenses for the three months ended March 31, 2026, included $5.4 million for cost reduction strategies.
•The impact of foreign currencies strengthening against the U.S. dollar resulted in a $4.3 million increase in total operating expenses during the three months ended March 31, 2026, compared to the same period in 2025.
•Adjusted for the impact of cost reduction strategies and foreign currency, total operating expenses for the three months ended March 31, 2026, increased $22.5 million, or 7%, compared to the same period in 2025.
Cost of Revenue
Cost of revenue includes costs to provide SaaS and PaaS, third-party royalties, amortization of purchased and developed software for resale, the costs of maintaining our software products, as well as the costs required to deliver, install, and support software at customer sites. SaaS and PaaS service costs include payment card interchange fees, amounts payable to banks, and payment card processing fees. Maintenance costs include the efforts associated with providing the customer with upgrades, 24-hour help desk, post go-live (remote) support, and production-type support for software that was previously installed at a customer location. Service costs include human resource costs and other incidental costs such as travel and training required for both pre go-live and post go-live support. Such efforts include project management, delivery, product customization and implementation, installation support, consulting, configuration, and on-site support.
Cost of revenue increased $15.1 million, or 7%, during the three months ended March 31, 2026, compared to the same period in 2025.
•The impact of foreign currencies strengthening against the U.S. dollar resulted in a $1.6 million increase in cost of revenue during the three months ended March 31, 2026, compared to the same period in 2025.
•Adjusted for the impact of foreign currency, cost of revenue for the three months ended March 31, 2026, increased $13.5 million, or 6%, compared to the same period in 2025.
•The increase was primarily due to higher payment card interchange fees of $15.4 million, partially offset by lower personnel and related expenses of $1.9 million.
Research and Development
Research and development ("R&D") expenses are primarily human resource costs related to the creation of new products, improvements made to existing products as well as compatibility with new operating system releases and generations of hardware.
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R&D expense increased $5.2 million, or 13%, during the three months ended March 31, 2026, as compared to the same period in 2025.
•The impact of foreign currencies strengthening against the U.S. dollar resulted in a $0.7 million increase in R&D expenses during the three months ended March 31, 2026, compared to the same period in 2025.
•Adjusted for the impact of foreign currency, R&D expenses for the three months ended March 31, 2026, increased $4.5 million, or 11%, compared to the same period in 2025.
•The increase was primarily due to higher personnel and related expenses.
Selling and Marketing
Selling and marketing includes both the costs related to selling our products to current and prospective customers as well as the costs related to promoting the Company, its products and the research efforts required to measure customers' future needs and satisfaction levels. Selling costs are primarily the human resource and travel costs related to the effort expended to license our products and services to current and potential clients within defined territories and/or industries as well as the management of the overall relationship with customer accounts. Selling costs also include the costs associated with assisting distributors in their efforts to sell our products and services in their respective local markets. Marketing costs include costs incurred to promote the Company and its products, perform or acquire market research to help the Company better understand impending changes in customer demand for and of our products, and the costs associated with measuring customers' opinions toward the Company, our products and personnel.
Selling and marketing expense decreased $2.0 million, or 6%, during the three months ended March 31, 2026, as compared to the same period in 2025.
•The impact of foreign currencies strengthening against the U.S. dollar resulted in a $1.2 million increase in selling and marketing expense during the three months ended March 31, 2026, as compared to the same period in 2025.
•Adjusted for the impact of foreign currency, selling and marketing expense decreased $3.2 million, or 10%, for the three months ended March 31, 2026, as compared to the same period in 2025.
•The decrease was primarily due to lower personnel and related expenses.
General and Administrative
General and administrative expenses are primarily human resource costs including executive salaries and benefits, personnel administration costs, and the costs of corporate support functions such as legal, administrative, human resources, and finance and accounting.
General and administrative expense increased $12.6 million, or 46%, during the three months ended March 31, 2026, as compared to the same period in 2025.
•General and administrative expenses for the three months ended March 31, 2026, included $5.4 million for cost reduction strategies.
•The impact of foreign currencies strengthening against the U.S. dollar resulted in a $0.6 million increase in general and administrative expense during the three months ended March 31, 2026, as compared to the same period in 2025.
•Adjusted for the impact of cost reduction strategies and foreign currency, general and administrative expense increased $6.6 million, or 24%, for the three months ended March 31, 2026, as compared to the same period in 2025.
•The increase was primarily due to higher professional and other legal fees of $5.4 million, and personnel and related expenses of $1.2 million.
