Good day, and thank you for standing by. Welcome to the ACI Q1 earnings announcement call. Please note that today's conference is being recorded. It is now my pleasure to turn the call over to Mr. John Kraft, Senior Vice President of Strategy and Finance. Please go ahead.

Thank you, and good morning, everyone. On today's call, we will discuss the company's first quarter 2022 results and our financial outlook for the rest of the year. We will take your questions at the end. The slides that accompany 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 on the first and final pages of our presentation deck, a copy of which is available on our website and with the SEC. On this morning's call is Odilon Almeida, our President and CEO; and Scott Behrens, our CFO. With that, I'd like to turn the call over to Odilon.

Thank you, John. Hello, everyone, and thank you for joining our first quarter 2022 earnings conference call. I'm pleased with the direction and focus of the business, the execution of our strategy, and our progress in driving growth and strengthening profitability. Once again, we delivered results within our guidance and above consensus. We continue to execute on the rigorous and disciplined management processes implemented in the last two years. It is making our business more predictable and our growth momentum clear. We recorded organic revenue growth of 13% or 14% on a constant currency basis. EBITDA growth of 50% or 49% on a constant currency basis and new ARR bookings growth of 117% compared to the first quarter of 2021. We expect 2022 to be an inflection point for ACI. We will cement the foundation for accelerating growth towards the range of 7% to 9% by 2024 with gradual margin improvement. I'm pleased with our operational progress and our significant financial flexibility, which support short- and long-term profitable growth. We have continued buying back ACI shares and ended the first quarter with $178 million remaining on our share repurchase authorization. Now let me turn to some recent wins. Our Boots on the Ground strategy continues to deliver. We had wins from across Asia, the Pacific, the Middle East, Africa, Europe, Latin America, and closer to home in North America. Some examples include: Maybank is the largest financial services group in Malaysia with a strong regional footprint in Asia. Maybank partners with ACI to drive and transform the bank's increasing real-time transactions for its digital channels; we will modernize Taiwan's NCCC, the national switch, which represents 23 members; KNET, Kuwait's leading payment gateway for online transactions, will modernize its electronic banking services using ACI; Redbanc, Colombia's leading payments network, will use ACI issuing to expand services to local and regional banks. A leading global clothing merchant will use our newly launched chargeback indemnification service. Our partnership with Ellucian, the industry leader in student information systems, has resulted in the signing of 22 schools. It helps bring them into NACHA compliance while enhancing their payment offerings. In summary, we had a strong first quarter with results within our guidance and above consensus. We continue to make our business more predictable and deliver on our commitments. This quarter's strong organic revenue growth and significant new business wins demonstrate the continued execution of our Fit for Growth and Focus on Growth strategy. Regarding our third pillar, step-change value creation through M&A, we have no announcements at this time, but I can assure you that we are making progress. I will turn it over to Scott to discuss financials and forward guidance.

Thanks, Odilon, and good morning, everyone. I first plan to go through our financial results for Q1, and then provide our outlook for the rest of 2022. We'll then open the line for questions. First quarter revenue totaled $323 million, up 13% or 14% on a constant currency basis from Q1 last year. Adjusted EBITDA for the quarter was $68 million, up 50% or 49% on a constant currency basis from Q1 2021. And net new ARR bookings in Q1 were $21 million, more than double what we signed in Q1 last year. These results continue a string of quarters in which we've achieved or exceeded our financial guidance. Turning to our segment results. Bank segment revenue grew 38% or 40% on a constant currency basis to $132 million, and segment adjusted EBITDA increased 74% on both a reported and a constant currency basis versus Q1 2021. Merchant segment revenue increased 6% or 8% on a constant currency basis, while Merchant segment adjusted EBITDA was flat or down 3% on a constant currency basis versus Q1 last year. Biller segment revenue was flat with last year on a reported and a constant currency basis, and the Biller segment adjusted EBITDA decreased 23% or 22% on a constant currency basis versus Q1 2021. We ended the quarter with $115 million in cash on hand, a debt balance of $1 billion and a net debt leverage ratio of 2.4x, which is just under our 2.5x target. We repurchased 1.1 million shares during the quarter for $38 million and have $178 million remaining on our current repurchase authorization as of the end of March. And finally, turning to our outlook for 2022. We are reiterating our full year guidance and expect revenue growth to be in the mid-single digits on a constant currency basis. We're in the range of $1.415 billion to $1.435 billion. We continue to expect 2022 adjusted EBITDA of $400 million to $415 million, and this excludes one-time costs related to the move of our European data centers to the public cloud. As we've previously stated, now that our debt balances are at our leverage targets, we have revised our capital allocation priorities in the near term, increasing the expected cash flow used for repurchases to approximately 50% of our cash flow. We announced a $250 million share repurchase authorization in December with plans to use a significant portion of this in the near term. For Q2 2022, we expect revenue to be in a range of $325 million to $345 million, and adjusted EBITDA to be in a range of $55 million to $75 million. So overall, we had a strong start to the year, delivering another quarter at or above the guidance we provided, and we are on track to deliver our full year outlook. With that, I will pass it back to Odilon for some closing comments.

