ACI Worldwide, Inc. reports 1,242% Net Income growth in 2018 and 3.9 pp EBITDA Margin growth from 18.2% to 22.1%
02/28/2019 • About ACI Worldwide, Inc. (
$ACIW) • By InTwits
ACI Worldwide, Inc. reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- ACI Worldwide, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.5%. At the same time it's a lot of higher than industry average of 3.1%.
- CAPEX is quite volatile: $18m in 2018, $26m in 2017, $41m in 2016, $27m in 2015, $18m in 2014
- In the last 5 years the company invested considerably less than D&A: $130m vs. $487m. In 2018 this situation was still the same: CAPEX was 18 while D&A was 97
- The company has business model with low profitability: ROIC is 8.0%
- It operates with medium-size leverage: Net Debt/EBITDA is 2.3x while industry average is -2.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
ACI Worldwide, Inc.'s Revenue decreased slightly on 1.4%. Revenue decline showed acceleration in 18Q4 - it was 2.0% YoY. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 3.9 pp from 18.2% to 22.1% in 2018.
Gross Margin increased slightly on 1.5 pp from 55.8% to 57.4% in 2018. During 2014-2018 Gross Margin bottomed in 2015 at 54.8% and was growing since that time. SG&A as a % of Revenue decreased on 3.2 pp from 25.5% to 22.3% in 2018. During 2014-2018 SG&A as a % of Revenue topped in 2017 at 25.5%. Stock Based Compensation (SBC) as a % of Revenue increased slightly on 0.68 pp from 1.3% to 2.0% in 2018.
Net Income margin increased on 6.3 pp from 0.50% to 6.8% in 2018. The efficient tax rate was 24.9% in 2018 while the average for the last five years was 33.1%.
Investments (CAPEX, working capital and M&A)
ACI Worldwide, Inc.'s CAPEX/Revenue was 1.8% in 2018. The company's CAPEX/Revenue decreased slightly on 0.80 pp from 2.6% in 2015 to 1.8% in 2018. It's average CAPEX/Revenue for the last three years was 2.8%. During 2014-2018 CAPEX as a % of Revenue topped in 2016 at 4.1% and was declining since that time.
Accounts receivable as a % of Revenue increased on 8.8 pp from 25.7% to 34.5% in 2018. Accounts payable as a % of Revenue increased slightly on 1.5 pp from 7.7% to 9.2% in 2018.
Return on investment
The company operates at low ROIC (8.0%) and ROE (7.6%). ROIC increased on 2.1 pp from 5.9% to 8.0% in 2018. ROE increased on 6.9 pp from 0.68% to 7.6% in 2018.
Leverage (Debt)
Debt level is 2.3x Net Debt / EBITDA and 3.0x Debt / EBITDA. Net Debt / EBITDA dropped on 1.0x from 3.3x to 2.3x in 2018. Debt decreased on 2.0% while cash surged on 113%.
ACI Worldwide, Inc. has good short term financial stability: Interest coverage ratio (ICR) is 3.0x. ACI Worldwide, Inc. has no short term refinancing risk: cash is higher than short term debt (715.1%).
Average interest expence paid by the company was 6.2% in 2018.
Valuation and dividends
The company's trades at EV/EBITDA 18.6x and P/E 52.6x.
Management team
The company's CEO is Philip G Heasley "Phil". Philip G Heasley "Phil" is a founder and has 14 years tenure with the company. CEO total compensation was
$5,956,791 in 2018 which included
$720,000 salary. ACI Worldwide, Inc.'s CFO is Scott W Behrens. Scott W Behrens has 12 years tenure at the company.
2.7% of the company is owned by insiders. Insider ownership didn't change in 2018.
The company has 3,807 employees. The number of employees decreased on 4.3%. Average revenue per employee in 2018 was
$265,243 and it increased on 3.0%.
