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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________
FORM 10-Q
___________________________
(Mark One)

☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2020
Or

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to
Commission File Number 0-25346
___________________________
ACI WORLDWIDE, INC.
(Exact name of registrant as specified in its charter)
___________________________

Delaware |  |  |  |  | 47-0772104
(State or other jurisdiction of incorporation or organization) |  |  |  |  | (I.R.S. Employer Identification No.)
3520 Kraft Rd, | Suite 300 | Naples, | Florida |  | 34105
(Address of principal executive offices) |  |  |  |  | (Zip code)

(239) 403-4660
(Registrant’s telephone number, including area code)
___________________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of the Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer | ☒ | Accelerated filer | ☐
Non-accelerated filer | ☐ | Smaller reporting company | ☐
|  | Emerging growth company | ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of May 4, 2020, there were 115,944,850 shares of the registrant’s common stock outstanding.
Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of each class |  | Trading Symbol(s) |  | Name of each exchange on which registered
Common Stock, $0.005 par value |  | ACIW |  | Nasdaq Global Select Market

Table of contents

| TABLE OF CONTENTS |
|  | Page
PART I – FINANCIAL INFORMATION |  |
Item 1 | Financial Statements (unaudited) |
| Condensed Consolidated Balance Sheets as of March 31, 2020, and December 31, 2019 | 3
| Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2020 and 2019 | 5
| Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2020 and 2019 | 6
| Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2020 and 2019 | 7
| Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2020 and 2019 | 8
| Notes to Condensed Consolidated Financial Statements | 9
Item 2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 24
Item 3 | Quantitative and Qualitative Disclosures About Market Risk | 38
Item 4 | Controls and Procedures | 38
PART II – OTHER INFORMATION |  |
Item 1 | Legal Proceedings | 39
Item 1A | Risk Factors | 39
Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds | 40
Item 3 | Defaults Upon Senior Securities | 40
Item 4 | Mine Safety Disclosures | 40
Item 5 | Other Information | 40
Item 6 | Exhibits | 41
Signature |  | 42

2

Table of contents
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ACI WORLDWIDE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited and in thousands, except share and per share amounts)

| March 31, 2020 |  | December 31, 2019
ASSETS |  |  |
Current assets |  |  |
Cash and cash equivalents | $ | 119,124 |  |  | $ | 121,398 |
Receivables, net of allowances of $3,465 and $5,149, respectively | 305,647 |  |  | 359,197 |
Settlement assets | 317,156 |  |  | 391,039 |
Prepaid expenses | 32,047 |  |  | 24,542 |
Other current assets | 32,472 |  |  | 24,200 |
Total current assets | 806,446 |  |  | 920,376 |
Noncurrent assets |  |  |
Accrued receivables, net | 198,554 |  |  | 213,041 |
Property and equipment, net | 67,893 |  |  | 70,380 |
Operating lease right-of-use assets | 53,490 |  |  | 57,382 |
Software, net | 225,171 |  |  | 234,517 |
Goodwill | 1,280,226 |  |  | 1,280,525 |
Intangible assets, net | 344,156 |  |  | 356,969 |
Deferred income taxes, net | 63,795 |  |  | 51,611 |
Other noncurrent assets | 70,168 |  |  | 72,733 |
TOTAL ASSETS | $ | 3,109,899 |  |  | $ | 3,257,534 |
LIABILITIES AND STOCKHOLDERS’ EQUITY |  |  |
Current liabilities |  |  |
Accounts payable | $ | 32,166 |  |  | $ | 37,010 |
Settlement liabilities | 297,936 |  |  | 368,719 |
Employee compensation | 35,035 |  |  | 29,318 |
Current portion of long-term debt | 34,177 |  |  | 34,148 |
Deferred revenue | 90,660 |  |  | 65,784 |
Other current liabilities | 66,382 |  |  | 76,971 |
Total current liabilities | 556,356 |  |  | 611,950 |
Noncurrent liabilities |  |  |
Deferred revenue | 46,104 |  |  | 53,155 |
Long-term debt | 1,321,452 |  |  | 1,339,007 |
Deferred income taxes, net | 31,959 |  |  | 32,053 |
Operating lease liabilities | 43,053 |  |  | 46,766 |
Other noncurrent liabilities | 43,177 |  |  | 44,635 |
Total liabilities | 2,042,101 |  |  | 2,127,566 |
Commitments and contingencies |  |  |
Stockholders’ equity |  |  |
Preferred stock; $0.01 par value; 5,000,000 shares authorized; no shares issued at March 31, 2020, and December 31, 2019 | — |  |  | — |
Common stock; $0.005 par value; 280,000,000 shares authorized; 140,525,055 shares issued at March 31, 2020, and December 31, 2019 | 702 |  |  | 702 |
Additional paid-in capital | 656,723 |  |  | 667,658 |
Retained earnings | 906,403 |  |  | 930,830 |
Treasury stock, at cost, 24,642,813 and 24,538,703 shares at March 31, 2020, and December 31, 2019, respectively | (398,278) |  |  | (377,639) |
Accumulated other comprehensive loss | (97,752) |  |  | (91,583) |
Total stockholders’ equity | 1,067,798 |  |  | 1,129,968 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 3,109,899 |  |  | $ | 3,257,534 |

The accompanying notes are an integral part of the condensed consolidated financial statements.
4

Table of contents
ACI WORLDWIDE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited and in thousands, except per share amounts)

|  |  |  |  | Three Months Ended March 31, |  |
|  |  |  |  | 2020 |  | 2019
Revenues |  |  |  |  |  |  |
Software as a service and platform as a service |  |  |  |  | $ | 192,950 |  |  | $ | 108,557 |
License |  |  |  |  | 28,129 |  |  | 21,078 |
Maintenance |  |  |  |  | 53,280 |  |  | 55,111 |
Services |  |  |  |  | 17,126 |  |  | 21,109 |
Total revenues |  |  |  |  | 291,485 |  |  | 205,855 |
Operating expenses |  |  |  |  |  |  |
Cost of revenue (1) |  |  |  |  | 165,837 |  |  | 114,941 |
Research and development |  |  |  |  | 39,024 |  |  | 36,194 |
Selling and marketing |  |  |  |  | 30,083 |  |  | 29,430 |
General and administrative |  |  |  |  | 35,926 |  |  | 31,517 |
Depreciation and amortization |  |  |  |  | 31,898 |  |  | 21,866 |
Total operating expenses |  |  |  |  | 302,768 |  |  | 233,948 |
Operating loss |  |  |  |  | (11,283) |  |  | (28,093) |
Other income (expense) |  |  |  |  |  |  |
Interest expense |  |  |  |  | (17,171) |  |  | (11,614) |
Interest income |  |  |  |  | 2,900 |  |  | 3,033 |
Other, net |  |  |  |  | (9,758) |  |  | (1,912) |
Total other income (expense) |  |  |  |  | (24,029) |  |  | (10,493) |
Loss before income taxes |  |  |  |  | (35,312) |  |  | (38,586) |
Income tax benefit |  |  |  |  | (10,885) |  |  | (12,623) |
Net loss |  |  |  |  | $ | (24,427) |  |  | $ | (25,963) |
Loss per common share |  |  |  |  |  |  |
Basic |  |  |  |  | $ | (0.21) |  |  | $ | (0.22) |
Diluted |  |  |  |  | $ | (0.21) |  |  | $ | (0.22) |
Weighted average common shares outstanding |  |  |  |  |  |  |
Basic |  |  |  |  | 116,006 |  |  | 116,090 |
Diluted |  |  |  |  | 116,006 |  |  | 116,090 |

(1) The cost of revenue excludes charges for depreciation but includes amortization of purchased and developed software for resale.
The accompanying notes are an integral part of the condensed consolidated financial statements.
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ACI WORLDWIDE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited and in thousands)

|  |  |  |  | Three Months Ended March 31, |  |
|  |  |  |  | 2020 |  | 2019
Net loss |  |  |  |  | $ | (24,427) |  |  | $ | (25,963) |
Other comprehensive income (loss): |  |  |  |  |  |  |
Foreign currency translation adjustments |  |  |  |  | (6,169) |  |  | 1,321 |
Total other comprehensive income (loss) |  |  |  |  | (6,169) |  |  | 1,321 |
Comprehensive loss |  |  |  |  | $ | (30,596) |  |  | $ | (24,642) |

The accompanying notes are an integral part of the condensed consolidated financial statements.
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ACI WORLDWIDE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(unaudited and in thousands, except share amounts)

| Three Months Ended March 31, 2020 |  |  |  |  |  |  |  |  |  |
| Common Stock |  | Additional Paid-in Capital |  | Retained Earnings |  | Treasury Stock |  | Accumulated Other Comprehensive Loss |  | Total
Balance as of December 31, 2019 | $ | 702 |  |  | $ | 667,658 |  |  | $ | 930,830 |  |  | $ | (377,639) |  |  | $ | (91,583) |  |  | $ | 1,129,968 |
Net loss | — |  |  | — |  |  | (24,427) |  |  | — |  |  | — |  |  | (24,427) |
Other comprehensive loss | — |  |  | — |  |  | — |  |  | — |  |  | (6,169) |  |  | (6,169) |
Stock-based compensation | — |  |  | 6,950 |  |  | — |  |  | — |  |  | — |  |  | 6,950 |
Shares issued and forfeited, net, under stock plans | — |  |  | (17,885) |  |  | — |  |  | 19,215 |  |  | — |  |  | 1,330 |
Repurchase of 1,000,000 shares of common stock | — |  |  | — |  |  | — |  |  | (28,881) |  |  | — |  |  | (28,881) |
Repurchase of stock-based compensation awards for tax withholdings | — |  |  | — |  |  | — |  |  | (10,973) |  |  | — |  |  | (10,973) |
Balance as of March 31, 2020 | $ | 702 |  |  | $ | 656,723 |  |  | $ | 906,403 |  |  | $ | (398,278) |  |  | $ | (97,752) |  |  | $ | 1,067,798 |
| Three Months Ended March 31, 2019 |  |  |  |  |  |  |  |  |  |
| Common Stock |  | Additional Paid-in Capital |  | Retained Earnings |  | Treasury Stock |  | Accumulated Other Comprehensive Loss |  | Total
Balance as of December 31, 2018 | $ | 702 |  |  | $ | 632,235 |  |  | $ | 863,768 |  |  | $ | (355,857) |  |  | $ | (92,617) |  |  | $ | 1,048,231 |
Net loss | — |  |  | — |  |  | (25,963) |  |  | — |  |  | — |  |  | (25,963) |
Other comprehensive income | — |  |  | — |  |  | — |  |  | — |  |  | 1,321 |  |  | 1,321 |
Stock-based compensation | — |  |  | 6,585 |  |  | — |  |  | — |  |  | — |  |  | 6,585 |
Shares issued and forfeited, net, under stock plans | — |  |  | (1,860) |  |  | — |  |  | 7,525 |  |  | — |  |  | 5,665 |
Repurchase of 23,802 shares of common stock | — |  |  | — |  |  | — |  |  | (631) |  |  | — |  |  | (631) |
Repurchase of stock-based compensation awards for tax withholdings | — |  |  | — |  |  | — |  |  | (2,624) |  |  | — |  |  | (2,624) |
Balance as of March 31, 2019 | $ | 702 |  |  | $ | 636,960 |  |  | $ | 837,805 |  |  | $ | (351,587) |  |  | $ | (91,296) |  |  | $ | 1,032,584 |

