ACI Worldwide Aktie

Hello, everyone. Thank you for joining us, and welcome to ACI Worldwide, Inc. Reports Final Results Call. [Operator Instructions] I will now hand the conference over to John Kraft. You may begin.

Thank you, and good morning, everyone. On today's call, we will discuss ACI Worldwide's first quarter 2026 results as well as our updated financial outlook for the remainder of the year. The slides accompanying this webcast can be found at aciworldwide.com under the Investor Relations tab and will remain available after the call. We will then open the line for your questions.

As always, today's call includes forward-looking statements and is subject to the safe harbor provisions. You can find the full text of these statements in our earnings press release and in our filings with the SEC. These documents describe important risk factors that could cause actual results to differ materially from those indicated in any forward-looking statements. Joining me today are Tom Warsop, our President and CEO; and Bobby Leibrock, our Chief Financial Officer. Tom will begin with an overview of our Q1 performance, strategic highlights and the progress we're making against our long-term plan, and Bobby will then review our financial results in more detail, including segment performance, cash flow and updated outlook for 2026. We'll then open the line for questions.

Before we begin, I'd like to let everybody know that we will be attending several upcoming investor conferences, including JPMorgan's 2026 Global Technology, Media and Communications Conference on May 18 in Boston, Baird's 2026 Global Consumer Technology and Services Conference on June 4 in New York City; and D.A. Davidson's 2026 Technology Conference in Nashville on June 11. With that, I'll turn the call over to Tom.

Thanks, John, and good morning, everyone. As always, I appreciate you joining us for our first quarter 2026 earnings call. We're pleased with the start to 2026, and that's building on the strong performance we delivered throughout 2025. We're executing well. We're delivering on our promises, and we're staying focused on our strategic priorities. We're in a strong competitive position, and we're increasingly optimistic about the outlook for our business.

If I look at the first quarter, we delivered 6% organic revenue growth in constant currency, and that growth compares against the strongest first quarter in the company's history last year. That is the strongest quarter until this quarter since we grew on top of that. So I'm particularly happy with this performance. Our focus on operational efficiency, combined with the operating leverage in our model drove over 160 basis points of FX-adjusted net adjusted EBITDA margin expansion and 8% adjusted EBITDA growth. The combination of this overall strong operating performance and our continued share repurchases, I'll detail that a little bit later, translated to double-digit growth in adjusted EPS.

Bobby is going to cover the quarter in more detail in a few moments. But for my part, I'd like to step back and provide an update on our strategic initiatives and what we're seeing in our markets. Our business momentum stems from continuing sustained focus on our multiyear value creation strategy. As we regularly discuss, our strategy emphasizes growth within our core vertical markets, disciplined operational execution and a return-driven approach to capital allocation. We expect our strategy to enable us to deliver at least high single-digit organic revenue growth, strong cash flow conversion and the allocation of capital to drive incremental value, all with a focus on maximizing shareholder returns.

Our growth strategy is built on expanding within our existing customer base in addition to winning new logos and of course, accelerating innovation all along the way. Within our Payment Software segment, we took a major step forward in 2025 when we unified our bank and merchant businesses into what we now call payment software. The goal is to increase efficiency, to accelerate innovation and to simplify our operating structure. We're seeing the benefits of this strategy and the payment software business had a very solid first quarter, growing 6%, 2% on a constant currency basis. Now again, as you recall, Q1 last year was particularly strong in this area, driven by our largest competitive issuing and acquiring takeaway ever in the Asia Pacific region.

Our issuing and acquiring solutions remain leading edge and strongly in demand. We've been at it for 50 years, and our latest versions of these proven tools utilize leading technology as we continue to innovate and deliver market-leading customer value. And these solutions are, to put it very simply, mission critical. They're so critical, in fact, that we actually have one Middle East customer push itself to not let an upgrade go-live date slip even with the Iran conflict raging all around them. Together, we successfully delivered on time, and that's just another reminder of the resilience of our customers, the dedication of our employees and the mission-critical nature of the solutions we provide. They just wouldn't let it slip.

We also saw strength in real-time payments. That part of the business grew revenue by over 20% as increasing real-time payment volumes drive larger total contract values at renewal. Transaction volumes, as most of you know, are one of the key levers we use at ACI to expand our relationships with existing customers. I'd like to share a specific example from Q1 of how this sometimes works as it relates to real-time account-to-account solutions. We had a renewal of a base 24 customer in the first quarter. It happened to be in Asia. And this is a customer that's seeing very significant growth in real-time payment transaction volumes. We were able to construct a deal which drove mid-single-digit growth in the pricing for their renewing portion of their transactions and 25% plus growth in pricing related to the net new real-time transactions. And those transactions are generating new business, incremental business for the customer.

Overall, when you put all that together, this led to a healthy overall increase in total contract value from this customer. And as RTP volumes continue to grow, we expect similar opportunities across our portfolio. This is a demonstration of the power of having many different payment solutions our customers can use as the market evolves. They see ACI as a partner across payments, not just in a particular payment area. I gave you an example of RTP and its impact in Asia. Much of our business and the growth we're seeing right now is international, but the U.S. adoption of real-time payments is also starting to pick up. FedNow and RTP adoption is increasing. This is obviously a huge opportunity for us, and we remain optimistic about future volume growth here domestically. So the volumes are still small in the U.S., but we're definitely seeing them start to expand.

We also continue to make progress advancing ACI Kinetic and that, of course, is critical to our long-term platform and modernization strategy. In the quarter, we expanded Kinetic's scope and momentum. We extended the platform to modernize card payments to unify multi-rail U.S. clearing connectivity and to embed advanced fraud and verification capabilities directly into the payment flow. These advancements reinforce Kinetic's role as a single cloud-native foundation that helps customers reduce complexity, manage risk and modernize across payment types at their own pace. Kinetic's capabilities, combined with ACI's proven reliability and future-ready road map remain and are, in fact, growing as meaningful differentiators between us and our competitors.

And I want to share something about the broader Kinetic's strategy that may not be quite as clear to some people and may require a little more explanation. So let me try to put it this way. Simply investing in Kinetic, and of course, that's the name of our next-generation payments technology, just investing in that is providing confidence in our customer base that our longer-term technology road map is aligned with where most people in the industry want to go. I want to use a sports analogy here. We're skating to where the puck will be, not where it is today.

As we compete for work under RFPs and during renewals, we're consistently asked about our multiyear road map and how we're going to help customers modernize without introducing undue risk. And Kinetic is that road map. It's resonating. Even when a customer isn't ready to migrate immediately, they're not ready internally. Aligning our strategy with theirs builds confidence and supports expansions and longer duration commitments. We've had several customers signed significant contracts with us for our core solutions because of Kinetic, even when they're not quite ready to go all the way down the Kinetic path. So to illustrate this dynamic, I want to use another specific example from the first quarter.

We had a renewal with a major North American bank, and I personally engaged to finalize the renewal terms. And the entire conversation was not about the renewal itself, the products they use today, it was about Kinetic. And even though the bank is not ready to embark on the modernization journey Kinetic enables, they know they need it in the future. The bank's CTO told me he wants Kinetic. He wants to begin the preparation for it during the next few years, and that's during the renewal period, this renewal period, and that he wants us to be ready to hit the ground running at the time of the next renewal. And when I say us, I mean the bank and ACI. In the meantime, they've asked for our help to get the bank to a place where they can make the progress they need internally from a business process, a personnel perspective and a technology perspective. They want our help, and of course, we're thrilled to support that. This is an example of Kinetic supporting expansion of a renewal deal and positioning us as the long-term partner for our customers.

Now I want to turn to Biller, where we continue to see strong results, and that's building on the momentum we saw in 2025. A key area of focus is advancing our market-leading Speedpay One platform, and that's driving core electronic bill payment transaction growth and new customer relationships. We signed significant new contracts in the quarter, and our total new ARR bookings grew 39% for the company, a majority of which was attributable to Biller. We signed several new logos, and we saw some nice expansionary up sells with existing customers in our utility and insurance verticals in particular.

One renewal that I'd like to highlight provided us an opportunity to improve pricing substantially while offsetting interchange increases, and that shows the strength of the relationship and leadership position we hold in the utility sector. Another large client was able to work with us to significantly improve its customer experience while also dramatically lowering operating costs by shifting transaction volume from calls to self-service. And when they do that, that reduces the operating cost from about $20 per inbound call to about $1 for a self-service interaction. That client was also able to consolidate 4 platforms into 1 while significantly improving the overall experience and adding new payment options at the same time.

Another deal in the quarter involved an existing customer in the insurance industry, and that also happens to be my personal insurer. In the first quarter, this customer nearly doubled their relationship with us, and I can personally attest that the experience is straightforward, quick and convenient. These are the types of significant outcomes we're able to achieve within our Biller business that benefit both ACI and our customers and their customers.

ACI is gaining share in the Biller market as more billers are consolidating on to modern outsourced digital bill payment platforms, ACI Speedpay One. They're meeting customers where they are with mobile-first digital payment experiences that enable them to tailor payments to their preferences. This is a highly fragmented market, and the immediate opportunity is converting the significant portion of the market that is using legacy or outdated platforms to ACI. Increasingly, we are the partner of choice, and we're excited by the opportunities for our biller business through modern, scalable, resilient platform, Speedpay One.

So I want to talk a little bit about operational execution across ACI. Our model remains highly scalable. As we grow, we have a clear opportunity to continue expanding margins through operational discipline and continued productivity improvements, while we still continue to invest in the initiatives that support our long-term road map. We saw that in the first quarter with about 200 basis points, nearly 200 basis points of margin expansion. And while near-term investments have a little bit of ebb and flow and they can modestly dampen operating leverage in any given quarter, we expect the underlying scalability of our business to become increasingly evident over time.

We're also very focused on our disciplined approach to capital allocation. We benefit from a strong business that has limited capital requirements and generates strong cash flow, and that gives us the flexibility to execute on our strategy. Our capital allocation strategy prioritizes investments in organic growth, strategic M&A, capital return and maintaining financial strength, of course. As we've discussed, a key area of recent focus has been returning capital through our share repurchase program. Last quarter, we committed to allocating at least 50% to 60% of our cash from operations to share repurchases in 2026, and that reflects our strong financial position, our confidence in the long-term outlook and our belief that current valuations are particularly attractive.

During the first quarter of 2026, we repurchased 1.5 million shares, and that brings the total repurchase since the start of 2025 to over 5% of the shares that were outstanding at the beginning of last year. We remain in a very strong financial position with leverage well below our targeted range of 2x EBITDA, and we remain committed to our capital allocation framework. To sum all that up, I'm excited about our recent financial performance, and I'm very encouraged by our path ahead. I'm proud of what we've accomplished, and we have a lot of work ahead, and I mean that in a really good way. We'll continue to invest in our key growth initiatives, and that includes our cloud-native Kinetic platform and Speedpay One.

In addition, as I discussed last quarter, we're investing in our AI-first road map. We view generative AI as a significant opportunity, not a threat. We're already deploying many tools across the enterprise, and this is accelerating our process. ACI is able to combine the power of these tools with our 50-plus years of engineering and architecture expertise and substantial volumes of proprietary data. When we put all that together, we can provide enormous customer value. Further, we provide certifications with hundreds of networks and payment schemes around the globe, and all of those regularly require updates. We are really good at that. AI simply cannot deliver these aspects of what we do. As I emphasized on our last earnings call, we see generative AI as a big opportunity, and we're well down the path to taking advantage of it.

Before I close, I want to briefly address the macro environment. The conflict in the Middle East and the resulting energy shock have introduced real uncertainty into the broader economic outlook. And of course, no organization is entirely insulated from macroeconomic pressures, but our business at ACI is purpose-built for moments like this. Payments infrastructure doesn't take a pause during geopolitical disruption. If anything, the resilience of our customers and the criticality of what we provide becomes even more apparent. The example I shared earlier from the Middle East is not an exception. It's indicative of who our customers are, the role they play in the world's economy and what our solutions mean to them.

I want to thank all of our employees across the organization for their hard work and dedication. We're excited about the opportunities ahead as we continue our shareholder value creation journey. I'll hand over to Bobby to talk more about our financial results and our updated outlook for 2026. Bobby?

Thank you, Tom, and thank you all for joining us today. I'll begin with a brief review of our first quarter financial performance, followed by an update on our balance sheet, liquidity and cash flows. I'll close with an update on our guidance and capital allocation priorities for 2026. As Tom said, we had a solid start to the year, driven by our progress on our growth initiatives, strong operating discipline and focused execution following the move to a 2-segment operating model last year. That translated into margin improvement and continued progress against our capital allocation priorities.

Total revenue in the quarter was $426 million, up 8% year-over-year on a reported basis and up 6% in constant currency. Recurring revenue was $313 million, up 10% as reported and up 8% in constant currency. The continued growth in recurring revenue reflects strong momentum and increasing demand from our software-led offerings across both payment software and biller. We delivered first quarter adjusted EBITDA of $105 million, an increase of 12% year-over-year or 8% in constant currency, driven by solid organic growth and improved operating performance. As a result, adjusted EBITDA margin was 38%, up from 36% last year, reflecting continued disciplined execution and the operating leverage inherent in our software model.