Depreciation and Amortization
Depreciation and amortization increased $1.3 million, or 5%, during the three months ended March 31, 2026, as compared to the same period in 2025.
•The impact of foreign currencies strengthening against the U.S. dollar resulted in a $0.2 million increase in depreciation and amortization expense during the three months ended March 31, 2026, as compared to the same period in 2025.
•Adjusted for the impact of foreign currency, depreciation and amortization expense increased $1.1 million, or 4%, for the three months ended March 31, 2026, as compared to the same period in 2025.
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Other Income and Expense
Interest expense for the three months ended March 31, 2026, decreased $2.5 million, or 17% compared to the same period in 2025, primarily due to lower comparative debt balances as well as a decrease in interest rates.
Interest income includes the portion of software license fees paid by customers under extended payment terms that is attributed to the significant financing component. Interest income for the three months ended March 31, 2026, decreased $0.5 million, or 11%, as compared to the same period in 2025.
Other, net is primarily comprised of foreign currency transaction gains and losses. During the three months ended March 31, 2025, other, net also included the $25.9 million gain on the sale of the Company's equity method investment. Other, net was $1.5 million and $23.7 million of income for the three months ended March 31, 2026 and 2025, respectively.
Income Taxes
See Note 10, Income Taxes, to our unaudited condensed consolidated financial statements in Part I of this Form 10-Q for additional information.
Segment Results
See Note 9, Segment Information, to our unaudited condensed consolidated financial statements in Part I of this Form 10-Q for additional information regarding segments.
The following is selected financial data for our reportable segments for the periods indicated (in thousands):
Three Months Ended March 31,
2026 2025
Revenue
Payment Software $ 213,461 $ 200,725
Biller 212,288 193,840
Total revenue $ 425,749 $ 394,565
Segment adjusted EBITDA
Payment Software $ 113,336 $ 106,561
Biller 33,969 30,895
Depreciation and amortization (25,319) (23,985)
Stock-based compensation expense (16,957) (11,627)
Corporate and unallocated expenses (47,539) (43,328)
Interest, net (8,592) (10,619)
Other, net 1,526 23,740
Income before income taxes
$ 50,424 $ 71,637
Payment Software Segment Adjusted EBITDA increased $6.8 million for the three months ended March 31, 2026, compared to the same period in 2025, due to a $12.7 million increase in revenue, primarily due to an increase in SaaS and PaaS and license revenues, partially offset by a $5.9 million increase in cash operating expense.
Biller Segment Adjusted EBITDA increased $3.1 million for the three months ended March 31, 2026, compared to the same period in 2025, due to a $18.4 million increase in revenue, partially offset by a $15.3 million increase in cash operating expense, primarily payment card interchange and processing fees.
Liquidity and Capital Resources
General
Our primary liquidity needs are: (i) to fund normal operating expenses; (ii) to meet the interest and principal requirements of our outstanding indebtedness; and (iii) to fund acquisitions, capital expenditures, and lease payments. We believe these needs will be satisfied using cash flow generated by our operations, our cash and cash equivalents, and available borrowings under our revolving credit facility over the next 12 months and beyond.
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Cash and cash equivalents consist of highly liquid investments with original maturities of three months or less. As of March 31, 2026, we had $161.8 million of cash and cash equivalents, of which $79.9 million was held by our foreign subsidiaries. The Company has recognized deferred income taxes for local country income and withholding taxes that could be incurred on distributions of certain non-U.S. earnings in foreign subsidiaries, as these earnings are not intended to be indefinitely reinvested.
Available Liquidity
The following table sets forth our available liquidity for the dates indicated (in thousands):
March 31, 2026 December 31, 2025
Cash and cash equivalents $ 161,757 $ 196,462
Availability under revolving credit facility 398,100 398,100
Total liquidity $ 559,857 $ 594,562
The decrease in total liquidity is primarily attributable to stock repurchase activity and payments on the Term Loan Facility, partially offset by cash generated from operations.
The Company and ACI Payments, Inc., a wholly owned subsidiary, maintain a $75.0 million uncommitted overdraft facility with Bank of America, N.A. The overdraft facility acts as a secured loan under the terms of the Credit Agreement to provide an additional funding mechanism for timing differences that can occur in the bill payment settlement process. As of March 31, 2026, the full $75.0 million was available.