The accompanying notes are an integral part of the condensed consolidated financial statements.
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ACI WORLDWIDE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in thousands)

| Three Months Ended March 31, |  |
| 2020 |  | 2019
Cash flows from operating activities: |  |  |
Net loss | $ | (24,427) |  |  | $ | (25,963) |
Adjustments to reconcile net loss to net cash flows from operating activities: |  |  |
Depreciation | 5,825 |  |  | 5,901 |
Amortization | 27,997 |  |  | 18,951 |
Amortization of operating lease right-of-use assets | 3,556 |  |  | 3,383 |
Amortization of deferred debt issuance costs | 1,212 |  |  | 753 |
Deferred income taxes | (10,413) |  |  | (17,414) |
Stock-based compensation expense | 6,950 |  |  | 6,585 |
Other | 650 |  |  | 574 |
Changes in operating assets and liabilities, net of impact of acquisitions: |  |  |
Receivables | 48,699 |  |  | 94,549 |
Accounts payable | (6,087) |  |  | (10,297) |
Accrued employee compensation | 6,985 |  |  | (8,598) |
Current income taxes | (5,361) |  |  | (1,041) |
Deferred revenue | 22,495 |  |  | (4,127) |
Other current and noncurrent assets and liabilities | (20,581) |  |  | (20,829) |
Net cash flows from operating activities | 57,500 |  |  | 42,427 |
Cash flows from investing activities: |  |  |
Purchases of property and equipment | (3,597) |  |  | (5,250) |
Purchases of software and distribution rights | (6,541) |  |  | (4,578) |
Net cash flows from investing activities | (10,138) |  |  | (9,828) |
Cash flows from financing activities: |  |  |
Proceeds from issuance of common stock | 947 |  |  | 831 |
Proceeds from exercises of stock options | 400 |  |  | 4,857 |
Repurchase of stock-based compensation awards for tax withholdings | (10,973) |  |  | (2,624) |
Repurchases of common stock | (28,881) |  |  | (631) |
Proceeds from revolving credit facility | 30,000 |  |  | — |
Repayment of revolving credit facility | (39,000) |  |  | — |
Repayment of term portion of credit agreement | (9,737) |  |  | (5,937) |
Payments on or proceeds from other debt, net | (3,593) |  |  | (1,857) |
Net cash flows from financing activities | (60,837) |  |  | (5,361) |
Effect of exchange rate fluctuations on cash | 11,201 |  |  | 433 |
Net increase (decrease) in cash and cash equivalents | (2,274) |  |  | 27,671 |
Cash and cash equivalents, beginning of period | 121,398 |  |  | 148,502 |
Cash and cash equivalents, end of period | $ | 119,124 |  |  | $ | 176,173 |
Supplemental cash flow information |  |  |
Income taxes paid | $ | 6,639 |  |  | $ | 5,949 |
Interest paid | $ | 21,837 |  |  | $ | 14,388 |

The accompanying notes are an integral part of the condensed consolidated financial statements.
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ACI WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Condensed Consolidated Financial Statements
The unaudited condensed consolidated financial statements include the accounts of ACI Worldwide, Inc. and its wholly-owned subsidiaries (collectively, the “Company”). All intercompany balances and transactions have been eliminated. The condensed consolidated financial statements as of March 31, 2020, and for the three months ended March 31, 2020 and 2019, are unaudited and reflect all adjustments of a normal recurring nature, which are, in the opinion of management, necessary for a fair presentation, in all material respects, of the financial position and operating results for the interim periods. The condensed consolidated balance sheet as of December 31, 2019, is derived from the audited financial statements.
The condensed consolidated financial statements contained herein should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2019, filed on February 27, 2020. Results for the three months ended March 31, 2020, are not necessarily indicative of results that may be attained in the future.
The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) requires management to make judgments, estimates, and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Risks and Uncertainties
The Company is subject to risks and uncertainties as a result of the COVID-19 pandemic. The extent of the impact of the COVID-19 pandemic on the Company's business is highly uncertain and difficult to predict, as the response to the pandemic is in early stages and information is rapidly evolving. The Company has experienced changes in volumes for certain Merchant and Biller customers and has received limited requests for extended payment terms under existing contracts. Furthermore, capital markets and economies worldwide have also been negatively impacted by the COVID-19 pandemic, and it is possible that it could cause a local and/or global economic recession. Such economic disruption could have a material adverse effect on our business as our customers curtail and reduce capital and overall spending. Policymakers around the globe have responded with fiscal policy actions to support the economy as a whole. The magnitude and overall effectiveness of these actions remains uncertain.
The severity of the impact of the COVID-19 pandemic on the Company's business will depend on a number of factors, including, but not limited to, the duration and severity of the pandemic and the extent and severity of the impact on the Company's customers, all of which are uncertain and cannot be predicted. The Company's future results of operations and liquidity could be adversely impacted by delays in payments of outstanding receivable amounts beyond normal payment terms, uncertain demand, and the impact of any initiatives or programs that the Company may undertake to address financial and operations challenges faced by its customers. As of the date of issuance of these condensed consolidated financial statements, the extent to which the COVID-19 pandemic may materially impact the Company's financial condition, liquidity, or results of operations is uncertain.
Other Current Liabilities
The components of other current liabilities are included in the following table (in thousands):

| March 31, 2020 |  | December 31, 2019
Operating lease liabilities | $ | 14,586 |  |  | $ | 15,049 |
Vendor financed licenses | 10,390 |  |  | 9,667 |
Royalties payable | 5,162 |  |  | 6,107 |
Accrued interest | 3,308 |  |  | 9,212 |
Other | 32,936 |  |  | 36,936 |
Total other current liabilities | $ | 66,382 |  |  | $ | 76,971 |

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Settlement Assets and Liabilities
Individuals and businesses settle their obligations to the Company’s various Biller clients using credit or debit cards or via automated clearing house (“ACH”) payments. The Company creates a receivable for the amount due from the credit or debit card processor and an offsetting payable to the client. Upon confirmation that the funds have been received, the Company settles the obligation to the client. Due to timing, in some instances, the Company may (1) receive the funds into bank accounts controlled by and in the Company’s name that are not disbursed to its clients by the end of the day, resulting in a settlement deposit on the Company’s books and (2) disburse funds to its clients in advance of receiving funds from the credit or debit card processor, resulting in a net settlement receivable position.
Off Balance Sheet Settlement Accounts
The Company also enters into agreements with certain Biller clients to process payment funds on their behalf. When an ACH or automated teller machine network payment transaction is processed, a transaction is initiated to withdraw funds from the designated source account and deposit them into a settlement account, which is a trust account maintained for the benefit of the Company’s clients. A simultaneous transaction is initiated to transfer funds from the settlement account to the intended destination account. These “back to back” transactions are designed to settle at the same time, usually overnight, such that the Company receives the funds from the source at the same time as it sends the funds to their destination. However, due to the transactions being with various financial institutions there may be timing differences that result in float balances. These funds are maintained in accounts for the benefit of the client, which is separate from the Company’s corporate assets. As the Company does not take ownership of the funds, these settlement accounts are not included in the Company’s balance sheet. The Company is entitled to interest earned on the fund balances. The collection of interest on these settlement accounts is considered in the Company’s determination of its fee structure for clients and represents a portion of the payment for services performed by the Company. The amount of settlement funds as of March 31, 2020, and December 31, 2019, was $215.5 million and $274.0 million, respectively.
Fair Value
The fair value of the Company’s Credit Agreement approximates the carrying value due to the floating interest rate (Level 2 of the fair value hierarchy). The Company measures the fair value of its Senior Notes based on Level 2 inputs, which include quoted market prices and interest rate spreads of similar securities. The fair value of the Company’s 5.750% Senior Notes due 2026 (“2026 Notes”) was $402.0 million and $432.0 million as of March 31, 2020, and December 31, 2019, respectively.
The fair values of cash and cash equivalents approximate the carrying values due to the short period of time to maturity (Level 2 of the fair value hierarchy).
Goodwill
In accordance with the Accounting Standards Codification (“ASC”) 350, Intangibles – Goodwill and Other, the Company assesses goodwill for impairment annually during the fourth quarter of its fiscal year using October 1 balances or when there is evidence that events or changes in circumstances indicate that the carrying amount of the asset may not be recovered. The Company evaluates goodwill at the reporting unit level and has identified its reportable segments, ACI On Demand and ACI On Premise, as the reporting units.
Changes in the carrying amount of goodwill attributable to each reporting unit during the three months ended March 31, 2020, were as follows (in thousands):

|  | ACI On Demand |  | ACI On Premise |  | Total
Gross Balance, prior to December 31, 2019 |  | $ | 554,617 |  |  |  | $ | 773,340 |  |  |  | $ | 1,327,957 |
Total impairment prior to December 31, 2019 |  | — |  |  |  | (47,432) |  |  |  | (47,432) |
Balance, December 31, 2019 |  | 554,617 |  |  | 725,908 |  |  | 1,280,525 |
Goodwill from acquisitions (1) |  | (299) |  |  | — |  |  | (299) |
Balance, March 31, 2020 |  | $ | 554,318 |  |  | $ | 725,908 |  |  | $ | 1,280,226 |

(1)Goodwill from acquisitions relates to adjustments in the goodwill recorded for the acquisition of E Commerce Group Products, Inc. ("ECG"), along with ECG's subsidiary, Speedpay, Inc. (collectively referred to as "Speedpay") and Walletron, Inc. ("Walletron"), as discussed in Note 3, Acquisition.
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Recoverability of goodwill is measured using a discounted cash flow valuation model incorporating discount rates commensurate with the risks involved. Use of a discounted cash flow model is common practice in impairment testing in the absence of available transactional market evidence to determine the fair value. The calculated fair value was substantially in excess of the current carrying value for all reporting units based upon the October 1, 2019, annual impairment test. Given the adverse economic and market conditions caused by the COVID-19 pandemic, the Company considered a variety of qualitative factors to determine if an additional quantitative impairment test was required subsequent to our annual impairment test. Based on a variety of factors, including the excess of the fair value over the carrying amount in the most recent impairment test, we determined that an additional quantitative impairment test was not required.
Equity Method Investment
On July 23, 2019, the Company invested $18.3 million for a 30% non-controlling financial interest in a payment technology and services company in India. The Company accounted for this investment using the equity method in accordance with ASC 323, Investments - Equity Method and Joint Ventures. Accordingly, the Company recorded an initial investment of $18.5 million, which is included in other noncurrent assets in the condensed consolidated balance sheet as of March 31, 2020 and December 31, 2019. The Company records its share of earnings and losses in the investment on a one-quarter lag basis.
Name Change
Effective January 1, 2020, Official Payments Corporation, a wholly owned subsidiary, changed its name to ACI Payments, Inc. An amended and restated certificate of incorporation was filed with the state of Delaware to reflect the change. The Official Payments Corporation name and corresponding trade name may continue to be used until all stationary and marketing materials are transitioned to ACI Payments, Inc. equivalents.
New Accounting Standards Recently Adopted
In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments, codified as ASC 326. Subsequent amendments to the guidance were issued as follows: ASU 2018-19 in November 2018; ASU 2019-04 in April 2019; ASU 2019-05 in May 2019; ASU's 2019-10 and 2019-11 in November 2019; and ASU 2020-02 in February 2020. This ASU provides financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The amendments in ASU 2016-13 replace the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The Company is required to use a forward-looking expected credit loss model for billed and accrued receivables. The Company adopted ASU 2016-13 as of January 1, 2020. The adoption of ASU 2016-13 did not have a material impact on the condensed consolidated financial statements.
In February 2020, the FASB issued ASU 2020-03, Codification Improvements to Financial Instruments, which clarifies or improves various financial instruments topics in the accounting standards codification to increase stakeholder awareness. ASU 2020-03 was effective upon issuance and did not have a material impact on the condensed consolidated financial statements.
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The update provides optional guidance for a limited period of time to ease potential accounting impacts associated with transitioning away from reference rates that are expected to be discontinued, such as the London Interbank Offered Rate (“LIBOR”). This guidance includes optional expedients and exceptions for applying U.S. GAAP to transactions affected by reference rate reform if certain criteria are met. ASU 2020-04 is effective for all entities as of March 12, 2020, through December 31, 2022, when the reference rate replacement activity is expected to be completed. The adoption of ASU 2020-04 did not have an impact on the Company's condensed consolidated financial statements.
Recently Issued Accounting Standards Not Yet Effective
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, as part of its initiative to reduce complexity in accounting standards. The amendments in this update simplify the accounting for income taxes by removing certain exceptions within ASC 740, as well as clarify and simplify other aspects of the accounting for income taxes to promote consistency among reporting entities. ASU 2019-12 is effective for annual and interim periods beginning after December 15, 2020. The Company is currently assessing the impact the adoption of ASU 2019-12 will have on its condensed consolidated financial statements.
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2. Revenue
In accordance with ASC 606, Revenue From Contracts With Customers, revenue is recognized upon transfer of control of promised products and/or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products and services. Revenue is recognized net of any taxes collected from customers and subsequently remitted to governmental authorities. See Note 10, Segment Information, for additional information, including disaggregation of revenue based on primary solution category and geographic location.
Total receivables represent amounts billed and amounts earned that are to be billed in the future (i.e., accrued receivables). Included in accrued receivables are services, software as a service ("SaaS"), and platform as a service ("PaaS") revenues earned in the current period but billed in the following period, and amounts due under multi-year software license arrangements with extended payment terms for which the Company has an unconditional right to invoice and receive payment subsequent to invoicing.
Total receivables, net is comprised of the following (in thousands):

| March 31, 2020 |  | December 31, 2019
Billed receivables | $ | 164,282 |  |  | $ | 213,654 |
Allowance for doubtful accounts | (3,465) |  |  | (5,149) |
Billed receivables, net | 160,817 |  |  | 208,505 |
Accrued receivables | 375,739 |  |  | 399,302 |
Significant financing component | (32,355) |  |  | (35,569) |
Total accrued receivables, net | 343,384 |  |  | 363,733 |
Less: current accrued receivables | 155,430 |  |  | 161,714 |
Less: current significant financing component | (10,600) |  |  | (11,022) |
Total long-term accrued receivables, net | 198,554 |  |  | 213,041 |
Total receivables, net | $ | 504,201 |  |  | $ | 572,238 |

