ACI Worldwide, Inc. (ACIW) Earnings Call Transcript & Summary

Welcome to the ACI Worldwide's Analyst Briefing 2021. Please welcome ACI's Head of Strategy and Finance, John Kraft.

Good morning, everyone. So nice to see live people, friendly faces. And welcome to everybody that's listening and watching virtually. We're very excited to be here today. It's been a year since we last talked to you. We introduced Odilon and his 3-pillar strategy a year ago, and we've come a long way towards accelerating organic growth and creating long- and short-term shareholder value. You'll hear more about that today from the team. We've got a lot of great content. At the end, we'll have lunch. We should be able to get you out of here at least done with lunch around newish. And with that, I'll turn it over to Odilon.

Thank you, John. I'd like just to repeat what you said. It's quite [ rare ] to see here a room full of people. I'm not used to that anymore. And knowing that there is even more people watching us now virtually, it's really something, feels like this hybrid world that we are living today came to stay, and it's going to be the new reality and we will shape our future. And talking about shaping the future, I don't know if you noticed that, but this is not an auditorium and this is not in a studio, it's something in between. This means that this hybrid world is really already shaping our future. And that's my segue to talk to you about our global industry, the global payments industry. Real-time payments will shape the future and is shaping right now the future of the global payments industry. If you go to Brazil, if you go to India, if you go to U.K., you can see it alive, changing the way that people behave, not only pay, not only receive payments but also behave. And this is the first takeaway that I would like to propose to you today. The first takeaway that you're going to see during the whole presentation is Real-Time Payments will shape the future of global payments. It's a reality now in some places, and it will become a global reality in 5, 10 years from now. And that ACI is very well positioned to lead the way through Real-Time Payments. We are well positioned today, and we're investing heavily to be even in a better situation in the future. The second takeaway that we would like to propose to you, very different than previous year for the ones that were in our last Investor Day, we came and we presented the 3-pillar strategy, and we committed to take the company from no growth to mid-digit growth. We're in a different stage now. The 3-pillar strategy is working, and we are achieving mid-digit growth. And then the question is what is next? But the second one is we have momentum now different than 1 year ago. And the third one is that step change value creation is not something that we do by the side. It is an intrinsic part of our strategy, is the third pillar. And the company has a great track record on that. It has done that before. And under my helmet, we will continue to do it going forward. Let me start with Real-Time Payments. Real-Time Payment is in the center of ACI and will be more and more in our center. If I take a photo now and if you take a photo in 5 or 10 years from now, ACI today is leading the path to Real-Time Payments. In 5 or 10 years, I would like you to think about ACI and think about Real-Time Payments right away. It is a global race. It is about occupying the spaces occupying the territories, and we are raising fast. Our mission is all about that. Our purpose is all about that. We believe that Real-Time Payments will create global prosperity and it is happening now in some countries already, and we accelerate global commerce. 20 months ago when I joined the company or just before that, I remember that I started to study ACI, and I was not very aware of ACI, to tell you the truth. And when I start to try to understand what ACI is and what ACI does, it was very complicated. It is too complicated to tell you the truth, but it was even more complicated by that time. I remember hearing about 6 solutions, 3 segments, 2 ways of delivery, 1 company, and I was like, so what do we do? It is complex. And we can be, I would say, very clear and specific if we talk by segment. I'm not going to do that. I'll leave that to the segment leaders to explain to you exactly what we do by segments. But if you go at the level of the company, there are some concepts that are very simple and real. Number one, we are a global software company. And people talk about SaaS about PaaS. What we do is we create value to our shareholders and to our customers by writing software and applying software. It's an important definition because if you look at our multiple today and multiple of software companies, we are not there. So there is a lot of room in that direction. That's number one. Number two, our software powers critical -- mission-critical payment systems around the globe. We are not something by the side. We are the core of that payment systems in every segment that we hold there. So if our software doesn't work, everybody has a problem. And that's very important because that makes us resilient in the clients and within the market ecosystem. And number three, we serve large corporations, those big banks around the globe, but we also serve fintechs. We also serve local disruptors. So when you invest at ACI, you're not investing on establishment only. You're investing in the future, you're investing in disruptors, you're investing on fintechs because we reach them all. I could talk to you now about some numbers and some facts. The reality is we have a very strong presence. We are all around the globe, but the numbers are significant. So we are not a start up. We are not -- we are a proven company that has been doing -- been serving our clients for a while with a very strong footprint. But instead of telling you more, let me show you. So I think we have some slides, right? Yeah, okay. [Presentation]

Yes. The map -- the map is blue, our global reach is impressive, but that's not our secret sauce. Our secret sauce is the combination between this global reach and the local presence. We speak the language. We know the localization of the softwares. We know the regulation, and that's what is valued the most from our clients here. So when you are in Argentina, when you are in South Africa, we know what we are talking about. We understand the market environment. And we can link that into our global scale and into our global knowledge. And I think this has been and will continue to be the secret sauce for ACI. When you talk about the global reach, we are very fortunate. Our market is huge, and it is a growing market. You don't have lots of markets like that, that size that grow this much. And that's the kind of environment that we are in, which is very significant. And if you think about the dynamics within this -- if you think about the dynamics within this market, you can see that Real-Time Payments is really leading the way. Last year, Real-Time Payments grew by 41% versus cards, 8% and cash minus 6%. During -- yesterday a conversation with one of you, there was a question about a cashless society, what is going to happen with the cards. I don't believe on a cashless society. I think cash is a great product. If you go to the Nordics today, you're going to see that cash still represents around 35% of the transactions. If you go to Africa, it's 95% of the transactions. So that will continue, but it's not going to grow anymore. I think it's going to be flat. It's going to -- so there's no growth in cash. If you think about cards, again, excellent product, tremendous infrastructure around the globe. It will continue to grow. I think, in the next 5 years, in the next 10 years, but it's not going to grow the 40% of 40 years ago. It may grow 8%, 9%, 10%, 11%, 12%, 6% who knows, it will continue to grow, but the explosive growth will be behind Real-Time Payments. And that's why I'm saying that Real-Time Payments will shape the industry because it's all about growth. Investments, most of the time, they don't come behind establishment. They come behind growth. And you're going to see a lot of investment behind Real-Time Payments, and we are going to get to a virtual cycle, that investment nurtures the trend and the power of the product itself. Again, it's already happened in some places. In U.S.A., that comes probably to your mind, U.S.A. will catch up as every country has catch up in the past. We are very well positioned if we think technology in Real-Time Payments. We have a complete offering today. We have On Premise, we have with our private cloud, we have our public cloud. But we are not stopping there. You're going to listen to much more in detail today how we are aiming to build the next-generation Real-Time Payments cloud. We're investing in that right now. And it's not catching up. It's really leapfrogging and going to the next step of payments around the globe. This chart is a lot of numbers. And I could talk to you about the numbers, but it's not really about the numbers. The message is not about the numbers Yes, we gained 150 basis points of margin in 2020, and we grew EBITDA by 17% in a COVID year. Yes, we are now growing and now we're growing 5%. Yes, for the first time, we are achieving the Rule of 40, not 40%, but 42%. But I'd like to relate to you on a story that happened -- new story that happened with me 2 weeks ago, I was with John in a call with an investor, an investor that we have been talking for like 2 or 3 years that have not made a position by that time in our company. And he started the call saying, "I just want to start the call saying that we are building a position on ACI. And we were surprised. And then I think John, I don't remember, we asked why? And he said, we had a conversation 1 year ago, and I remember it was May or June last year. And you guys told me a series of things that you would do. And we take notes and we are checking our notes and they're able to check all the points. So this chart in reality is not about the numbers about credibility. It's about being able to forecast and deliver. It's about delivering the last -- all the last quarters within guidance or above guidance. And that's what you can expect from this leadership team. We will be very transparent and tell you ahead what we know and what we don't know about the business. So going back to our strategy. I'm not going to spend a lot of your time on that because you're going to be spending the whole -- the whole morning here today, listening about fit for growth, about focus on growth, about step-change value creation. And there is no better people to talk to you about that then the ones that are making it happen. So we're going to start with Fit for Growth. We're going to have Tony Dinkins talking about our organization, then it's going to be followed by Eve Aretakis talking about how Fit for Growth goes into the commercial area. Then we are going to move to focus on growth with Jeremy Wilmot, Sanjay Gupta, Debbie Guerra, Sam Jawad and Ram Puppala. After that, we're going to move to the step-change value creation with Craig Maki. And then you're going to see a well-known face, Scott Behrens, our CFO, who's going to come and really wrap up of everything related to shareholder return. So with no more, I'd like to really thank you for being here today. I know that we are in this moment now of precision, not presential. And you took the initiative of coming and we very much appreciate that. But we also appreciate the ones that are watching us now virtually. So thank you very much for coming. So with no more, let me pass the ball to Tony Dinkins.

Good morning. Good morning. Good morning. I'm so happy to be here you today, and thank you for joining us. My name is Tony Dinkins, and I'm the Chief Human Resources Officer for ACI Worldwide. My job is to make sure that we have the human capital foundation and strategies to accelerate our growth. Some of you may recall, in January, we moved from 2 business units to 1 functional model. This is a simpler and more efficient operating model that's agile and nimble. It's a functional model that is unleashing ACI's rapid growth potential. Some of the benefits we expected and we're seeing from this functional model include our ability to seize commercial opportunities ahead of the competition and accelerate innovation cycles. We've clarified our P&L accountabilities for our key growth segments that you'll hear about later, Merchants, Billers and Banks. And most important to me, we're leveraging our talent to provide opportunities to stretch and grow our ACIers. We put in place operational discipline to help drive accountability, one of our values. Accountability and agility means for us less layers, broader spans of controls and individual empowerment. We're seeing the results in maintaining our lower layers, less layers in the organization and broader spans of control, averaging 8 or more. But we also have less senior levels. We're less top-heavy. We're only 6% of our population being at the director and above. And we've identified and eliminated some redundant and shadow functions and roles. As previously suggested, we put in some governance and some guidelines to ensure that we have discipline in our organizational model. That's done through something that we call a Fit for Growth review board that's led by our new Chief Strategy and Transformation Officer and myself, where we have weekly cross-functional reviews of our org structure, along with our operational leaders. We also are producing monthly dashboards that track our key metrics against Fit for Growth, and we put in tight controls to approve and maintain the integrity of our Fit for Growth design principles. But we've not just focused on efficiency. We're also focusing on investment. And as a byproduct of our Fit for Growth initiatives, we've captured $60 million, yes, $60 million in annual cost savings. And we've done this by elimination of redundant costs, streamlining our layers of management and redefining our processes and optimizing our facilities. We've completely realigned our biller data center after the Speedpay acquisition. Now a portion of those cost savings have already been reinvested in growth initiatives via increased sales and marketing and R&D as well as delivering on improved profitability. This focus of reinvestment is in Real-Time Payments, global merchants and emerging markets. Our Fit for Growth model has created for us human capital optimization opportunities. And we've done some strategic hires in key leadership roles to improve our bench strength. Roles like our new Chief Technology and Operations Officer, Ram Puppala; Sam Jawad, who leads our Banking segment. We have a new Chief Strategy and Transformation Officer and a new Chief Risk and Compliance Officer. We have a new Head of Communications and Brand, a new Head of International Sales, a new Head of Product Management and Marketing for Latin America. And yes, I just joined only a year ago myself. So we've really bolstered our leadership team but we've also done that by identifying skill gaps and adding key leaders in nearly every function in ACI. And we're leveraging our existing ACI talent by enhancing some roles and empowering them to support our business even more. Leaders like Eve Aretakis, our Chief Revenue Officer; and Jeremy Wilmot, our Chief Product Officer. We have a new Head of Revenue growth and a new Head of Customer Success. We have a new Head of Latin America sales, and we've consolidated all of our global financial planning analysis under 1 leader. Effectively, we created pull up opportunities for our strong ACI talent. And that shows with nearly 15% of our ACIers having been promoted and another 10% of our ACIers taking on internal development and stretch opportunities this past year alone. But in addition, more than 800 talented individuals have joined ACI year-to-date. And we talked about how global we are. Of those 800, 67% have been international, with 28% in being in EMEA and Asia Pacific, respectively, and another 10% in Latin America. And a significant number of those hires are also in commercial and in our technology and operations organization. This is a new ACI. In 2021, ACI introduced some new core values and took steps to bring those values to life through our actions. We introduced something that we call the ACI Growth team. This growth team is driving accountability, integrity and customer centricity, our values throughout the organization. There are 26 leaders in this growth team that are committed to ACI's transformation into a powerful and empowered and aligned team to achieve unprecedented results over the next 3 years. And soon, we'll be adding an additional 60 leaders as part of our critical contributors to this growth team. But that's not where we stop. ACI is also committed to initiatives that support ESG principles. And we strive and we achieve having a global diverse workshop. We've talked a lot about being global in our presence worldwide is in our name. And ACI has 60% of all of our employees who are based, living and working outside of the United States. We also are proud to say that 34% of our workforce are female and even more proud to say that nearly 1/3, 32% of our global executive team are also females. We continue to be focused, however, on leveraging our diversity to make sharper and more inclusive business decisions. And in 2022, we will be launching something we're calling our diverse leadership program RISE. We also are prioritizing the well-being of our ACI and our ACIers. And in 2021, we had an employee engagement survey that had 80% participation, and we're happy to say a 75% overall engagement score. Some of the words that were used in that survey that described our culture include flexible, collaborative, growth, diverse, inclusive and supportive. But we're also developing and preparing our talent for the future. And we are introducing several public cloud Microsoft enterprise skills initiatives to leverage our growth and opportunities. And we've established a public cloud champions program for our peers in ACI to travel that journey together onto their public cloud certification. Customer centricity is not just one of our values, but it's at the heart of everything we do. And our Fit for Growth org model and talent strategy all serve are closer to the customer commitment by empowering those close to the customer to make decisions that support our goals. We are a new ACI, inspired, engaged and excited about the future. Up next, my colleague, Eve Aretakis will tell you more about the impact of our Fit for Growth pillar in our commercial function. Eve?

