Thank you for standing by. My name is Belinda, and I will be your conference operator today. At this time, I'd like to welcome everyone to the ACI Worldwide Conference Call. [Operator Instructions] Thank you. I'll now turn the call over to you, John Kraft. You may begin your conference.

Thank you, and good morning, everyone. On today's call, we will discuss the Company's second quarter 2023 results and 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 in 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 press 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 Scott Behrens, our CFO. Before I hand it over, I wanted to share that ACI will be attending the upcoming Canaccord Genuity Annual Growth Conference on August 8, the Wells Fargo Annual FinTech Information and Business Services Forum on August 10, and the Needham FinTech and Digital Transformation Conference on August 17. With that, I'll turn the call over to Tom.

Good morning, and thank you all for joining our second quarter 2023 earnings conference call. I will start this morning with some brief comments on the quarter and then I'll hand it over to Scott to discuss the detailed financials and the outlook for Q3 and the remainder of the year. We'll then open the line for questions as usual. First, I want to say how honored I am to have been appointed as the permanent CEO a few weeks ago. Many of you may know that I've been a fan of ACI for a very long time, even as an ACI customer before joining the Board in 2015. And over the years, I've become very familiar with our team, our mission, and our software platforms. And in a month since assuming this role, I've traveled to many countries and visited with some of our largest most innovative customers and business partners. And the feedback I have received has been incredible. The opportunities we've discussed have been inspiring and energizing, and I'm confident we have the foundation in place to lead ACI through its next chapter of growth. I look forward to working alongside this team to continue accelerating growth, optimizing our portfolio, and maximizing value for our shareholders. Now moving to the quarter, we delivered second quarter results ahead of the guidance we provided to you back in May. Our team did a great job of securing some new and expansionary wins sooner than originally expected. And our Biller business is continuing to see real traction from the initiatives we've been discussing with you. The great news about Q2's results is that signing these new contracts early has de-risked the second half by reducing the number of new wins our team needs to secure. All of this gives us…

Thanks, Tom, and good morning, everyone. I first plan to review our financial results for Q2 and then provide our outlook for the rest of 2023. Revenue in the quarter was $323 million and adjusted EBITDA was $57 million. We continue to see solid growth in our recurring revenue, which is up 7% year-to-date compared to last year. That growth is coming from a combination of customer go-lives that happened late last year that will contribute a full year benefit this year. Our pricing initiatives in our Biller segment, as well as our annual CPI uplifts on our Bank segment. So overall, a number of contributing factors that are leading to strength in recurring revenue growth. And as a reminder, from our last earnings call, that our non-recurring license fee revenue, and that's primarily coming from renewals, will be more second half weighted this year. And when those license fees come in, they have little incremental fulfillment costs, so have very high flow through to EBITDA. Turning to our segment results. Bank segment revenue was $118 million and adjusted EBITDA was $52 million. The Bank segment is predominantly on-premise license software, so those will be the most impacted by this year's timing of the renewal license fees. Merchant segment revenue was $37 million and adjusted EBITDA was $10 million and our Biller segment revenue was $169 million, which represents 5% growth over Q2 last year. And adjusted EBITDA increased 10% compared to Q2 last year. The growth in both revenue and profitability in this segment is driven by customer go-lives and we have made notable progress with our interchange improvement broadly. We ended the quarter with $132 million in cash on hand, a debt balance of just over $1 billion, and a net debt leverage ratio of 2.9 times, and we have $200 million remaining on our share repurchase authorization. Turning next to our outlook. With what we're seeing here in the first half of the year, in particular, the strength of the recurring revenue growth, we are reiterating our full year guidance with revenue in the range of $1.436 billion to $1.466 billion, and we continue to expect adjusted EBITDA to be in a range of $380 million to $395 million, with net adjusted EBITDA margin expansion. For Q3, we expect revenue to be in the range of $335 million to $345 million, and adjusted EBITDA to be in a range of $70 million to $80 million, both ranges representing solid double-digit growth compared to Q3 last year. So, in summary, we're tracking on the year as expected and I think with the particular strength that we're seeing in the underlying recurring revenue base of the business, combined with additional go-lives we expect here in 2023, our second half strength sets us up well for delivering our long-term targets of 7% to 9% growth in 2024. So, with that, I'll pass it back to Tom for some closing remarks. Tom?