No customer accounted for more than 10% of the Company’s consolidated receivables balance as of March 31, 2020, or December 31, 2019.
Deferred revenue includes amounts due or received from customers for software licenses, maintenance, services, and/or SaaS and PaaS services in advance of recording the related revenue.
Changes in deferred revenue were as follows (in thousands):

Balance, December 31, 2019 | $ | 118,939 |
Deferral of revenue | 45,927 |
Recognition of deferred revenue | (25,359) |
Foreign currency translation | (2,743) |
Balance, March 31, 2020 | $ | 136,764 |

Revenue allocated to remaining performance obligations represents contracted revenue that will be recognized in future periods, which is comprised of deferred revenue and amounts that will be invoiced and recognized as revenue in future periods. This does not include:
•Revenue that will be recognized in future periods from capacity overages that are accounted for as a usage-based royalty.
•SaaS and PaaS revenue from variable consideration that will be recognized in accordance with the ‘right to invoice’ practical expedient.
•SaaS and PaaS revenue from variable consideration that will be recognized in accordance with the direct allocation method.
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Revenue allocated to remaining performance obligations was $682.2 million as of March 31, 2020, of which the Company expects to recognize approximately 44% over the next 12 months and the remainder ther eafter.
During the three months ended March 31, 2020 and 2019, revenue recognized by the Company from performance obligations satisfied in previous periods was not significant.
3. Acquisition
Speedpay
On May 9, 2019, the Company acquired Speedpay, a subsidiary of The Western Union Company (“Western Union”), for $754.1 million in cash, including working capital adjustments, pursuant to a Stock Purchase Agreement, among the Company, Western Union, and ACI Worldwide Corp., a wholly owned subsidiary of the Company. The Company has included the financial results of Speedpay in the condensed consolidated financial statements from the date of acquisition. The combination of the Company and Speedpay bill pay solutions serves more than 4,000 customers across the U.S., bringing expanded reach in existing and complementary market segments such as consumer finance, insurance, healthcare, higher education, utilities, government, and mortgage. The acquisition of Speedpay increases the scale of the Company’s On Demand platform business and allows the acceleration of platform innovation through increased research and development and investment in ACI's On Demand platform infrastructure.
To fund the acquisition, the Company amended its existing Credit Agreement, dated February 24, 2017, for an additional $500.0 million senior secured term loan (“Delayed Draw Term Loan”), in addition to drawing $250.0 million on the available Revolving Credit Facility. See Note 4, Debt, for terms of the Credit Agreement. The remaining acquisition consideration was funded with cash on hand.
The Company expensed approximately $4.7 million of costs related to the acquisition of Speedpay for the three months ended March 31, 2019. These costs, which consist primarily of investment bank, consulting, and legal fees, are included in general and administrative expenses in the accompanying condensed consolidated statements of operations.
Speedpay contributed approximately $88.7 million in revenue and $12.3 million in operating income for the three months ended March 31, 2020.
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In connection with the acquisition, the Company recorded the following amounts based upon its purchase price allocation as of March 31, 2020 (in thousands, except weighted average useful lives):

|  | Amount |  | Weighted Average Useful Lives
Current assets: |  |  |  |
Cash and cash equivalents |  | $ | 135 |  |  |
Receivables, net of allowances |  | 17,658 |  |  |
Settlement assets |  | 239,604 |  |  |
Prepaid expenses |  | 317 |  |  |
Other current assets |  | 19,585 |  |  |
Total current assets acquired |  | 277,299 |  |  |
Noncurrent assets: |  |  |  |
Goodwill |  | 366,508 |  |  |
Software |  | 113,600 |  |  | 7 years
Customer relationships |  | 208,500 |  |  | 15 years
Trademarks |  | 10,900 |  |  | 5 years
Other noncurrent assets |  | 3,745 |  |  |
Total assets acquired |  | 980,552 |  |  |
Current liabilities: |  |  |  |
Accounts payable |  | 6,623 |  |  |
Settlement liabilities |  | 212,892 |  |  |
Employee compensation |  | 1,959 |  |  |
Other current liabilities |  | 3,802 |  |  |
Total current liabilities acquired |  | 225,276 |  |  |
Noncurrent liabilities: |  |  |  |
Other noncurrent liabilities |  | 1,219 |  |  |
Total liabilities acquired |  | 226,495 |  |  |
Net assets acquired |  | $ | 754,057 |  |  |

During the three months ended March 31, 2020, the Company made adjustments to the preliminary purchase price allocation as additional information became available for accounts payable. These adjustments and any resulting adjustments to the statements of operations were not material to the Company’s previously reported operating results or financial position.
Factors contributing to the purchase price that resulted in the goodwill (which is tax deductible) include the acquisition of management, sales, and technology personnel with the skills to market new and existing products of the Company, enhanced product capabilities, complementary products, and customers.
Unaudited Pro Forma Financial Information
The pro forma financial information in the table below presents the combined results of operations for ACI and Speedpay as if the acquisition had occurred January 1, 2018. The pro forma information is shown for illustrative purposes only and is not necessarily indicative of future results of operations of the Company or results of operations of the Company that would have actually occurred had the transaction been in effect for the periods presented. This pro forma information is not intended to represent or be indicative of actual results had the acquisition occurred as of the beginning of each period, and does not reflect potential synergies, integration costs, or other such costs or savings.
Certain pro forma adjustments have been made to net loss for the three months ended March 31, 2019, to give effect to estimated adjustments that remove the amortization expense on eliminated Speedpay historical identifiable intangible assets, add amortization expense for the value of acquired identified intangible assets (primarily acquired software, customer relationships, and trademarks), and add estimated interest expense on the Company’s additional Delayed Draw Term Loan and Revolving Credit Facility borrowings. Additionally, certain transaction expenses that are a direct result of the acquisition have
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been excluded. The three months ended March 31, 2020, is not presented as Speedpay is included in the Company's consolidated results for the entire period.
The following is the unaudited summarized pro forma financial information (in thousands, except per share data):

|  |  |  | Three Months Ended March 31, 2019
Pro forma revenue |  |  |  | $ | 294,059 |
Pro forma net loss |  |  |  | $ | (21,245) |
Pro forma loss per share: |  |  |  |
Basic |  |  |  | $ | (0.18) |
Diluted |  |  |  | $ | (0.18) |

Walletron
On May 9, 2019, the Company also completed the acquisition of Walletron, which delivers patented mobile wallet technology. The Company has included the financial results of Walletron in the condensed consolidated financial statements from the date of acquisition, which were not material.
4. Debt
As of March 31, 2020, the Company had $230.0 million, $746.3 million, and $400.0 million outstanding under its Revolving Credit Facility, Term Loan, and Senior Notes, respectively, with up to $270.0 million of unused borrowings under the Revolving Credit Facility portion of the Credit Agreement, as amended.
Credit Agreement
On April 5, 2019, the Company (and its wholly-owned subsidiaries, ACI Worldwide Corp. and ACI Payments, Inc. entered into the Second Amended and Restated Credit Agreement (the “Credit Agreement”) with the lenders, and Bank of America, N.A., as administrative agent for the lenders, to amend and restate the Company's existing agreement, as amended, dated February 24, 2017.
The Credit Agreement consists of (a) a five-year $500.0 million senior secured revolving credit facility (the “Revolving Credit Facility”), which includes sublimits for (1) the issuance of standby letters of credit and (2) swingline loans, (b) a five-year $279.0 million senior secured term loan facility (the "Initial Term Loan") and (c) a five-year $500.0 million Delayed Draw Term Loan (together with the Initial Term Loan, the "Term Loans", and together with the Initial Term Loan and the Revolving Credit Facility, the “Credit Facility”). The Credit Agreement also allows the Company to request optional incremental term loans and increases in the revolving commitment. The Credit Facility will mature on April 5, 2024.
At the Company’s option, borrowings under the Credit Facility bear interest at an annual rate equal to, either (a) a base rate determined by reference to the highest of (1) the annual interest rate publicly announced by the administrative agent as its Prime Rate, (2) the federal funds effective rate plus 1/2 of 1%, or (3) a London Interbank Offered Rate (“LIBOR”) rate determined by reference to the costs of funds for U.S. dollar deposits for a one-month interest period, adjusted for certain additional costs, plus 1% or (b) a LIBOR rate determined by reference to the costs of funds for U.S. dollar deposits for the interest period relevant to such borrowings, adjusted for certain additional costs, plus an applicable margin. Based on the calculation of the applicable consolidated total leverage ratio, the applicable margin for borrowings under the Credit Facility is between 0.25% to 1.25% with respect to base rate borrowings and between 1.25% and 2.25% with respect to LIBOR rate borrowings. Interest is due and payable monthly. The interest rate in effect for the Credit Facility as of March 31, 2020, was 3.17%.
The Company is also required to pay (a) a commitment fee related to the unutilized commitments under the Revolving Credit Facility, payable quarterly in arrears, (b) letter of credit fees on the maximum amount available to be drawn under all outstanding letters of credit in an amount equal to the applicable margin on LIBOR rate borrowings under the Revolving Credit Facility on an annual basis, payable quarterly in arrears, and (c) customary fronting fees for the issuance of letters of credit fees and agency fees.
The Company’s obligations under the Credit Facility and cash management arrangements entered into with lenders under the Credit Facility (or affiliates thereof) and the obligations of the subsidiary guarantors are secured by first-priority security interests in substantially all assets of the Company and any guarantor, including 100% of the capital stock of ACI Worldwide Corp. and each domestic subsidiary of the Company, each domestic subsidiary of any guarantor, and 65% of the voting capital stock of each foreign subsidiary of the Company that is directly owned by the Company or a guarantor, in each case subject to
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certain exclusions set forth in the credit documentation governing the Credit Facility. The collateral agreement of the Credit Agreement, as amended, released the lien on certain assets of ACI Payments, Inc., our electronic bill presentment and payment affiliate, to allow ACI Payments, Inc. to comply with certain eligible securities and unencumbered asset requirements related to money transmitter or transfer license rules and regulations.
The Credit Agreement contains a number of covenants that, among other things and subject to certain exceptions, restrict the Company’s and its subsidiaries' ability to: create, incur, assume or suffer to exist any additional indebtedness; create, incur, assume or suffer to exist any liens; enter into agreements and other arrangements that include negative pledge clauses; pay dividends on capital stock or redeem, repurchase or retire capital stock or subordinated indebtedness; create restrictions on the payment of dividends or other distributions by subsidiaries; make investments, loans, advances and acquisitions; merge, consolidate or enter into any similar combination or sell assets, including equity interests of the subsidiaries; enter into sale and leaseback transactions; directly or indirectly engage in transactions with affiliates; alter in any material respect the character or conduct of the business; enter into amendments of or waivers under subordinated indebtedness, organizational documents, and certain other material agreements; and hold certain assets and incur certain liabilities.
Expected Discontinuation of LIBOR
In July 2017, the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, announced it will no longer compel banks to submit rates for the calculation of LIBOR after 2021. The Alternative Reference Rates Committee has proposed the Secured Overnight Financing Rate ("SOFR") as its recommended alternative to LIBOR, and the first publication of SOFR rates was released in April 2018.
The Company is evaluating the potential impact of the transition from LIBOR as an interest rate benchmark to other potential alternative reference rates, including SOFR. The Company's Credit Agreement is currently indexed to LIBOR and the maturity date of the Credit Agreement extends beyond 2021. The Credit Agreement contemplates the discontinuation of LIBOR and provides options for the Company in such an event. The Company will continue to actively assess the related opportunities and risks involved in this transition.
Senior Notes
On August 21, 2018, the Company completed a $400.0 million offering of the 2026 Notes at an issue price of 100% of the principal amount in a private placement for resale to qualified institutional buyers. The 2026 Notes bear interest at an annual rate of 5.750%, payable semi-annually in arrears on February 15 and August 15 of each year. The 2026 Notes will mature on August 15, 2026.
Maturities on debt outstanding as of March 31, 2020, are as follows (in thousands):