Thank you, Scott. We are off to a strong start in 2022. This year, we are cementing our mid-single-digit organic growth and positioning the company to deliver upper single digits by 2024. Our three-pillar strategy is working. We are making our business more predictable and delivering on our financial promises. I want to thank the ACI family for all the efforts and outcomes in Q1. We look forward to reporting on our continued progress in the next quarters. Thank you.

Your first question comes from George Sutton from Craig-Hallum.

As someone who has argued for double-digit organic growth for over a decade, the fact you've done it two quarters in a row, I have to give you credit. So I wanted to, if we could, Odilon, go more into detail on some of the segments. Banks obviously drove the results. Billers was down year-over-year. I would have anticipated Biller to be a little stronger with the modernized interface. So I just wanted to get some picture there, if we could.

Sure, George. And thanks for that. We are also very, very happy about these two quarters with double digits. And I think that's what the whole journey is about. The bank segment continues to come a little above what we expect. I think all the focus on the international areas is paying off. We see our international business growing much faster than our business in the United States and Europe at this point, and that should continue going forward. So I think it is more about sales effort than anything else. But in parallel, we have all the modernization of our offering, where we are building this next generation of cloud-native payments, which we will have a minimum viable product ready by the beginning of next year. So, I am very, very positive about the trends with banks. When you talk about Merchants, you can see that in Merchants, we are going back to an 8% constant currency basis; we believe that this segment can give double-digit growth, around 10% to low teens, I would say. If you look at the performance last year, you can see that as an improvement, and I would expect that we are well positioned this year to continue to get closer to double-digit growth. It is performing as expected. When you go to Billers, we spent a lot of time and effort migrating from the data center of Western Union last year. A lot of consolidation happened. This is still ongoing. We have a very strong pipeline in Billers and we continue to invest in this segment. You can expect that we're going to continue to invest in this segment this year. I believe that this segment is a 7% to 9% growth segment by 2024. This year, as we said last time, we are projecting around mid-digit growth. Q1 didn't come any different than what we were expecting and was close to what we were anticipating. That's why we are within guidance. So everything is on plan at this point.

As a follow-up, I know, Scott, you give real-time numbers in your Q, but we haven't seen that yet. Can you just give us an update on the real-time piece of the business?

Yes. I mean, that’s an area if you look at banks, banks have had pretty broad-based growth. It wasn't just in our traditional issuing and acquiring where the BASE24 product is. Real-time payments had over 60% revenue growth in the quarter, and our fraud detection product was in the mid-20s. So real-time is very strong and broad-based in the bank's strength in the first quarter.

Great. So real-time is up 60%. So you buried the lead again. All right.

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

I wanted to follow up a little bit on your second quarter guidance. Certainly, the revenue range is strong, indicating another good quarter. The margin range is a little bit lower than what I would have expected. And so I wanted to follow up and just see if I'm misinterpreting the mix. I guess I looked at your guidance and assumed that to get to those numbers, licenses would have to have another good quarter, maybe up 50% year-over-year. And given that, I would have expected that EBITDA margins to be more in line with the first quarter. Anything else going on that I should be thinking about in terms of margins in the second quarter?

No, nothing in particular. I wouldn't look at Q2 kind of standalone as anything. If you look at it, it’s a pretty wide range on revenue and in particular on EBITDA. We did the same thing here with Q1. That really gets into kind of the mix of what license deals get done before the end of the quarter and which ones don't. So that's kind of why we put that range in there. A lot of that license revenue would drop to EBITDA as well. But if you look at combined Q1 and Q2, first half year-over-year, that would imply the low end of the range would imply a 10% revenue growth and EBITDA growth in the mid-teens. So, I wouldn't look at anything structural with Q2 in particular. We're tracking to our expectations through mid-year.

Okay. Great. And then anything changing? This is a number of quarters in a row, very good to see, but certainly, the last two quarters have just been very, very strong from a software license fee perspective. Anything changing there in terms of the average term or anything that could be pulling some revenue forward?