We also took certain onetime cost reduction actions in G&A during the quarter, which are excluded from our adjusted EBITDA. Net new ARR bookings increased 39% to $12 million, while new license and services bookings were $50 million, flat against a notably strong prior year comparison. Turning to our segment results. In Payment Software, revenue increased 2% in constant currency to $214 million. We continue to see increasing demand for cloud-based offerings with SaaS revenue growing 11% in Q1, excluding FX. Segment recurring revenue, representing SaaS and maintenance, grew 9% year-over-year as reported or 6% in constant currency.

From a product perspective, we saw particular strength in real-time payments and merchant, which grew 22% and 21% in constant currency, respectively, driven by transaction-based volume growth within our customer base. Fraud management was essentially flat as we're issuing and acquiring, which maintained the strong revenue levels achieved in the first quarter last year. Payment software EBITDA was $113 million in the first quarter, up 2% year-over-year in constant currency. EBITDA margin was 53%, flat versus last year as operating leverage was offset by continued investment in growth initiatives, including ACI Kinetic.

Turning to Biller. Revenue increased 10% to $212 million, driven by higher transaction volumes and new customer wins. Revenue net of interchange increased 5% year-over-year. We continue to see strong new business momentum across utilities, government and consumer finance as billers increasingly consolidate onto modern digital platforms. We also continue to advance Speedpay One, our next-generation biller platform, supporting the long-term modernization of the segment.

Building on Tom's comments, I want to highlight the diversity of our top 10 ARR contributions this quarter. Three were consumer finance, 3 were utilities, 2 in insurance and 2 in government and higher ed. That breadth across verticals is exactly what we want to see. Equally important is the balance between new and expansion. 3 of the 10 were new logos and 7 were existing customers expanding the relationship with us. That mix is a healthy indicator of the durability of our growth. Biller adjusted EBITDA grew 10% to $34 million. EBITDA margin net of interchange was 51%, up more than 200 basis points from last year, reflecting operating leverage from new implementations and incremental volume from existing customers.

Turning to cash flow and the balance sheet. Cash flow from operating activities was $64 million in the first quarter compared to $78 million last year. Strong underlying performance continued to translate into solid cash generation with the year-over-year change driven by timing in working capital, including a higher concentration of billings late in March. We are not seeing changes in billing discipline or collection patterns, and we expect this timing to normalize in the second quarter. We ended the quarter with $162 million of cash on hand and total debt of $812 million, resulting in net leverage of 1.3x adjusted EBITDA, below our targeted leverage range of 2x. With total liquidity of $560 million, including revolver availability, our balance sheet remains a strategic asset and provides flexibility to invest in growth while returning capital to shareholders.

Capital allocation remains a core component of our value creation framework. As Tom discussed, during the first quarter, we repurchased 1.5 million shares for approximately $65 million. Since the start of 2025, we have repurchased roughly 5.7 million shares, representing more than 5% of shares outstanding. We remain well on track to allocate 50% to 60% of operating cash flow to share repurchases in 2026, and we ended the quarter with $391 million remaining under our current authorization.

Turning to our outlook for 2026. Based on the strong start to the year, we are raising our financial guidance. This increase is driven by operational performance with minimal impact from currency movements relative to our February guidance. For the full year, we now expect revenue growth of 7% to 9% or $1.89 billion to $1.92 billion, up from our prior forecast. Both payment software and biller are expected to deliver upper single-digit growth. For the second quarter, we expect revenue of $420 million to $440 million, representing approximately 7% growth at the midpoint. Payment Software is expected to deliver double-digit growth, while Biller is expected to grow at mid-single digits against a strong prior year comparison.

Looking to the second half, we see a strong pipeline of implementations and renewals with a heavier contribution weighted towards the fourth quarter. We expect an approximate 40-60 revenue split between Q3 and Q4, consistent with historical patterns. Payment software licenses are the primary driver of the SKU with Biller expected to accelerate in the second half. For the full year, we are raising adjusted EBITDA guidance to a range of $540 million to $555 million, up from $530 million to $550 million, representing growth of 7% to 10% -- this outlook reflects continued cost discipline while reinvesting in high-return initiatives and maintaining flexibility to support our long-term road map.

For the second quarter, we expect adjusted EBITDA in the range of $85 million to $95 million. Looking ahead to the remainder of 2026 and beyond, we remain confident in our strategy and execution. Our strong balance sheet and a highly cash-generative business give us the flexibility to return capital to shareholders while continuing to invest in innovation and long-term growth. With that, Tom and I would be happy to take your questions.

[Operator Instructions]Your first question comes from the line of George Sutton.

Great job, guys. So I think you buried the lead a little bit with the 39% bookings growth. I just wondered if we could kind of talk about that in the context of the full year. What kind of growth does your pipeline support? Was there anything super unusual in that first quarter bookings?

George, this is Bobby. Thanks for the question and agree that, that was one of the most encouraging pieces underneath of our ARR recurring businesses there. And to provide some context, we delivered $12 million, 39% growth in our new ARR bookings that straddle both segments. Tom talked about the great performance we saw in there for our Biller Business, our Speedpay platform as well as the SaaS offerings across payment software that span both our banking as well as our merchant customers. Very encouraged across it. I think as you think about the pipeline for the year, it's strong. The team got off to a great focused execution. And then that means 2 things. One, healthy demand in the market for our products and platforms; and two, we're off to the races to go implement these SaaS-based offerings to go -- be able to get those live for our customers.

I did try to expand, George, when I was talking a bit about the profile of those underneath the Biller business in my earlier comments. When I looked across the top 10 of those in our Biller business, I was really talking about new logos within there and equally encouraging, the amount of new customers that are doubling up on the revenue that they see and the commitments they're making to platforms like Speedpay. Tom talked about a big insurance business. That was one of our top 3 wins there. The team has been maniacally focused on reliability, new innovation, and we're seeing a lot of demand there from that piece. And it reflects when you look at our guidance for the year that we've taken that up.

Yes. I think, George, just to add, I want to reiterate the point Bobby is making about the spread of wins, and we saw it specifically in builder, we saw it across all the verticals. And that is precisely, as he said, what we want to see, and we are seeing that. The team -- they got off to an amazing start. And we just -- we're pushing them to continue to deliver at a very high level.

I wondered if we could just talk about Kinetic and the target market. Originally, when you're building Kinetic, it was really driven towards more of a midsized institution and it sounds like it's creating confidence across even your larger markets in terms of sizes of customers. Are you kind of redesigning the target market or rethinking the target market for Kinetic as you build this out?

No, we're not -- I wouldn't say it that way, but I'll give you the kind of 2 most encouraging things from my perspective around Kinetic. One, the new customers, net new customers that are interested in Kinetic, they are, for the most part, that mid-tier that you were just talking about that we talked about at the Investor Day. whatever, 2 years ago, I guess it was. So that hasn't changed. The net new ones, that is absolutely the target. What's happening, which is super encouraging, is that the larger customers, they're not ready, as I was highlighting in my prepared remarks, they're not ready. And they're not ready because it's kind of an inertia thing. They've made huge investments in what they have. It's hard to turn a battleship as they say.

So they're not quite ready, but Kinetic has had a very clear impact on our ability to cross-sell and expand with those big customers. So we always expected them to want Kinetic, always expected that. We knew it would take longer for them to really take advantage and to be prepared for the transformation at the institution that will be both facilitated by and required to take advantage of Kinetic. So the great news is this is a massive selling point for us. And we -- Bobby highlighted that we have increased our investment in Kinetic, and that's absolutely true. And one of the things that I want to tie that point together with my point that larger customers, current customers and even new customers are excited about Kinetic, and it's a big selling point. It's one of the reasons that they're buying or expanding.

And we talked about that big Asia Pacific brand-new takeaway from last year. That deal would not have happened without Kinetic and our ability to explain the road map, show them where we're going. They were so excited about the future of Kinetic that they said, "I got to have that. I'm not ready. Can you put in current software right now and then phase us in over the next few years? Of course, we said yes. And that deal alone funded would -- if we looked at it this way, it would fund the entire budget for our Kinetic development. So that's the power of Kinetic with big customers, and then we've got these net new ones coming, pipeline continues to grow. So we're really excited about it. But these are -- just as a reminder, these are very complex transactions. These are big changes for financial institutions, whether they're midsized or extremely large. These are big deals and complicated. And so it does take time, but I couldn't really be happier with the way that our investment in Kinetic is driving our pipeline and our expansion of existing customers.

Your next question comes from the line of Jeff Cantwell with Seaport.

Can you elaborate a little more on Kinetic in terms of how sales are going right now? I'm curious if maybe you could talk a little bit about the announcement you had with the 8 major U.S. payment networks and give us some details on why that's important? And then more broadly, how is everything tracking with Kinetic versus your expectations at the beginning of the year? And when should we expect to see these announcements impact your P&L over time?

Yes. I'll jump in first, Jeff. I appreciate the focus there. And I was going to bring up actually that expansion we saw because what we were just talking about was one dimension of how Kinetic expands the addressable market from the top-tier banks into a longer tail within the mid-tier, as Tom described. There's 2 other dimensions, I think, and you've touched on one of them that I think are really important in Kinetic.

One, it touches the payment software portfolio very holistically. It touches both the issuing and acquiring business, the card side of that, you saw those types of announcements and the account-to-account, the real-time payment side. We put out an announcement 2 weeks ago, really showing the breadth of that across 8 different payment types. And when you think about the core value prop of Kinetic, intelligent payment orchestration, orchestration is key with the amount of payment types that customers are challenged to deal with right now. The intelligence side, and Tom's had some great examples on this and our customers are really seeing the excitement and the value around this.

The intelligence side is around the AI capabilities we're infusing in Kinetic across those payment types. So a couple of points. The second dimension after the addressable market is really it covers our portfolio. It embeds AI across that as well as the orchestration touches everything from our account-to-account capabilities to the issuing acquiring and the card side. The third dimension that's important is a geographic one. One of the impressive stats that I've highlighted over my last year here is how internationally diverse our payment software business is. It's 75% of payment software business for ACI comes outside of the domestic market here in the U.S.

And with that, you've got customers that rely on us across Europe to operate within many different economies there, straddle, the U.K. economy, the euro economy. When you get into that, we've invested early on, and you can see the public wins that we've announced in Europe. This year is a big year for the U.S., and our pipeline starts to show that because you saw that announcement, we'll have kind of a rolling thunder of capabilities that customers are excited for here on the road map in the U.S. And then your last point there is where is the money? When is that -- how does the pipeline look? And how does that contribute to the year? Pipeline is healthy across the 2 markets we have availability in.

It's, I'd call it, a little bit more than half in Europe and then the other part made up here in the U.S. Like Tom said, that does not preclude probably every one of our renewals we do in APAC or LATAM and asking about it. A lot of the face-to-face meetings I've had with customers across Latin America, we still spend half the time on the Kinetic road map, and they're eager to get that localized for their market. You put it in context for this year. We don't have a dependency on Kinetic revenue this year, and I'll tell you why. It's not related to the confidence that we're seeing from customers or the confidence in the pipeline. It's because of the availability that we're providing in a hybrid fashion for customers to consume Kinetic as a service or if they want to manage it themselves.

It's a fully cloud-native offering, runs on Kubernetes. But if you're running it yourself, that's a different licensing revenue model for it as a service. So as we look at the pipeline, it's split across those, and that's going to either have a ratable revenue model or it's going to have more of our traditional upfront. But we're encouraged by it. This year, we'll continue to provide the visibility and the transparency that we've done against that.

And the early -- just to add a couple of things. The early wins have been primarily, I think, actually exclusively SaaS. And so those -- the rev rec, as Bobby was just saying, that happens as transactions flow and the first go-live is coming up here in the next few months. And so we will start to see revenue come in this year, but we're not dependent on it. It's not a huge amount this year, and it's not factored really into our guidance at all. So it's great pipeline growth. I mean we're seeing real excitement about the platform. It is driving, as I was just saying a moment ago, it is driving expansion with existing customers as well as new customers. So it's been a fantastic journey so far, and we're keeping the pedal to the metal, Jeff.

Okay. Great. I appreciate all the color on that. And then my other one was, could you maybe just clarify for Q1, was there any pull forward of revenue from Q2? I seem to remember that happened last year. And I'm curious if there's anything to be aware of on that front. And then when we think about Q2, what are the biggest drivers for payment software delivering double-digit growth? Can you maybe unpack that for us in terms of what's driving the step-up in growth there?

I'll jump in. So one, I viewed it. We provided visibility on the first half SKU and reaffirm that here with our 2Q guide. Your beginning part of your question, you asked about the quality of the roughly $15 million, $16 million beat on revenue in Q1, which was a great way to start the year on top of the roughly 25% growth we saw last year in Q1, we posted the 6% constant currency this year. So underneath of that, really, Jeff, it was minimal pull forwards, and that's why we're able to reaffirm the 2Q guidance.

Really, what we saw is on the deals that we had forecasted, both renewals and some of the new logo opportunities, it was exceeding the expectations we have on upselling and cross-selling into those accounts. We came in at the high end of those ranges, which is really encouraging when you think about the retention rates you're getting on renewals and the adoption you're getting and the commitment you're getting on the new logo side of it. As you put that in context and roll that forward through the year, we rolled the bulk of that beat right through to the full year for us. We maintained a disciplined approach to the way we're guiding.