Fiscal Year Ending December 31, |
Remainder of 2020 | $ | 29,213 |
2021 | 38,950 |
2022 | 50,431 |
2023 | 69,906 |
2024 | 787,823 |
Thereafter | 400,000 |
Total | $ | 1,376,323 |

The Credit Agreement and 2026 Notes contain certain customary affirmative covenants and negative covenants that limit or restrict, subject to certain exceptions, the incurrence of liens, indebtedness of subsidiaries, mergers, advances, investments, acquisitions, transactions with affiliates, change in nature of business, and the sale of the assets. In addition, the Credit Agreement and 2026 Notes contain certain customary mandatory prepayment provisions. The Company is also required to maintain a consolidated leverage ratio at or below a specified amount and an interest coverage ratio at or above a specified amount. As specified in the Credit Agreement and 2026 Notes agreement, if certain events occur and continue, the Company may be required to repay all amounts outstanding under the Credit Facility and 2026 Notes. As of March 31, 2020, and at all times during the period, the Company was in compliance with its financial debt covenants.
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Total debt is comprised of the following (in thousands):

| March 31, 2020 |  | December 31, 2019
Term loans | $ | 746,323 |  |  | $ | 756,060 |
Revolving credit facility | 230,000 |  |  | 239,000 |
5.750% Senior notes, due August 2026 | 400,000 |  |  | 400,000 |
Debt issuance costs | (20,694) |  |  | (21,905) |
Total debt | 1,355,629 |  |  | 1,373,155 |
Less: current portion of term loans | 38,950 |  |  | 38,950 |
Less: current portion of debt issuance costs | (4,773) |  |  | (4,802) |
Total long-term debt | $ | 1,321,452 |  |  | $ | 1,339,007 |

Overdraft Facility
In 2019, the Company and ACI Payments, Inc. entered in to a $140.0 million uncommitted overdraft facility with Bank of America, N.A. The overdraft facility bears interest at LIBOR plus 0.875% based on the Company’s average outstanding balance and the frequency in which overdrafts occur. The overdraft facility acts as a secured loan under the terms of the Credit Agreement to provide an additional funding mechanism for timing differences that can occur in the bill payment settlement process. Amounts outstanding on the overdraft facility are included in other current liabilities in the condensed consolidated balance sheet. As of March 31, 2020, there was no amount outstanding on the overdraft facility. As of December 31, 2019, there was $1.5 million outstanding on the overdraft facility.
Other
As of March 31, 2020, and December 31, 2019, $13.8 million was outstanding related to certain multi-year license agreements for internal-use software, of which $6.0 million and $7.8 million was included in other current liabilities and other noncurrent liabilities, respectively, in the condensed consolidated balance sheets. Upon execution, these arrangements have been treated as a non-cash investing and financing activity for purposes of the condensed consolidated statements of cash flows.
5. Stock-Based Compensation Plans
Employee Stock Purchase Plan
Shares issued under the 2017 Employee Stock Purchase Plan during the three months ended March 31, 2020 and 2019, totaled 31,794 and 32,174, respectively.
Stock Options
A summary of stock option activity is as follows:

| Number of Shares |  | Weighted Average Exercise Price ($) |  | Weighted Average Remaining Contractual Term (Years) |  | Aggregate Intrinsic Value of In-the-Money Options ($)
Outstanding as of December 31, 2019 | 4,006,816 |  |  | $ | 18.18 |  |  |  |  |
Exercised | (23,223) |  |  | 17.21 |  |  |  |  |
Forfeited | (57,744) |  |  | 19.08 |  |  |  |  |
Expired | (6,090) |  |  | 18.44 |  |  |  |  |
Outstanding as of March 31, 2020 | 3,919,759 |  |  | $ | 18.17 |  |  | 3.13 |  | $ | 23,427,581 |
Exercisable as of March 31, 2020 | 3,772,523 |  |  | $ | 18.10 |  |  | 3.18 |  | $ | 22,816,683 |

The total intrinsic value of stock options exercised during the three months ended March 31, 2020 and 2019, was $0.3 million and $5.3 million, respectively. There were no stock options granted during the three months ended March 31, 2020 or 2019.
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Long-term Incentive Program Performance Share Awards
A summary of nonvested long-term incentive program performance share awards (“LTIP performance shares”) is as follows:

| Number of Shares at Expected Attainment |  | Weighted Average Grant Date Fair Value
Nonvested as of December 31, 2019 | 669,469 |  |  | $ | 20.12 |
Vested | (668,240) |  |  | 20.12 |
Forfeited | (5,368) |  |  | 20.12 |
Change in attainment | 4,139 |  |  | 20.12 |
Nonvested as of March 31, 2020 | — |  |  | $ | — |

During the three months ended March 31, 2020, a total of 668,240 LTIPs vested. The Company withheld 165,237 of those shares to pay the employees’ portion of the minimum payroll withholding taxes.
Restricted Share Awards
A summary of nonvested restricted share awards (“RSAs”) is as follows:

| Number of Shares |  | Weighted Average Grant Date Fair Value
Nonvested as of December 31, 2019 | 92,842 |  |  | $ | 20.13 |
Vested | (88,913) |  |  | 20.12 |
Forfeited | (3,929) |  |  | 20.35 |
Nonvested as of March 31, 2020 | — |  |  | $ | — |

During the three months ended March 31, 2020, a total of 88,913 RSAs vested. The Company withheld 28,233 of those shares to pay the employees’ portion of the minimum payroll withholding taxes.
Total Shareholder Return Awards
A summary of nonvested total shareholder return awards (“TSRs”) is as follows:

| Number of Shares |  | Weighted Average Grant Date Fair Value
Nonvested as of December 31, 2019 | 1,062,291 |  |  | $ | 35.77 |
Granted | 677,195 |  |  | 30.01 |
Vested | (199,413) |  |  | 24.37 |
Forfeited | (59,733) |  |  | 38.95 |
Change in payout rate | (14,259) |  |  | 24.37
Nonvested as of March 31, 2020 | 1,466,081 |  |  | $ | 34.64 |

During the three months ended March 31, 2020, a total of 199,413 TSRs awards granted in fiscal 2017 vested and achieved a payout rate of 93% based on the Company's total shareholder return as compared to a group of peer companies over a three-year performance period. The Company withheld 53,033 of those shares to pay the employees’ portion of the minimum payroll withholding taxes.
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The fair value of TSRs granted during the three months ended March 31, 2020 and 2019, were estimated on the date of grant using the Monte Carlo simulation model, acceptable under ASC 718, using the following weighted average assumptions:

| Three Months Ended March 31, |  |
| 2020 |  | 2019
Expected life (years) | 2.8 |  | 2.8
Risk-free interest rate | 0.5 | % |  | 2.5 | %
Expected volatility | 31.4 | % |  | 29.3 | %
Expected dividend yield | — |  |  | — |

Restricted Share Units
A summary of nonvested restricted share unit awards (“RSUs”) is as follows:

| Number of Shares |  | Weighted Average Grant Date Fair Value
Nonvested as of December 31, 2019 | 1,009,404 |  |  | $ | 29.96 |
Granted | 726,012 |  |  | 25.43 |
Vested | (327,491) |  |  | 28.40 |
Forfeited | (74,771) |  |  | 30.02 |
Nonvested as of March 31, 2020 | 1,333,154 |  |  | $ | 27.87 |

During the three months ended March 31, 2020, a total of 327,491 RSUs vested. The Company withheld 103,839 of those shares to pay the employees’ portion of the minimum payroll withholding taxes.
As of March 31, 2020, there were unrecognized compensation costs of $33.7 million related to nonvested RSUs, $31.5 million related to nonvested TSRs, and less than $0.1 million related to nonvested stock options, which the Company expects to recognize over weighted average periods of 2.4 years, 2.5 years, and 0.9 years, respectively.
The Company recorded stock-based compensation expense recognized under ASC 718 for the three months ended March 31, 2020 and 2019, of $7.0 million and $6.6 million, respectively, with the corresponding tax benefits of $1.4 million and $1.2 million, respectively.
6. Software and Other Intangible Assets
The carrying amount and accumulated amortization of the Company's software assets subject to amortization at each balance sheet date are as follows (in thousands):

| March 31, 2020 |  |  |  |  |  | December 31, 2019 |  |  |  |
| Gross Carrying Amount |  | Accumulated Amortization |  | Net Balance |  | Gross Carrying Amount |  | Accumulated Amortization |  | Net Balance
Software for resale | $ | 136,739 |  |  | $ | (122,317) |  |  | $ | 14,422 |  |  | $ | 138,823 |  |  | $ | (122,061) |  |  | $ | 16,762 |
Software for internal use | 405,794 |  |  | (195,045) |  |  | 210,749 |  |  | 400,065 |  |  | (182,310) |  |  | 217,755 |
Total software | $ | 542,533 |  |  | $ | (317,362) |  |  | $ | 225,171 |  |  | $ | 538,888 |  |  | $ | (304,371) |  |  | $ | 234,517 |

Amortization of software for resale is computed using the greater of (a) the ratio of current gross revenues to the total of current and future gross revenues expected to be derived from the software or (b) the straight-line method over the remaining estimated useful life of generally five to ten years. Software for resale amortization expense recorded in the three months ended March 31, 2020 and 2019, totaled $1.9 million and $3.0 million, respectively. These software amortization expense amounts are reflected in cost of revenue in the condensed consolidated statements of operations.
Amortization of software for internal use is computed using the straight-line method over an estimated useful life of generally one to ten years. Software for internal use amortization expense recorded during the three months ended March 31, 2020 and
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2019, totaled $16.7 million and $10.4 million, respectively. These software amortization expense amounts are reflected in depreciation and amortization in the condensed consolidated statements of operations.
The carrying amount and accumulated amortization of the Company’s other intangible assets subject to amortization at each balance sheet date are as follows (in thousands):

| March 31, 2020 |  |  |  |  |  | December 31, 2019 |  |  |  |
| Gross Carrying Amount |  | Accumulated Amortization |  | Net Balance |  | Gross Carrying Amount |  | Accumulated Amortization |  | Net Balance
Customer relationships | $ | 501,039 |  |  | $ | (166,172) |  |  | $ | 334,867 |  |  | $ | 507,785 |  |  | $ | (160,775) |  |  | $ | 347,010 |
Trademarks and trade names | 27,090 |  |  | (17,801) |  |  | 9,289 |  |  | 27,312 |  |  | (17,353) |  |  | 9,959 |
Total other intangible assets | $ | 528,129 |  |  | $ | (183,973) |  |  | $ | 344,156 |  |  | $ | 535,097 |  |  | $ | (178,128) |  |  | $ | 356,969 |