Good morning. Thanks, Tony. As Tony mentioned, I'm Eve Aretakis. I'm the Chief Revenue Officer, and I'm excited to share with you today some of the things that we've done to enable our global go-to-market and really deliver and capitalize on growth opportunities. And I'm very excited to talk about not only the things that we've already accomplished and results associated with those things, but also talk about some of the ground changes we're making to further our enablement. So Tony talked about boots on the ground. And of course, let me share some of the other things we've done besides adding people and how we've empowered those people to be able to execute on a global marketplace. We've added weekly cadence, operating cadence, not only to make the business more predictable, but to also make sure that we have clear line of sight on our ability to execute wherever we go around the globe. And as you can imagine, some of the demands around the globe are quite different. We've created fighting units to rally around the sales organizations and the regional setup to be able to differentiate our offers that are necessary for those markets as we see those customers needing differentiation in their local markets. Examples of those fighting units are focused on areas in North America, growth in high-value payments where we see tremendous opportunity. In Latin America, the move for fast start acquiring and not only acquiring but acquiring as it moves into the public cloud and also integrates with lots of things that are important in those markets like loyalty programs. Africa, we're expanding our presence in the East and Western territories, which is key to expanding our offer. And then a very important market to us, Middle East. We're building on our very strong position as we see countries like Saudi Arabia, aggressively looking to modernize and reflect on the change in the dynamics in the local market. So across the board, the development of our go-to-market is really broadening across what those local regions want and then also capitalizing on those things that are important for total cost of ownership. The move to SaaS, Software as a Service, the consumption model associated with using public cloud, something that's already deep in our DNA, what we were doing for Billers and for Merchants, we are now capitalizing on that with banks as we look and travel across the globe. The other things that are very important to adding growth in our business is creating a well-oiled machine for demand generation to be able to scope out those opportunities by market and be able to present that to our sales organization for execution and be able to find key areas that are repeatable as we look across those markets is key. And we will talk a little bit more about that and what it's doing to our pipeline. Obviously, our sales compensation is a key area, which is we've linked it heavily to company revenue, so not only driving our results, but also driving both customer satisfaction and the customer experience because, obviously, if our customers can't utilize and generate revenue, then we're not focused on the right things. So pipeline, let's talk a little bit about some of the things that we've seen in pipeline. We focused our energies around what we call a 4V model. And that's more than a structure. It's really a rally cry for the entire organization for the organization to leverage what's important and to focus on the win. So first, of course, let's talk about the win. Victory is our first point. The percentage of deals we are winning versus losing is absolutely key to measuring our success, and to understand how we can improve those win ratios by market and by solution set. So we are monitoring that. We are driving and working collaboratively across the organization. And also, as we look at the win, we also need to understand that we're focusing the right clients, the ones that are also ready for consumption in terms of some of the solutions we deliver and that our value proposition resonates really well with those selected customers. So some of the things that we see emerging from that, FedNow rails in the U.S. absolutely an opportunity for ACI and one that's very repeatable for us in terms of serving that market. So let's turn to value. Value is the total size of the sales funnel in dollars and to really help us drive on our growth objectives and make sure that, that pipeline is there for growth. This includes early prospecting. Our in-region field marketing teams driving top of the funnel. So looking at the various solution sets we sell and making sure our brand is aware in the marketplace. Some of the things that we see early on is for example, making sure our people that are on the ground in the local market understand and drive based on culture, aligning relevant value propositions and delivering the results. So some of the things we're already seeing is early wins. In LatAm, we put -- made a major push on ACI brand awareness, which we pushed out in multiple forums in media. And it's really interesting to see that, that -- those efforts have boosted our pipeline for Latin America at 70%. The third catalyst in our change is around volume. The number of deals in our sales funnel and making sure that we're managing systematically or prospecting our lead generation to create a sustainable model and a repeatable model. We see a steady inflow of new customers, which is very important to us. And of course, that those new customers can differentiate their offer even though we create repeatable solutions. So what's some examples we're seeing as good wins there is really our integration with the verticals. Some of the things you'll hear about today, grocery and convenience for merchant -- for the Merchant segment, absolutely key in one of our areas of focus across the globe. In the U.S. higher ed and consumer finance for the Biller segment, another high-growth area. Obviously, modernization in the banks. Modernization is being driven depending on where you go around the globe, by lots of different factors, market dynamics, disruptions, regulatory mandates and other modernization drivers of various banks depending on what geo you're in. And then finally, velocity. The total time it takes on average for us to win a deal. We're focused on enabling the local regions to make sure that, that win can be realized as soon as possible with the relevant capabilities available to them. So this includes our go-to-market optimization, the fighting units, the demand generation. But one of the other important characteristics are partnerships. We are spending a tremendous amount of effort building partnerships that can allow ACI to expand our reach. Examples of some of our partners, Gilbarco, a world leader in fueling and convenience store, equipment and technology, complements very well the ACI value proposition, helping us to penetrate fuel and grocery in Merchant. Banking, we have a number of customers where we're expanding the relationship with long-term partners so that where they have strong market reach, we can capitalize and bring them solutions that are enveloped in their total care solution set. In Q3, we saw a great win where we expanded a partnership with a major player in the higher ed vertical, that's bringing to us the opportunity to provide payment solutions to 100 higher ed schools in the U.S. using our ACI Speedpay. And in doing that, we're building a portal to make that really attractive in terms of onboarding so that we can replicate that again into a lot of the higher eds in the U.S. market. And we think our disciplined approach is really delivering results in some of those key results you can see on this chart. First, in terms of pipeline, our efforts to drive pipeline, we've seen 40% increase in pipeline just since January. And that's supported by our new capabilities, uplift of our talent, our regional focus and strategy and also creating those repeatable deals and strengthening our customer base. One interesting data point that we've been watching in terms of pipeline development is over 1/3 of our new pipeline is coming from our new additional sales leaders. So this is great that we can bring those diversified offers from other parts of the market into our fold. In banking, one of the major opportunities we're seeing is the shift of our customers to SaaS, where they look for a solution that can be hosted, managed, public cloud, private cloud, On Prem, and we see tremendous opportunity in driving our pipeline, especially for our 3 big areas that are moving fast on SaaS North America, Europe and Pacific. On Biller pipeline, we see strong momentum across the board with a lot of movement from the education and the consumer finance verticals and areas where we are going deeper in terms of the solution set. Obviously, ARR is a big trend for us. Our ARR increased 50% year-over-year in Q3, a significant shift from the more traditional license model to the annual recurring revenue model. ARR is also driving -- driven by some of the market demands. Customers that want an all-in SaaS offer. This is also helping us build our new logo portfolio. We've signed 65 new logos across the 3 segments in Q3, and we're hoping to leverage that in a broader way. Some examples of those kinds of wins that we're seeing one of the largest issuers in the U.S. will use ACI issuing as a managed service, SaaS, where we'll manage the service. The goal is we bring to the customer, they have greater control of their go-to-market solution. They increase their efficiencies and they can focus on their customer and lower costs. Another example, a longtime customer, Albertsons, a very large U.S. grocery signed a deal for ACI omni-channel, also a SaaS model, where we can operate. Again, taking advantage of some key areas that are important to them, multi-acquiring reduced PCI scope also offer optimal customer experience in terms of how they go to market. And last comment I'll say about our results is when I started this job, I never expected to be working on 2022 before the year is over. But now, as you can see on this chart, we've signed 99% of our full year revenue for 2021 and it allows us the opportunity to start focusing on 2022, which I think is a real testament to our plan and our execution of that plan. So let's talk also about how ACI is working to deepen the customer relationship. We have doubled down on customer success. The goal is to implement changes that drive revenue and start to change our mindset about long-term customer relationships, looking deeper into how we can be a full-fledged solution provider to our customers. We want those relationships to be lobbied and localized on the global market and allow our local teams to differentiate that offer in the market but still establish that partnership. So we've introduced customer success managers around the globe. One that we're particularly proud of is 1 we've lined up with in a Middle Eastern customer where we provide an eCommerce solution that has skyrocketed to be one of our top 5 revenue producers for eCommerce. So we're seeing already the results of those deep relationships and obviously, getting closer into those verticals, bringing expertise that understands our customers' business. In Biller, our customer success model is now organized by vertical so that we make sure that we are able to deliver expertise to those verticals and obviously speak the language of those verticals we service and provide industry knowledge as well. So our view is to become that trusted adviser for clients, working on not only our own solutions, but the integration of partnerships that are relevant for those marketplaces. So let me just share a very quick story. I just returned from a trip from -- to Saudi Arabia. I think I'm still on the time zone of Saudi Arabia. But it represents a lot of the experiences that I'm talking about today. We were able to demonstrate our collaboration, innovation, technical capability as Saudi aggressively modernizes their banking system. The possibilities when you talk to various banks in Saudi are overwhelming, as the customers look at some of the technical implications about not only what they consume, but how they consume and deploy. And I think we can show up very, very well as ACI can be a partner that helps these customers navigate these changes. So in conclusion, let me just say that I think these stronger relationships have had a positive impact not only on our revenue, but also in minimizing attrition and building the art of the possible with customers as they navigate their future. Now let me introduce some of my colleagues as we switch to the next pillar and talk about Focus on Growth. Thank you for your time this morning.

Please welcome to the stage, ACI's Jeremy Wilmot.