We want to provide you numbers we have high confidence in getting to. You look at Q2, which you asked about, pleased with the profile we've given you the range at the midpoint, revenue is growing 7% and strong operating leverage when you see the EBITDA that's growing 11% -- and I think you're asking about some of the durability underneath of that. I think hopefully, you see this year a transparent approach and more visibility that we're trying to give you into the quarterly dynamics. I talked about second half as well and really providing not just through adjusted EBITDA, I've given you all the componentry to think about the earnings power we have in the business.

For the full year, we've guided an EBITDA range that's growing 7% to 10%. When you see what that translates to on an adjusted earnings per share basis, you can see we almost double that growth range at the midpoint of what we're telling you there. So we're excited about the year, the position of strength and the team is very focused.

Your next question comes from the line of Alex Neumann with Stephens.

Just wanted to ask, are you facing any headwind from lower tax payments from the IRS this year from higher refunds? And then if you could quantify that impact, if so? And then just secondly, assumptions for FX benefiting the '26 guide?

Yes. I'll jump in on them. On the IRS side, I mean you're right to point out, we do have some seasonal benefits that started last year as we saw the ramping of this business. The IRS and our federal business maintains strong volumes, good resiliency there. And there is some spreading of that throughout the year as tax payments are made multiple times throughout the year. We don't -- we see growth continuing in that segment. So no declines forecasted there. I did try to provide transparent commentary, Alex, within Q2. As we lap on some of that growth, the 10% we had of biller growth in Q1, that's going to be more like mid-single-digit growth. And then we see that reaccelerating in the second half based on the compare we saw in Q2. And as you heard, I did try to provide segment-level commentary on the full year in line with our model that we see both segments growing high single digits there.

Yes. And Alex, we don't see a meaningful impact from what -- specifically what you were talking about, more refunds leading to potentially fewer tax payments. We're not really seeing that. So I read the same thing, more people are getting a refund, but we're not seeing material impacts. I think what Bobby was highlighting was there'll be -- it's a tougher compare because we had a very strong year last year and that IRS business, in particular, grew a lot over the previous year, but we don't we don't see anything material there.

And the second part of your question, Alex, was around currency impacts. I made the comment earlier that we -- versus 90 days ago, 60 days ago, roughly when we guided in February, we didn't see a change really in the U.S. dollar strengthening or weakening against that guidance level. But we did see 2 points of tailwind with a weaker U.S. dollar versus last year in Q1. On the full year basis, the rest of the quarters are more neutral and nominal when you look at the -- our reported delta. I'm not forecasting where the U.S. dollar goes, but versus current positioning, we don't see that 2 point really carrying forward in the remaining quarters. And that's how it plays out in terms of the modeling on the top line there.

We have reached the end of the Q&A session. I will now turn the call back over to the company management for closing remarks.

Well, thank you very much for the questions and of course, for the support that you give us all the time. We really appreciate it. I want to just summarize, we're pleased with the start to 2026. We're pleased with the momentum we're seeing in our business. Of course, there's a lot of noise in the industry. There's a lot of geopolitical unrest, all kinds of things happening in the world, but we remain absolutely focused on continuing to execute on our strategy, and we're very confident that we remain well positioned to continue winning.

The platforms we're operating are mission-critical, highly reliable and deeply embedded in our customers' critical workflows, and we sit at the center of payment flows that are global, highly regulated and increasingly complex. We have a clear strategy, a resilient portfolio. We're seeing accelerating growth. We have significant financial flexibility, and we're very well positioned to continue delivering our long-term value for shareholders. So we feel great about where we are, great start, and we're going to keep doing our best to deliver very high-quality results and shareholder value. Thank you very much.

This concludes today's call. Thank you for attending. You may now disconnect.

Thank you for standing by. My name is Janice, and I will be your conference operator for today. At this time, I would like to welcome everyone to the ACI Worldwide Incorporation Fourth Quarter and Full Year Ended 2025 financial results. [Operator Instructions] Thank you. I would now like to turn the call over to John Kraft. Please go ahead.

Thank you, and good morning, everyone. On today's call, we will discuss ACI Worldwide Fourth quarter and full year 2025 results as well as our financial outlook for 2026. We will then open the line for your questions. The slides accompanying this webcast can be found at aciworldwide.com under the Investor Relations tab and will remain available after the call. As always, today's call is subject to safe harbor and forward-looking statements. .

You can find the full text of these statements in our earnings press release and in our filings with the SEC. These documents describe important risk factors that could cause actual results to differ materially from those indicated in any forward-looking statements. Joining me this morning are Tom Bersot, our President and CEO; and Bob Adeback, our Chief Financial Officer.

Tom will begin with an overview of our Q4 and full year performance strategic highlights and the progress we're making against our long-term plan. Bobby will then review our financial results in more detail, including segment performance, cash flow and our outlook for 2026. We will then open the line for questions. With that, I'll turn it over to Tom.

Thanks, John, and good morning, everyone. I appreciate you joining our Q4 and full year 2025 earnings call, and let me start with the headline. 2025 was a very strong year for ACI. We delivered another year of double-digit revenue growth improving margins and solid free cash flow, all of which are consistent with or better than the long-term financial framework we outlined at our Investor Day 2 years ago. For the full year 2025, we delivered $1.76 billion in total revenue. That's up 10% from 2024, and that was our second consecutive year of double-digit revenue growth. Adjusted EBITDA increased 9% to $507 million, and our adjusted net EBITDA margin expanded to 42%.

We also continue to execute against our capital deployment strategy. Our balance sheet remains exceptionally strong, and we ended 2025 with $196 million of cash on hand, net debt leverage ratio of 1.2x, this gives us significant flexibility to continue executing on our growth agenda while also returning capital to shareholders. In 2025, we repurchased 4.2 million shares, about 4% of the outstanding shares at the beginning of the year for $203 million.

This strong performance is a direct reflection of our committed focus to our multiyear value creation strategy. As a reminder, our strategy emphasizes growth within our core vertical markets, disciplined operational execution and a return-driven approach to capital allocation. I also want to take a moment to discuss some of the important strategic successes we had at a segment level during 2025. First, in our Payment Software segment. In 2025, we took a major step forward in scaling our bank and merchant businesses by unifying them into a new segment we call payment software.

This increases efficiency, it accelerates innovation and it simplifies our operating structure. This part of our business delivered 9% revenue growth and 10% adjusted EBITDA growth. Demand was broad-based with issuing and acquiring solutions growing 11%, building on strong double-digit growth in 2024, the year also saw a meaningful growth in real-time payments with new contracts for both central infrastructure and bank solutions. In the fourth quarter, we signed a large European bank to Kinetic our cloud native payments hub.

This was the second kinetic signing in 2025, and that's further validation of its differentiated architecture and our long-term modernization vision. Customer interest continues to accelerate. Kinetic is central to our long-term strategy, it offers customers both the immediate stability of proven technology and a path to modernization through a modern cloud-native architecture. Kinetic's combination of capability ACI's proven reliability and future readiness are major differentiators.

Earlier in the year, we also signed 1 of our largest competitive takeaways in the Asia Pacific region in our issuing and acquiring segment. We're making progress on getting this customer live and we fully expect to use them as a reference as we actively pursue other potential customers with outdated systems. In real-time account-to-account payments, we continue to sign new logos and extend our reach with existing customers. In Q4, we signed an important expansion with PayNet, Malaysia's real-time account-to-account national infrastructure. In the fourth quarter, we also went live with Banco de la Republica, the Central Bank of Colombia, which was a very strategic regional win for ACI.

We also renewed and expanded our relationship with Canada's leading digital payments network. In the U.S., FedNow and RTP adoption is slowly increasing.and we're optimistic that volumes will continue to grow and be material. In 2025, ACI's biller segment delivered another year of strong, consistent performance. with full year revenues growing 13% and segment adjusted EBITDA expanding year-over-year, reflecting continued transaction growth and investment in advancing our market-leading Speedpay platform.

The segment benefited from sustained momentum across core electronic bill payment transaction growth and ongoing customer adoption of ACI's go-forward platform, Speedpay One. We added many new biller logos and expanded relationships with many other customers including 1 of the country's largest insurance builders and a top credit union to add new payment types and an upgraded modern payment experience. ACI is gaining share in the biller market as more builders consolidate onto modern outsourced digital bill pay platforms. ACI is increasingly the partner of choice.

I'll let Bobby cover the financials in a moment, but first, I want to address the topic that's top of mind for many investors. The impact of generative AI on the software industry and the volatility that has come with this. At ACI, we view generative AI as a significant opportunity, not a threat. We are already deploying it across the enterprise to improve engineering productivity, to enhance customer outcomes and to reduce structural costs, all while supporting our strong margins and cash flow profile.

There's been a lot of speculation about whether AI could fundamentally disrupt software. While modern AI tools are very effective at generating code and we use them extensively for this, ACI's platforms are not simply collections of software modules or computer programs. their large-scale mission-critical transaction processing systems operating at global scale, built on decades of payments expertise, deeply embedded regulatory and network rules and proprietary data derived from billions of transactions. Generative AI is a powerful tool, but it's only 1 component of what's required to design, operate and continuously evolve industrial-grade payments platforms.

From a technical perspective, our advantage rests on 3 foundations, transaction-level data at massive scale, deep domain expertise and payment message flows and exception handling and highly resilient infrastructure engineered for always on high throughput environment. AI augments these foundations. It does not replace them. And when combined, those 3 foundations are difficult to replace and they provide ACI with durable, long-term competitive advantage and they lead to strong, sticky relationships. We at ACI applying AI in 3 primary ways. First, engineering productivity. Our development teams are using a combination of industry standard and proprietary AI tools to accelerate design, coding, testing and maintenance across extremely complex code bases.

These platforms involve thousands of interdependent components, integrations and country-specific variations and AI helps our engineers move faster while maintaining the reliability and security our customers require. As adoption deepens and training completes, we expect these productivity gains to compound over time. Second, operational efficiency. We're using AI to unite and scale knowledge-intensive workflows across our business. One example is our ability to index, query and analyze our entire corpus of customer contracts in real time. This allows us to instantly assess regulatory impacts, contractual obligations and pricing terms across the installed base and that dramatically increases productivity in legal and compliance functions while lowering costs as we scale our business.

Third, and I think most importantly, enhanced customer value. I want to give you an example within ACI Kinetic, we're implying AI models trained on data from billions of historical transactions to address 1 of the most complex and costly problems in payments, exception handling and payment repair. Today, many large institutions employ hundreds of people to manually resolve errors in high-volume payments. By embedding AI-driven intelligence directly into the transaction flow, we are able to automatically identify likely corrections when there is an error and dramatically reduce manual intervention.

The result is lower operating costs, faster settlement and a materially better customer experience. This capability cannot be created by an LLM, large language model alone. It requires deep domain expertise, purpose-built software and, of course, unmatched data at scale. In short, while we understand the broader concerns around AI and software at ACI, we're leaning in. We have an AI-first approach across the company. That's coordinated through what we call our Velocity program. And we are already seeing tangible benefits across productivity, efficiency and customer outcomes.

And quite simply, the combination of our resilient infrastructure, our extensive proprietary data and our unique domain expertise will allow ACI to continue delivering mission-critical payment and building software that is deeply embedded in our customers' operations and very difficult to replace. We believe this positions ACI to remain a leader as payments technology continues to evolve. And 1 last important item before I turn it over to Bobby, I'm pleased to share that as part of our ongoing Board refreshment process, we announced today the appointment of Kim DeBeers whose unique skill set and deep professional and advisory experience will further strengthen the Board of Directors' governance approach and risk culture, complementing the backgrounds of our other directors.

This appointment follows the previously announced additions of Didier Lamouche and Todd Ford back in October of 2025. And as part of a planned succession, Jan step and Charlie Peters have transitioned off the board. I would personally like to welcome Kim and of course, thank Dan and Charlie for many years of helpful service. I've enjoyed our time together, and I look forward to hearing about your future endeavors. In summary, 2025 was another year of significant progress for ACI Worldwide. We had strong balanced growth expanding profitability and broadening global demand for all of our solutions, including our cloud-native Kinetic platform.

And we continue to invest in our AI first road map, including kinetic capabilities such as realized payments and digital currency connectivity, including stable coins, reflecting the themes we've talked about throughout 2025. I'm proud of our team, and I'm excited for the opportunities ahead to continue our shareholder value creation journey. I'll hand it over to Bobby to talk more about our financial results and the outlook for 2026. Bobby?

Thank you, Tom, and good morning, everyone. I'll begin with a brief review of our fourth quarter results, then focused primarily on our full year 2025 performance. reflecting our long-term full year approach to managing the business. I'll close with our outlook and capital allocation priorities for 2026. The fourth quarter was a solid close to a year of strong execution. Total revenue in the quarter was $482 million, up 6% year-over-year, and recurring revenue was $304 million, up 13%, reflecting continued strength across both segments and growing demand for our recurring software-led offerings.

For the full year, total revenue was $1.76 billion, representing 10% growth versus 2024. Recurring revenue was $1.21 billion, up 11%, underscoring the durability and quality of our revenue base. We delivered adjusted EBITDA of $506 million, an increase of 9% year-over-year and expanded net adjusted EBITDA margin to 42%, reflecting disciplined execution and the operating leverage inherent in our software model, which provides flexibility to continue investing in the business while returning capital to shareholders. Net new ARR bookings increased 7% to $70 million, while new license and services bookings were $255 million, down 12%. This year-over-year comparison primarily reflects the timing of contract signings between periods with 2025 representing a more normalized Q4 to Q1 booking cadence and no change in underlying demand or deal quality. As Tom outlined, our results reflect broad-based demand across both segments and continued customer adoption of our modern payment and bill pay platforms.