Other intangible assets amortization expense for the three months ended March 31, 2020 and 2019, totaled $9.3 million and $5.5 million, respectively.
Based on capitalized intangible assets as of March 31, 2020, estimated amortization expense amounts in future fiscal years are as follows (in thousands):

Fiscal Year Ending December 31, |  | Software Amortization |  | Other Intangible Assets Amortization
Remainder of 2020 |  | $ | 54,143 |  |  | $ | 27,493 |
2021 |  | 58,348 |  |  | 36,275 |
2022 |  | 40,407 |  |  | 36,143 |
2023 |  | 25,977 |  |  | 35,871 |
2024 |  | 20,083 |  |  | 31,456 |
Thereafter |  | 26,213 |  |  | 176,918 |
Total |  | $ | 225,171 |  |  | $ | 344,156 |

7. Common Stock and Treasury Stock
In 2005, the board approved a stock repurchase program authorizing the Company, as market and business conditions warrant, to acquire its common stock and periodically authorize additional funds for the program. In February 2018, the board approved the repurchase of the Company's common stock of up to $200.0 million, in place of the remaining purchase amounts previously authorized.
The Company repurchased 1,000,000 shares for $28.9 million under the program during the three months ended March 31, 2020. Under the program to date, the Company has repurchased 46,357,495 shares for approximately $612.3 million. As of March 31, 2020, the maximum remaining amount authorized for purchase under the stock repurchase program was $112.1 million.
8. Loss Per Share
Basic loss per share is computed in accordance with ASC 260, Earnings Per Share, based on weighted average outstanding common shares. Diluted loss per share is computed based on basic weighted average outstanding common shares adjusted for the dilutive effect of stock options, RSUs, and certain contingently issuable shares for which performance targets have been achieved.
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The following table reconciles the weighted average share amounts used to compute both basic and diluted loss per share (in thousands):

|  |  |  |  | Three Months Ended March 31, |  |
|  |  |  |  | 2020 |  | 2019
Weighted average shares outstanding: |  |  |  |  |  |  |
Basic weighted average shares outstanding |  |  |  |  | 116,006 |  |  | 116,090 |
Add: Dilutive effect of stock options and RSUs |  |  |  |  | — |  |  | — |
Diluted weighted average shares outstanding |  |  |  |  | 116,006 |  |  | 116,090 |

The diluted loss per share computation excludes 6.7 million and 7.4 million options to purchase shares and RSUs during the three months ended March 31, 2020 and 2019, respectively, as their effect would be anti-dilutive.
Common stock outstanding as of March 31, 2020, and December 31, 2019, was 115,882,242 and 115,986,352, respectively.
9. Other, Net
Other, net is comprised of foreign currency transaction losses of $9.8 million and $1.9 million for the three months ended March 31, 2020 and 2019, respectively.
10. Segment Information
The Company reports financial performance based on its segments, ACI On Demand and ACI On Premise, and analyzes Segment Adjusted EBITDA as a measure of segment profitability.
The Company’s Chief Executive Officer is also the chief operating decision maker (“CODM”). The CODM, together with other senior management personnel, focus their review on consolidated financial information and the allocation of resources based on operating results, including revenues and Segment Adjusted EBITDA, for each segment, separate from Corporate operations.
ACI On Demand serves the needs of banks, merchants, and billers who use payments to facilitate their core business. These on-demand solutions are maintained and delivered through the cloud via our global data centers and are available in either a single-tenant environment for SaaS offerings, or in a multi-tenant environment for PaaS offerings.
ACI On Premise serves customers who manage their software on site or through a third-party cloud service provider. These on-premise customers use the Company’s software to develop sophisticated solutions, which are often part of a larger system located and managed at the customer specified site. These customers require a level of control and flexibility that ACI On Premise solutions can offer, and they have the resources and expertise to take a lead role in managing these solutions.
Revenue is attributed to the reportable segments based upon the product sold and mechanism for delivery to the customer. Expenses are attributed to the reportable segments in one of three methods: (1) direct costs of the segment, (2) labor costs that can be attributed based upon time tracking for individual products, or (3) costs that are allocated. Allocated costs are generally marketing and sales related activities as well as information technology and facilities related expense for which multiple segments benefit. The Company also allocates certain depreciation costs to the segments.
Segment Adjusted EBITDA is the measure reported to the CODM for purposes of making decisions on allocating resources and assessing the performance of the Company’s segments, and, therefore, Segment Adjusted EBITDA is presented in conformity with ASC 280, Segment Reporting. Segment Adjusted EBITDA is defined as earnings (loss) from operations before interest, income tax expense (benefit), depreciation and amortization (“EBITDA”) adjusted to exclude stock-based compensation, and net other income (expense).
Corporate and unallocated expenses consist of the corporate overhead costs that are not allocated to reportable segments. These overhead costs relate to human resources, finance, legal, accounting, merger and acquisition activity, and other costs that are not considered when management evaluates segment performance.
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The following is selected financial data for the Company’s reportable segments for the periods indicated (in thousands):

|  |  |  |  | Three Months Ended March 31, |  |
|  |  |  |  | 2020 |  | 2019
Revenue |  |  |  |  |  |  |
ACI On Demand |  |  |  |  | $ | 192,950 |  |  | $ | 109,848 |
ACI On Premise |  |  |  |  | 98,535 |  |  | 96,007 |
Total revenue |  |  |  |  | $ | 291,485 |  |  | $ | 205,855 |
Segment Adjusted EBITDA |  |  |  |  |  |  |
ACI On Demand |  |  |  |  | $ | 23,121 |  |  | $ | (262) |
ACI On Premise |  |  |  |  | 30,909 |  |  | 28,268 |
Depreciation and amortization |  |  |  |  | (33,822) |  |  | (24,852) |
Stock-based compensation expense |  |  |  |  | (6,950) |  |  | (6,585) |
Corporate and unallocated expenses |  |  |  |  | (24,541) |  |  | (24,662) |
Interest, net |  |  |  |  | (14,271) |  |  | (8,581) |
Other, net |  |  |  |  | (9,758) |  |  | (1,912) |
Loss before income taxes |  |  |  |  | $ | (35,312) |  |  | $ | (38,586) |
Depreciation and amortization |  |  |  |  |  |  |
ACI On Demand |  |  |  |  | $ | 9,332 |  |  | $ | 7,562 |
ACI On Premise |  |  |  |  | 3,106 |  |  | 3,030 |
Corporate |  |  |  |  | 21,384 |  |  | 14,260 |
Total depreciation and amortization |  |  |  |  | $ | 33,822 |  |  | $ | 24,852 |
Stock-based compensation expense |  |  |  |  |  |  |
ACI On Demand |  |  |  |  | $ | 2,026 |  |  | $ | 1,951 |
ACI On Premise |  |  |  |  | 2,030 |  |  | 1,956 |
Corporate |  |  |  |  | 2,894 |  |  | 2,678 |
Total stock-based compensation expense |  |  |  |  | $ | 6,950 |  |  | $ | 6,585 |

Assets are not allocated to segments, and the Company’s CODM does not evaluate operating segments using discrete asset information.
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The following is revenue by primary geographic market and primary solution category for the Company’s reportable segments for the periods indicated (in thousands):

| Three Months Ended March 31, 2020 |  |  |  |  |  | Three Months Ended March 31, 2019 |  |  |  |
| ACI On Demand |  | ACI On Premise |  | Total |  | ACI On Demand |  | ACI On Premise |  | Total
Primary Geographic Markets |  |  |  |  |  |  |  |  |  |  |
Americas - United States | $ | 175,654 |  |  | $ | 29,139 |  |  | $ | 204,793 |  |  | $ | 93,036 |  |  | $ | 26,422 |  |  | $ | 119,458 |
Americas - Other | 3,233 |  |  | 17,941 |  |  | 21,174 |  |  | 2,743 |  |  | 10,945 |  |  | 13,688 |
EMEA | 10,918 |  |  | 28,955 |  |  | 39,873 |  |  | 12,068 |  |  | 42,451 |  |  | 54,519 |
Asia Pacific | 3,145 |  |  | 22,500 |  |  | 25,645 |  |  | 2,001 |  |  | 16,189 |  |  | 18,190 |
Total | $ | 192,950 |  |  | $ | 98,535 |  |  | $ | 291,485 |  |  | $ | 109,848 |  |  | $ | 96,007 |  |  | $ | 205,855 |
Primary Solution Categories |  |  |  |  |  |  |  |  |  |  |
Bill Payments | $ | 153,686 |  |  | $ | — |  |  | $ | 153,686 |  |  | $ | 68,967 |  |  | $ | — |  |  | $ | 68,967 |
Digital Channels | 8,393 |  |  | 7,563 |  |  | 15,956 |  |  | 9,788 |  |  | 8,725 |  |  | 18,513 |
Merchant Payments | 19,014 |  |  | 4,106 |  |  | 23,120 |  |  | 19,339 |  |  | 5,022 |  |  | 24,361 |
Payments Intelligence | 9,013 |  |  | 4,113 |  |  | 13,126 |  |  | 8,981 |  |  | 7,037 |  |  | 16,018 |
Real-Time Payments | 997 |  |  | 17,299 |  |  | 18,296 |  |  | 618 |  |  | 14,715 |  |  | 15,333 |
Retail Payments | 1,847 |  |  | 65,454 |  |  | 67,301 |  |  | 2,155 |  |  | 60,508 |  |  | 62,663 |
Total | $ | 192,950 |  |  | $ | 98,535 |  |  | $ | 291,485 |  |  | $ | 109,848 |  |  | $ | 96,007 |  |  | $ | 205,855 |

The following is the Company’s long-lived assets by geographic location for the periods indicated (in thousands):

| March 31, 2020 |  | December 31, 2019
Long-lived Assets |  |  |
United States | $ | 1,507,574 |  |  | $ | 1,526,046 |
Other | 732,084 |  |  | 759,501 |
Total | $ | 2,239,658 |  |  | $ | 2,285,547 |