Financial and operational results
FY ended 12/31/2018
ACI Worldwide, Inc. ($ACIW) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 1,016 | 1,046 | 1,006 | 1,024 | 1,010 | -1.4% |
| Gross Profit | 561 | 574 | 561 | 572 | 579 | 1.3% |
| SG&A | 207 | 217 | 232 | 261 | 225 | -13.6% |
| EBITDA | 225 | 225 | 325 | 187 | 223 | 19.5% |
| EBIT | 138 | 128 | 221 | 85 | 126 | 48.8% |
| Interest expence | 40 | 41 | 40 | 39 | 42 | 6.5% |
| Tax | 31 | 28 | 56 | 38 | 23 | -40.5% |
| Net Income | 68 | 85 | 130 | 5 | 69 | 1,242.2% |
| Stock Based Compensation | -1 | 13 | 44 | 14 | 20 | 48.8% |
Balance Sheet
|
|---|
| Cash | 77 | 102 | 76 | 70 | 149 | 113.0% |
| Accounts Receivable | 227 | 219 | 268 | 263 | 348 | 32.5% |
| Accounts Payable | 50 | 55 | 43 | 35 | 40 | 14.1% |
| Short Term Debt | 87 | 90 | 90 | 18 | 21 | 16.8% |
| Long Term Debt | 805 | 834 | 654 | 668 | 651 | -2.5% |
Cash flow
|
|---|
| Capex | 18 | 27 | 41 | 26 | 18 | -29.0% |
| Acquisitions | 204 | 179 | -0 | | | |
Ratios
|
|---|
| Revenue growth | 17.5% | 2.9% | -3.9% | 1.8% | -1.4% | |
| EBITDA growth | 16.5% | 0.2% | 44.0% | -42.4% | 19.5% | |
|
|---|
| Gross Margin | 55.2% | 54.8% | 55.8% | 55.8% | 57.4% | 1.5% |
| EBITDA Margin | 22.1% | 21.5% | 32.3% | 18.2% | 22.1% | 3.9% |
| EBIT Margin | 13.6% | 12.2% | 22.0% | 8.3% | 12.5% | 4.2% |
| SG&A, % of revenue | 20.4% | 20.7% | 23.0% | 25.5% | 22.3% | -3.2% |
| SBC, % of revenue | -0.1% | 1.3% | 4.3% | 1.3% | 2.0% | 0.7% |
| Net Income Margin | 6.6% | 8.2% | 12.9% | 0.5% | 6.8% | 6.3% |
| CAPEX, % of revenue | 1.7% | 2.6% | 4.1% | 2.5% | 1.8% | -0.7% |
|
|---|
| ROIC | 10.3% | 8.7% | 14.8% | 5.9% | 8.0% | 2.1% |
| ROE | 12.0% | 13.8% | 18.4% | 0.7% | 7.6% | 6.9% |
| Net Debt/EBITDA | 3.6x | 3.6x | 2.1x | 3.3x | 2.3x | -1.0x |
| Interest coverage ratio (ICR) | 3.5x | 3.1x | 5.5x | 2.2x | 3.0x | 0.9x |
| Interest expence / Average debt | 4.5% | 4.6% | 4.8% | 5.5% | 6.2% | 0.7% |
People
|
|---|
| Insider ownership | 2.7% | 2.7% | 2.7% | 2.7% | 2.7% | 0.0% |
| Employees | 4,472 | 4,576 | 4,111 | 3,979 | 3,807 | -4.3% |
| Revenue/Employee, th. $ | 227 | 229 | 245 | 257 | 265 | 3.0% |
ACI Worldwide, Inc. ($ACIW) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 209 | 235 | 246 | 320 | | -9.6% | -2.3% | 8.8% | -2.0% |
| EBITDA | 8 | 22 | 52 | 141 | | -71.7% | | 40.4% | 5.5% |
| Net Income | -19 | -15 | 15 | 88 | | | | 349.6% | 164.4% |
Balance Sheet
|
|---|
| Cash | 74 | 59 | 76 | 149 | | -25.5% | -38.1% | 12.4% | 113.0% |
| Short Term Debt | 20 | 23 | 19 | 21 | | 15.1% | 29.3% | 5.6% | 16.8% |
| Long Term Debt | 659 | 655 | 656 | 651 | | -3.0% | -3.0% | -2.7% | -2.5% |
Ratios
|
|---|
| Gross Margin | 48.7% | 50.5% | 58.3% | 67.4% | | -4.4% | 0.6% | 5.8% | 2.9% |
| EBITDA Margin | 4.0% | 9.4% | 21.1% | 44.0% | | -8.7% | 14.8% | 4.8% | 3.1% |
| Net Income Margin | -9.3% | -6.2% | 6.2% | 27.4% | | -8.6% | 6.2% | 4.7% | 17.2% |
Peers in Application Software
Below we provide ACI Worldwide, Inc. benchmarking against other companies in Application Software industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| nFusz Inc ($FUSZ) | | | | | 433.3% |