Good morning. My name is Jeremy Wilmot. I'm the Chief Product Officer at ACI and we're going to switch now to look at our focus on growth pillar. My role at ACI is to build market programs that drive sustainable and repeatable organic growth. And we do that across all 3 of our segments, and I'll be talking a lot about these 3 segments and setting up the next hour or so. We focused our investments in high-growth areas. 12 months after we started these investments and they were focused on research and development, sales and marketing, we have made great progress. In Real-Time Payments, we've added new countries in Asia, Indonesia, the biggest country in Southeast Asia as well as adding new countries in Latin America and Central America. And we've matured our real-time offering across the value chain and across the world. We signed large sophisticated merchants. Eve talked about Albertsons in North America, and we've done that in other regions as well. In international markets, we've expanded our sales footprint with feet on the street. We've significantly, as a result of that, improved our sales pipeline, and we've won new logos and cross sold to existing customers in those international markets. So as we talked about 3 years ago in these 3 areas, we've made great progress. We've laid a very solid foundation building blocks for us to continue as we modernize our technology stack. And we'll be talking to you about that technology stack modernization. We're investing heavily in our current offerings, and we're investing in our next-generation platform. So in our current offerings, we offer that On Premise in our customers' data centers. We offer that in private clouds run by our customers, and we offer that in public cloud as well. And this ability to offer across multiple deployment options, it more than any other vendor can provide in this space. Our current software assets, they are unmatched in terms of their existing functionality that we have, the generally available software that we have. And again, our breadth of functionality is more than any other software payments vendor in the world. So when we look at that current software capability for Billers, we have our Speedpay platform that serves the needs of consumer finance companies, educational institutions, insurance companies as well as utility companies. For our global Merchants, we have our secure eCommerce platform, and we have our omni-commerce platform that serves the end-to-end needs in-store, out of store of payment acceptance. And for our global banks and intermediaries, we have our enterprise payments platform that provides acquiring, issuing and real-time functionality, and we have our digital business banking platform for global banks. And all 3 of these areas and all the different current products that I've talked about are secured by our fraud management assets across all of those areas. In addition to these current assets we're building this next-generation platform, the next-generation platform is designed to be simple, secure and flexible and is going to leverage the latest in cloud-native principles. Most importantly for our next-generation platform we're going to leverage our existing rich functionality in order to ensure that we have fast time to market. And we're going to make real-time the center of gravity for everything we do in the next-generation platform; and Ram Puppala, our new Chief Technology Officer, he's going to talk more about NextGen and our next-generation platform. So these assets that we see here, they serve the needs identify the problem areas, opportunity areas of 3 market segments, number one, Billers; number two, Merchants; number three, Banks and Intermediaries. We're accelerating revenue growth at ACI by delivering strong performances across these 3 segments. So in 2021, we transformed ACI from a no-growth organic company to a mid-single-digit growth organic company. And this growth will increase to a high single digit in 2024. This growth, it is delivered and powered by strong performances in segments. So number one -- I'm going to go through the 3 segments. Number one, the Biller segment. We expect the Biller segment to deliver low single-digit growth in 2021. You've heard from Eve about how we've invested and built our strong sales capability. This has resulted in a strong pipeline in our Billers segment, which we, therefore, expect to increase our growth rates in 2022. And as a result of that, we expect high single-digit growth in the Billers segment, and that's going to be delivered by acquiring new transactions on our next-generation platform and cross-selling to our existing customers value-added services. Secondly, in the Merchant segment, we've been delivering single-digit growth. We expect to deliver single-digit growth in 2021. You're going to notice that the growth rate in 2021 is lower than prior periods. That's driven by a shift of license revenue to SaaS revenue, but most importantly, that's with double digit recurring revenue growth in the Merchant segment. As a result, we expect double-digit revenue growth in the Merchant segment in 2024. Moving on to the bank segment. We expect a very strong performance in 2021, plus 12% year-on-year. This is unusually high as it's driven by a bounce back from delayed decisions in 2020 due to the pandemic. And in 2024, we expect more normalized growth rates in the bank segment of mid-single digits. And that's going to be driven by expanding our usage and offerings into our existing customers as they add new Real-Time Payment types, as they add new geographies. And as we win new logos in specific regions and in verticals. So let's talk about across these 3 segments, Real-Time and how is Real-Time going to impact these 3 segments. Simply said, our 3 segments will lead the Real-Time revolution. ACI software is going to make it possible by building out Real-Time infrastructures across all 3 segments that we will build out that drive direct deposit account connectivity, merchant payment acceptance as well as digital bill presentment and payment. Banks and intermediaries in this ecosystem, they will connect consumers and they'll connect corporates directly to domestic Real-Time schemes and new upcoming cross-border Real-Time schemes and they'll offer value-added services on top of those rails that will drive adoption and usage. The Merchants, they'll accept zero interchange digital real-time payments. That will drive new innovative loyal schemes, loyalty schemes. It will enable cross-sell offers that are going to drive overall growth of sales for the Merchants. And then Billers in the consumer finance area, education, insurance, utilities, they will deliver Real-Time invoices. They will request to pay new services. They'll settle immediately on these Real-Time rails, and they'll offer financial incentives to consumers in order to use that new channel. So across all of these segments, real time is the future. It's the North Star of where these segments are going to go from a payments perspective. It's not a question of if it's going to happen, it's a question of how fast it's going to happen and when it's going to happen. And ACI is very well positioned in order to take that opportunity for Real-Time Payments. So we're going to spend the next 45 minutes talking about these 3 segments and double-clicking on the 3 segments. We got the talented segment leaders who will be coming up here, Sanjay Gupta for Billers; Debbie Guerra for Merchants; and Sam Jawad for Banks after the break. They're going to talk about the market opportunity that they see. They're going to talk about the investments that we've made, the investments we're going to make. They're going to talk about how we're differentiated in the space and why we're going to win in the space. You're also going to hear in those 3 segment sessions from our customers and partners by video. And I think it will be a great 45 minutes as we go through those 3 segments. We're going to start with Biller and I welcome up Sanjay Gupta, who leads our Biller segment. Thank you.

Thanks, Jeremy. Good morning, everybody. Delighted to be here in person and virtually with all of you. My name is Sanjay Gupta, and I lead ACI's Biller segment. My role is to drive and accelerate our growth and sustainability for our Biller segment. But before I tell you why ACI is the leader in the direct biller market in the U.S. Let me introduce you to one of our major channel partners. And that channel partner is Ellucian, which is a key player in higher education. So let's watch a brief video. [Presentation]

So if any of you have had the experience of college going kids and the pain that can happen multiple levels, but we're trying to take the pain out of the payment experience. So -- that is one of our key channel partner initiatives that we're having. Now that you know a little bit more about one of our partners and one of our key verticals. I want to talk about what sets ACI apart in bill payments? We focus on providing a broad range of bill payment and presentment solutions directly to Biller clients across the U.S. market. We are the leader in the direct-to-bill payments market in the U.S. I'm personally very proud of our extensive and diversified base of over 3,000 clients we have across a broad range of industries. We currently process over $0.5 billion bill payments annually and with a sizable revenue base of around $600 million, we have the scale and the breadth to drive growth. We believe vertical specialization is key to succeeding and winning in the bill payments market. We've chosen 6 key major industry verticals, where we have distinctive strengths to focus on and win. ACI has had a strong presence in 4 of these verticals for many years. This includes the utilities vertical that covers major gas, electricity and other utility companies. Our consumer finance vertical covers companies in areas such as mortgages, auto loans, credit cards and consumer loans. In government, we offer a wide range of solutions to federal, state and local government clients. In our higher education vertical, like you saw in the video, we addressed the payment needs of a number of colleges and universities across the country. We've been building our presence and driving growth more recently in 2 additional adjacent verticals. Our insurance vertical includes P&C, health and life insurance. Telco and digital subscriptions with recurring payments are the other new areas that we focused on, and we're getting strong marketplace traction. We're driving growth with our existing clients while acquiring new clients in each of these verticals. Let me now talk a little bit more about our solution and platform. We made a major acquisition of Speedpay in our Biller segment a couple of years ago. Speedpay had been investing heavily in a front-end solution called NextGen. This is focused on enhancing the end consumer bill payment experience and offering the Biller clients a high degree of configurability to meet their specific needs. On the ACI side, we had been investing in a scalable and modern middle and back-end solution. We've now brought together the Speedpay and ACI front, middle and back ends to offer distinctive end-to-end solution. We've also now completed the migration of all Speedpay customers to the modern NextGen front end. Our platform solution offers a full range of payments. This includes all payment channels, involved in Internet, call center, IVR and mobile for bill payments. We offer a wide spectrum of payment types across debit, credit, ACH and alternate payments. We configure these solution for each client in our different verticals to ensure we offer the most relevant user experience and functionality. Let me now switch on to our go-to-market and build on what Eve talked about earlier. In our go-to-market capabilities, we've been strengthening our presence over the past good number of months. Along with creating a distinctive bill payment platform for clients, we've been investing in expanding our Biller sales force. We've been recruiting heavily this year for our Biller segment sales team. We have significantly expanded our sales feet on the street with experienced hires. We both aligned our sales team in each of our verticals that we are competing in. I've personally been very pleased with the strong growth of our sales pipeline and the wins that we're getting. For instance, in the government vertical where we've invested in bringing on experienced sales hires, we're seeing strong traction and pipeline with state and local government clients. In the case of higher education, like you've been seeing, we've been having major wins across a range of colleges and universities with the expanded sales force. One interesting metric that across our verticals, around 30% of our current pipeline and billers is coming from the new hires that we brought on board this year itself. And we can expect that to increase as the sales force gets more mature in the coming months. I'll now switch over to talk about our investment to date and where we're focused on. We've been investing very heavily in relevant technology and capabilities to drive our growth in the Biller segment. As I mentioned earlier, we have brought the best of ACI and Speedpay front, middle and back ends to offer a distinctive solution to our Biller clients. On top of that, we've been driving a mobile-first approach. We built on the acquisition we made of Walletron a couple of years ago that gave us distinctive capabilities in what we call moBills. This goes beyond payments to provide presentment of a bill on an Apple or Android phone and enables active customer interaction on their bills and payments. We've got great feedback from Biller clients on these user experience and adoption and are continuing to invest in functionality to support a mobile-first approach. Another area that we've been investing in heavily is alternate payments. We announced a partnership and went live with PayPal earlier this year, and we're now expanding to offer Venmo and PayPal Credit. Besides PayPal and Venmo, we're making Apple Pay and Google Pay available to each of our Biller clients in all of our verticals. We're driving growth initiatives in key areas to meet the current and future needs for our Biller segment. Firstly, we're driving vertical-specific channel partnerships. So you saw on the video, Ellucian, in the case of higher education. We're doing that in each of our verticals. We're signing partnerships and integrating with companies who are the lead system of record and technology providers for clients in those verticals. The partnership with Ellucian in higher education is an example. We're doing that in other verticals, vertical by vertical, the major channel partners. Through the joint go-to-market and integrated offering with Ellucian, we are reaching a wide range of colleges and universities for a modern and user-friendly solution for not just students but their families. So I mentioned we're driving that in each of our major verticals, and we think that will be a continued driver for growth as we get deeper in each of our verticals within the bill payment market. Our second initiative area is value-added services that go beyond bill payments. This includes outbound disbursements, for example, insurance claim payouts. Personally, I moved to Florida as part of ACI's global headquarters and experienced a number of hurricanes and weather conditions, so I've had the personal experience of also having to feel the need for insurance payouts. It can be complex, and we're ensuring that we address that for outbound disbursements for not just the insurance vertical, but other vertical needs as well. We've gone live already with our first set of Biller clients in disbursements, and we've seen rapid growth, having dispersed over $150 million since our launch a few months ago. We are launching an even broader dispersion solution in December, and we have a strong pipeline of client prospects for this. Other value-added services we are driving include electronic bill presentment, and this includes moBills, like I talked about. It includes eBills. In addition to that, we also offer collection tools that allow the end consumers who are facing financial difficulty the ability to restructure their payments without having to interact with live collections agent. Besides these 2 areas, the third area that we're driving is realtime payments. So like you heard from Odilon, you heard from Jeremy, we're bringing the reality into real-time payments for our Biller customers. We already offer real-time payments today for outbound business-to-consumer disbursals like I talked about. In addition to that, we have existing last mile connectivity to our Biller customers that enables real-time payments. We are directly participating in the [ Fed down ] initiative in the U.S. For real-time bill payments, we're working very closely with Zelle and The Clearing House for real-time pilots in the coming year. And lastly, we're continuing to modernize our solution for bill payments. We're enabling emerging payment channels and payment types while further enhancing the biller and the end consumer experience. I'm personally very excited that now that we've completed the Speedpay integration, we've invested in expanding our sales force significantly, we're driving vertical channel partnerships, and we're driving value-added services. We are poised for accelerated and sustained growth for our Biller segment. With that, I'll now invite my colleague Debbie Guerra to come on stage to outline growth plans for Merchant segment. Thank you very much.