No single customer accounted for more than 10% of the Company’s consolidated revenues during the three months ended March 31, 2020 and 2019. No other country outside the United States accounted for more than 10% of the Company's consolidated revenues during the three months ended March 31, 2020 and 2019.
11. Income Taxes
The effective tax rate for the three months ended March 31, 2020, was 31%. The Company reported an overall tax benefit on a pretax loss for the three months ended March 31, 2020. The losses of the Company’s foreign entities for the three months ended March 31, 2020, were $14.4 million. The effective tax rate for the three months ended March 31, 2020, was positively impacted by equity compensation excess tax benefits and state income tax benefits on domestic loss.
The effective tax rate for the three months ended March 31, 2019, was 33%. The Company reported an overall tax benefit on a pretax loss for the three months ended March 31, 2019. The losses of the Company’s foreign entities for the three months ended March 31, 2019, were $6.1 million. The effective tax rates for the three months ended March 31, 2019, was positively impacted by equity compensation excess tax benefits and state income tax benefits on domestic loss.
The Company’s effective tax rate could fluctuate on a quarterly basis due to the occurrence of significant and unusual or infrequent items, such as vesting of stock-based compensation or foreign currency gains and losses. The Company’s effective tax rate could also fluctuate due to changes in the valuation of its deferred tax assets or liabilities, or by changes in tax laws, regulations, accounting principles, or interpretations thereof. In addition, the Company is occasionally subject to examination of its income tax returns by tax authorities in the jurisdictions it operates. The Company regularly assesses the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of its provision for income taxes.
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As of March 31, 2020, and December 31, 2019, the amount of unrecognized tax benefits for uncertain tax positions was $30.0 million and $29.0 million, respectively, excluding related liabilities for interest and penalties of $1.2 million as of March 31, 2020 and December 31, 2019.
The Company believes it is reasonably possible that the total amount of unrecognized tax benefits will decrease within the next 12 months by approximately $11.7 million, due to the settlement of various audits and the expiration of statutes of limitation.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
This report contains forward-looking statements based on current expectations that involve a number of risks and uncertainties. Generally, forward-looking statements do not relate strictly to historical or current facts and may include words or phrases such as “believes,” “will,” “expects,” “anticipates,” “intends,” and words and phrases of similar impact. The forward-looking statements are made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended.
Forward-looking statements in this report include, but are not limited to, statements regarding future operations, business strategy, business environment, key trends, and, in each case, statements related to expected financial and other benefits. Many of these factors will be important in determining our actual future results. Any or all of the forward-looking statements in this report may turn out to be incorrect. They may be based on inaccurate assumptions or may not account for known or unknown risks and uncertainties. Consequently, no forward-looking statement can be guaranteed. Actual future results may vary materially from those expressed or implied in any forward-looking statements, and our business, financial condition and results of operations could be materially and adversely affected. In addition, we disclaim any obligation to update any forward-looking statements after the date of this report, except as required by law.
All forward-looking statements in this report are expressly qualified by the risk factors discussed in our filings with the Securities and Exchange Commission (“SEC”). The cautionary statements in this report expressly qualify all of our forward-looking statements. Factors that could cause actual results to differ from those expressed or implied in the forward-looking statements include, but are not limited to, those discussed in our Risk Factors in Part 1, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, and in Part 2, Item 1A of this Form 10-Q.
The following discussion should be read together with our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, and with our financial statements and related notes contained in this Form 10-Q. Results for the three months ended March 31, 2020, are not necessarily indicative of results that may be attained in the future.
COVID-19 Pandemic
In December 2019, an outbreak of COVID-19 was identified in China and was subsequently recognized as a global pandemic by the World Health Organization (“WHO”) on March 11, 2020. Since that time, COVID-19 has spread around the world and throughout the United States, including in the regions and countries in which we operate. Federal, state and local governments in the U.S and around the world have imposed restrictions on travel and business operations and are advising or requiring individuals to limit or eliminate time outside of their homes. Temporary closures of businesses have also been ordered in certain jurisdictions, and other businesses have temporarily closed voluntarily. These actions expanded significantly in March and April of 2020 throughout the U.S. Consequently, the COVID-19 outbreak has severely restricted the level of economic activity in the U.S. and around the world.
The outbreak has resulted in authorities implementing numerous measures to try to contain the virus, such as quarantines and shelter in place orders. These measures may remain in place for a significant period of time and adversely affect our business, operations and financial condition as well as the business, operations and financial conditions of our customers and business partners. The spread of the virus has also caused us to modify our business practices (including employee work locations and cancellation of physical participation in meetings) in ways that may be detrimental to our business (including working remotely and its attendant cybersecurity risks). We may take further actions as may be required by government authorities or that we determine are in the best interests of our employees and customers. There is no certainty that such measures will be sufficient to mitigate the risks posed by the virus or otherwise be satisfactory to government authorities.
ACI Worldwide, Inc. ("ACI") created a dedicated Crisis Management Team that proactively oversaw and executed our business continuity plans and has taken a variety of measures to ensure the ongoing availability of our products, solutions and services for our customers around the world, while taking health and safety measures for our employees. We monitor information on
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COVID-19 from the U.S. Centers for Disease Control ("CDC") and the WHO and believe we are adhering to their recommendations regarding the health and safety of our employees. To address the potential human impact of the virus, most of our staff, with the exception of essential personnel (e.g. certain data center personnel), are telecommuting. For those essential personnel not telecommuting, we have implemented appropriate social distancing policies and have stepped-up facility cleaning at each location. Non-essential domestic and international travel for our employees has ceased. Essential travel for mission critical functions is allowed only on an exception basis with a 14-day self-quarantine period required upon an employee’s return before they may enter an ACI office. Travel is restricted without exception for China, Hong Kong, Italy, and South Korea.
ACI believes it has sufficient liquidity to continue business operations during this volatile and uncertain period. We have $389 million of available liquidity as of March 31, 2020, consisting of cash on hand and availability under our revolving credit facility. To begin to address the potential long-term financial impacts of the virus, we have delayed non-essential capital spending and operating expenses.
The pandemic presents potential new risks to the Company’s business. Although there have been logistical and other challenges to date, there has been no material adverse impact on the Company’s first quarter 2020 results of operations, excluding the impacts of foreign exchange losses as a result of foreign currency volatility. The Company began to see the impacts of COVID-19 on certain customer transaction volumes in late March and continues to see changes in the second quarter of 2020, primarily within the M erchants and B illers customer-base of the Company's ACI On Demand segment. The effect of COVID-19 and related events, including those described above and those not yet known or knowable, could have a negative effect on the stock price, business prospects, financial condition, and results of operations of the Company, including as a result of quarantines, market volatility, market downturns, changes in consumer behavior, business closures, or the inability of our customers to satisfy their obligations to the Company. More specifically, f or those M erchant and B iller customers under consumption-based contracts, continued declines in transaction volumes could negatively impact the Company's financial position, results of operations and cash flows.
For the reasons discussed above, ACI cannot reasonably estimate with any degree of certainty the future impact COVID-19 may have on the Company’s results of operations, financial position, and liquidity. Notwithstanding any actions by national, state, and local governments to mitigate the impact of COVID-19 or by the Company to address the adverse impacts of COVID-19, there can be no assurance that any of the foregoing activities will be successful in mitigating or preventing significant adverse effects on the Company.
Overview
ACI, the Universal Payments (“UP”) company, powers electronic payments for more than 5,100 organizations around the world. More than 1,000 of the largest banks and intermediaries, as well as thousands of leading global merchants, rely on ACI to execute $14 trillion each day in payments and securities. In addition, myriad organizations utilize our electronic bill presentment and payment services. Through our comprehensive suite of software solutions delivered on customers' premises, through a third-party public cloud environment or through ACI's private cloud, we provide real-time, immediate payments capabilities and enable the industry's most complete omni-channel payments experience.
Our products are sold and supported through distribution networks covering three geographic regions – the Americas; Europe, Middle East, and Africa (“EMEA”); and Asia/Pacific. Each distribution network has its own globally coordinated sales force that it supplements with independent reseller and/or distributor networks. Our products and solutions are used globally by banks, financial intermediaries, merchants, and billers, such as third-party electronic payment processors, payment associations, switch interchanges, and a wide range of transaction-generating endpoints, including ATMs, merchant point-of-sale (“POS”) terminals, bank branches, mobile phones, tablets, corporations, and Internet commerce sites. Accordingly, our business and operating results are influenced by trends such as information technology spending levels, the growth rate of electronic payments, mandated regulatory changes, and changes in the number and type of customers in the financial services industry. Our products are marketed under the ACI brand.
We derive a majority of our revenues from domestic operations and believe we have large opportunities for growth in international markets as well as continued expansion domestically in the United States. Refining our global infrastructure is a critical component of driving our growth. We also continue to maintain centers of expertise in Timisoara, Romania and Pune and Bangalore in India, as well as key operational centers such as Cape Town, South Africa and in multiple locations in the United States.
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Key trends that currently impact our strategies and operations include:
Increasing electronic payment transaction volumes. Electronic payment volumes continue to increase around the world, taking market share from traditional cash and check transactions. In their 2019 World Payments Report, Capgemini predicts that non-cash transaction volumes will grow in volume at an annual rate of 14.0%, from 538.6 billion in 2017 to 1,045.5 billion in 2022, with varying growth rates based on the type of payment and part of the world. We leverage the growth in transaction volumes through the licensing of new systems to customers whose older systems cannot handle increased volume, through the sale of capacity upgrades to existing customers, and through the scalability of our platform-based solutions. Furthermore, electronic payments have taken on greater importance during the global COVID-19 crisis as consumers increasingly prefer cashless payment options and shift to shopping and paying bills online.
Adoption of real-time payments. Customer expectations, from both consumers and billers, are driving the payments world to more real-time delivery. In the U.K., payments sent through the traditional ACH multi-day batch service can now be sent through the Faster Payments service giving almost immediate access to the funds, and this is being considered and implemented in several countries including Malaysia, Thailand, Singapore, Australia, the United States, and various countries in Europe. In Europe, the ECB TIPS and EBA RT1 schemes are driving real-time payments adoption, while in the U.S. market, Zelle and TCH Real-Time Payments are now driving adoption. Corporate customers expect real-time information on the status of their payments instead of waiting for an end-of-day report. Regulators expect banks to be monitoring key measures like liquidity in real time. ACI’s focus has always been on the real-time execution of transactions and delivery of information through real-time tools, such as dashboards, so our experience will be valuable in addressing this trend.
Increasing competition. The electronic payments market is highly competitive and subject to rapid change. Our competition comes from in-house information technology departments, third-party electronic payment processors, and third-party software companies located both within and outside of the U.S. Many of these companies are significantly larger than ACI and have significantly greater financial, technical, and marketing resources. As electronic payment transaction volumes increase, third-party processors tend to provide competitive solutions, particularly among customers that do not seek to differentiate their electronic payment offerings or are eliminating banks from the payments service. As consolidation in the financial services and financial technology industries continues, we anticipate that competition for those customers will intensify.
Adoption of cloud technology. To leverage lower-cost computing technologies, some banks, financial intermediaries, merchants, and billers are seeking to transition their systems to make use of cloud technology. Our investments and partnerships provide us the grounding to deliver cloud capabilities now and in the future. Market sizing data from Ovum indicates that spend on SaaS and PaaS payment systems is growing faster than spend on installed applications.
Electronic payments fraud and compliance. As electronic payment transaction volumes increase, organized criminal organizations continue to find ways to commit a growing volume of fraudulent transactions using a wide range of techniques. Banks, financial intermediaries, merchants, and billers continue to seek ways to leverage new technologies to identify and prevent fraudulent transactions and other attacks such as denial of service attacks. Due to concerns with international terrorism and money laundering, banks and financial intermediaries in particular are being faced with increasing scrutiny and regulatory pressures. We continue to see opportunity to offer our fraud detection solutions with advanced machine learning capabilities to help customers manage the growing levels of electronic payments fraud and compliance activity.
Adoption of smartcard technology. In many markets, issuers are being required to issue new cards with embedded chip technology, with the merchant liability shift having gone into effect in 2015 in the U.S. (and the fuel dispenser liability shift occurring later in 2020). Chip-based cards are more secure, harder to copy, and offer the opportunity for multiple functions on one card (e.g., debit, credit, electronic purse, identification, health records, etc.). While this combats card-present fraud, it results in greater card-not-present fraud (e.g., fraud at eCommerce sites).
Single Euro Payments Area (SEPA). SEPA, primarily focused on the European economic community and the U.K., is designed to facilitate lower costs for cross-border payments and reduce timeframes for settling electronic payment transactions. The transition to SEPA payment mechanisms will drive more volume to these systems with the potential to cause banks to review the capabilities of the systems supporting these payments. Our retail payments and real-time payments solutions facilitate key functions that help banks and financial intermediaries address these mandated regulations.
European Payment Service Directive (PSD2). PSD2, which was ratified by the European Parliament in 2015, required member states to implement new payment regulations in 2018. The XS2A provision effectively creates a new market opportunity where banks in European Union member countries must provide open API standards to customer data, thus allowing authorized third-party providers to enter the market.
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Financial institution consolidation. Consolidation continues on a national and international basis, as financial institutions seek to add market share and increase overall efficiency. Such consolidations have increased, and may continue to increase, in their number, size, and market impact as a result of recent economic conditions affecting the banking and financial industries. There are several potential negative effects of increased consolidation activity. Continuing consolidation of financial institutions may result in a smaller number of existing and potential customers for our products and services. Consolidation of two of our customers could result in reduced revenues if the combined entity were to negotiate greater volume discounts or discontinue use of certain of our products. Additionally, if a non-customer and a customer combine and the combined entity decides to forego future use of our products, our revenue would decline. Conversely, we could benefit from the combination of a non-customer and a customer when the combined entity continues use of our products and, as a larger combined entity, increases its demand for our products and services. We tend to focus on larger financial institutions as customers, often resulting in our solutions being the ones that survive in the consolidated entity.
Global vendor sourcing. Global and regional banks, financial intermediaries, merchants, and billers are aiming to reduce the costs in supplier management by picking suppliers that can service them across all their geographies instead of allowing each country operation to choose suppliers independently. Our global footprint from both a customer and a delivery perspective enables us to be successful in this internationally-sourced market. However, projects in these environments tend to be more complex and therefore of higher risk.
Electronic payments convergence. As electronic payment volumes grow and pressures to lower overall cost per transaction increase, banks and financial intermediaries are seeking methods to consolidate their payment processing across the enterprise. We believe that the strategy of using service-oriented architectures to allow for re-use of common electronic payment functions, such as authentication, authorization, routing and settlement, will become more common. Using these techniques, banks and financial intermediaries will be able to reduce costs, increase overall service levels, enable one-to-one marketing in multiple bank channels, leverage volumes for improved pricing and liquidity, and manage enterprise risk. Our product strategy is, in part, focused on this trend, by creating integrated payment functions that can be re-used by multiple bank channels, across both the consumer and wholesale bank. While this trend presents an opportunity for us, it may also expand the competition from third-party electronic payment technology and service providers specializing in other forms of electronic payments. Many of these providers are larger and have significantly greater financial, technical and marketing resources.
Mobile banking and payments. There is a growing demand for the ability to carry out banking services or make payments using a mobile phone. According to analysis from the Deloitte Center for Financial Services in 2018, 84% of global consumers use online banking and 72% use mobile banking applications. Additionally, digital channels are used more frequently than bank branches and ATMs across all generations and in all countries. Our customers have been making use of existing products to deploy mobile banking, mobile payments, and mobile commerce solutions for their customers in many countries. In addition, ACI has invested in mobile products of our own and via partnerships to support mobile functionality in the marketplace.
Electronic bill payment and presentment. EBPP encompasses all facets of bill payment, including biller direct, where customers initiate payments on biller websites, the consolidator model, where customers initiate payments on a financial institution’s website, and walk-in bill payment, as one might find in a convenience store. The EBPP market continues to grow as consumers move away from traditional forms of paper-based payments. Nearly three out of four (73%) online payments are made at the billers’ sites, rather than through banking websites. The biller-direct solutions are seeing strong growth as billers migrate these services to outsourcers, such as ACI, from legacy systems built in-house. We believe that EBPP remains ripe for outsourcing, as a significant amount of biller-direct transactions are still processed in-house. As billers seek to manage costs and improve efficiency, we believe that they will continue to look to third-party EBPP vendors that can offer a complete solution for their billing needs. ACI is supporting Billers during the COVID-19 crisis with new, automated tools that allow consumers to defer payments, set-up flexible payment plans, and request virtual appointments to discuss payment options.
Several other factors related to our business may have a significant impact on our operating results from year to year. For example, the accounting rules governing the timing of revenue recognition are complex and it can be difficult to estimate when we will recognize revenue generated by a given transaction. Factors such as creditworthiness of the customer and timing of transfer of control or acceptance of our products may cause revenues related to sales generated in one period to be deferred and recognized in later periods. For arrangements in which services revenue is deferred, related direct and incremental costs may also be deferred. Additionally, while the majority of our contracts are denominated in the U.S. dollar, a substantial portion of our sales are made, and some of our expenses are incurred, in the local currency of countries other than the United States. Fluctuations in currency exchange rates in a given period may result in the recognition of gains or losses for that period.
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We continue to seek ways to grow through organic sources, partnerships, alliances, and acquisitions. We continually look for potential acquisitions designed to improve our solutions’ breadth or provide access to new markets. As part of our acquisition strategy, we seek acquisition candidates that are strategic, capable of being integrated into our operating environment, and accretive to our financial performance.
Chief Executive Officer
On February 18, 2020, we announced the appointment of Odilon Almeida as the Company’s new President and Chief Executive Officer, effective March 9, 2020. Mr. Almeida was also appointed to serve as a member of ACI’s board of directors.
Acquisition
Speedpay
On May 9, 2019, we acquired E Commerce Group Products, Inc. ("ECG"), a subsidiary of The Western Union Company, along with ECG's subsidiary, Speedpay, Inc. (collectively referred to as "Speedpay") for $754.1 million in cash, including working capital adjustments, pursuant to a Stock Purchase Agreement, among the Company, The Western Union Company, and ACI Worldwide Corp., our wholly owned subsidiary.
To fund the acquisition, we amended our existing Credit Agreement, dated February 24, 2017, for an additional $500.0 million senior secured term loan, in addition to drawing $250.0 million on the available Revolving Credit Facility. See Note 4, Debt, to our unaudited condensed consolidated financial statements in Part I of this Form 10-Q for terms of the Credit Agreement. The remaining acquisition consideration was funded with cash on hand.
Backlog
Backlog is comprised of:
•Committed Backlog, which includes (1) contracted revenue that will be recognized in future periods (contracted but not recognized) from software license fees, maintenance fees, service fees, and SaaS and PaaS fees specified in executed contracts (including estimates of variable consideration if required under ASC 606 and included in the transaction price for those contracts, which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods and (2) estimated future revenues from software license fees, maintenance fees, services fees, and SaaS and PaaS fees specified in executed contracts.
•Renewal Backlog, which includes estimated future revenues from assumed contract renewals to the extent we believe recognition of the related revenue will occur within the corresponding backlog period.
We have historically included assumed renewals in backlog estimates based upon automatic renewal provisions in the executed contract and our historic experience with customer renewal rates.
Our 60-month backlog estimates are derived using the following key assumptions:
•License arrangements are assumed to renew at the end of their committed term or under the renewal option stated in the contract at a rate consistent with historical experience. If the license arrangement includes extended payment terms, the renewal estimate is adjusted for the effects of a significant financing component.
•Maintenance fees are assumed to exist for the duration of the license term for those contracts in which the committed maintenance term is less than the committed license term.
•SaaS and PaaS arrangements are assumed to renew at the end of their committed term at a rate consistent with our historical experiences.
•Foreign currency exchange rates are assumed to remain constant over the 60-month backlog period for those contracts stated in currencies other than the U.S. dollar.
•Our pricing policies and practices are assumed to remain constant over the 60-month backlog period.
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In computing our 60-month backlog estimate, the following items are specifically not taken into account:
•Anticipated increases in transaction, account, or processing volumes by our customers.
•Optional annual uplifts or inflationary increases in recurring fees.
•Services engagements, other than SaaS and PaaS arrangements, are not assumed to renew over the 60-month backlog period.
•The potential impact of consolidation activity within our markets and/or customers.
We review our customer renewal experience on an annual basis. The impact of this review and subsequent updates may result in a revision to the renewal assumptions used in computing the 60-month backlog estimates. In the event a significant revision to renewal assumptions is determined to be necessary, prior periods will be adjusted for comparability purposes.
The following table sets forth our 60-month backlog estimate, by reportable segment, as of March 31, 2020, and December 31, 2019 (in millions). Dollar amounts reflect foreign currency exchange rates as of each period end.