Stock Repurchase Program
The Board approved a stock repurchase program authorizing the Company, as market and business conditions warrant, to acquire its common stock and periodically authorizes additional funds for the program. In October 2025, the Board approved the repurchase of the Company's common stock of up to $500.0 million in place of the remaining purchase amounts previously authorized.
We repurchased 1,549,291 shares for $65.8 million under the program during the three months ended March 31, 2026. Under the program to date, we have repurchased 68,596,875 shares for approximately $1.4 billion. As of March 31, 2026, the maximum remaining amount authorized for purchase under the stock repurchase program was approximately $390.5 million. See Note 6, Common Stock and Treasury Stock, to our unaudited condensed consolidated financial statements in Part I of this Form 10-Q for additional information.
Cash Flows
The following table sets forth summarized cash flow data for the periods indicated (in thousands):
Three Months Ended March 31,
2026 2025
Net cash provided by (used by):
Operating activities $ 64,247 $ 78,221
Investing activities (14,511) 37,092
Financing activities (64,185) (15,351)
Cash Flows from Operating Activities
The primary source of operating cash flows is cash collections from our customers for purchase and renewal of licensed software products and various services including software and platform as a service, maintenance, and other professional services. Our primary uses of operating cash flows include employee expenditures, taxes, interest payments, and leased facilities.
Cash flows provided by operating activities of $64.2 million were $14.0 million lower for the three months ended March 31, 2026, compared to $78.2 million for the same period in 2025. Operating cash flows for the current quarter decreased primarily due to the timing of customer billings and payments.
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Our cash flow from operating activities can fluctuate from period to period due to several factors, including: the timing of billings, which are typically higher in the third and fourth quarters in conjunction with sales timing and are variable based upon license renewal timing; collections, which will lag the quarters with higher billings; the timing and amounts of interest due to interest rate fluctuations; income tax and other payments; and our operating results.
Cash Flows from Investing Activities
The changes in cash flows from investing activities primarily relate to the timing of our purchases and investments in capital and other assets, including strategic acquisitions, that support our growth.
During the first three months of 2026, we used cash of $14.5 million to purchase software, property, and equipment, as compared to $8.9 million during the same period in 2025. In addition, during the first three months of 2025, we received net proceeds of $46.0 million from the sale of our equity method investment.
Cash Flows from Financing Activities
The changes in cash flows from financing activities primarily relate to borrowings and repayments related to our debt instruments and other debt, stock repurchases, and net proceeds related to employee stock programs.
During the first three months of 2026, we used $65.3 million to repurchase common stock and $3.8 million for the repurchase of stock-based compensation awards for tax withholdings. In addition, we repaid a net $10.6 million on the Incremental Term Loan and $3.5 million of other debt payments. We received net proceeds of $1.0 million from the exercise of stock options and the issuance of common stock under our 2017 Employee Stock Purchase Plan, as amended, and $18.1 million for settlement assets and liabilities due to processing timing. During the first three months of 2025, we repaid a net $9.4 million on the Term Loan under the Amendment, $70.0 million on the Revolving Credit Facility, and $4.2 million of other debt payments. In addition, we used $14.4 million to repurchase common stock and $7.1 million for the repurchase of stock-based compensation awards for tax withholdings. We received net proceeds of $1.4 million from the exercise of stock options and the issuance of common stock under our 2017 Employee Stock Purchase Plan, as amended, and $88.3 million for settlement assets and liabilities due to processing timing.
Contractual Obligations and Commercial Commitments
For the three months ended March 31, 2026, there have been no material changes to the contractual obligations and commercial commitments disclosed in Item 7 of our Form 10-K for the fiscal year ended December 31, 2025.
Critical Accounting Estimates
The preparation of the condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and other assumptions we believe to be proper and reasonable under the circumstances. We continually evaluate the appropriateness of estimates and assumptions used in the preparation of our condensed consolidated financial statements. Actual results could differ from those estimates.
The accounting policies that reflect our more significant estimates, judgments, and assumptions, and that we believe are the most critical to aid in fully understanding and evaluating our reported financial results, include the following:
•Revenue Recognition
•Intangible Assets and Goodwill
•Stock-Based Compensation
•Accounting for Income Taxes
During the three months ended March 31, 2026, there were no significant changes to our critical accounting policies and estimates. Please refer to Management's Discussion and Analysis of Financial Condition and Results of Operations contained in Part II, Item 7 of our Annual Report on Form 10-K for our fiscal year ended December 31, 2025, for a more complete discussion of our critical accounting policies and estimates.
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