Thanks, Scott. In summary, we delivered results ahead of our expectations in the second quarter. Our bookings and implementation progress provides us confidence to reiterate our forward outlook for this year and next. ACI has significant opportunity in the marketplace. With AI and real-time payments, it's certainly an exciting time to be at ACI. I am and always will be relentlessly focused on delivering shareholder value. And finally, as John mentioned, we're planning to attend several investor conferences coming up. We look forward to increasing our level of investor engagement going forward and I look forward to spending time with you. Thank you again for joining us today. We'll now open it up for Q&A.

[Operator Instructions] The first question comes from the line of Alli Heckmann from D.A. Davidson. Alli Heckmann, your line is open.

Good morning. This is Alli talking for Peter Heckmann. We had a question about, you already touched on the Merchant segment, but with revenue being kind of flattish, we wondered if you could go over new solutions and geographies where you are expecting to have success in this segment over the next two years. And do you expect accelerating growth over the next four quarters? Thankyou.

Yes, Alli. This is Scott Behrens. The short answer is, accelerating growth. We kind of had signaled that when we came out of our first quarter call, that we'd be about - we were negative first quarter, second quarter was about flat, slightly positive in terms of dollars, and that we would exit the year in kind of that mid-to-upper single-digits growth. The Merchant business is actually pretty heavily-weighted to international markets, and so I would expect that that growth is predominantly going to come from international markets over the next couple of years.

Sweet. Thank you.

Your next question comes from the line of Joseph Vafi from Canaccord. Joseph Vafi, your line is open.

Hi, guys. Nice results. And also, Tom, nice to see the updated vision here for ACI moving forward. It's great to see. So, I know you were interim CEO for a while. Now you're permanent CEO. It sounds like you've got plenty of wood to chop but, just wondering if you're contemplating any other kind of major shifts or changes or updates to the business model. Thanks a lot.

Yes, thanks, Joseph. That's - I appreciate all those comments. It's - so, as I've said a few times and I definitely want to reiterate that I think ACI's strategy is solid, and I think the team is solid. I think the business model is solid. So, you shouldn't expect to see major shifts anytime soon because we just don't need them. But what I am focused on is making sure that we are concentrating our investments and efforts in areas that are going to deliver results as fast as possible. So, one example of course being that what we've been talking about in our Biller segment, we had some challenges but big opportunities and we have - we've been laser-focused, we brought in new leaders for that space and it's really performing well. So, that is one example. But you're - getting back to your actual question, I do not anticipate major shifts. It will be more about focus and ensuring that we are concentrating in areas that are going to deliver results fast.

Thanks very much.

You're welcome. Thank you.

The next question comes from George Sutton from Craig-Hallum. George, your line is open.

Thank you. Tom, I appreciate the additional information on the segments. So, I wanted to focus specifically on Biller. Obviously, there has been a platform change. You had recent wins of some good size. You mentioned that you had another large win post-quarter. So, I wondered if you could just go through win rates and sort of opportunity sets that you're seeing in Biller relative to maybe several months ago.

Okay. Well, we haven't publicly - this is Scott. I mean we don't publish at least at this point what our win rates are. But you're right, I mean we have had success. What we haven't seen yet this year is some of the impact of some of the bigger go-lives that we see here in the second half on deals we sold last year. So, I think that the upside in Biller is kind of yet to come in terms of the performance and again, that stuff we sold last year, it was more like in the second half. The one that Tom mentioned, that signed here the 1st of July will probably more likely impact us as we get into the second half of next year, but again in terms of publishing win rates, we don't have those statistics to provide.

We do think we're taking share though or gaining share. Well, we are winning deals that we needed to win and as Scott mentioned, we got - we really haven't seen the bulk of the impact from those larger deals quite yet. The really big one we've been talking about, it is live. But it is not completely cut over, so second half, you'll see more impact than we saw in this quarter.

Again - I'm sorry.

Do we have any more questions? Is anybody there?

Yes, I'm here.

Is there a follow-up?

As there are no further questions at this time, I turn the call back over to you, John Kraft.

Alright. Thanks, Linda. Thanks everybody for joining us. We look forward to catching up in the coming weeks. Have a great day.

Thanks.

This concludes today's conference. You may now disconnect.