In payment software, revenue increased 9% to $942 million and adjusted EBITDA grew 10% to $544 million. We continue to see increasing demand for our cloud-based offerings, with SaaS revenue growing 15% in Q4 and 11% for the full year, alongside continued strength across our broader payment software portfolio. Growth was broad-based across issuing, acquiring, real-time payments, fraud management and merchant solutions.

We also continue to make progress advancing ACI Kinetic, including the key customer wins Tom referenced, as part of our long-term platform and modernization strategy. As payment complexity increases globally, our large bank and processor customers continue to expand their relationships with ACI over time. Turning to Biller. Revenue increased 13% to $818 million, and adjusted EBITDA grew 7% to $141 million. Growth was driven by continued transaction volume with existing customers and strong new business momentum across utilities, government and consumer finance as more billers consolidate on to modern digital bill pay platforms.

The segment continues to perform consistently with our revenue profile and margin structure that are well understood and predictable. We also continued to make progress advancing Speedpay 1, our next-generation biller platform. which supports our long-term modernization strategy for the segment. Both segments provide a balanced growth profile with recurring revenue and exposure to multiple end markets. while each continues to invest in modern platforms and capabilities to meet evolving customer needs.

Turning to cash flow and the balance sheet. Cash flow from operating activities in 2025 was $323 million compared to $359 million in 2024, reflecting normal timing differences in working capital, including receivables and deferred revenue. Underlying cash generation remains strong. We ended the year with $196 million of cash on hand and total debt of $823 million, resulting in a net debt leverage ratio of 1.2x adjusted EBITDA, below our targeted leverage range of 2x. Our balance sheet remains a significant strategic asset and provides flexibility to invest in growth while returning capital to shareholders.

Capital allocation continues to be a core component of our value creation framework. In 2025, we returned $203 million to shareholders through the repurchase of approximately 4.2 million shares or about 4% of shares outstanding. We ended the year with $456 million remaining on our current share repurchase authorization. Turning to our outlook for 2026. Building on the momentum Tom described, our guidance reflects the durability of our recurring revenue base and continued growth driven by new customer wins, share of wallet expansion and increasing adoption of our cloud native and real-time payment capabilities.

For the full year, we expect revenue growth of 7% to 9% on a constant currency basis or $1.88 billion to $1.91 billion.

For the first quarter, we expect revenue in the range of $405 million to $415 million. In terms of revenue phasing, we continue to expect a more second half weighted revenue profile with approximately 44% of full year revenue in the first half of 2026 and 56% in the second half, consistent with historical seasonality. We expect adjusted EBITDA of $530 million to $550 million for the full year and $88 million to $93 million in the first quarter. This outlook reflects continued cost discipline while reinvesting in high-return initiatives and maintaining flexibility to support our long-term road map. As we look at capital deployment for 2026, our approach reflects the strength and flexibility of our current financial position.

We expect to allocate approximately 50% to 60% of our cash flow from operating activities to share repurchases in 2026, subject to market conditions and business needs.while continuing to invest organically and preserving capacity for disciplined, strategic M&A within our targeted leverage range to provide additional transparency and support investor understanding below adjusted EBITDA, our current expectations include net interest expense of approximately $30 million for the full year, depreciation and amortization of approximately $90 million noncash compensation expense of approximately $65 million to $75 million and an effective tax rate of approximately 25%.

We also expect capital expenditures of approximately $45 million in 2026 and cash taxes in the range of $80 million to $90 million. On share count, we expect diluted shares outstanding of approximately $105 million, excluding any impact from future share repurchase activity. Stepping back from detailed guidance, I want to put both our 2025 performance and our 2026 outlook into broader context. Since joining ACI last year, the consistency of execution and financial discipline across the organization has been clear. In 2025, we delivered double-digit revenue growth, expanded margins strong cash flow generation and meaningful capital returns.

Looking ahead to 2026, we entered with solid momentum, strong customer demand and a position of financial strength that allows us to both return capital to shareholders and invest in a compelling innovation agenda to support continued execution. With that, Tom and I will be happy to take your questions.

[Operator Instructions] Your first question is coming from the line of Jeff Cantel with Seaport Research.

And I think you answered the big questions that are out there right now about AI in your prepared remarks. So thanks for all that. I wanted to ask you a question on your revenue guidance for 2026. Can you just go through the building blocks and cadence by building blocks, I'm curious how you get to an acceleration in the back half of the year. Is that coming from the payment software segment or from biller -- and what are those drives under the head? And then kind of second, what gives you the confidence that you can accelerate revenue growth in the back half. I know you didn't have a lot of visibility. So I wanted to kick the tires on that back half acceleration, what you see as the drivers?

Jeff, it's Bobby. I'll jump in. So I appreciate the question. To put it in context, if I zoom out and look at 2025, we delivered 10% growth. We had a strong start to the year as we talked about at 15% in the first half, 25% and then delivered 10% in the full year. So some of this, as you point out, is going to be how the phasing 1 year compares to the next. But I appreciate the question because it really shows the strength that we see entering 2026.

Think about our guidance of 7% to 9% growth I'll start with a statement of that's pretty balanced across both of our segments. We see both biller and payment software with strength to contribute into that high single-digit model. We have, as you mentioned, given our high recurring revenue model, we've got great visibility in this guidance looking at this year. And as you think about the first half versus the second half, a lot of that is going to do with the renewal fees phasing to see in that visibility. And as we see the implementations and the new bookings and such that we've signed this year. So we feel good about the demand we're seeing across the board and how that plays out throughout the year.

Yes. And Jeff, this is Tom. The -- Bobby already said this, but I'll just say it a little bit differently. We have a lot of visibility, as you highlighted, and not just on the renewal book. And just as a reminder for everybody, I know you all know this, but when we sign a renewal, it doesn't matter when you sign it, the revenue gets recognized on the date of renewal. So that -- we can do a lot to accelerate signing. We can't do much -- we can't do anything really change when that revenue gets recognized. So we have a lot of visibility there.

We also have a great deal of visibility to the deals that we talked about a few of them, specifically deals that were signed in 2025 and being implemented in 2026. And so revenue recognition typically happens when you go live and you start to see volume in the biller and merchant part of the business, especially. And so we have a lot of visibility there. We -- those deals are on track to implement as expected, and then we have high confidence in the revenue coming through.

And we have very strong and growing pipeline in our key products, especially our kinetic products. So all of that gives us a lot of confidence, and it's a little bit more back-end weighted than last year. But that's sort of a normal thing that it fluctuates a little bit year-to-year, largely based on that renewal book, but also in tandem with the deals that we signed and expect to implement.

Got it. And then this is a little technical. But if we take the midpoint of your 2026 guidance, it does look like adjusted EBITDA, while it tracks revenue growth more or less, it does imply a slight compression. So my question is, can you talk about why? meaning what's in the business plan for this year or maybe should we talk that up there some of the conservatives or you guys have shown over the past couple of years. What are the main callouts for adjusted EBITDA margins for this coming year.

Yes. I'll jump in. So as you point out on the revenue, as I mentioned, we're guiding 7% to 9% growth. We feel good about that, the visibility of it. And we feel good about the operating leverage we're seeing in the business. the guide on EBITDA is on a growth basis is about 6% to 9% as well. So both kind of straddling that high single-digit range. As you think underneath of it, we expanded about 100 basis points of margin in 2025.

That's, I think, about 300 basis points in 2024. We're showing the operating leverage. And -- if I look at this past year, 2025 is going to play out -- or in 2026 will play out similar to 2025, where we're repurposing these investments for our new platforms like Kinetic and SpeedPitOne. If I comment on 2025, the 100 basis points of margin underneath of that, we doubled our investment in our Kinetic platform by reprioritizing that.

We have similar focus around productivity entering this year. And some of this is the flexibility to invest throughout the year as we continue to build that out, Jeff. But I think we feel good about that. The other thing I'd mention, I hope you appreciate the additional transparency below the EBITDA line items. We tried to give you our visibility there. We have to model that out. And I think what you'll see is good double-digit growth on top of that high single-digit EBITDA is possible when you get into the other components that would drive EPS and other pieces, too.

Yes. And Jeff, just to comment on your comment about conservatism. I think -- I hope that everyone agrees that over the last several years, we've -- we try to always do what we say. And so -- you could call that conservatism we call it prudence, I think. We want to make sure that we give you guidance that we feel highly confident in and we want to make sure that we continue to deliver on the commitments we make to you. .

Your next question is coming from the line of George Sutton with Craig Hallum.

And first, Tom, that was as impressive an explanation of the AI relevance to what you do that I've heard. So I think that was helpful. I wanted to address Kinetic in terms of the pipeline, you continue to reference a growing pipeline. Obviously, prior to what you said today, you had signed just 1 bank with a small use case, but it sounds like there's more significant things coming in addition to the bank you just announced today. So can you walk through the pipeline there?

Sure. So yes, you're absolutely right. We expected to have a relatively longer ramp of new signings. I always expected that you might remember, we can go back a year or more, and I was -- I think I was telling everyone on our earnings calls that I had actually not given the sales team permission to sell Kinetic because we wanted to make sure we were ready and that the product was there, and we started actively selling last year first -- end of the first quarter of last year.

So we're actually quite pleased with the traction that we've gotten the sales that we have. They're as expected. And that's great. But the real question is what about the pipeline, and we feel very good about the pipeline. Kinetic is the fastest-growing portion of our overall pipeline by a significant margin. And that's exactly what we expected. It's exactly what we want. And another important point is we did start -- you mentioned -- I think you said a limited use case. It was a very important use case for a European bank was the first signing that we had.

And again, we understood that because there's a lot of pressure and focus on financial institutions in Europe around instant payments. We knew that customers would need that help, and that's why we built -- completely built out that portion of Kinetics capabilities. We continue to expand and Bobby was just talking about the continued investment in future products and Kinetic is a big part of that. We continue to expand the functionality and very, very shortly we will be launching the card portion of ACI kinetic. And that will significantly expand the use cases that we can support with our general availability versions of Kinetic.

So that's exciting. But even before we launched that portion, we're seeing significant growth month-on-month on the pipeline. Now these are long sales cycles. These are big decisions for these financial institutions. And again, we expected that but we are making excellent progress. Pipeline is growing. We continue to add functionality and we'll continue to add functionality, which it continues to increase the level of interest. And then one, I think, quite important point, when I look at the pipeline overall for QinetiQ, the 2026 potential closes about 2/3 of those opportunities on a numbers basis are mid-tier financial institutions.

So remember, if we go back, you probably recall that we made a very specific point of saying that we were targeting the mid-tier, which is something we've never targeted as a company before. And so that pipeline that is actually growing even faster than the total pipeline. And again, 2/3 of the opportunities we're working on right now are in that mid-tier segment, which is completely net new for us. So it's -- it's good news all the way around. We're excited about it. Our sales teams are very excited about having these really compelling value propositions for our customers.

One other thing on real-time payments. You mentioned the addition of some additional logos as a Gulf or Alaska in this context. What whole are you on, in your view relative to real-time payments -- penetration. .

Yes. I like that analogy, George. We're -- I think we're still pretty early in the cycle, we've done a good job at ACI over the last 3 or 4 years of planting flags on the real-time payment side. as I mentioned, we had all the different flavors of real-time payment wins. We had some really important implementations, for example, in Colombia that I specifically mentioned and we're seeing growth in transactions, and that will ultimately lead to growth in revenue. In 2025, that part of our business grew by 8% and we expect it to continue to be a significant contributor to our growth overall. But I'd say we're still early days. We've talked a lot about it. We've had good growth, we have a lot of wins to show across the world. But I think in terms of overall adoption and volumes, we're still in relatively early innings. Sorry, you said golf, so on an early hole .

Your final question is coming from the line of Charles Steven with Defense.

I want to put a finer point on some of the 2 earlier questions. In the past, you called renewals. as a uplift upon renewals as a tailwind. You called out CPI, you called out pricing, you called out an uplift coming from volumes. Could you maybe touch on that tailwind and if you're seeing any change in the uplift you're seeing upon renewals, it sounds like we're still early days in terms of the RTP adoption. But any -- are you seeing any changes in that uplift upon renewals. It sounds like we're -- again, it sounds like we're still in the front line but I wanted to get a little clarity about that as we think about the building blocks for '26 and '27. .

Yes. I'll jump in, Chuck, I appreciate the question. It's Bobby. And I'll talk about it across both businesses. And I think a lot of the times when we've talked about those 4 or 5 areas, we've talked about payment software, which I'll come to. And -- but first, I'll start on the biller business. It grew 13% last year. And that business, recurring revenue business, processing model, cloud native model, that 13% really had a couple of buckets there. One would be the high retention rates we're seeing and the new it goes underneath of it and the transactions. We see opportunity to continue to grow in that business, 1 through price and also through value-added services we can put into there. in that business model, I see the first 3 buckets more around retention rates, transactions and new logos.