Please welcome to the stage ACI's Debbie Guerra.

Well, hi, everyone. I'm Debbie Guerra. I lead ACI's Merchant segment, and my job is to accelerate growth for merchants. So just like Sanjay did, before I begin, I want to introduce you to a new key stakeholder in our Merchant business. This is one of ACI's newest partners, RocketFuel Blockchain. RocketFuel is an innovative company focused on cryptocurrency payment processing. Let's watch this brief video. [Presentation]

So ACI's work with RocketFuel is really an example of our ability with our solutions to support and yes, fuel innovation in a rapidly evolving market. But now let me tell you a little bit about how ACI is accelerating growth in our Merchant segment. So first, who do we sell to? So ACI sells to 2 areas. First, to global sophisticated merchants in select verticals, and this is a direct sale. Today, our customer base includes 9 of the top 15 global merchants and 19 of the top 29 U.S. merchants. We also sell through an expanding distribution channel, and that allows us to reach the broader merchant market. So this distribution channel includes intermediaries who can white label or resell our solutions. And so those intermediaries are companies such as processors, payment service providers, payment facilitators, ISOs and even retail manufacturers that have embedded payments. This allows us to reach the medium-sized and smaller retailers that we don't sell directly to. So within the Merchant segment, ACI goes to market with 3 powerful solutions, and this is also consistent with what we communicated to you all last year. First, we have our Omni-Commerce solution. This is a payments orchestration platform, it's terminal, point-of-sale and acquire agnostic. So Omni-Commerce means our solution facilitates payments across channels whether that's in-store, online, at the pump, at a kiosk, via mobile or via the Internet of things or even some combination of these methods. The solution features are universal omni-token, and that allows merchants to fast track payments innovation, and leverage a set of value-added services to really enable diverse consumer journeys. The second solution is our Secure eCommerce solution, and this is a holistic eCommerce platform with a fully-integrated fraud prevention solution. So this solution focuses on helping merchants to sell more with great conversion rates while protecting them from losses due to fraud or chargeback. It provides a native mobile SDK and single RESTful APIs that provide access to extensive value-added services and more than 250 payment end points. And this could be an acquirer or an alternate payment method. And that includes digital wallets, different payment methods, such as buy now, pay later as well as what you just heard about with RocketFuel, even cryptocurrency acceptance. The third solution is our merchant fraud prevention solution, and I call this one of our best-kept secrets, which hopefully will not be so secret in the future. But through this, we deliver the best leading conversion rates with the lowest fraud and chargeback rates across multiple industries. And we do this through having multiple layers of control, and this includes machine learning, artificial intelligence, our recently-patented incremental learning. We have positive profiling that is delivered through a robust global data consortium, and we provide expert support from dedicated payments optimization specialists. So what makes us different? And how do we win? Well, first, we offer our customers choice, flexibility and control. We have broad reach and deep functional capabilities. We embed security into all things payments, and this is to protect our customers' data, the transactions and also their reputations. We had vertically relevant solutions that are used at scale by some of the world's most known brands. So I want to talk now about how our merchant solutions address some of the critical challenges that our customers and prospects are facing. So today, merchants, in order to be competitive and grow, they have to fine-tune the consumer experiences that occur across all the channels in which they engage with their customers, whether that's in-store, online or increasingly via mobile engagement. They need a seamless view of their customers across these channels and they have to be able to understand buying behaviors, purchasing preferences and they have to deliver an experience that is frictionless and is consistent but supports the way their customers want to pay. Merchants are focused on growing revenue, and they do that by successfully converting payment transactions. They have to be completed and they have to be authorized. For them, it's all about driving growth and ensuring a really strong experience. At the same time, though, merchants are concerned with expense. The high cost of credit and debit interchange is a big deal. And merchants are interested in how they can optimize that spend, and this is where ACI's multi-acquiring capabilities really come into play. Merchants are also worried every day about security. And this is a growing issue as the increase in complex fraud has really accelerated with more digital payments occurring. We see that encryption and tokenization are critical to help prevent data breaches and to help keep merchants safe and not being impacted by potential financial losses or reputational damage. Merchants are very focused on the appropriate handling of customer data, particularly private information and payments data. At a transaction level, they want to avoid losses due to fraud and chargeback. So with all this going on, at the same time, merchants have to be able to adapt their business systems and points-of-sale to respond to these needs. So they need payment systems that are based on modern architecture, that's cloud-based that can be easily integrated and rapidly updated. Lastly, payment systems are mission-critical. They impact revenue generation and the customer experience, so merchants expect these solutions to be rock solid and always available because commerce never sleeps. So with all that in front of them, you can imagine that in the last years, ACI has made several investments and focused those investments to drive growth in the Merchant segment. So first, we've really expanded the payment methods we accept. So we go beyond credit and debit card acceptance. We've added digital wallets, alternate payment methods such as PayPal, local payment methods in various global markets and new payment structures like buy now, pay later, which is really exploding, particularly this year. As you heard in the video, we announced acceptance of cryptocurrency payments through the partnership with RocketFuel. This is yet another new payment method that merchants are going to want to accept. But we're doing it jointly with RocketFuel at 0 processing fees for the merchant, and we believe this is going to enable merchants to accept more than 50 different crypto coins and via the most popular cryptocurrency wallets. So our focus is really on ensuring that merchants are ready to take advantage of all these expanded payment types. And when you think in the crypto space with more than 40 million adults just in the U.S. that have invested in crypto, we want our markets to be ready at the point folks are ready to start spending that money or that value. So we've added important new endpoints that further the reach of our solutions, and so that is to countries, acquirers and payment methods. And we're responding to what our customers are asking for. Now let's turn our attention to security. So tokenization and point-to-point encryption are really necessary to secure payments and personal data. It helps reduce the risk of data breach. But more importantly, that token allows a merchant to create and deliver frictionless consumer journeys across channels. We've made strong investments in ensuring that ACI's tokenization and point-to-point encryption solutions are robust and really can serve this need. And reducing friction is really linked also to maximizing conversion, so this goes back to helping merchants grow their revenue. Last, similar to what you heard from Sanjay and you're going to hear from Sam, is we've also invested in strengthening vertical industry partnerships, particularly in our Omni-Commerce space. So in omni, we actually work in 4 vertical industries. First, the retail industry; second, fuel and convenience store; third, grocery and drugstore; and fourth, the quick-serve restaurant space. We launched this year a vertical-oriented business intelligence and analytics offering that delivers an intuitive cross-channel analytics that helps the business understand consumer journeys and payment habits so that the merchant can actually adjust their business strategies. Another example in the partnership space is our partnerships in the fuel and convenience store space. You heard Eve talk about our partnership with Gilbarco. And this is an important one for us. In the fuel space, many of our customers there have been really disrupted and they're facing disruption from the adoption of EMV that continues at the pump, the impact of the shift to electric vehicle charging as well as digital disruption that doesn't just occur at the pump itself, but from your own car. So our partnership with Gilbarco, who provides -- is really the world's largest provider of fuel solutions that rely on secure payments, is another way that we can offer more value to our customers in that vertical. We're really encouraged with the merchant uptake of all these capabilities that I've discussed and they're taking advantage of the investments that we've made. But we're thrilled with the awards and recognition that these solutions have garnered from third parties. So just this year, to name a few, Juniper awarded ACI the Payments Innovation of the Year for the Best Checkout Experience solution as well as the Best In-Vehicle Payments innovation. Retail Systems Awards also recognized our Artificial Intelligence Project of the Year. And just last week in Europe, the Payments Awards for 2021 delivered ACI the award of Best eCommerce Payment Solution (sic) [ Best Online Payment Solution ]. So these investments have really paid off for us. Looking ahead, we're going to continue to have very focused initiatives to drive growth. You're going to see us continue to expand our endpoints and connectors, and this is particularly in support of even greater international expansion beyond North America and Europe, into Brazil, Mexico, the Middle East, South Africa and Australia. We're there today, but we can do more. Additionally, you've already heard that we have a very robust artificial intelligence and machine learning capability that underpins our merchant fraud solutions. We're going to be taking that and extending that capability across our platforms, and you can expect to see that enhance our smart routing that we deliver embedded with machine learning. In the case of Real-Time Payments, our focus is making Real-Time Payments real for merchants. So what will that do? First, it will allow the elimination of interchange charges and it's going to drive faster settlements, all while addressing changing consumer payment preferences. With the use of Request-to-Pay, we expect to see more frictionless and secure payments experience as possible. But making real-time real for merchants requires more than just a technical solution. It also requires that merchants are able to encourage changes in consumer behavior through compelling offers. We'll be delivering real-time loyalty and offers for merchants so that they can impact consumer payment choice. And lastly, in the space around modernization and innovation, we will continue to accelerate our transition from our existing private cloud platform solutions to the public cloud. And our move to the public cloud is going to really help us address local country data residency restrictions and allow us to expand the target market for our eCommerce and Omni-Commerce solutions. We also expect continued modernization of these solutions. So in closing, the Merchant segment is focused on sustained investments to drive present and near future growth with a robust solution portfolio. But we're not stopping there. We are architecting the future of digital commerce with real-time cloud technology. We're going to take a short break in just a moment, and then my colleague, Sam Jawad, joins us to talk about growth acceleration in banks and intermediaries. But before we go to break, I want to take the opportunity to introduce you to another one of our merchant customers. This is The Co-operative Group. Co-op is a leading grocery chain in the U.K., and they're very focused on innovation. ACI solutions help make their innovations possible in the world of payments. So let's watch the brief video. [Presentation]

We will now take a short break. [Break]

Please welcome to the stage ACI's Sam Jawad.

