ACI Worldwide Increases Sales but Misses Revenue Estimate

ACI Worldwide (Nasdaq: ACIW  ) reported earnings on Feb. 28. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), ACI Worldwide missed estimates on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue expanded significantly. Non-GAAP earnings per share increased significantly. GAAP earnings per share expanded significantly.

Gross margins shrank, operating margins grew, net margins grew.

Revenue details
ACI Worldwide logged revenue of $224.1 million. The six analysts polled by S&P Capital IQ predicted a top line of $241.1 million on the same basis. GAAP reported sales were 66% higher than the prior-year quarter's $135.0 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $1.37. The five earnings estimates compiled by S&P Capital IQ anticipated $1.30 per share. Non-GAAP EPS of $1.37 for Q4 were 56% higher than the prior-year quarter's $0.88 per share. GAAP EPS of $1.24 for Q4 were 77% higher than the prior-year quarter's $0.70 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 73.0%, 370 basis points worse than the prior-year quarter. Operating margin was 33.7%, 390 basis points better than the prior-year quarter. Net margin was 22.2%, 450 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $170.6 million. On the bottom line, the average EPS estimate is $0.45.

Next year's average estimate for revenue is $780.8 million. The average EPS estimate is $2.75.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 50 members out of 62 rating the stock outperform, and 12 members rating it underperform. Among 21 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 16 give ACI Worldwide a green thumbs-up, and five give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on ACI Worldwide is hold, with an average price target of $44.57.

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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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  • Report this Comment On March 01, 2013, at 5:37 PM, fpartel wrote:

    ACIW probably qualifies as a MF "rule breaker." The firm has two gold standard payment engines. The consumer, small-value engine manages ~60% of global debit card and ATM transactions, and 23 of the 25 largest banks in the world use its high-value, wholesale system. It's technology is superb and a bank using these systems merely needs to add a front-end piece of software to manage additional devices such as smartphone mobile payments. It is also far and away ahead of every other software firm in developing a comprehensive end-for-end payments solution and will unify the product set with a common reference architecture. Virtually every hot technology company in payments that can process a complete transaction has an ACIW engine behind it. The company has been mismanaged after the founders retired but over the last 10 years it is working through its legacy issues and could very well emerge as the dominant global player in payments with double-digit growth and best in class margins. One of the emerging trends in payments is peer-to-peer transactions which disintermediate networks and clearinghouses and associated fees and tolls. ACIW engines are the only high-quality, industrial strength systems that can reliably execute these transactions. It's Money Transfer System, the high-value system has never had a failed transaction in its 3 decade plus history. After the Herstatt bank failure in the mid 70s which nearly brought the world's payment system down, central banks insist that countries wishing to enter the global economy have banks with bullet proof payments systems. That's a synonym for ACIW. ACIW systems are the only systems specified for "5 nines" payment systems. It is extremely difficult to argue that ACIW is at risk to a new and emerging disruptive technology. This is a company to watch as a serious longterm core holding. I do not have a position in ACIW.

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9/28/2016 4:00 PM
ACIW $19.30 Up +0.31 +1.63%
ACI Worldwide CAPS Rating: *****