I think we have opportunity for the fourth set, which would be price and value-added services. So that 13% very solid. The second part, I mean a lot of the question, you're mostly asking a payment software question, where we grew 9% last year. Really happy with that off of a double-digit growth the prior year. Underneath of that, similar to the biller business, our retention rates are very nice, you add on top of that, the transactions we're seeing, which continue to grow in mid-single digits across the market in terms of transaction based we get respectable price in this area.

And then I think we're in the early innings in terms of the lift you're going to see in there across real-time payments, especially fraud and the payment intelligence capabilities that we're investing in that will continue to grow those customer relationships and then Kinetic. So those are the pieces. I will say that the fifth though is always new logos. And this is an area where we had much better progress in 2025. And the focus that Eric and the team have across this our General Manager for the space on new logo, new logo pipeline, it's only intensifying. So I see good upside in those last 2 buckets in this business around expansion into the rest of the portfolio and new logos.

Yes. And Chuck, just 1 thing to add there. You specifically asked about uplift on renewal, and we continue to see very strong performance in that area. We're extremely good at driving cross-sell, upsell, price and which -- all of which contribute to that uplift on renewal. So we're very good at it. We expect -- we're not seeing -- we're seeing upside there, not downside. .

Got it. And as a follow-up, I wanted to ask about strategic M&A. You mentioned that in your prepared remarks. I wanted to get a sense for -- and you did a deal -- a small deal last year. I wanted to see if there's any particular areas of interest you could point to with respect to inorganic growth.

Yes, absolutely. So we -- I have the same comment I've had for quite some time on this. There are 2 main areas where we're focused and we will be opportunistic on this. We're not -- this is not something where we're out there every day seeking something to buy. but there are a couple of areas. One would be an ability to accelerate what we're doing with Kinetic. because as I mentioned before, we continue to add features, functions, capabilities into Kinetic. And if we find a technology and it would likely be a technology acquisition, we buy it because we like the technology.

If we found something that would enable us to go faster in building out the -- what we think are the market-leading capabilities of Kinetic. That would be very interesting for us. And we certainly have capacity if we find the right opportunities. So that's one, accelerate Connect. Number two, would be if we can -- if we found something that would enable us to expand geographically, for example, there aren't many areas around the world where we don't have a significant presence, but there are a couple of holes, and that could be interesting for us to take a bigger focus on a particular geography, could be interesting.

So those are the 2 primary areas that we've been open to, and I think we still are open to those. But a lot of focus in making sure that we are we are really pushing on Kinetic accelerating that as much as we possibly can, both with our organic investments that Bobby mentioned before and then potentially inorganical. There's nothing -- I don't have anything to announce, but that would be interesting to us.

And I think, Tom, if I could add, let me put it in context, Chuck, of our broader capital allocation strategy. So last year, we generated $323 million of cash flow from operating activity. We returned over $200 million of that to shareholders to share repurchase. We continue to invest in the business. We paid down our debt to a 1.2x leverage. What we wanted to do is get out in front of that this year and give investors the confidence that we have similar levels of planning deploy 50% to 60% of our cash flow from operating activity, which tends to convert at about, call it, 60%, 2/3 of our EBITDA to return that to shareholders this year. In addition to that, that gives us the flexibility to do exactly what Tom just said around opportunistic M&A.

And as I said in the comments and you saw it in our press release, and we think we can do that within our 2x leverage that we see. So looking across the market, I think we've tried to give a lot more transparency on how we plan to deploy capital this year and be opportunistic to invest in the business organically like Kinetic continue to look at inorganic opportunities, but maintain our commitment to shareholders with that 50% to 60% return to shareholders through share repurchase.

So we don't have any other questions. I'll turn the call back over to Tom for closing remarks. Please go ahead.

Thanks. And thank you all for joining us, and thanks for the insightful questions. I just want to make a couple of comments to close. We feel great about 2026. We feel great about the momentum we're seeing, our guidance reflects the clear visibility we have into pipelines, renewals and implementation schedule. We've talked quite a bit about that this morning. We're taking an AI-first approach across the company. We're already seeing tangible benefits and customer outcomes and productivity. And at the same time, we're very clear eyed about what creates durable advantage in our industry. The platforms we operate are mission-critical, Obviously, they're highly reliable and they need to continue to be so. They're deeply embedded in our customers' critical workflows, and we sit at the center of payment flows that are global, highly regulated and increasingly complex.

From our cloud-native orchestration with Kinetic to Speedpay's never miss a payment standards ACI's leading domain expertise and unrivaled global data has earned us trust over many decades. With a clear strategy, resilient portfolio, accelerating growth and significant financial flexibility we're well positioned to continue delivering long-term value for our shareholders. Thank you very much again for joining us. Have a wonderful day.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Thank you for standing by. My name is Janice, and I will be your conference operator today. At this time, I would like to welcome everyone to the ACI Worldwide Inc. Third Quarter 2025 financial results. [Operator Instructions] And I would now like to turn the conference over to John Kraft. You may begin.

Good morning, everyone, and thank you for joining our call. On today's call, we will discuss ACI's third quarter 2025 results and our financial outlook for the remainder of the year. We will take your questions at the end of the call. The slides accompanying this webcast can be found at aciworldwide.com under the Investor Relations tab and will remain available after the call. As always, today's call is subject to safe harbor and forward-looking statements. You can find the full text of these statements in our presentation deck and earnings release, both available on our website and filed with the SEC.

Joining me today are Tom Warsop, our President and CEO; and Bobby Leibrock, our CFO. Before I turn it over, I did want to share that we will be attending some investor conferences, including Citi's 14th Annual Fintech Conference in New York City on November 18; Stephen's Annual Investment Conference in Nashville on November 20, and the UBS Global Technology and AI Conference in Scottsdale, December 3.

With that, I'll turn the call over to Tom.

Thanks, John. Good morning, everyone, and thank you for joining our Q3 earnings call. I'm going to share some key takeaways, and then Bobby will review our financials and guidance before we take your questions. We spent the last couple of years investing in our leading software and working hard to structurally reshape ACI for accelerating growth and financial predictability. Q3 was another strong quarter for ACI and another proof point that our efforts are working.

We delivered 7% year-over-year total revenue growth with double-digit recurring revenue growth in the quarter. For the year so far, both total revenue and adjusted EBITDA are up 12%, reflecting consistent execution and operational efficiency across the business. Given this momentum, we're again raising our full year guidance, and Bobby will share more about that shortly.

As I've mentioned on prior calls, our team is working hard to reduce some of the variability introduced by our historic term license software business model. While we can't completely eliminate it, our focus on getting deals closed earlier in the year, movement toward more ratable pricing structures in our Payment Software segment and consistent growth in our Biller business, is helping lessen the quarter-to-quarter variability. We're continuing this effort, and I expect to continue to see benefits.

Looking at our segments, the Biller business continues to perform well, with Q3 revenue up 10% compared to a year ago. We're seeing particularly strong growth in the utility and government verticals. Our Payment Software segment delivered 4% growth compared to last year, and it's up 12% year-to-date with the strong start we had to 2025. We continue to see strong demand from both traditional banks and established payment processors as well as from up-and-coming fintechs.

Bottom line is the winners in the marketplace are investing and they're often choosing ACI for their software needs. I've been talking about our ACI Connetic platform for several quarters now, and I'm happy to report, we signed our first new ACI Connetic customer in Q3, Solaris, a German fintech and bank. We were very selective in choosing our first customer, as I've indicated we would be and we're committed to working closely with the Solaris team to successfully implement the technology across their system. They are an ideal partner focused on the future and on dramatically improving their business supported by our industry-leading technology and services.

Solaris CEO, [ Carsten Holkemier ], was a featured speaker at our recent payments and lease event in New York, and he talked about the many challenges and opportunities in the financial services industry and specifically about how we are working together to take advantage.

Looking ahead, Connetic's architecture and capabilities are resonating with customers who are looking to modernize and simplify their payments infrastructure. We have expanded our pipeline, we've deepened relationships with existing customers, and we're excited about what's ahead as we roll out this compelling new platform.

In addition, we made a small, but important acquisition of a European-based fintech Payment Components that provide software for financial messaging translation, orchestration and integration. Although the direct impact to our revenue will not be material, the software they provide and the great team of technologists that have now joined us will augment our AI-First initiatives and help accelerate the development roadmap of our ACI Connetic offering. We will continue to be opportunistic in our approach to M&A grounded in disciplined capital allocation.

I also want to point out our ongoing commitment to returning capital to shareholders and point you to our other announcement today. Year-to-date, we've repurchased 3.1 million shares for $150 million. And just today, we announced the increase of our repurchase authorization to $500 million.

Stable coin has obviously been another hot topic in our industry and on our recent earnings calls. Just a few weeks ago, we announced a partnership with BitPay, which supports our ability to unlock even more potential as crypto currencies and stable coins continue to grow in importance. This partnership strengthens our existing commitment to digital currency innovation by expanding our Payments Orchestration platforms to establish capabilities for our customers.

I mentioned Payments Unleased briefly, and let me take a moment to give you a bit more insight on this great event. Payments Unleased was ACI's Premier Payments Summit and a celebration of our 50th anniversary. We brought together some of the brightest minds, thought leaders, innovators and visionaries to discuss the future of payments. Topics included stable coins, real-time payments, AI, modernization strategies for banks, merchants and billers. The feedback was overwhelmingly positive, and we're proud to be at the center of these important conversations.

On the topic of thought leadership, ACI has also been active in the media. Most recently, I joined Bloomberg TV's Crypto Show to share our perspective on stable coins and its role in cross-border real-time payments. A couple of weeks earlier, I discussed similar topics, including the role of Europe and the growth of stable coins on CNBC's [ SquakBox Europe ]. This is all part of a focused campaign to make ACI's points of view clearer and more widely shared. Expect to see me and the entire ACI leadership team much more often.

Before I turn it over to Bobby, I'd also like to touch on the ongoing Board refreshment that has continued to be a priority for us. We recently appointed [ Todd Ford ] and welcomed back [ Didier Lamouche ] as Independent Directors. Todd's many years as CFO of high-growth software technology companies in combination with Didier's successful track record of leadership in global technology companies will add value to our Board and additional support for our management team as we focus on accelerating sustainable growth, delivering industry-leading software solutions and generating shareholder value.

Overall, we're pleased with our progress and optimistic about the remainder of 2025. And none of what we're doing would be possible without the hard work of our team members. I want to thank our talented team for their steadfast commitment to our customers and to all of our stakeholders.

As I mentioned earlier, our strategy to sign contracts earlier in the year continues to pay off and our pipeline remains robust. We will continue to focus on increasing shareholder value through operational excellence and technology leadership, solidifying the durability of our improving growth.

With that, I'll turn it over to Bobby to walk through financials and guidance.

Thank you, Tom, and good morning, everyone. I'll start with our third quarter financial results and then cover our year-to-date performance and outlook. Q3 was another solid quarter, and we exceeded our expectations. Total revenue was $482 million, up 7% year-over-year and up 6% adjusted for foreign exchange. Recurring revenue was $298 million, up 10% and represents 62% of our total revenue. Adjusted EBITDA came in at $171 million and was up 2% year-over-year.

Both of our segments contributed to this growth. The Biller business continues to perform well with revenue of $198 million, up 10% year-over-year. Segment adjusted EBITDA for Biller was $32 million, a 4% increase. In Payment Software revenue grew 4% to $284 million, and adjusted EBITDA was $182 million, up 1%. We're pleased with our recurring revenue momentum, which was $100 million in Q3 and accelerated to 9% growth year-over-year.

Looking now at the first 9 months of the year, we generated $1.3 billion in total revenue and $346 million in adjusted EBITDA, both up 12% compared to the first 9 months of last year. That growth is the same as reported and adjusted for foreign exchange, so no impact from currency fluctuation. This strong performance reflects consistent execution across the business and the strong start we had in first quarter license sales.

Payment Software revenue year-to-date grew 12%, and adjusted EBITDA grew 13%. This includes growth across issuing and acquiring, merchant, fraud management and real-time payments. Biller revenue is also growing 12% year-to-date and adjusted EBITDA grew 4%. Our revenue momentum is driven by our continued booking strength. Net new ARR bookings year-to-date grew 50% to $46 million, and new license and services bookings grew 8% to $189 million.

And as Tom mentioned, we were pleased to welcome Solaris as our first Connetic customer. These results reflect the execution focus across our team and the growing customer demand across both segments.

Turning to the balance sheet. We ended the quarter with $199 million in cash and a net debt leverage ratio of 1.3x. We continue to generate strong underlying cash flow with $201 million cash flow from operations year-to-date. That compares to $232 million last year and reflects the anticipated timing of receivables and tax payments between periods. We also repurchased approximately 400,000 shares in the third quarter, bringing our year-to-date total to $3.1 million or about 3% of our shares outstanding.

As Tom mentioned, we have increased our share repurchase authorization to a total of $500 million, underscoring our commitment to returning capital to shareholders. Based on the strong year-to-date performance and a healthy fourth quarter pipeline, we are again raising our 2025 guidance.

We now expect total revenue to be in the range of $1.73 billion to $1.754 billion, up from our prior range of $1.71 million to $1.74 billion. We expect adjusted EBITDA to be in the range of $495 million to $510 million, up from our previous guidance of $490 million to $505 million.