Good morning, everyone, and welcome to those of you who are joining us here in person in New York and the ones online virtually. My name is Sam Jawad. I am the new Head of ACI's Banks and Intermediaries segment. My role at ACI is to accelerate growth and help banks and key players in the financial ecosystem grow. Before I begin, much like my colleagues Sanjay and Debbie did before me, I want to take a moment and introduce you to an ACI banking customer, Green Dot. Green Dot offers banking-as-a-service to enable consumers and technology companies design and deploy their own banking and money movement solutions. Please join me in watching a brief video. Thank you. [Presentation]

We are really excited about the things we're doing with Green Dot and many other customers in cloud payments. And there's a lot more to come on that, so stay tuned. Now let me talk about how ACI is accelerating growth in our banking segment. We have been at the center of banking and payments industry for over 50 years, driving innovation with our software as used by many clients around the globe to process nearly $14 trillion of payments every single day. The customers who use ACI banking solutions are aligned in 3 categories: banks, processors and financial institutions who require software for the consumers and their merchants and corporate customers, the ability to initiate and receive payments. We also have central infrastructure and payment networks who sit at the center of the ecosystem, sending and receiving payments instructions from banks and processors and ensuring that all payments are successfully cleared and settled. And fintechs and emerging players, which were really excited about this category, ACI is leading the way in helping them navigate the increasing responsibility of payment processing so they can retain focus on their customers on their core business. Now ACI meets the needs of these customers in 3 key solutions: our Enterprise Payment Platform, which includes real-time, issuing, acquiring. And our digital payment solution, which provides integrated treasury management solutions for banks and corporates. And of course, our Fraud Management solution that sits across all of our solution set and secures all forms of payments. We have multiple differentiators, but I would say that our key differentiator is our real-time offering. It is capable of processing billions of transactions, but more importantly, our customers can enable in a pre-configured fashion our software, and it's ready-to-use and support their customers very quickly. We also enable acquirers to fast start capabilities in new markets. And we also make digital banking API and real-time led. But across all of these solutions, we are protecting all kinds of payments in real-time, digital, online and traditional card. ACI built our unique combination of global reach and local presence. And Odilon refers to it as secret sauce, and it's truly been a true differentiator for us over the years. We operate across 34 global offices. We have presence with people on the ground, speaking local languages, supporting local clients in 45 geographies, serving customers in 95 countries across all our solutions set. That's issuing, acquiring and real-time. It has been -- and when I talk about differentiator, it's been an incredible differentiator for our clients, being able to serve them in their home country, speak in their local language. In terms of perspective on our scale and our reach, our software supports over 1.4 billion direct deposit accounts across 84 countries. That includes 13 of the G20 countries, and we protect over 1 billion consumer accounts every single day against fraud attacks. Our merchant acquiring solution allows acquirers and processors to serve millions of merchants in accepting payments and facilitating commerce. Now I'd like to switch gears to talk about the investments we've made in our key strategic areas. Real-time has come up multiple times. It is the future, as Odilon referred to it. Our real-time solution is already helping 60 banking customers worldwide process and connect to instant payment schemes. This includes our cloud-based solutions that are providing easy API access in the U.K., the EU and U.S. schemes for processors and their indirect customers. We also evolved our merchant acquiring offering, so our customers now can deliver end-to-end solutions in Microsoft Azure cloud, which is ready for certification in 100 days. Now that's disruption. But I'm really excited about, and I'm really excited a lot of things in banking, but I'm really excited about is our global SaaS offering across real-time issuing and acquiring. We experienced significant growth in our pipeline in SaaS over the last year. Our customers are looking to us to simplify their operations so they can focus on their core business. And of course, partnerships. The payments ecosystem, as we all know, is increasingly open and connected. ACI entered into strategic partnership with Microsoft, with Mastercard for real-time central infrastructure and Mindgate to bring a digital overlay capability and value-added services to our customers. These investments have really helped us be recognized by the industry and recognized through awards, through white papers have been referenced in. But this year alone, we won 7 awards for our banking business. And I'll just name 3 of them, which I think are really important that speak to the work that we've done, the Best in Future of Industry Ecosystems from IDC, the Artificial Intelligent Project of the Year from Retail System Awards, and across real-time in product leadership from Frost & Sullivan. In last year's Analyst Meeting, we said that our international markets were very important for us. And that continues to be an incredible focus. You've heard from my colleagues and from Odilon on about the increase in focus on international markets. We increased headcount in banking in our international markets to reach more of our customers. We were very selective in where we've done that. We've built product teams in Latin America and Asia to capture the increase of real-time and merchant acquiring opportunities in these markets. What we also said last year was real-time with strategic priority in itself, and that remains a very strong focus for us. We're executing on the real-time opportunity by not only capturing the transaction growth, and this is really important, but providing additional revenue streams for our clients through Enbridge data and value-added services, such as QR code and Request-to-Pay capabilities, which is actually helping as well our omni-channel growth. But this is what we've done today, what we invested in. I don't want to talk about the future because I really think this is where ACI is heading into is our focus on where we're going to go from here. We are building our next-generation platform of real-time. I mean this is where most of our management team, most of my time is spent with my team. Our objective is not to simply meet today's requirements, but to leapfrog our competition and deliver innovative solutions that drive value for our customers. With that in mind, we've invested in enabling our solution stack to be fully optimized in the cloud, which, of course, brings significant efficiencies for our customers in terms of time to market and reducing complexity from their business and a number of automation tools that helps them deliver value to their customers. And we continue to invest in our next-gen cloud capabilities. But the best person to speak about that is my colleague, Ram Puppala, who's coming up next, and his team is fully dedicated to help us get on that journey. So welcome to the stage, Ram. Thank you very much, everyone.

Please welcome to the stage ACI's Ram Puppala.

Thank you, Sam. I am Ram Puppala, ACI's Chief Technology Officer. I joined ACI a few months ago, and I'm really excited to be part of ACI family, especially at this critical juncture. My role in the company is to deliver on our customer commitments and build out the next-generation technology capabilities that will enable ACI solutions to be competitive for next 10 to 15 years. We all know that changes in the technology can affect everything from how we do business, to how we live our everyday lives. Today, we are going to talk about some exciting technology-based innovation that is happening right here at ACI. Specifically, I'm very excited about how we are building the next-gen payments cloud. Now you're wondering, we have used this payment cloud many times. What does it really mean? And why you should be excited about it? Well, let's get into it. When we say we are building the next-gen payments cloud, what we mean by that is we are modernizing and integrating our current capabilities and software stack that process billions of transactions and services hundreds of millions of consumers globally into a digital-first cloud-native payment architecture, which is scalable, secure, compliant and efficient. Our goal is to modernize the global payments value chain for financial institutions, new banks, fintechs and businesses and their customers. The next-gen payments cloud will consist of portfolio of payment solutions, which are real-time and engineered to enable rapid product innovation and provide rich, frictionless anytime, anywhere user experience. Sanjay, Debbie and Sam have talked about how some of these capabilities are being applied in the solutions for their segments. What I'm going to talk next about is what does the characteristics of the next-gen payment clouds look like? Next-gen payment cloud is real-time, first of all. It's a future-ready cloud-native architecture, will innovatively flex and scale for customers. It will be easy to consume and will enable our clients to rapidly build innovative payment products, such as contextual and embedded payments, ultimately increasing the revenue potential from new offerings. It features a digital-first customer experience, simplifies the adoption of digital payment products and services. It also has an open API and AI machine learning-enabled data foundation Debbie and Sam have talked about that allow financial institutions, third parties and fintech providers to tap into ACI's ecosystem to uncover new product opportunities and build unique value-added services and last mile applications that very few can offer in the market today. Our next-gen cloud payment software is highly scalable, compliant and secure and designed for efficiency with AI accelerators built into and automation-enabled. It will be always on, and it's going to be highly reliable and available. Now let's talk a little bit about how we are approaching our modernization journey. We are approaching our modernization journey very pragmatically. First, we are building out the cloud-native core foundation, which consists of infrastructure and tools that enables security, operational resiliency, consistency and agility. In parallel, we are enhancing and integrating the current capabilities we have on the shelf to work within the new cloud-native architecture and the core foundation we are building out. Second, we are adding new functional capabilities for easier extensibility and a digital-first anytime, anywhere user experience. We also are modernizing and going to migrate. And as part of the migration, we're going to rationalize some of the current capabilities for efficiencies to the new architecture while reducing time to value and disruption for our customers while they consume new services. Lastly, we will finish the migration of the current capabilities to new architecture while enabling new payment possibilities. We expect the cloud-enabled capabilities to available in 2022. It's -- the journey has already begun, which will allow our customers to start utilizing the solution sooner than later. So I want to take a moment to do a quick recap about why this next-gen payments cloud innovation is so important and why we are excited about it, I'm excited about it, and what customers can expect from it. Customers can expect, first, a faster digital payments innovation through open APIs. They -- second, they can expect improved payments product adoption through digital-first user experience. Third, they can expect to uncover new opportunities and improved customer engagement through AI machine learning-enabled data fabric. Fourth, it will be easy for them to adopt ACI's next-generation payment products into their existing solutions, environment and workflows without a major disruption. They can expect ACI to continue to deliver the best-in-class, globally compliant and secure capabilities across the entire payments value chain without needing to buy separate systems and integrate them. Customer can expect these capabilities to be available on private cloud, public cloud and on-prem. In closing, our next-gen payments cloud is poised to enable our customers to grow their payments offering worldwide. Now let's switch a gear from our focus on growth pillars to our shareholder value-creation pillar. I would like to invite my colleague, Craig Maki, to the stage. Thank you for your attention.

Please welcome to the stage ACI's Craig Maki.

Good morning, everyone. Thanks, Ram. Good job, by the way. My name is Craig Maki, and along with my team and the leadership team that you've met today, I lead our third strategic pillar, which is step change value creation. And again, in my role, it's a little different. I get to see the world from an external perspective and what fit and what doesn't fit. I mean, one thing that you -- that we'll continue to do is we will use our M&A capabilities, investments and divestitures to create shoulder value. But what's different this year compared to like last year or prior years? We've never really had the organic growth to set M&A on top. So M&A was much more, what I would call, reactive. Now we can be much more deliberate and proactive in what we're looking for. I'd like to go through a few examples of some of the new names on what will be done in the past inorganically, just to set the stage on where we're coming from. So in the Bill Pay segment, through a series of acquisitions, we actually had a big -- pretty big Bill Pay business. It served both banks and billers. We made a strategic decision to get out of the bank Bill Pay, which I think was a good move, but that left us a Biller direct business that was -- that lacked scale. We had built out the infrastructure, our data centers, et cetera. So the profitability really wasn't there. So we acquired Speedpay. I mean Speedpay was really a good acquisition for us when you think about what it did. It added scale to our key verticals: consumer finance and utilities. And it added revenue that we could put on top of our fixed infrastructure. So our profitability in Biller actually is one of our more profitable business lines, as you can see in our public filings. A second example is real-time. So as everyone said, we're building out real-time capabilities, et cetera. We made a significant minority investment in a company called Mindgate. So Mindgate is based in India. They're the leading processor of UPI transactions. UPI is the real-time scheme in India. It's called unified payment interface. They're one of the leaders for the banks processing those. So again, with that significant investment, we're very enthusiastic with our partnership with Mindgate, and we really think there is a long runway to go with them. And lastly, in our Merchant segment, Debbie talked about a product line, which we called Secure eCommerce. So the actual origins of Secure eCommerce were 2 acquisitions. We had bought 2 smaller eCommerce companies. Debbie and Ram's team actually integrated them, they innovated them, and they modernize them. And now it's called Secure eCommerce, and it's one of our fastest-growing product lines we have today. Before I leave this page, I'd like to reiterate one item that Odilon mentioned. Because of my role, we are constantly reviewing our portfolio of solutions, both to create long-term and short-term value. I mean, we take this pretty seriously. So just rest assured, we're doing that every day. Turning to the next slide. I'd like to talk about some of the inorganic priorities. Obviously, we can't get into details today, and we have nothing to announce. But the areas where we're looking, real-time. So you've heard from Odilon, Debbie, Ram, we're really localizing our capabilities, our decision-making, which is also we want to be the local provider of technology. Again, in real-time, you think about it. We serve the central banks, the big banks. We're the big horizontal engine. Now we want to get down to the local levels, like we've done with Mindgate. Secondly, in Bill Pay. I think we're one of the leaders in the direct Bill Pay business. You saw the stat from Sanjay. What's good about it is we've finished the TSA with Western Union. We've actually got our NextGen platform ready to go. So what we do now is put stuff on top of that. It's all about incremental net revenue per tran. And that's what we're looking at, not only in our Biller segment but in Debbie's segment as well. And lastly is scale. A lot of people in this room are bankers, and they know scale's the play and fintech. So we are open to any and all scale plays across all of our solutions. And again, we're here to serve both the short-term and long-term investor. So in summary, our third pillar is M&A step value change. We will continue to acquire complementary assets, and we also proactively review our portfolios to maximize shareholder value. Now I'd like to turn it over to our CFO, Scott Behrens, to give you some perspective, not only on our past, our current and our future financial results of the company. Scott?