| CloudCommerce Inc ($CLWD) | | -38.1% | 247.6% | 40.9% | 301.1% |
| Seven Stars Cloud Group, Inc. ($SSC) | | 134.7% | 663.8% | 310.3% | 161.7% |
| Aurora Mobile Limited ($JG) | | | | 304.9% | 150.8% |
| Intelligent Systems Corporation ($INS) | | 14.2% | 71.0% | 12.2% | 119.0% |
| |
|---|
| Median (151 companies) | -43.3% | 14.0% | 14.3% | 15.7% | 15.2% |
|---|
| ACI Worldwide, Inc. ($ACIW) | | 2.9% | -3.9% | 1.8% | -1.4% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Skkynet Cloud Systems Inc ($SKKY) | 99.7% | 97.4% | 98.0% | 97.6% | 96.5% |
| hopTo Inc ($HPTO) | 91.8% | 87.8% | 95.9% | 98.2% | 95.4% |
| Aware, Inc. ($AWRE) | 75.4% | 87.2% | 90.3% | 94.6% | 92.3% |
| Alteryx, Inc. ($AYX) | 77.5% | 80.5% | 81.3% | 83.4% | 91.0% |
| Aspen Technology, Inc. ($AZPN) | 86.5% | 88.7% | 89.7% | 90.2% | 89.9% |
| |
|---|
| Median (150 companies) | 63.4% | 61.9% | 64.2% | 64.6% | 66.1% |
|---|
| ACI Worldwide, Inc. ($ACIW) | 55.2% | 54.8% | 55.8% | 55.8% | 57.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Aspen Technology, Inc. ($AZPN) | 34.5% | 42.2% | 46.0% | 45.2% | 43.3% |
| ANSYS, Inc. ($ANSS) | 45.9% | 45.8% | 45.1% | 41.9% | 41.4% |
| Paycom Software, Inc. ($PAYC) | 15.1% | 19.5% | 35.1% | 34.4% | 35.9% |
| j2 Global, Inc. ($JCOM) | 41.6% | 40.6% | 41.7% | 36.5% | 35.7% |
| Adobe Inc. ($ADBE) | 17.5% | 25.9% | 31.2% | 34.2% | 35.3% |
| |
|---|
| Median (152 companies) | -10.3% | -10.7% | -5.3% | -4.2% | -3.3% |
|---|
| ACI Worldwide, Inc. ($ACIW) | 22.1% | 21.5% | 32.3% | 18.2% | 22.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| TimefireVR Inc ($TFVR) | 0.0% | 350.5% | 4.3% | | 1,021.9% |
| MGT Capital Investments Inc ($MGTI) | 0.0% | 36.5% | 221.4% | 129.8% | 344.5% |
| Integrated Ventures Inc ($INTV) | | | | | 199.9% |
| ShotSpotter, Inc. ($SSTI) | | 18.3% | 28.9% | 27.1% | 24.3% |
| Ellie Mae, Inc. ($ELLI) | 12.3% | 20.6% | 16.7% | 21.1% | 19.4% |
| |
|---|
| Median (153 companies) | 2.8% | 2.7% | 2.9% | 2.3% | 2.4% |
|---|
| ACI Worldwide, Inc. ($ACIW) | 1.7% | 2.6% | 4.1% | 2.5% | 1.8% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| InsPro Technologies Corp ($ITCC) | -558.9% | | | | 127.4% |
| Manhattan Associates, Inc. ($MANH) | 64.8% | 78.7% | 99.3% | 102.5% | 80.9% |
| Intuit Inc. ($INTU) | 34.2% | 23.7% | 52.1% | 72.6% | 66.8% |
| Aspen Technology, Inc. ($AZPN) | 133.4% | | | | 58.1% |
| Paycom Software, Inc. ($PAYC) | 16.7% | 30.5% | 75.4% | 51.1% | 47.5% |
| |
|---|
| Median (179 companies) | -14.4% | -13.1% | -9.8% | -11.8% | -10.4% |
|---|
| ACI Worldwide, Inc. ($ACIW) | 10.3% | 8.7% | 14.8% | 5.9% | 8.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Upland Software, Inc. ($UPLD) | | | 16.4x | 115.6x | 16.7x |
| Nuance Communications, Inc. ($NUAN) | 7.9x | 5.7x | 5.3x | 7.1x | 15.2x |
| Asure Software Inc ($ASUR) | 3.4x | 4.5x | 3.6x | 9.5x | 14.5x |
| SS&C Technologies Holdings, Inc. ($SSNC) | 1.7x | 7.3x | 4.6x | 3.1x | 8.5x |
| Avaya Holdings Corp. ($AVYA) | | | | | 7.4x |
| |
|---|
| Median (69 companies) | -1.4x | -1.0x | -0.9x | -0.9x | -0.7x |
|---|
| ACI Worldwide, Inc. ($ACIW) | 3.6x | 3.6x | 2.1x | 3.3x | 2.3x |