As I complete my first full quarter as ACI's CFO, I want to thank the team for their seamless collaboration and disciplined execution. Over the past few months, I've had the opportunity to engage with employees across ACI and more deeply with our Board. I've heard directly from our customers and partners and had a chance to meet many of you, both current and prospective investors. And after these first few months, I'm even more energized by the opportunity ahead for ACI. I've been impressed by the strength of our team, the quality of our technology and the clarity of our strategy. This is a strong, well-run company, and I'm excited to be part of it.

I'm also very pleased with the operational discipline and financial controls across ACI. There is a strong tone from the top, both our Board and Tom, and we have the processes and assurances to back it up. We are prudent in how we manage financial risk. For example, as you know, our Payment Software business operates across approximately 90 countries with nearly 75% of revenue generated outside the U.S. While this demonstrates our global scale and leadership, we've always managed this exposure carefully and transparently. In hyperinflationary markets, we transact almost entirely in U.S. dollars to mitigate risk. And we consistently disclosed the impact of foreign exchange on our results, providing visibility into our underlying operational performance.

Looking forward, we remain focused on maintaining a proactive dialogue with the investment community. Transparency remains a top priority, and we're actively exploring ways to provide even greater clarity into our business and the progress we're making. I look forward to spending more time on the road again in Q4, continuing the conversation and deepening our engagement with investors.

Tom, back to you.

Thanks, Bobby. We're proud of our performance in Q3, and we're energized by the momentum that we have heading into Q4. Our strategy, execution and innovation, especially with ACI Connetic, position us well to enter 2026 on track to achieve our longer-term targets.

Thank you for your continued support and for your continued interest in ACI. We're ready to take some questions.

[Operator Instructions] Your first question is coming from the line of Trevor Williams from Jefferies.

I wanted to start on pricing, Tom, maybe bigger picture. I'm curious how you would frame the runway for pricing as a lever within the longer-term growth [indiscernible] know it's something you've talked about increasing monetization has been a focus over the last year plus. So I'm curious kind of where you still see the most opportunity? And then any way to put into perspective how impactful pricing has been this year relative to maybe the historical growth algo? Any context around that would be helpful.

Sure. Thanks, Trevor. So it's a lever that we always pull as appropriate against the value that we provide to our customers. We -- essentially, we always get a price increase when we do a renewal or when a customer needs additional volume. And I think we've -- I'm sure you and I have probably talked about the way we structure the capacity purchases by customers. We try to encourage through our pricing model, we encourage customers to buy as close to exactly the number of transactions they need as possible because if they need to come back and buy more, they're more expensive.

So there's a lot of levers that we pull there. I don't see that fading at all. In fact, as we add more value with new versions of software as we start to move customers onto Connetic, the value we add is higher, and we expect to get our fair share of that. So this is an important lever. It's been an important lever in '24 and '25. You specifically asked about those. It's always been an important lever. But 2024, 2025, it's been an important lever will continue to be -- and I think we're just excited about continuing to add new, more valuable features, functions and capabilities for our customers and then getting our share.

Okay. Understood. And then on payment software, just as we're getting closer to '26, anything we should be mindful of in terms of the cadence of renewals just thinking whether renewal cadence has been a tailwind to '25, if that potentially abates in '26? Any context you could give us around that would be helpful.

Trevor, I'll jump in. This is Bobby. So one, let me put it in the context of our backlog, and I'll give you the total number. We were healthy growth, again, double digits in our $7.1 billion 60-month backlog. And that's across both Payment Software, as you asked about and our Biller business. As I look into 2026, as I mentioned, we feel good about continuing to be on track for our longer-term high single-digit growth model and EBITDA tracking along that revenue growth. As you think about the cadence of the renewals that you put it, we got off to a great start here in the beginning of this year, overall growing 25% and almost 50% in Payment Software. That level is something we're continuing to be focused on to have deals spread out throughout the year.

But I do expect things to be more balanced throughout the quarters next year, especially against that compare against the first quarter. So in terms of cadence of renewals next year, we feel good about achieving our longer-term growth model, but I do expect it to be the levels we have this year a more balanced from a SKU standpoint.

Yes. Trevor, just one more comment on that. I sometimes get the question, is it highly variable year-to-year, the volume of renewals and if you just do the average math, obviously, it's -- if you have 5-year terms, you think kind of 20% per year. It's not exactly 20% per year, but it isn't that far off. So we don't -- the good news, I think, is that we don't have huge variability year-to-year. A little bit, yes, but we feel very comfortable managing that relatively small level.

Okay. Great. So it sounds like there's not going to be some major change in the percentage of the portfolio that's renewing next year that we need to be mindful of if you're on track for the high single. So all that sounds good.

Your next question is coming from the line of Jeff Cantwell from Seaport Research.

Congrats on the signing of your first Connetic client. Would you mind just telling us a high level about the progression from here. Maybe talk about the pipeline you think you'll start seeing more contracts side from here? And what is the timing on when that converts into revenue? Any thoughts on sizing or the magnitude of that revenue would be great.

Yes. So we're really excited actually about the pipeline. These are big decisions, Jeff, first of all, thanks for the question. Good to talk to you. But we've -- these are complicated decisions for financial institutions and fintechs. And as I've -- hopefully, I've been clear that we want to make sure we get the right first few customers. So we've got a strong pipeline. It's getting stronger literally every month as we look at it. So I feel great about that. Obviously, we never know the exact timing of when sales are going to happen, but they're progressing really well. So we'll continue to keep everybody informed as we add new customers.

You were asking specifically about the -- when it converts to revenue. The first couple of these are highly likely to be SaaS models where we're hosting the solution on behalf of our customer. And those -- the way that revenue model works is when the implementation is finished, and transactions start to flow, that's when we'll see the revenue. So it will be a few months in the case of this first customer several months, but we feel great about that. And I expect the first few will probably be like that.

Yes. I think -- and Jeff, if I can add to Tom's comments, the other comment I'd say is this is the first proper Connetic customer that will start getting revenue as we onboard, but it's not a large discrete amount, but it is across every one of our customer conversations. We talked about Payments Unleashed and those conversations we have 2 weeks ago. It was across every one of them. And right now, we're focusing on our European and U.S. capabilities for Connetic. We'll have more of a global rollout through the medium term. But every customer in Mexico loves it, every customer in Asia, we talk to is excited about it. So I like the effect that Connetic has to raise those conversations and encourage customers and get them to commit to the continued long-term ACI relationships they've had.

Okay. Great. And then you made a lot of moves during the quarter, so I want to ask you about a couple of them. Can you talk more about the Payments Components acquisition, why you wanted to capitalize on that opportunity, what that does for you? How should we think about the revenue contribution for your results going forward? And also, can you elaborate on the BitPay announcement? Maybe just explain what that unlocks for ACI? Is that domestic, international. I'm just trying to get a sense of how that becomes part of the story and what we should expect to see from here on that one as well.

Yes. Thanks, Jeff. So I would say super high level, they're similar. The reasons that we did both the BitPay partnership and the Payment Components acquisition, they're similar in that they allow us to accelerate progress in terms of adding or enhancing capabilities in our solutions so we can go faster through the partnership and the acquisition. Different capabilities, obviously, but the BitPay partnership, we already have a lot of capabilities around crypto and stable coin. We talked a little bit about that on the last call. We have good capabilities. BitPay allows us to improve those -- the way that we serve our customers in those really important and increasingly important areas. And they -- frankly, that partnership allows us to add a few things that we didn't have.

And so it's really an enhancement of the tools that we already have. We're excited about it. I think BitPay is excited about it. So that's a great one, good strategic reason to do that. So we're excited about that.

On the Payment Components, we were faced with a decision as we continue to build out and enhance ACI Connetic, we needed world-class payment message, translation and orchestration. And we either had to build some of the capabilities that Payment Components has or we needed to buy them. And we did tons of research, lots of due diligence. We really think highly of the Payment Components team and the capabilities and software that they already have, ready to, go on the shelf was exactly what we felt we needed for ACI Connetic. So it's not -- it's a small acquisition, as I said, but really important strategically, we didn't buy it for immediate revenue growth. We bought it because the capabilities they have and talent they have is a great add to ACI.

So we do not expect to say to you next quarter, oh, Payment Components added a bunch of revenue. That's not the reason we did it. But it makes ACI Connetic more impactful and gets us to where we want to go faster. That's why we did that.

Your next question is coming from the line of George Sutton from Craig-Hallum.

A highlight at Payments Unleased for me was Scotty's Connetic presentation and demo. And it seems clear to me that Tom, when you originally announced this, it was really meant for an SMB type of a customer, potentially a mid-market customer. And it would appear that this is now potentially an offering that could be delivered to virtually any size. Can you just talk about that?

Yes, absolutely, George. Thanks for joining us. So you're 100% right. And when we were talking about the -- what new markets could we portend to tap or new segments could we potentially tap with ACI Connetic, if you're thinking about really new, then it really was focused on the -- it still is focused on the mid-market because they -- those customers may not have made enough investment or have enough experience and expertise to take advantage of the historical ACI offerings.

So that -- from a new market perspective, that was true. We always expected that large financial institutions, large merchants would eventually be ready to take advantage of ACI Connetic and what we're building. So we always believe that what I -- maybe I'd say it this way. We didn't want to get people too excited about that opportunity because that's going to take some time. These very big banks, for example, they've made so much investment in their infrastructure, and they have so many processes and ways of doing things that making a change to a new platform, no matter how good it is, is a big, big, big change. So we absolutely see what you said, which is this is super appealing to a large customer, a large potential customer. Absolutely yes. I think the early adopters are likely to be a little bit smaller, but we are in active conversations with people -- customers along that whole continuum -- couldn't think of the right word -- along that whole continuum.

So we have smaller financial institutions, smaller merchants. We have midsized and we have very, very large. They're all interested in the capabilities, and we're just trying to work with them to make them comfortable and get them ready for the transition.

Got you. And just one other question on Biller. It sounds like utilities were really a key component of the growth this quarter. Can you just talk about your win rates and what you're broadly seeing in terms of opportunities for continued growth there. There's definitely a movement we see in the market from bespoke solutions to kind of moving to an outsourced model like yours. So just curious your thoughts on that would be helpful.

Yes, sure. So I think we highlighted that utilities and government were very a big contributor to the growth in this quarter. That's still been true through the year, but we see very good pipeline and pipeline growth across all of the verticals that we serve. So we feel good about the business.

I agree with what you just said that there continues to be a real interest and a move away from -- I think you called them bespoke, good a name as any, solutions per biller to outsource. And that's been happening for quite a long time. It continues to happen. Obviously, that's the reason that we're so excited about this business. We have a great offering, great client base. And what we're -- our new customers are all going on to our Speedpay One platform, which is our new -- I don't know if you saw that one, George, at Payments Unleashed. We also had a demo of Speedpay One, which is our new native solution around biller. And it's exciting.

And so we're putting new customers on that platform. It gives them much faster time to market for new capabilities, better experience for the consumers, better experience for the billers themselves. So we're really excited about that. We're happy with the performance of the segment, and we're just focused on accelerating that growth.

Yes. Maybe I'll just have one comment on some too -- I think besides the financials that you'll see, George, right at 10% in the period and a backlog that's growing at the same level going forward. The other part I'd say, I met with a lot of those same customers you asked about as Payments Unleashed in the utility space. The reason they're coming to us in some of the top players is the complexity is increasing. And that's what a player like Speedpay can actually bring to them is to address that complexity that some of those bespoke ones can't.

So that -- in terms of win rates, that's one of our bigger competitive advantages I see in that segment and one of the reasons we're winning more.

Your next question is coming from the line of Alex Newman from Stephens Inc.

Just to double-click there. There's another great quarter for Biller with double-digit growth. I was wondering if you could just provide some additional detail on the drivers of growth there, whether it's new customers, volume price and maybe the relative contribution there? And then just the same for the Payment Software segment, which had some nice growth over, which was a pretty tough comparison this quarter.

I could jump in, Alex. One, it's pretty broad based across both. I'll start with the second part on Payment Software. As I mentioned in my opening comments, all key cylinders, all key solution areas are growing in that across that business on a year-to-date basis. In the third quarter, we saw a great contributing -- contribution from the issue and [indiscernible] space. We saw real time and fraud in Q2, they had really blowout quarters there on a year-to-date basis, all growing. You go into the Biller side of it. It's -- I would emphasize it's new customers and retention the price lever, I view, there's an earlier question that Tom was answering around pricing. I view that as untapped potential in our billing business actually. I view it more as success rates on getting new customers, onboarding them and expanding those into more use cases across there.

I will now turn the conference back over to the company for closing remarks. Please go ahead.

Well, thanks, everybody, for joining us. We do look forward to catching up with individually -- with you guys individually in the coming weeks at the various events that we mentioned earlier. Have a great day.

Thanks, everybody.

Ladies and gentlemen, that concludes our today's call. Thank you for joining. You may now disconnect.

Good morning, and welcome to ACI Worldwide, Inc. Reports Financial results for the quarter ended June 30, 2025. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the call over to John Kraft. Thank you. Please go ahead.

Thank you, and good morning, everyone. On today's call, we will discuss the company's second quarter 2025 results as well as our financial outlook for the rest of the year. We will take your questions at the end. The slides accompanying this call and webcast can be found at aciworldwide.com under the Investor Relations tab and will remain available after the call. Today's call is subject to safe harbor and forward-looking statements like all of our events. You can find the full text of both statements in our presentation deck and earnings release, both of which are available on our website and with the SEC.