Please welcome to the stage, ACI's Scott Behrens.

Well, good morning, and welcome. I'm Scott Behrens. I'm ACI's Chief Financial Officer. I think to start today, I'd really like to look back at where we were a year ago when we met for our Investor Day last November. We said our 3-pillar strategy would deliver continuous, profitable growth. And it was going to do so really of a combination of a couple of pillars in the strategy. One is our Fit for Growth strategy, which created a more scalable, agile, efficient cost structure. And that, combined with our focus on growth strategy, whereby we're reinvesting the cost savings into sales and R&D investments, in particular -- what we talked about last year was real-time, global merchants and international markets. And we're supplementing that even further this year with our next-generation payments cloud. Jump to today, 1 year into our 3-pillar strategy, and we've delivered our strongest organic growth in nearly 10 years. And through our combined revenue growth and profitability improvements, we've delivered the Rule of 40 in 2021 for the first time. And most importantly, our efforts to date has set the foundation for accelerating growth in the future. Our progress is allowing us to increase our long-term growth outlook. Our investments in growth are starting to pay off with growth in pipeline as well as strong growth in ARR bookings that we're seeing here in the second half of 2021. We see revenue growth accelerating to 7% to 9% in 24 while continuing to invest in growth and delivering annual improvement in profitability. Underlying our revenue growth and profitability improvement will be growth in our recurring revenue. As a proof point of our focus on growth investments actually working, in Q3, and he brought this up, we saw a 50% increase in the annual recurring revenue contracts sold in the quarter. And so if you look year-to-date, that represents $50 million of recurring revenue that we've sold year-to-date that once live will begin to contribute to revenue in the second half of 2022. And this growth in ARR will really set the foundation for increased growth over the next 3 years in total revenue and recurring revenue as a percentage of our total revenue. And by layering on that incremental recurring revenue on top of our scalable cost base, it will allow us to continuously improve profitability and further improve our Rule of 40. Here, as Jeremy previously discussed, you can see our projected growth rates by each of our segments. In recent years, our revenue growth has been flat to negative, sort of bounced around 0. In 2021, you see our efforts on focus on growth initiatives have delivered 5% revenue growth, and we expect that to accelerate to 7% to 9% as we get out to 2024. And that's really driven by merchants that are expected to grow double digits, billers that are expected to grow in the high single digits and banks that are expected to deliver mid-single-digit growth. Our continuous profitable growth and high EBITDA to cash flow conversion combined with our solid balance sheet allows us the flexibility to delever and invest in growth. I think the 1 thing to point out here -- we spent a lot of time talking about revenue and EBITDA, but probably the underappreciated metric is our cash flow conversion. We have very high EBITDA to cash flow conversion. We have low cash taxes. As a reminder, and Craig mentioned the Speedpay acquisition, that was $750 million, and that was treated as a 338(h)(10) election. So it was treated as an asset purchase. So that's really almost entirely deductible. But low cash taxes, low and declining cash interest as we delevered. And this allows us to convert about 65% to 70% of our EBITDA to cash. And we expect that to continue in the long term. Our strong cash flow allows us to delever. Over the last 2 years since the Speedpay acquisition, we've really used our liquidity and cash to delever. We'll exit this year below our targeted leverage of 2.5x. Again, we have solid liquidity. We've purchased $100 million of our stock since the beginning of 2020. And historically, we've said we would deploy about 1/3 of our capital towards share buybacks, debt service and tuck-in acquisitions. But as we are approaching and below that 2.5x, we're changing our capital deployment model for the near term to more of a balance of 50% share buybacks and 50% tuck-in acquisitions. So in summary, our 3-pillar strategy is delivering continuous profitable growth. We are increasing our long-term outlook. We have a scalable software and SaaS business model with blue chip customer base that delivers solid EBITDA growth and cash flow conversion. And I think, again, on the underappreciated asset, the cash -- if you -- if we assume a 65% to 70% EBITDA conversion, we would expect our business to deliver $900 million in operating cash flow over the next 3 years, which represents approximately 20% to 25% of our current market cap. So again, with a combination of solid liquidity, low leverage, we'll target near-term capital deployment about 50% to share buybacks and more on that in the coming weeks. So with that, I'll invite Odilon to share some final thoughts. Odilon?

Once again, please welcome to the stage ACI's Odilon Almeida.

I hope we have checked some boxes for you today. I think the first box is about our belief that ACI is a long-term strategic investment. We are focused on the future. Our vision is about the future, and we are well positioned to design that future in the global payments industry. The second point is our belief that we are also a short-term opportunity. It's related to the results we are achieving today. We're not talking about the results anymore. We are delivering results and the momentum is there. And last but not least, under my helm, we are going to continue with the successful M&A of the past where we will be looking at divestitures, we will be looking at investments to provide our shareholders step change value creation as it has happened in the past. I think those 3 together really separate our company as a significant opportunity for investment. But I'd like now to direct my conversation with my team here, our leaders. Just to say that thank you. I'm very proud of everything that you have achieved. For the ones that are going to be watching this later, our employees, the same thing. And I state that the best is still to come. We're in the right place, in the right moment and the best is still to come. Thank you for coming today here. Thank you for taking the risk of being all together in 1 room. Thank you for the ones watching us today. And I think, John, now we are ready for Q&A.

Thanks, Odilon. [Operator Instructions]

So I have kind of a 2-part question, 1 more short term and 1 little longer term. So Odilon, you started out -- okay, sure. Okay. As I said, I set up the question as more short term, and little more kind of medium-term in focus. So Odilon, you started out in the beginning of the whole morning talking about your commitment to delivering really on guidance and on the goals. And it was great to hear when you guys reported third quarter results that you had 99% of kind of the sales and contracts signed for the guidance. I would say though, in the past, that always has not been the case. And we certainly have seen slippage in prior years. So the short-term question is, how did that happen? And then within the environment we've been in, I know you guys have talked about longer decision cycles on the part of clients. And so just wanted to see where you are in that kind of process. And then the medium-term question is, when I look at the 2024 revenue targets, especially the over 10% growth on the merchant side, the 7% to 9% on the billers in terms of the growth. What's behind that? What gives you the confidence? How did you build up to those targets?

Okay. I'm going to start with the first one, talking about how they happen, right? How can we say for the first time ever that we can tell you what's going to happen in the year, in the beginning of the quarter. I will tell you that this is called operational discipline. We used to track this business on a quarterly basis. Now we track it on a weekly basis. We run 52 P&Ls in a year. And the team sits with me every Monday and every Monday we talk about what is going to happen in the month, what's going to be the P&L of the month. And by the end of [ they brief me ], if we have more than 2% variation in the different lines. And we learn from that and we get better on the forecast. And that's true for the pipeline. That is true for everything. But I'd like Eve perhaps to give more color on that.

Sure. Sure. So I think 1 of the things that we've done is created this discipline, as Odilon's comments on -- on the weekly, that then flows into the global organization. So we're also looking in terms of the mix of the business. So we look at the license business, obviously, ARR and the conversion of ARR. So we're actually tracking that. And then, of course, PaaS, SaaS, which is our ongoing business and working hard with the customer success around keeping attrition down on PaaS, SaaS and then also looking for revenue opportunities in the base through customer success. And I think all of those levers are getting us to the point of the predictability of the business and also understanding the conversion rates, where that conversion rate is a license conversion or an onboarding conversion or a growth conversion and then bring in the other dynamics. I mean COVID was a great dynamic to really blow apart the modeling because of how people bought on merchant versus what stimulus checks did on biller, et cetera. So we're also putting a lot of effort in managing all of those other elements that can impact both transactional as well as revenue growth.

So now going to the second question about the how the billers are going to get to the 7 to 9 and how merchants are going to get above 10. Let me tell you 1 thing that the numbers don't say, but it is behind the numbers, and we are very aware of that: It will be harder to get banks from 4 to 6 than dealers to 7 to 9 and get like merchants above 10. Why? Because we look at the billers #1, it is already there. We did all our homework. We integrated the platform. The pipeline is huge. The sales is producing. It's just a question of time, to count their onboarding next year and the years to come. So it is already there. We can see it happening. You get to merchants the same thing, great pipeline, great -- the product -- the innovation on the product is already there. On the bank part, we are transforming the bank part, all these initiatives that you saw over there. So in the bank, I think we're fighting more than the other 2 parts of it. So I see from the top, I'm very confident about the 3 parts of our business. But I see more difficulty on driving the banks, even though we had 12% growth this year -- driving the banks to 3 to 6 every year than getting those business to that level of growth. But I'd like to give that to Jeremy and to the segment leaders. I'm sure that you guys can give much more color than I can.

Yes. On the merchant side, we have eCommerce. And the eCommerce piece is a very significant part of the platform. eCommerce growth globally is exploding. So very high growth rates. We have a very competitive offering. We'll rise with the tide. In addition to that, we'll globalize our opportunity. So by leveraging the public cloud, we can open up new markets for ourselves, address data residency issues. For example, in India, you can't provide an eCommerce service unless you're actually in country and you're running the software in country. So those 2 elements are really going to grow -- are going to drive the merchant growth. On the biller side, I think Odilon said it all. We have the pipeline. We have a pipeline -- not just a sales pipeline, but also an onboarding pipeline. So a backlog of signed clients that now in the next 12 months, we're going to be investing in our onboarding capabilities that Ram will be executing on. And so we see a clear path on that. So I think those 2 that you specifically asked about, we've got a good path on both those segments.

Anything to complement, Debbie? Sanjay? Nope? Okay. Good.

Let's take a couple from the online [ Transom ]. We've got a number coming through.

Then after that [indiscernible].

First one from Mark Palmer at BTIG. To what extent has the company been able to get traction with clients as it seeks to amend contracts to allow for less lumpy revenue recognition?

I'll take that one. We said coming into this year, and we laid this out at last year's Investor Day that we were going to try to convert a certain portion of our customer base every year to more of a subscription-based license fee. We have targeted a handful of customers this year, and they have been receptive to the conversion to subscription. But I would say what we have experienced, and you actually see it in the numbers already is that the big shift in merchants going to subscription, there's where you're seeing in their growth rate this year of 3% is actually double-digit recurring revenue growth but it's offset by declines in the license fee side. And so we think that, that really is -- we've already experienced that. So you're seeing it reflected in the numbers. But those we have gone to offer that sort of subscription alternative, they've been very receptive.

Just to complement, to set expectations -- because I think it's very important to set the right expectation. If you think on a quarterly basis, please don't expect consistency because we still have a big part of our revenue that is license-driven. So you may see a quarter that we go -- we are flat in the other quarter, then we go 50% because of our renewal backlog. With the time, then we'll get more consistent. What you can expect is that we're going to be very consistent on a yearly basis. We are talking continuous profitable growth on a yearly basis. That, we can do. And the other thing is the more that we go from license to recurring, the more predictable is going to be the business going forward. So you can expect that we're going to be very precise about the quarters when we give guidance. You cannot expect that you're going to have like all the quarters delivering progressive growth.

A question from George Sutton at Craig-Hallum. With the new clarity across segments, what operational synergy is there among segments? Is there cross-selling between banks, billers and merchants? And Jeremy, he also wanted to know about the mustache. Is that a November thing?

I want to hear also about that one. So take that mustache part. I think that there are opportunities, and we are seeing that. For example, we are seeing solutions of merchants -- we are selling solutions of merchants to banks, intermediaries for acquiring and so forth. But I'm going to stop here and really give the floor to you.