No. No, nothing new. I'd say that we really saw a lot of pent-up demand, particularly on the bank side for software license in the early part of last year that really picked up in the second half. When we went out of our Q4 earnings, we said we are continuing to see that here in the first half of this year. But no, nothing that would change the structural change in our licenses. Remember, under the new rules, if you have an example renewal, you can’t recognize that until the start of the new term. So, there are no structural changes in how we're doing business.

Peter, just to complement what Scott is saying is there is an important change here, which is cultural, and it's not extrinsic to ACI; it’s intrinsic to ACI, which is our culture of accountability and operational discipline. I think that’s what you’re seeing quarter after quarter. You’re seeing us predicting numbers coming within the range above consensus after eight quarters doing the same thing and accelerating growth. That is really the change that we're seeing in the company related to the culture of accountability and the culture of operational discipline.

Your next question comes from Mayank Tandon from Needham & Company.

This is actually Sam Salvas on for Mayank today. I wanted to hit on one of the previous questions asked, just dive a little deeper there into some of the trends you guys are seeing in real-time payments. If you could also touch on some of the investments you guys are making here for future growth, that would be great.

Sure, Sam. I think real-time payments is the star, right? It is the star of the payments around the globe. It continues to grow above 40% around the globe. You have India, Brazil, China, Taiwan, and the U.K. leading the pace. As you know, we are on the board of FedNow, and we are expecting a good year in 2023 with the pilot. So you can expect that real-time payments will continue to drive growth in the payments industries going forward. That's why we are so focused on real-time payments. We will continue to invest behind that. We are winning all around the globe, sometimes with the local hub, and sometimes with the connections of the banks to the local hub. We are also moving fast in merchants for real-time payments wherever possible. I think the investment for growth in real-time payments is showing; you can see the above 60% growth this quarter. The other main belief that we have, as I said before, one of the four pillars of growth in international markets, and those international markets continue to overdeliver for us. It's all about market share, sales efficiency, and again, the culture of accountability that we are establishing. I would really emphasize the other pillars of growth: international markets, global merchants, and you have the next generation of payments. What we are building in the cloud with Azure now, we are going to have the minimum viable product for the United States by the beginning of next year, and this is going quite well. We're already talking to the banks about that. They are excited about this new technology that we are building, and that's all about the future.

Awesome. That's great to hear. And then I just had a quick follow-up. I know you guys touched on it earlier in the call, but I just wanted to ask about the M&A pipeline. What the appetite is today there? And what some potential areas of interest might be in the near term?

Yes. We have nothing to announce today, Sam. But what I can tell you is I've been spending a good amount of my time on many opportunities that we have. Some are divestitures, some are acquisitions, and all of them are accretive to the company. Again, we have nothing to announce, but there is a lot of work on that and a lot of progress.

Your next question comes from Joe Vafi from Canaccord Genuity.

This is Pallav Saini on for Joe. Odilon, how would you characterize your pipeline today from a geographic or segment perspective versus, let's say, three months ago given the macro environment? And where do you see the most opportunity to add to your pipeline as we look at the rest of the year? And I have a follow-up.

Thank you for the question. That's a great question because the pipeline is all about the future. We are following the pipeline very closely. I can tell you that our pipeline today for banks and intermediaries is significant—bigger than the pipeline that we had two quarters ago. It is significantly bigger and very focused on international markets overall as planned and expected. Also, we have a very strong pipeline of ARR in banks, which is new for us, with a lot of new logos really looking to our cloud offering. Our winning rate in our cloud offering today for new logos is significantly higher than our winning rate on-premise today, which also shows the trend of how we are investing in the future of banks and intermediaries. For banks and intermediaries, the answer is a much more significant pipeline than three or six months ago. When you talk about Merchants, that's the same case. Our pipeline is significantly better than it was three months ago or six months ago. That is a combination of the market reacting and the combination of our international expansion of Merchants. We can see, again, the pipeline in the international markets getting stronger month after month. When you go to Billers, I can tell you that we have never had this strong pipeline as we have today. I am very confident about the pipeline of Billers, and I am very confident about the signing of Billers this year. I think we are well positioned to have a record year in signings of Billers this year.

Great. That's great to hear. And any update on the crypto part of your business? What are maybe some of the opportunities there for you in the near to medium term?

Yes, this is Scott. I wouldn't say we have any particular update. Last year, we announced our partnership with RocketFuel as a partner in providing crypto as a payment option. So we're in the early months of that partnership, but nothing in particular to update on that.

And there are no further questions at this time. You may continue.

Well, thanks, everybody, for joining us today. We look forward to catching up in the coming weeks. Have a great day.

And this concludes today's conference call. Thank you all for joining. You may now disconnect.