On this morning's call is Tom Warsop, our President and CEO; and Robert Leibrock, our new CFO. With that, I'll turn the call over to Tom. Tom?

Thanks, John. Good morning, everyone. We appreciate you joining our Q2 2025 earnings conference call. I'm going to start by highlighting some key takeaways of our second quarter results, and then Bobby, in his first earnings call as our CFO, will provide a financial and segment-level review. They'll conclude with our updated 2025 guidance. We'll then open the call for questions.

Q2 was another solid quarter for ACI. Revenue was up 7% year-over-year versus Q2 2024, and it was up 15% versus the first half of 2024. The momentum we're achieving gives us the confidence to raise our full year guidance for revenue and adjusted EBITDA for fiscal 2025, and Bobby will discuss that in more detail shortly. Our strong business momentum is reflected in strength across both our segments.

And turning to the segments. The Biller segment was up 16% in Q2 and up 13% for the first half of 2025. Our Payment Software segment was roughly flat in Q2, and that was driven by the timing of our renewal and new business signings between Q1 and Q2, but it's up 18% in the first half of 2025. As a company, we signed notable new contracts and our ARR bookings in the quarter were up 86%. That brings our first half 2025 new ARR bookings growth to 71%.

In May, we officially launched Connetic, our next-generation payments hub platform. As a reminder, Connetic is cloud native, and it provides enhanced capabilities such as automated decisioning, straight-through processing, decline transaction reduction and AI-powered insights that support fast decisions and superior value for our customers' customers. We have several live opportunities right now with particular interest related to real-time payments and wire transfers and the feedback about Connetic from potential customers continues to be overwhelmingly positive. Our pipeline is strong, and I'll keep you updated on our progress.

In addition to our continued investment in technology leadership and innovation, we remain committed to returning capital to shareholders. In the second quarter of 2025, we repurchased 2.4 million shares, representing approximately 2.4% of ACI's common shares outstanding at the beginning of the quarter. Our ability to take these important steps to enhance shareholder returns is built on the foundation of work we've done over the last few years to strengthen our company's balance sheet. We finished the quarter with a strong cash balance of $190 million and a net leverage ratio of 1.4x adjusted EBITDA, which is significantly below the recently lowered target of 2x that we have previously discussed.

I'd now like to revisit the revenue growth I just mentioned. As you know, our quarterly growth rates can fluctuate due to the timing of our term license-based business with both new contracts and renewals having significant revenue recognition upfront. Because of this, it's important to analyze longer-term trends to get an accurate sense of the trajectory of the business. And those trends are improving. While Q2 revenue was up 7% for the first half of 2025, revenue grew 15%, and that's on top of the 10% revenue growth we achieved for the full year 2024. These first half results position us well for achieving our upper single-digit revenue growth target in 2025, and they let our team focus on new business, closing opportunities more quickly and expanding our pipeline. And that supports meeting or exceeding our long-term growth target of sustainable high single-digit revenue growth.

I want to highlight the changes we've made to improve our growth performance. This hasn't been an accident or a fluke. There are several factors that contribute to the growth acceleration we've seen over the last few years, and just a few of those include improving solution mix, active portfolio management, including a strategic divestiture and more aggressive pricing. But one that really stands out to me is our conscious effort to complete the signing of new contracts and renewals earlier in the year. While the revenue from a renewal contract cannot be recognized earlier than the renewal date, that's just how the accounting rules work. Getting these time-consuming renewals out of the way continues to allow us to focus on new customer wins, which can often be recognized at the time of signing. That allows our sales team to be far more efficient, and it's shown a direct impact on our results. In fact, this quarter marks the first time our estimated 60-month backlog has exceeded $7 billion.

Before I turn the call over to Bobby, I thought I'd take a moment to address stablecoin, which has increasingly entered the discussions I've had over the last few weeks, particularly after the Circle IPO. You may have heard me say before that real-time payments use cases get more interesting as cross-border payments are allowed. Stablecoin is a potential driver of more adoption of cross-border real-time payments, and our solutions can already support those payments. If I broaden the lens beyond cross-border, from my perspective, the most important news to share with you today about stablecoin is that ACI is well positioned to benefit from stablecoin adoption in general. Our solutions have long accommodated many different digital currencies. One of ACI's sales differentiators is that our software handles more alternative payment networks and methods than any other competitor. Quite simply, increasing payment complexity drives customers to our solutions. It's part of our core competencies.

We're actively working with players in the stablecoin space as partners enabling additional payment types for our solutions and even as customers. Our software is a great way to switch stablecoin transactions, for example. With increasing regulatory clarity such as the signing into law of the GENIUS Act in the U.S. recently, we see new use cases, and we're excited about the opportunities this trend represents for us.

To sum up, we see potential here with stablecoin, and we feel very well positioned to take advantage of the opportunities it presents and it will present in the future. I'd also like to point you to the newsroom page on our website where we published some articles about stablecoin and how it may impact the global payments ecosystem over time. Have a look for some interesting stuff.

Lastly, I'm proud to say that our leadership in the Payment Software industry and our ability to stay on top of emerging trends around the world has helped ACI to earn recognition as one of CNBC's world's top fintech companies for 2025 and one of Time's America's best midsized companies in 2025. These 2 honors are a recognition of our continued efforts to power the global payments ecosystem with people and technology that push the envelope, that move our industry forward and that solve money movement needs for banks, merchants and billers alike. ACI Worldwide is continually committed to excellence. I want to provide a huge thank you to the entire ACI Worldwide team for helping the company earn both awards.

I'm going to turn it over to Bobby to discuss our financials and our guidance. Bobby?

Thank you, and good morning, everyone. Before I dive into our financial results and guidance, as Tom mentioned, I want to express how energized and honored I am to be part of ACI as Chief Financial Officer and to be speaking with you on my first earnings call since assuming the role on July 1.

Let me start by sharing why I joined ACI. The decision was driven by the clear potential to create meaningful long-term value for customers, employees and importantly, shareholders. That alignment is fundamental to how I lead as CFO. I was also drawn to how well positioned ACI is in a fast-moving payments industry with rising demand for secure, intelligent real-time solutions. ACI has a durable competitive advantage and is a trusted leader powering the world's payments ecosystem. Over the past month, I've been diving into the business and engaging deeply with Tom, the ACI leadership team and the financial leadership team as well as the Board. I've come away confident in the company's direction and motivated by the path ahead.

I've also spent a lot of time with Scott Barron, my predecessor, and I want to extend my appreciation for his nearly 2 decades of dedicated leadership. His commitment to financial discipline and operational rigor has helped position ACI for continued success, and I'm grateful for his support during the transition.

Looking ahead as CFO, I am committed to financial transparency, operational discipline and a proactive dialogue with the investment community. In the coming quarters, I'll be evaluating ways to enhance how we provide you even greater clarity into our progress. I believe the best outcomes originate from open data-driven discussions, and I look forward to having conversations with many of you in the months to come.

Now let's get into the financial results. I'll cover Q2 and then provide first half progress. Revenue was $401 million in Q2, growing 7% compared to last year, and recurring revenue of $322 million accelerated to 13% growth compared to last year. Total adjusted EBITDA in Q2 was $181 million, down 13% compared to last year, driven primarily by the quarterly timing of license-based contracts and Payment Software.

Turning to the segments for Q2. Growth was led by the Biller segment. Where revenue grew 16% and segment adjusted EBITDA increased 6% compared to last year. We saw particularly strong growth driven by our solutions in the government, consumer finance and utility markets. Payment Software segment revenue in Q2 declined 1% and segment adjusted EBITDA decreased 12% compared to last year. This decline year-over-year was expected and incorporated into the prior guidance given our renewal calendar and the strong new business signings we had in Q1 this year. We continue to manage the business towards our full year growth objectives and reduce the historically heavy Q4 seasonality while focusing on building sustainable revenue growth. This is shown in Payment Software's recurring revenue that accelerated to 8% growth in Q2.

Looking now at the first half of the year, revenue grew 15%, recurring revenue grew 11% and adjusted EBITDA grew 24% compared to the first 6 months of last year. Both segments contributed to growth in the first half. Payment Software segment revenue grew 18% and adjusted EBITDA grew 29% compared to the first half last year. Banking solutions saw strength across all 3 main product sets with issue and acquiring, fraud management and real-time payments all growing 20% or more for the first half of the year. Biller segment revenue in the first half grew 13% and adjusted EBITDA grew 4% compared to last year. Cash flow from operating activities in the first 6 months of this year was $128 million compared to $178 million last year, lower largely due to the timing of receivables. We ended Q2 with strong liquidity, including $190 million in cash on hand and approximately $900 million (sic) [ $904 million ] of total debt outstanding, representing a net debt leverage ratio of 1.4x.

During the quarter, we also retired our $400 million senior unsecured notes maturing in August 2026 with an updated and expanded credit facility that matures in February 2029. Tom mentioned our $119 million Q2 share repurchase. And for the first half, this brings our total share repurchases to approximately 2.7 million shares for $134 million. Exiting June this year, we have approximately $223 million remaining on our share repurchase authorization.

Based on the momentum exiting first half, we are raising our guidance for 2025. We now expect total revenue for the full year to be in the range of $1.71 billion to $1.74 billion, higher than the previously issued guidance of $1.69 billion to $1.72 billion. We expect adjusted EBITDA for the full year to be in the range of $490 million to $505 million, higher than the previously issued guidance of $480 million to $495 million. For next quarter, Q3, we're providing guidance for total revenue to be in the range of $460 million to $470 million and adjusted EBITDA to be in the range of $155 million to $165 million.

To recap, the first 2 quarters of 2025 are tracking ahead of our original expectations, and we're well positioned as we enter the second half of the year. As I hope you can tell, I'm excited to be part of the ACI team at such a pivotal time, and I look forward to helping deliver on our mission and our commitments to shareholders.

With that, I'll pass it back to Tom for some closing remarks.

Thanks, Bobby. We're pleased with our progress in 2025. We remain focused on our broader strategy on sales execution, on the development of our next-generation Connetic platform. The first half of 2025 was strong, and we're increasingly optimistic about the rest of the year as well. With our healthy pipeline and strong full year financial forecast, we're confident in our ability to continue delivering significant shareholder value.

Finally, I want to mention an upcoming event we're planning for October 21 to the 23 in New York City. We've named it Payments Unleashed, and it will be partly a celebration of 50 years of ACI payments innovation. This is our 50th year as a company. And partly, it's a thought leadership event for the payments industry, gathering some of the brightest minds in payments for 2 days of speakers, panels and topical sessions. While this is not a financial or investor-focused event per se, I think many of you will appreciate learning more about AI, stablecoin, ACI Connetic and many other hot topics in payments. If you're interested in attending, please reach out directly to John Kraft, and we'll do our best to make that happen.

Thank you for joining our call. Thank you for your interest in ACI, and thank you for your ongoing support. We really appreciate it. Operator, we can now take questions.

[Operator Instructions] Our first question today will come from Trevor Williams from Jefferies.

I wanted to go back to stablecoins, Tom. I think maybe you could just frame for us what the latest has been in the conversations that you've been having with the bank's customers. And then as a second part to that, we've seen the core processors introduce some of their own solutions to help facilitate stablecoin payments for banks. If you could remind us within the stack for a bank, just where ACI sits relative to the core and what the interplay would be if there are more interbank payments made using stablecoins.

Sure. So thanks, Trevor. So stablecoin is, as I mentioned, getting a lot of press and discussion, and it's really interesting. I think the most important points from my perspective are, one, we've been ready for digital currencies for a long time. Stablecoins are digital currency. They obviously have a little bit different backing, but the way that they are processed and let's call it, switched for a minute, just for simplicity's sake, is we're ready for that. And you asked specifically about where we sit in the stack, where we sit right, of course, right in the middle of the payments infrastructure for banks. You asked about banks. It's also a merchant issue, and we sit in the middle of that as well for the merchants.

And I think we're ready as soon as there is significant demand for stablecoin payments we're ready to facilitate it. And I mentioned specifically the real-time payments because over the last few years, we've talked a lot about real-time payments. And I think I've been -- hopefully, I've been very consistent about it. I get really excited about real-time payments when we start to talk about cross-border. And I've always said that the challenge there isn't technology because we're totally ready for that. The challenge is the regulatory environment. And stablecoin -- a very exciting thing about stablecoin is it should allow those cross-border real-time payments to be more straightforward and to get support quicker. And I think that's proving to be true. So -- and it even eliminates the FX portion of the transaction to a large extent.

So we're excited about stablecoin. We're largely ready for stablecoin transactions. And as I mentioned, we're working with a number of other players that are facilitating stablecoin or want to facilitate stablecoin to make it even easier. So this is kind of playing into our long-term strategy, particularly around real-time payments.

Okay. I appreciate all that. And then on Biller, if you guys could just help unpack the acceleration this quarter. And I think coming into the year, the expectation had been for Biller to grow within that high single-digit range. For the first half, you're running quite a bit above that. So if anything has changed on the full year expectation? And just any help on how we should think about Biller in the back half would be great.

