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ACI Worldwide Inc (ACIW) Q4 2020 Earnings Call Transcript

By Motley Fool Transcribers - Jan 29, 2021 at 6:30AM

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ACIW earnings call for the period ending December 31, 2020.

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ACI Worldwide Inc (ACIW -3.08%)
Q4 2020 Earnings Call
Jan 28, 2021, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

And Mr Kraft, you may begin.

John Kraft -- Vice President, Investor Relations

Good morning, I'm joined this morning by Odilon Almeida, our President and CEO; and Scott Behrens, our CFO.

Before we begin, please take note of the forward-looking statement disclaimer, included in our press release issued yesterday and filed with the SEC. We will make forward-looking statements on today's call. Forward-looking statements inherently involve risks and uncertainties, and reflect our view as of today and we are under no obligation to update. In addition, the 2020 amounts discussed today, are preliminary unaudited estimates based on currently available information, and are subject to change, as we complete our year-end accounting procedures and our audited financial statements. We expect to announce our audited 2020 results in the second half of February 2021.

With that, I'll turn it over to Odilon.

Odilon Almeida -- President and Chief Executive Officer

Thank you, John. Hello, everyone, and thank you for joining our call. At our Analyst Day in November, I shared with you my strong belief in the significant value creation potential of ACI. And every day, as we work to capture this potential through the execution of our clearly defined three pillar strategy, my confidence continues to grow.

Today, I'm pleased to provide an update on the company's performance, outlook and the improvement initiatives we announced in November. While we laid out these plans only a few months ago, the foundation for the new ACI, as well as a new laser focus on overall costs, began earlier in 2020. AsScott will discuss in a minute, our focus on maximizing profitability led us to deliver significant year-over-year EBITDA growth and margin improvement, all despite continued COVID impact.

Looking to 2021, we are making significant progress advancing our three pillars; fit for growth, focus on growth and step change value creation initiatives. On January 1, 2021, we launched our fit for growth organizational plan to become a more nimble and agile company. These changes included flattening our organizational structure to centralized sales, furthering our goal of becoming a best-in-class sales organization. We have hired experienced senior management talent and in October 2020, expanded our Board of Directors. We are already seeing the benefits this new structure provides, like faster decision-making and increased responsiveness to our customers.

For our focus on growth initiative, we reevaluated our investment spend then begin to reallocate funds to R&D, selling and marketing, in more targeted markets, where we expect to experience the most growth. Specifically, we see significant opportunity in real time payments, e-commerce with large sophisticated global merchants, and fast growing emerging markets. Over the past several months and into 2021, we are increasing our sales and marketing investment by 25% and increasing the number of sales associates by 35%.

And finally, although our third pillar Step Change Value Creation through M&A, we continue to evaluate opportunities for accretive transactions, as well as opportunities to divest underperforming assets.

With that, I will turn it over to Scott to discuss the financials.

Scott Behrens -- Chief Financial Officer

Thanks Odilon and good morning everyone. As outlined in our press release and based on preliminary information available at this time. We currently expect revenue for the year ended December 31, 2020 of between $1.28 billion and $1.295 billion up slightly over 2019 and adjusted EBITDA between $350 million and $360 million, up double digits over 2019. As Odilon said, we've been very focused on overall costs and maximizing profitability and we are pleased with these results.

Today, we are reaffirming our long-term outlook of mid single-digit organic revenue growth, and gradual net adjusted EBITDA margin improvement annually, as discussed in our November 2020 Analyst Day. While we currently expect COVID-19 related headwinds to persist through the first half of 2021, we expect growth to accelerate in the second half of the year. We'll provide you with a detailed of 2021 guidance on the company's Q4 2020 earnings call later in February.

Turning to our Rule of 40 metric, which we outlined at our November Analyst Day and is defined as the combined total company revenue growth and net adjusted EBITDA margin. In 2019, prior to COVID-19 and our new ACI strategic plan, our Rule of 40 score was 19%. As a result of the cost rationalization efforts we made in 2020, and the revenue acceleration we expect this year, we will achieve the Rule of 40 for the first time in 2021. We are very proud of this significant achievement.

In summary, we're happy about our performance in 2020 and we're expecting 2021 to be an important milestone year.

I will now hand it back over to Odilon for some closing comments. Odilon?

Odilon Almeida -- President and Chief Executive Officer

Thanks Scott. While it is too early in 2021, we are confident that our strategy is already making headway and we remain confident that we are well positioned to excel within our new organizational model. Above all, we know that we have the right team in place to continue to accelerate revenue growth and deliver transformational long-term value to our shareholders.

As you know we are in a quiet period and we will not be taking questions today. We look forward to speaking with you again next month when we announce our final Q4 and full year 2020 results. Thank you.

Operator

[Operator Closing Remarks].

Questions and Answers:

Duration: 6 minutes

Call participants:

John Kraft -- Vice President, Investor Relations

Odilon Almeida -- President and Chief Executive Officer

Scott Behrens -- Chief Financial Officer

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