|  |  |  |  |  |  | March 31, 2020 |  | December 31, 2019
ACI On Demand |  |  |  |  |  |  | $ | 3,781 |  |  |  | $ | 3,855 |
ACI On Premise |  |  |  |  |  |  | 1,933 |  |  |  | 1,977 |
Total |  |  |  |  |  |  | $ | 5,714 |  |  |  | $ | 5,832 |
|  |  |  |  |  |  | March 31, 2020 |  | December 31, 2019
Committed |  |  |  |  |  |  | $ | 2,095 |  |  |  | $ | 2,168 |
Renewal |  |  |  |  |  |  | 3,619 |  |  |  | 3,664 |
Total |  |  |  |  |  |  | $ | 5,714 |  |  |  | $ | 5,832 |

Estimates of future financial results require substantial judgment and are based on several assumptions, as described above. These assumptions may turn out to be inaccurate or wrong for reasons outside of management’s control. For example, our customers may attempt to renegotiate or terminate their contracts for many reasons, including mergers, changes in their financial condition, or general changes in economic conditions (e.g. economic declines resulting from COVID-19) in the customer’s industry or geographic location. We may also experience delays in the development or delivery of products or services specified in customer contracts, which may cause the actual renewal rates and amounts to differ from historical experiences. Changes in foreign currency exchange rates may also impact the amount of revenue recognized in future periods. Accordingly, there can be no assurance that amounts included in backlog estimates will generate the specified revenues or that the actual revenues will be generated within the corresponding 60-month period. Additionally, because certain components of Committed Backlog and all of Renewal Backlog estimates are operating metrics, the estimates are not required to be subject to the same level of internal review or controls as contracted but not recognized Committed Backlog.
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RESULTS OF OPERATIONS
The following table presents the condensed consolidated statements of operations, as well as the percentage relationship to total revenues for items included in our condensed consolidated statements of operations (in thousands):
Three Month Period Ended March 31, 2020, Compared to the Three Month Period Ended March 31, 2019

| Three Months Ended March 31, |  |  |  |  |  |  |  |  |  |
| 2020 |  |  |  |  |  |  |  | 2019 |  |
| Amount |  | % of Total Revenue |  | $ Change vs 2019 |  | % Change vs 2019 |  | Amount |  | % of Total Revenue
Revenues: |  |  |  |  |  |  |  |  |  |  |
Software as a service and platform as a service | $ | 192,950 |  |  | 66 | % |  | $ | 84,393 |  |  | 78 | % |  | $ | 108,557 |  |  | 53 | %
License | 28,129 |  |  | 10 | % |  | 7,051 |  |  | 33 | % |  | 21,078 |  |  | 10 | %
Maintenance | 53,280 |  |  | 18 | % |  | (1,831) |  |  | (3) | % |  | 55,111 |  |  | 27 | %
Services | 17,126 |  |  | 6 | % |  | (3,983) |  |  | (19) | % |  | 21,109 |  |  | 10 | %
Total revenues | 291,485 |  |  | 100 | % |  | 85,630 |  |  | 42 | % |  | 205,855 |  |  | 100 | %
Operating expenses: |  |  |  |  |  |  |  |  |  |  |
Cost of revenue | 165,837 |  |  | 57 | % |  | 50,896 |  |  | 44 | % |  | 114,941 |  |  | 56 | %
Research and development | 39,024 |  |  | 13 | % |  | 2,830 |  |  | 8 | % |  | 36,194 |  |  | 18 | %
Selling and marketing | 30,083 |  |  | 10 | % |  | 653 |  |  | 2 | % |  | 29,430 |  |  | 14 | %
General and administrative | 35,926 |  |  | 12 | % |  | 4,409 |  |  | 14 | % |  | 31,517 |  |  | 15 | %
Depreciation and amortization | 31,898 |  |  | 11 | % |  | 10,032 |  |  | 46 | % |  | 21,866 |  |  | 11 | %
Total operating expenses | 302,768 |  |  | 103 | % |  | 68,820 |  |  | 29 | % |  | 233,948 |  |  | 114 | %
Operating loss | (11,283) |  |  | (3) | % |  | 16,810 |  |  | (60) | % |  | (28,093) |  |  | (14) | %
Other income (expense): |  |  |  |  |  |  |  |  |  |  |
Interest expense | (17,171) |  |  | (6) | % |  | (5,557) |  |  | 48 | % |  | (11,614) |  |  | (6) | %
Interest income | 2,900 |  |  | 1 | % |  | (133) |  |  | (4) | % |  | 3,033 |  |  | 1 | %
Other, net | (9,758) |  |  | (3) | % |  | (7,846) |  |  | 410 | % |  | (1,912) |  |  | (1) | %
Total other income (expense) | (24,029) |  |  | (8) | % |  | (13,536) |  |  | 129 | % |  | (10,493) |  |  | (6) | %
Loss before income taxes | (35,312) |  |  | (11) | % |  | 3,274 |  |  | (8) | % |  | (38,586) |  |  | (20) | %
Income tax benefit | (10,885) |  |  | (4) | % |  | 1,738 |  |  | (14) | % |  | (12,623) |  |  | (6) | %
Net loss | $ | (24,427) |  |  | (7) | % |  | $ | 1,536 |  |  | (6) | % |  | $ | (25,963) |  |  | (14) | %