Trevor, this is Bobby. Appreciate the question. Yes, we're very pleased with how the Biller teams come out of the year in Q2 with acceleration. Some of that you probably guess what we talked about. We saw the government area really come through with the IRS putting us in a more advantageous position there. We have seen other new logos kick in as well. For the rest of the year, we continue to see progress in there. It probably won't be at the Q2 levels, but it's still going to be strong performance that we're seeing out of that segment the rest of the year. And you'll see some of that reflected in the guidance increase for the year of $20 million that we took that up. That's in Biller, but as well as the strength in the pipeline we see in Payment Software as well.

Our next question comes from Peter Heckmann from D.A. Davidson.

Very nice bookings on the ARR side. Good to see. Can you talk about some of the areas of strength you had there and whether that was dominated by, let's say, one large deal or several large deals? Or was it pretty diversified in a number of smaller deals?

Yes. Pete, thanks for joining us. Yes, it's -- we're really pleased with the sales momentum that we're seeing really across the board. And it's not dominated by a single deal. We had a couple of nice size deals, but we also had a tail of a little bit smaller deals, so really nice mix. So nothing dominated the performance there. But as you can see, we're up over 70% year-over-year. And obviously, that will translate into benefits late this year and into next year. So it's always great when you see the sales momentum kick in and especially on the recurring revenue and ARR.

The only thing I'd add, Tom, I mean, the diversity that you mentioned, I'm staring at the top 15 of those that we did. They span all geos, merchants, banks, biller. So I was pleased with how pervasive the traction we're seeing there is.

That's great. That's great. And then can you maybe give us an update on the project within merchant to kind of further develop the software to better serve the U.S. market, if I'm correct in that assumption, can you give us an update on that?

Yes. Sure, Pete. So we've got a number of initiatives. Some of that sales momentum is coming from our merchant business. The work we're doing with merchant is tracking well as usual with these big projects. You make changes as you go along, but we're able to compete very effectively. I think I was talking about stablecoin a minute ago. You didn't ask about stablecoin, but that's -- it gets really interesting as well. I talked about real-time payments, but it's also about merchant. And great news from my perspective on that is that our merchant solutions can handle digital payments and many, many other types of payments. So as merchants -- I'm going to tie this back to your question in a second. But as merchants want to explore accepting more types of payments, more types of digital currency and particularly stablecoin, we are absolutely ready to support them, and it's kind of an exciting time.

And that isn't the reason that we -- what you're talking about wasn't specifically tied to that point about digital currency. But I think the point I'm trying to make is that we are well positioned to support customers around the world, and that's critical to be able to play a role as these types of payments become more important to the global payments ecosystem. So the short answer, which I could have just given you probably is that, that project is going just fine, and we're getting good traction with U.S. merchants as well as merchants around the world.

Our next question comes from George Sutton from Craig-Hallum.

Welcome to Bobby. Bobby, I wondered if you could just take us real quickly through what you see here relative to what you saw at Red Hat, where you saw them go from a similar high single-digit stance for growth into the teens. Do you see the same kind of dynamics here?

Yes. I think -- I appreciate the welcome. And I mean you heard in my opening comments a bit, George, on kind of how excited I am on what I've seen so far in my first month. I'll start with some of the similarities that maybe are more qualitative, and then I'll get to your quantitative part of the question. Super impressed with the passion and expertise and 50 years of history, like Tom talked about, there's a ton of expertise on why our customers are coming to us across ACI's, very similar to the passion I saw at Red Hat as well on that why and that purpose of what we're trying to do in the payment industry. The second thing on a similarity basis is going to be the trust those customers have in us. Similar to the other parts of software I've been in, we're running mission-critical systems for banks around the world.

The part of it that I think I get excited about and when I talk about the opportunities I see here in ACI, there's an operational and I think an execution opportunity ahead of us. Tom has been on this since he got here. He talks a lot about spreading out our capacity from a sales effort standpoint throughout the year of getting deals done earlier. And the byproduct of that is the net new ARRs we're seeing. So getting that engine going, getting the demand out there for our market-leading portfolio, very similar to the Red Hat side.

The other part of it, I think I spent a decent amount of time at Red Hat on this, too, really helping our external constituencies and very squarely our investor base understand the progress we're making there. So I see the opportunity on the operational side as well as being very transparent on the progress we're making for you all as we go on that journey. But excited about the acceleration opportunities that could exist.

Awesome. And then, Tom, we had to go into this quarter watching FIS and Fiserv put up pretty lousy outlooks and yours is quite separated from that. I wondered if you can give us a bigger picture kind of how you feel strategically positioned up against some of the other large payment players.

Yes. Thanks, George. So we're not -- it's not a perfect compare. Obviously, it's not even a great compare between us and those companies. We certainly watch them closely. There -- we work with them. But -- and yes, they're customers of ours, important customers of ours. But the drivers of our business are quite different, and we're not seeing -- I think the big drivers, certainly, if I think about Fiserv, there was a little weakness in the growth around Clover, and that's a completely different business from ours. So we're not seeing, obviously, that -- the weakness that they're seeing. And I mean weakness is probably not the right word. Their growth rate a little bit slower than they originally thought.

But I think we feel great about our business. We continue to solidify relationships with customers. The sales efforts are working better every quarter. Obviously, we're generating very nice cash flows and margins. We just feel really good about where our business is. It's a different business than those 2. Obviously, sometimes we get lumped in with them, and I understand that. But we have a different business, different business model and ours is working very well. That's all we can say.

Our next question comes from Charles Nabhan from Stephens.

I wanted to talk -- I wanted to ask about some of the trends underlying the strength in the backlog. Specifically, are you seeing any increase in investment on the part of governments -- or anything you could say on investment trends, competitive factors in terms of like banks investing in payment technology relative to prior years. So I'm just trying to get a sense for what's underlying that strength in the backlog this quarter.

Yes. I don't think there's a -- we haven't seen a fundamental change in the way our customers are thinking about investments. They've -- I mean, this is a really important area for all of our customers, merchants, billers and banks alike and intermediaries, processors as well. So that really hasn't changed. I don't think there's anything to point to there. I think the -- we're getting a lot of attention, not just ACI, but payments in general, getting a lot of attention, which is great. And I think I've talked for -- ever since I became the CEO, I've talked about the discussions that we have constantly with our customers about modernization, about making sure that they can bring new products to market faster, they can meet the needs of their customers. And we're able to demonstrate clearly that we can support them in doing that. And that's the story just fit. And that's -- and I think we're getting better at executing it and particularly on the sales side, on the more consultative account management side, we're getting better at it.

And so I think those are the drivers. I don't think it's a fundamental shift in investment and willingness to invest. I think that's been there. We're just -- I think we're just getting a little bit better at taking advantage of it. And the position we have in, as we say, powering the world's payments ecosystem makes us one of the usual suspects. We always pretty much always get a chance when somebody is looking to make a change.

Yes, if I could add just one comment, Chuck, on the backlog, I'm glad you brought it up. I mean, Tom mentioned it's the first time we published a backlog that starts with a $7 billion. I'm excited for that. When you get the queue, just to give you a preview of -- you're going to see equal strength across both Payment Software and Biller. And Tom covered the interplay of your question between banks and maybe governments. But really, it's around that focus on new logos and equally in a lot of cases, more important with new scope and new applications as our existing customers expand and trust us even more. So we're super excited about the health of the backlog, and it gives us confidence on the revenue increase that we provided.

Yes. Got it. And as a follow-up, I think capital flexibility is one of the aspects of the story that sometimes might fall by the wayside, but you've been pretty active on buybacks through the first half of the year. I wanted to get your -- get a little more color around your philosophy towards capital allocation entering the back half of the year, if the performance of the stock has changed your attitude towards buybacks and how you think about M&A going forward as well if that becomes a bigger part of the consideration at some point?

Yes, Chuck, so we -- as you said, flexibility is king on this. And we've -- I think we've positioned ourselves really well. We have a ton of flexibility to do what's right for the company and right for our shareholders. And obviously, we were more aggressive than we've ever been on buybacks in the second quarter, probably for some obvious reasons. We think it was attractively priced stock that we bought, and we leaned in heavily. Our capital allocation strategy hasn't changed. We want to apply investment where we can help the company grow -- profitably grow faster, and we're going to continue to do that. We have plenty of capacity to do that. And then when we find attractive M&A, that will make a lot of sense.

I think I've said many times on these calls that there are 2 primary reasons we would make an acquisition. One would be to accelerate our progress on Connetic. If we find the right company with software we like that's cloud native and multi-tenant, that would be amazing, and we look actively for those. And then the other is for geographic expansion. So there are a few areas in the world where we have a small presence, and we're interested in finding those. We look actively, but if we don't find them, then we go to the third one, which is return capital to shareholders. And the way that we've obviously chosen to do that historically is through share buybacks, and you can see that in the quarter. But we have plenty of capacity to do all of those things, and we're actively looking for the best ways to deploy the capital that we generate.

[Operator Instructions] Our next question comes from Jeff Cantwell from Seaport Research.

Tom, interesting comments on stablecoins, particularly where you see the potential adoption in certain areas like cross-border. The question I want to ask is, can you talk at all about how the unit economics stack up for you when it's a stablecoin transaction versus maybe some of the other form factors of payments you were to switch for? Are they better or are they same on average? It seems to me like maybe there's potentially some difference on a per transaction basis if you're involved with the stablecoin transaction versus maybe something like debit. So I wanted to ask, can you maybe talk through how you see that?

Sure. Yes. Thanks, Jeff. And so I'll tell you how it works today, and then I'm going to explain a little bit about how -- why that is. And why it probably will change over time. So if I think about -- if I go to my cross-border real-time payment that I was describing, that's a very interesting use case for stablecoin. And by the way, it could be the same, whether it's -- even if it's Bitcoin or a different transaction or actually any currency really. But if I look at the unit economics for ACI, a real-time payment generates significantly more revenue than a debit transaction. That was the example that you used right now. And the reason that is true is because we price our transactions, our customers buy buckets of capacity, so buckets of transactions. And when you buy -- we price on a curve. So when you buy a lot of transactions, the per transaction price will naturally be lower than if you buy a small number of transactions. So it all kind of depends on the volumes that are expected.

And so if I look at it today, I'm just going to specifically answer your question. If I look at it today, and we saw a cross-border stablecoin transaction on a real-time platform, that would be multiples of what we would charge or what a customer would pay for a debit transaction. Today, as adoption happens, obviously, they would move up the pricing curve. And so if the volumes were the same between debit and a real-time cross-border transaction, then the prices would approach each other. They would be similar. But in the -- as that ramps up, the economics are better for us.

Interesting. Okay. Great. And Bobby, welcome. I wanted to ask you one on your Q3 EBITDA guidance. Can you just walk us through the puts and takes that you see there? I wanted to better understand, you had some strong results in Q2 here. So clearly, there's some flow-through, some good momentum. But we also understand there's a lot of moving parts to this business. So curious if you can tell us more about what the major call-outs are for Q3 EBITDA and how you arrived at the guide of $155 million to $165 million. And what in your own mind puts you at the high end of that range? And what would be the main factors that will put you at the lower end of the range?

Yes. I appreciate it, Jeff. So one, like you said, we were comfortable putting out a strong Q2 -- Q3 guide based on what we see at this point. One, I mean, I'll just highlight some of the dynamics we see over the typical seasonality. We're going up almost $70 million on a quarter-to-quarter basis in our EBITDA. A lot of that's going to carry with it a much higher Payment Software revenue stream we see in the third quarter. That goes up by about a certain amount every year as we see better seasonality there in some of our deals. So that's going to carry with it a lot more contribution to the EBITDA mix we get from that part of our business.

I will say we're continuing to invest in our new platforms in these guides, things like Connetic within our sales capacity to continue to drive this. You asked specifically about what's going to be the differences within that $10 million range. It's usually going to be the uncertainty we have around when customers are going to sign those high-margin license deals. I've got a pipeline that's very strong. We're working through with the team. I feel comfortable on this where we've guided currently. And the way we're going to get towards the higher end of that is going to see a better mix of deals to flow through to the bottom line. And that's kind of what underpinned it and got me comfortable there.

Yes. And Jeff, as you know, the increment that Bobby is talking about, what would move one way or another would be new deals or additional cross-sell because obviously, the renewals, as we've said, they book when they book, when the renewal happens. This would be new. And so there's always -- it's a little bit of an art to say how much of that new business pipeline do I expect to close in Q3 versus Q4 or Q1 of next year. And that's really the factor that could move us in that range.

We have no further questions. I would like to turn the call back over to the company for any closing remarks.

All right. Well, thank you. Thanks all for joining us, of course, and for the insightful questions, and I always enjoy the engagement. We're really pleased with the results we delivered in the quarter, in the first half, and we're certainly energized about the momentum that we see for the second half of 2025. I want to just reiterate something we actually just talked about, our strategy to drive earlier contract signings is working. And when I combine that with the strong pipeline, the growing pipeline that we have, the customer demand for our Connetic platform, that reinforces the confidence we have in our path ahead, and it makes us really excited about what's coming. We appreciate your continued support. We'll obviously keep you updated on our progress, and we appreciate you and what you do to help us.

So thank you very much.

Thanks, Tom. Thanks, everyone, for attending here. We look forward to connecting with you all in the coming weeks, including at the Jefferies Conference in New York City. Tom, Bobby and I will be there on September 4. Thanks, everyone.

This concludes today's conference call. Thank you for your participation. You may now disconnect.