Yes. We talked a lot about real-time and how real-time just transcends across all of the 3 segments, and we expect that. So we expect to see real-time for merchant acceptance of the payments. We expect to see real-time make its way into bill payments. We already have real-time in the banking segment. So we absolutely expect that. We also have the eCommerce asset that we talked about, and that's very relevant for our banking clients who are acquirers, the intermediaries who are acquirers. It's very relevant for billers as they also move towards that eCommerce model as well. So there are a number of solutions that are relevant across all 3 segments. And then I think our commercial team as well, we're leveraging our geographical advantage and ensuring that we're going after the banking, the merchant and the bill payment because real-time rails opens up bill payment opportunities for us on a global basis. We're seeing that in India today with Bharat Bill Pay and our partner company, Mindgate, has been very successful in that space.

And I think to just add to that is you see it on the solution side. So for example, subscription buying -- merchant biller subscription buying is -- creates a huge opportunity for us to leverage across there. But as Jeremy points out, our customers, if you talk about the banks and you look at what they're doing in certain areas with acquiring and their desire to really look at their merchant population, it obviously gives us another avenue to also take our merchant solutions into the banks as a channel for us as well. So I think there is a lot of opportunity for us to leverage between the different solution areas. And I think the consumer style in terms of buying new solutions associated with monthly subscription is also going to change the landscape going forward as well.

There's a big change that happened with Fit for Growth that perhaps was not clear or we not -- made that clear. If you go before the change of organization that we did, you used to run P&Ls by solution. So what is about the 6 solutions that we have would be what's the P&L of that solution. Now the P&L is on the segment, not in the solution. So the segment leaders are free to sell whatever solution they want. And I think that's the most important part of the synergy.

And to answer George's second part of the question, George, thanks a lot for suggesting this should be a temporary measure. But since you asked, I'm going to send you an e-mail, this is for Movember. Movember is a global charity that raises money for men's mental health and men's cancer, puts a spotlight on that. It's close to my heart, and I'm raising money for that. So anyone who would like to give, just let me know afterwards.

Now I understand, it's a noble cause. So it's okay. Eric?

So you support real-time payments in a range of national markets worldwide. Real-time payments are accelerating. But it's a patchwork of systems worldwide. Is there a role perhaps medium term for ACI worldwide in interconnecting and enabling cross-border connection between the national real-time payment systems??

Let me start. I think you just said something very real, Eric, which is real-time payment is a local business. So for example, if you are in U.K. and you are the king in U.K., you have all the systems in the U.K., that doesn't mean anything for France. You need to start from 0 in France, and you need to run after that. Yes, it helps that to have the system, but then you need to localize. So let me start there. And I understand your question. Your question is when you have all of those hubs together -- and can you make a connection and help the cross-border because you have the local hubs? So let me give it to Jeremy.

I mean domestic interoperability. So you have domestic markets that have multiple real-time schemes. And here in the U.S., we've got an example, we're about to add a third. And in India, we always talk about UPI, but there's actually another real-time scheme, IMPS, in India. And so this interoperability of the real-time schemes can be made possible by digital wallet. So Odilon talked about digital wallets and the importance of that. And ACI can absolutely play a role in terms of that digital front-end wallet but also the interoperability in connection with the real-time scheme itself. And that's domestic to domestic. And then the big future opportunity is going to be cross-border. We're already seeing that. So UPI to Singapore fast pay has already happened. That rail is already open and it's disrupting that very high remittance, very large remittance corridor that's there, it's already disrupting that. And we provide the fast pay capability. We provide the UPI capability in the bank to bank. So absolutely ACI has a role to play there.

Eric, I think the nice thing about that is you saw the example of the merchant from Debbie, right? And it's by purpose that we talk about blockchain. We can tap whatever comes to our system, and we can enable whatever currency. So if the government starts with virtual currency, which I think it is the -- I think it's the next step of cross-border, by the way, virtual currency directly from the government. When that starts with that, we're going to be able to just tap into that and serve these central banks around the globe as we are already doing in some places.

So effectively, you would be supporting a kind of cross-border clearinghouse, potentially for CBDCs and stablecoins and other...?

If that [ clearinghouse ] comes to life, we are going to be ready to serve.

Yes.

Let's take a couple more from online. Tim Curro from Value Holdings asks, which specific companies are you typically competing with in bill pay? And what specifically differentiates ACIW from them?

We have someone very passionate about that here. So let me give to Sanjay.

Thanks for the question. So in the bill payments market, we have a wide range of competitors. I put them in 2 categories. There's a couple of them that are broad-based and significant in terms of size and scale. There's Fiserv, there's Paymentus that you would have probably heard about. And then we have competitors in -- which are more niche, based in different verticals or they play in a couple of them, and we have a number of those. Where we're differentiated and are -- continue to differentiate -- I'd probably put across, I think, 3 key points or areas on that. The first, as I mentioned, we brought our solution where we have the best of our Speedpay next-gen front end to our middle and back end that's highly configurable, highly scalable, and it has great customer experience and end consumer experience. And that is something that we've been working on for the past good number of months. It's ready. And that is a differentiated solution. So that's number one. The second area where we differentiate is on vertical specialization. So even though we talk about bill payments, a bill payment experience for higher education is different from a bill payment experience for mortgage or a utility payment. So going deep in each of these verticals allows us the ability to differentiate. And we have the scale to be able to do that because if you're smaller, you don't have the scale to be able to differentiate by vertical. And that includes channel partnership by vertical, user experience by vertical and going very deep in that. The third area that we differentiate is in terms of value-added services. So for instance, moBills on presentment. Unique solution. Great traction. We have patents on it -- on the process of that, and we're building on that further. So it provides the hub of interacting with the end consumer for bill presentment, communication as well as the payment. We're doing the same for disbursements, which is distinctive, where we have disbursements not just for insurance, but we have for consumer finance, higher education. And it's not just 1 disbursement. We also have multiparty disbursements where you can have the same disbursement on multiple ways in any kind of payment method that an end consumer wants. So I'd say the solution we have, the front, middle and back end, our vertical specialization and our value-added services is differentiating us and winning from the competition.

What is our market share today more or less in this market?

So overall, the overall U.S. bill payment market, there are different estimates, but it ranges around 15 billion plus transactions overall. We have a very sizable scale. We talked about 0.5 billion. But if you look at the overall market of that, 0.5 billion on 15 billion plus. So it's less than 10%, depending upon which way you cut it. So there's really opportunity for that.

And that's the first point. We are the biggest biller business with less than 10% of market share. So there's a lot of room to grow, a lot of room to grow. The second point that I'd be hearing sometimes is that there's better technology than we have, not true. We have invested in our technology. We have the best front end of the market. That's what matters and it's very stable. All the rest -- so it's not better. And the other rumor that I've been listening to is there are players that are growing much more than we are. 30% on $100 million is $30 million, 5% of $600 million is $30 million. So it's a question of size. If you're small, you can grow a lot. If you are not that small, you grow a little bit slower, but you create the same amount of value. So that's just some clarifications that I think are important.

No, that's pretty true. So we're all very excited about what we have. And but I mentioned that we're already getting the growth and we're poised for accelerating the growth with those differentiations. And we're seeing that in our pipeline, in our win rates. Jeremy talked about we already have signed clients that we're onboarding and ramping in the coming year. So we're actually seeing that accelerated growth and differentiation with the competition.

How about 1 from Pete Heckmann at D.A. Davidson. While I know you don't plan to provide 2022 guidance until you've reported Q4 results, how do you think about organic growth and margins next year given that 2021 contemplates a rather strong Q4 for the high-margin software license fees?

Scott?

Yes. No, I would say if you look out over the 3 years, so we said 2024, 7% to 9% growth. Next year, I'd model in mid-single-digit growth, growing incrementally revenue to the 7% to 9% in 2024 and EBITDA increases every year to support really the continuous profitable growth strategy.

Yes. And we're not giving guidance for next year. But it's going to start in the base of it, right? It's going to start in the base of it. It's not -- we're not going to go to 7, 9 right away. 7, 9 [ is in that year ], and we're going to build from where we are today. So I think without giving guidance, I mean, it's going to be linear and we're still, I would say, cementing the growth. It's hard to come from 0 to 5, and we need to cement that pace before we go forward.

Jordan McKee, 451 Research. Thanks for the update, guys. It's been very useful. So I'll ask the obligatory cryptocurrency question. RocketFuel partnership, obviously, evidence that you all are thinking about the space, thinking about opportunities. Wondering if you could elaborate on some of the future opportunities you see for ACI around crypto, perhaps helping your bank customers with things like digital asset custody and transfer or anything else you see on the horizon?

Yes, so -- so you want me to start? So first of all, as Debbie talked about and RocketFuel crypto as another method of payment, we need to understand how we can ensure that we have the widest possible acceptance capability there. So by partnering with someone like RocketFuel who has acceptance capabilities across multiple cryptos, also has a capability to add new cryptos very fast. We can put that on to an endpoint, onto our eCommerce network. That can work for acquirers. It can work for billers. It can work for merchants. And so we would continue to look to widen as much as possible the acceptance of crypto. The second area, and Odilon touched on it, was the central bank digital currency, CBDCs, already seeing that happening today. There will be an interplay between the real-time rails as well as CBDC and ACI will look to be able to accept that as well as an endpoint. And the value-added services that sit on top of those real-time rails and the value-added services that sit on top of CBDCs, that's what's going to drive adoption. If there's no use case for consumers and corporates, you'll see no volume. So the value-added services and our last mile real-time capabilities, getting closer to the consumer or the corporate, that will be the second play that we'll see on organic, and as Craig Maki talked about, in inorganic capacity as well.

Anything to add? No? I think that's what's great about the business. We are not betting on cryptocurrency. We are betting on whatever works, and we're going to be present on whatever works.

Thanks, Jordan. That actually was the same question from Jim Mortenson at Aite-Novarica. Richard Crone from Crone Consulting asks, will decoupled debit come of age and challenge your network and banking customers given Amazon and PayPal's Venmo acceptance, Plaid's recent announcement and the plethora of other fintechs pursuing alternative debit rails?

Can you repeat the question? Sorry, John, to make sure that I understand.

Sure. Will decoupled debit come of age and challenge your network and banking customers given Amazon and PayPal's Venmo acceptance, Plaid's recent announcement and the plethora of other fintechs pursuing alternative debit rails?

Yes. I think the answer regarding ACI, it's very hard to build the future. But -- and I will give to you someone that can build it better than I do. But the answer is we are positioned in all the places here. So again, we are not betting in the future, we are not betting this player versus the other player. We are positioned for all players. But Debbie will probably have a more educated vision.

Thanks for that question. For us, it's all about enabling the payment methods that our customers and their customers, many of whom are consumers, are demanding. And so we've seen that evolution, whether it's decoupled debit, whether it's the shift away from credit, whether it's facilitating point-of-sale lending. The explosion right now, particularly for merchants, for Buy Now Pay later methods, is actually very interesting. And the linkage that, that has, for example, to practices that have been in play, for example, in Latin America with installments, there are a lot of similarities there. So whether -- all these methods are driving change. And so for us, it's all about the choice and facilitating the acceptance that the merchants and the consumers are demanding. But it doesn't just stop at the merchants. It has to be delivered through the bank, through the acquirer, the billers as well. So I would say it's how our platforms facilitate and enable the breadth of choice.

Steve at Mercator Advisory Group. I think this is for Ram. So the first part of the question would be that nice design that you have here that's taking 3 years, if you go to the right-hand side and the core functionality, what does that actually mean at the end of 3 years? And then the second part of the question has to do with the adoption of real-time. And this could be for anybody. We -- I know on the Bill Pay side, Odilon, you said that, that was probably going to be 1 of the big use cases. What about the banks? We know there's been historical resistance to moving to the cloud. I think that's starting to melt away. Is there a watershed moment coming for the banks in adopting SaaS models or Payments-as-a-Service?

