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Payments technology firm ACI Worldwide, which provides retail and wholesale banking products as well as retailer-focused software and hardware solutions, announced Q2 2016 results that were in-line with expectations during its earnings call last week.
But the firm’s software-as-a-service (SaaS) and other high growth offerings were highlights in the call, which indicates success in the firm’s ongoing plan to transform its business to embrace and stay ahead of the digital disruption of the payments industry.
Gains in high-growth segments points to ACI’s clients’ shifting demand for digital solutions. SaaS-specific bookings, which now comprise 50% of the firm’s backlog, grew by 16% in Q2 and 23% year-to-date. For context, on-premise software bookings decreased by 26% in the quarter.
The strong market demand for SaaS offerings, especially compared to on-premise bookings, indicates that ACI’s customers are seeking the efficiency, convenience, and security of digital offerings. That’s in line with larger industry trends, where major payments firms are becoming increasingly focused on software and services in order to diversify revenue moving forward.
The firm’s ongoing emphasis on high-growth areas rather than legacy business seems to be paying off. In January, ACI sold off its community banking division to Fiserv as part of a move to increase its focus on its most strategic initiatives, like e-commerce and real-time payments. The performance of newer digital-focused segments relative to the firm’s traditional business points to the ways this shift is already helping ACI’s performance.
It’s likely that as the firm allocates more resources to these areas through new initiatives, like a comprehensive European data center nearly ready to launch and new digital acquisitions, it will begin to see these services overtaking legacy offerings and driving business.
ACI Worldwide […]