So let me start from the second. And then you get the first, so you have time to think. So starting from the second one. What is the -- what are the triggers for real-time payments? What's happening around the globe? The first trigger is you need to have a consolidated effort. Real-time payments doesn't happen only with 1 bank. It needs to be a consolidated effort. So we have countries that the federal government is driving it, like Brazil, India, U.K. And in those places, you see acceleration, you see it happening. And they make it compulsory for the big banks to enter -- not to the smaller banks, but then the smaller banks have to enter on that. So that's the first force, needs to be to the bulk of the banks that hold the DDAs, right? The number of DDAs. So that's the first trigger. The second trigger is the experience needs to be very simple and consumer friendly. That happens today Zelle, by the way. It happens with Venmo, I would say, better than Zelle -- than Venmo, but it happens with Zelle and it happens with Venmo. So it is a simple, fast experience and that works, which gets more features when it starts to scale. So now you see much more features in India like loyalty, like other features coming to real-time payments, but it needs to start with a very simple experience on that. And last but not least, you need to manage fraud like crazy because then it comes a different level of fraud. And that's no different than cards. I mean when cards started, you guys remember the frauds. And with ATMs, I mean, with ATMs in some countries, you will not be able to go in during the night with ATMs because there would be like people watching and so forth. So it's going to be a new industry that's going to be. So those are the 3 important triggers to make it happen. If your question is more specific about the United States -- I think United States is lagging behind as everybody knows. And 1 of the reasons I think it is because there has been no this one force behind it. That's what FedNow is aiming to do. So we are working very close to FedNow and we are part of this effort, and we believe that it is inevitable. It's a question of time. The United States is not going to be behind it. And this really transforms the marketplace, and it's about inclusion, it's about effectiveness, efficiency and all of that. So I think it's going to come in the United States. If you ask me to bet on timing, it's hard. It's hard to bet on time. But it will depend on that -- it will depend on how much -- how -- what is the amount of banks that will really be part of this effort and if they are significant players, that's number one. Number 2 is simple operation. And number 3 is fraud prevention when it starts to scale.

So the question you asked around the core foundation, the core foundation is actually -- the intention behind it's the shared capabilities across our solution lines. So you have to think about it as a real-time payments. Real-time payment connectors are not a dedicated part of segment, they are actually a shared capability across all of the segments. You think about when the core foundation gets built, it's getting -- how it's getting built out, it will allow a local deployment of our solution with a global operational capability. So it's built for efficiency. Somebody asked the question around what are the -- the efficiencies across the segments are. So that is from an operational side as well on day-to-day management of these applications in a cloud. Those things are actually managed by a centralized global teams. But with the local deployment, with the local data production, all of that day-to-day management, which needs to happen from a compliance perspective, that happens locally within the core foundation, but with a global operating model. I hope that does answer your question.

Time for 1 more -- or maybe more.

Sort of following on to that, you mentioned there'll be hybrid on-prem, cloud native. And I'm wondering, as you transition and then the end state, how much sort of legacy tech is going to be sitting there that you have to maintain for customers that don't migrate? And then over time, if you have these multiple deployment methods, how do you keep everybody on the same version and therefore, keep DevOps and all that modernized versus having to constantly go back and make sure everything works retroactively.

Very good question. I'll answer the second portion first. So when you look at the 3 deployment options we talked about, on-prem, private cloud, public cloud, doesn't matter which way clients choose to deploy it. In a traditional sense, the software CDs used to get shipped to the clients and everybody picked and choosed when they installed, when they upgrade and you ended up with the multiple versions. In a new cloud-centric deployment model, our vision is to actually have -- we're going to ship, not CDs, it's going to be the containers, which they can deploy in any of the choices, deployment choices. So when everybody gets upgraded the DevOps, CI/CD pipeline, it's actually built into our container strategy and our deployment strategy. So everybody when the software gets upgraded, it's not upgraded like a patch as where you used to supply and give a client [ the update, ] it gets upgraded very transparently. So it's going to be a micro deployment built into how we manage and support ongoing basis. So that's how we think about it. We don't expect -- though we are calling it on-prem, different deployment option, it's a lot different than a traditional software installation process. The first question, which you asked around how much of the legacy tech is going to still be around. So when you think about -- in a merchant and biller stack, I think we are much more ahead in terms of modernization journey. In a bank side, we actually have still a way to go. We do expect, once we get through this rationalization done and modernization done, this very little legacy stuff is going to be left out. But with that being said, we are not taking, we're not going to force our clients to do a major upgrade and create a disruption, as I talked about. Our goal is to minimize the disruptions on our client while adopting the new technology strategy and have a pragmatic approach to adopting a modernized platform. For that, we -- our basic design is built for coexistence. So on-prem clients should be able to adopt cloud capabilities without disturbing on-prem. That does mean is that we have to continue to support that legacy environment they're running for a period of a time till they pragmatically are able to upgrade into fully cloud-enabled capabilities. We do expect this strategy would reduce their assistance to adoption and also a wide opening up entire new process because if they have to do a big bang approach, the RFPs come out. So this will eliminate that process. That's the thinking behind it. [ Martin, ] hopefully, that answers your question.

Yes. Let me just expand on that because from the point of view of the client , [ Martin ] [indiscernible], from the point of view of the client. There are 4 segments -- can you guys hear me? Yes. Is it working -- it's not getting a return. So there are 4 segments, 4 segments today, if I think, from the point of view of clients. First of all are the ones starting in the cloud already, cloud native and so forth. So these disruptors, the neo banks, you heard about the Green Dot now. So there are those ones that are not even blinking. They are going cloud directly. It's not mainframe. So that's the first segment. There was a second segment, which are the ones that made the decision to go and they're going out. And we have like a global bank that we're helping around the globe to do that today. And interesting enough, that global bank, it's coming on-premise in the cloud. So we're not -- it's not SaaS with us. It's really on-premise. They are going to the cloud with our software, and we are helping them doing that. So that's the second group. There's a third group of clients that they are talking about modernization and they're striving to make the first steps. And I'm talking banks and fintechs and disruptors. And what they are doing is they're going hybrid. So they keep the legacy, but they build new features in the cloud. And we are helping them on that journey. And there is the last group of clients that they are talking about that, but nothing really is happening. So I think the summary of it, [ Martin ], is the future is going to be hybrid again. You're going to have lots of clients in the next 5 or 10 years that are going to be 100% mainframe. And you're going to have clients that are going to migrate added services. And they're going to have clients that do migrate their holding, and they're going to have clients that will never experiment mainframe.

I think we've got time for 1 more coming in through the transom here. Paul Rodgers at Vendorcom. How significant is ACI Worldwide's strategy to build strategy -- how significant to ACI's strategy is today's announcement by Amazon in the U.K. that it will stop taking Visa credit cards from January 2022 due to the high card payment fees?

Debbie?

Yes, I'm happy to take that one. You'll recall that I made the point that merchants -- and Amazon is clearly not just a merchant but a marketplace and a force to be reckoned with -- that interchange costs are a big deal, particularly credit interchange costs. And so I think today's announcement where Amazon will not accept U.K. issued Visa cards is a great example of that pressure that merchants see and how do they reduce interchange costs and as well as most likely the negotiating power that Amazon will have in order to effect the change there. But I think that this is also representative of the situation and how options for other alternative payment methods are really going to continue showing up. And it's not just about getting the revenue in the door but doing it at the right cost.

And I think, too, that today the announcement today, obviously, that's a regulated market with regard to interchange. So obviously, they give some not only the Amazon brand but also the regulated environment to relate to. But it's clearly an issue that you're seeing in a number of markets associated with interchange and how different segments as well as different markets will manage the different costs associated with interchange as well.

Here's 1 from -- also from Crone Consulting, Heidi Liebenguth. What impact has the COVID-19-spurred exponential growth in mobile wallets such as Apple Pay, Google Pay, had on Biller Direct recurring payments?

I think you can complement, but I can start. When -- last year, I do remember all these stimulus packages that we had. And when those happened, I mean there was a tremendous boost in bill payment around the globe. If you think about payment method, it's no different because always digital for us -- we're not about cash and everything is remote when you pay a bill. So that has not impacted that much. But I can tell you that the stimulus packaging had a tremendous impact, right, in the capacity of people to pay bills, so.

I'll just expand upon that further. So probably 2 parts to it. On the COVID side, we've actually seen whenever the stimulus came in that had an impact on consumer finance, for instance, repayments. It also made an impact on what type of payment instrument, whether it's using a debit or credit and so on. So that's 1 part of it, which has clearly had impact. I think the broader theme has been the drive towards digital payments on 2 types. So 1 is that there's a notion about going away from cash. So like Odilon said, cash is around, but we've seen that the -- becoming more familiar with digital payments, digital interactions has actually become more pronounced. And that we're seeing is a positive, good trend for us that consumers are saying, let's not pay by checks. Let's not use mail, let's not use cash, let's actually use digital payments. And on our bill-payment business, it's all about digital payments and enabling digital payments. So that's an area that we're already well positioned in. Within the Apple Pay, Google Pay, alternate payments of different types, including PayPal, Venmo, PayPal Credit, we're also seeing an acceleration of that and we're providing that for each of our verticals. It's still on a very small base, but it's a question of choice. We're seeing that more prevalent in certain verticals like some of our consumer finance clients have been driving that more and they really want it like the here and now. There are some of our other verticals, whether it's government, higher education, insurance are having slower demand at that, but we're ready for that. And whether it's Apple Pay, Google Pay, it's an Alexa-enabled payment, we are providing that or enabling that in the coming year as well, if it's not already available. So it's a trend towards digital payments, and we're extremely well positioned for that.

While you're up there, Pete Heckmann from Davidson also asks, as real-time payments ramp in the U.S. how do you anticipate real-times directly from bank accounts may change the revenue and margin dynamics in the biller segment compared to the card base?

So the real-time payments, I think there's again 2 parts to it. There's the -- we operate in the biller direct market, where we provide -- we acquire billers in different verticals, we connect and provide that last mile connectivity and then offer them a wide range of payment channels and payment types directly to them. There is an indirect channel to the banks. And the banking channel for the past several years has continued to lose market share to the Biller Direct. And there's a number of studies and research that's been done against it. And it's a combination of the interaction that the biller has with the end consumer and the user experience that, that provides. So we're seeing that year-over-year, it's a secular trend for the past good number of years, and all indications are that, that trend will continue. Now the banks on the other side, there are clearly -- they are continuing to try to improve the user experience and whether it's real-time payments, whether it's other type of payments. And that is an area where the improved user experience, functionality, payment optionality is an area that we're continuing to see our biller customers saying that the Biller Direct channel they're expecting to remain as a primary force and continued growth in the months to come. On the question of real-time payments impacting interchange, interchange is a very substantive line item cost for us. So anything that drives -- that we manage that very, very carefully. We have pricing schemes that manage it. We look at it. We have a team that's dedicated on interchange management. Real-time payments has the possibility of impacting the interchange as that evolves. Crypto is another 1 that could impact it, like Debbie talked about earlier as well. So we're looking at that very, very closely. The announcement that we just talked about, about Amazon not accepting Visa credit, they're accepting Visa debit in the U.K. has an impact on that, it's had impact in the U.S. market. So that, in fact, is an opportunity for us to reduce interchange, any of these methods, as well and then pass on some of the benefits to our biller customers. So we're actually well positioned for those ongoing trends on interchange.

Any last questions in here?

So thank you, John. Thank you. And I'm very happy that we got all your questions. Thank you for that, John. So I just want again to thank you very much for coming here today for, again, taking the risk of being grouped here. And also, I thank everybody that is connecting with us today. We are very happy about the near past. We are very -- I'm very proud of the team for all the accomplishments. But I'm even more enthusiastic about the future to come. Thank you.