Revenues
Total revenue for the three months ended March 31, 2020, increased $85.6 million, or 42%, as compared to the same period in 2019. The acquisition of Speedpay contributed $88.7 million to total revenue during the three months ended March 31, 2020.
Total revenue was $1.5 million lower for the three months ended March 31, 2020, compared to the same period in 2019, due to the impact of foreign currencies weakening against the U.S. dollar. Excluding the impact of the acquisition of Speedpay and foreign currency, total revenue for the three months ended March 31, 2020, decreased $1.6 million, or 1%, compared to the same period in 2019.
Software as a Service (“SaaS”) and Platform as a Service (“PaaS”) Revenue
The Company’s SaaS arrangements allow customers to use certain software solutions (without taking possession of the software) in a single-tenant cloud environment on a subscription basis. The Company’s PaaS arrangements allow customers to use certain software solutions (without taking possession of the software) in a multi-tenant cloud environment on a subscription or consumption basis. Included in SaaS and PaaS revenue are fees paid by our customers for use of our Biller solutions. Biller-related fees may be paid by our clients or directly by their customers and may be a percentage of the underlying transaction amount, a fixed fee per executed transaction or a monthly fee for each customer enrolled. SaaS and PaaS costs include payment card interchange fees, the amounts payable to banks and payment card processing fees, which are included in cost of revenue in the condensed consolidated statements of operations. All fees from SaaS and PaaS arrangements that do not qualify for
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treatment as a distinct performance obligation, which includes set-up fees, implementation or customization services, and product support services, are included in SaaS and PaaS revenue.
SaaS and PaaS revenue increased $84.4 million, or 78%, during the three months ended March 31, 2020, as compared to the same period in 2019. The acquisition of Speedpay contributed $88.7 million to SaaS and PaaS revenue during the three months ended March 31, 2020. SaaS and PaaS revenue was $0.3 million lower for the three months ended March 31, 2020, compared to the same period in 2019 due to the impact of foreign currencies weakening against the U.S. dollar. Excluding the impact of the acquisition of Speedpay and foreign currency, SaaS and PaaS revenue for the three months ended March 31, 2020, decreased $4.0 million, or 4%, compared to the same period in 2019, primarily due to changes in the timing and magnitude of transaction volumes for Biller customers.
License Revenue
Customers purchase the right to license ACI software under multi-year, time-based software license arrangements that vary in length but are generally five years. Under these arrangements the software is installed at the customer’s location (i.e. on-premise). Within these agreements are specified capacity limits typically based on customer transaction volume. ACI employs measurement tools that monitor the number of transactions processed by customers and if contractually specified limits are exceeded, additional fees are charged for the overage. Capacity overages may occur at varying times throughout the term of the agreement depending on the product, the size of the customer, and the significance of customer transaction volume growth. Depending on specific circumstances, multiple overages or no overages may occur during the term of the agreement.
Included in license revenue are license and capacity fees that are payable at the inception of the agreement or annually (initial license fees). License revenue also includes license and capacity fees payable quarterly or monthly due to negotiated customer payment terms (monthly license fees). The Company recognizes revenue in advance of billings for software license arrangements with extended payment terms and adjusts for the effects of the financing component, if significant.
License revenue increased $7.1 million, or 33%, during the three months ended March 31, 2020, as compared to the same period in 2019. License revenue was $0.1 million lower for the three months ended March 31, 2020, compared to the same period in 2019 due to the impact of foreign currencies weakening against the U.S. dollar. Excluding the impact of foreign currency, license revenue for the three months ended March 31, 2020, increased $7.1 million, or 34%, compared to the same period in 2019.
The increase in total license revenue was primarily driven by the timing and relative size of license and capacity events during the three months ended March 31, 2020, as compared to the same period in 2019.
Maintenance Revenue
Maintenance revenue includes standard and premium maintenance and any post contract support fees received from customers for the provision of product support services.
Maintenance revenue decreased $1.8 million, or 3%, during the three months ended March 31, 2020, as compared to the same period in 2019. Maintenance revenue was $0.7 million lower for the three months ended March 31, 2020, as compared to the same period in 2019 due to the impact of foreign currencies weakening against the U.S. dollar. Excluding the impact of foreign currency, maintenance revenue for the three months ended March 31, 2020, decreased $1.1 million, or 2%, compared to the same period in 2019.
Services Revenue
Services revenue includes fees earned through implementation services and other professional services. Implementation services include product installations, product configurations, and custom software modifications (“CSMs”). Other professional services include business consultancy, technical consultancy, on-site support services, CSMs, product education, and testing services. These services include new customer implementations as well as existing customer migrations to new products or new releases of existing products.
Services revenue decreased $4.0 million, or 19%, during the three months ended March 31, 2020, as compared to the same period in 2019. Services revenue was $0.4 million lower for the three months ended March 31, 2020, as compared to the same period in 2019 due to the impact of foreign currencies weakening against the U.S. dollar. Excluding the impact of foreign currency, services revenue for the three months ended March 31, 2020, decreased $3.6 million, or 17%, compared to the same period in 2019. The decrease in services revenue was primarily driven by the timing and magnitude of project-related work during the three months ended March 31, 2020, as compared to the same period in 2019.
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Operating Expenses
Total operating expenses for the three months ended March 31, 2020, increased $68.8 million, or 29%, as compared to the same period in 2019. The acquisition of Speedpay contributed $76.4 million to total operating expenses during the three months ended March 31, 2020. Total operating expenses also included $8.5 million of significant transaction-related expenses, associated with cost reduction strategies implemented during the period. Total operating expenses for the three months ended March 31, 2019, included $4.7 million of significant transaction-related expenses associated with the acquisition of Speedpay. Total operating expenses were $2.1 million lower for the three months ended March 31, 2020, compared to the same period in 2019, due to the impact of foreign currencies weakening against the U.S. dollar. Excluding the impact of the acquisition of Speedpay, significant transaction-related expenses, and foreign currency, total operating expenses for the three months ended March 31, 2020, decreased $9.2 million, or 4%, compared to the same period in 2019, primarily due to lower cost of revenue and selling and marketing expense, partially offset by higher depreciation and amortization, general and administrative expense, and research and development expense.
Cost of Revenue
Cost of revenue includes costs to provide SaaS and PaaS services, third-party royalties, amortization of purchased and developed software for resale, the costs of maintaining our software products, as well as the costs required to deliver, install, and support software at customer sites. SaaS and PaaS service costs include payment card interchange fees, amounts payable to banks, and payment card processing fees. Maintenance costs include the efforts associated with providing the customer with upgrades, 24-hour help desk, post go-live (remote) support, and production-type support for software that was previously installed at a customer location. Service costs include human resource costs and other incidental costs such as travel and training required for both pre go-live and post go-live support. Such efforts include project management, delivery, product customization and implementation, installation support, consulting, configuration, and on-site support.
Cost of revenue increased $50.9 million, or 44%, during the three months ended March 31, 2020, compared to the same period in 2019. The acquisition of Speedpay contributed $62.0 million to cost of revenue during the three months ended March 31, 2020. Cost of revenue was $0.7 million lower for the three months ended March 31, 2020, as compared to the same period in 2019, due to the impact of foreign currencies weakening against the U.S. dollar. Excluding the impact of the acquisition of Speedpay and foreign currency, cost of revenue decreased $10.4 million, or 9%, for the three months ended March 31, 2020, as compared to the same period in 2019, primarily due to a $5.2 million decrease in payment card interchange and processing fees, a $2.1 million decrease in third-party product royalty expenses, and a $1.4 million decrease in amortization of acquired software.
Research and Development
Research and development (“R&D”) expenses are primarily human resource costs related to the creation of new products, improvements made to existing products as well as compatibility with new operating system releases and generations of hardware.
R&D expense increased $2.8 million, or 8%, during the three months ended March 31, 2020, as compared to the same period in 2019. The acquisition of Speedpay contributed $2.8 million to R&D expense during the three months ended March 31, 2020. R&D expense was $0.6 million lower for the three months ended March 31, 2020, as compared to the same period in 2019, due to the impact of foreign currencies weakening against the U.S. dollar. Excluding the impact of the acquisition of Speedpay and foreign currency, R&D expense increased $0.7 million, or 2%, for the three months ended March 31, 2020, as compared to the same period in 2019, due to an increase in professional fees and personnel and related expenses.
Selling and Marketing
Selling and marketing includes both the costs related to selling our products to current and prospective customers as well as the costs related to promoting the Company, its products and the research efforts required to measure customers’ future needs and satisfaction levels. Selling costs are primarily the human resource and travel costs related to the effort expended to license our products and services to current and potential clients within defined territories and/or industries as well as the management of the overall relationship with customer accounts. Selling costs also include the costs associated with assisting distributors in their efforts to sell our products and services in their respective local markets. Marketing costs include costs incurred to promote the Company and its products, perform or acquire market research to help the Company better understand impending changes in customer demand for and of our products, and the costs associated with measuring customers’ opinions toward the Company, our products and personnel.
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Selling and marketing expense increased $0.7 million, or 2%, during the three months ended March 31, 2020, as compared to the same period in 2019. The acquisition of Speedpay contributed $2.8 million to selling and marketing expense during the three months ended March 31, 2020. Selling and marketing expense was $0.3 million lower for the three months ended March 31, 2020, as compared to the same period in 2019, due to the impact of foreign currencies weakening against the U.S. dollar. Excluding the impact of the acquisition of Speedpay and foreign currency, selling and marketing expense decreased $1.8 million, or 6%, for the three months ended March 31, 2020, as compared to the same period in 2019, due to a decrease in professional fees and personnel and related expenses.
General and Administrative
General and administrative expenses are primarily human resource costs including executive salaries and benefits, personnel administration costs, and the costs of corporate support functions such as legal, administrative, human resources, and finance and accounting.
General and administrative expense increased $4.4 million, or 14%, during the three months ended March 31, 2020, as compared to the same period in 2019. Significant transaction-related expenses contributed $8.5 million to general and administrative expense during the three months ended March 31, 2020, primarily related to cost reduction strategies implemented during the period. The acquisition of Speedpay also contributed $0.4 million during the three months ended March 31, 2020. General and administrative expense for the three months ended March 31, 2019, included $4.7 million of significant transaction-related expenses associated with the acquisition of Speedpay. General and administrative expense was $0.3 million lower for the three months ended March 31, 2020, as compared to the same period in 2019, due to the impact of foreign currencies weakening against the U.S. dollar. Excluding the impact of the acquisition of Speedpay, significant transaction-related expenses, and foreign currency, general and administrative expense increased $0.5 million, or 2%, for the three months ended March 31, 2020, as compared to the same period in 2019, primarily due to an increase in professional fees.
Depreciation and Amortization
Depreciation and amortization increased $10.0 million, or 46%, during the three months ended March 31, 2020, as compared to the same period in 2019, of which $8.3 million, or 38%, was due to the acquisition of Speedpay. Depreciation and amortization was $0.2 million lower for the three months ended March 31, 2020, as compared to the same period in 2019, due to the impact of foreign currencies weakening against the U.S. dollar. Excluding the impact of the acquisition of Speedpay and foreign currency, depreciation and amortization increased $1.9 million, or 9%, for the three months ended March 31, 2020, as compared to the same period in 2019, due to higher amortization of capitalized software.
Other Income and Expense
Interest expense for the three months ended March 31, 2020, increased $5.6 million, or 48%, as compared to the same period in 2019, primarily due to higher comparative debt balances, partially offset by lower interest rates.
Interest income includes the portion of software license fees paid by customers under extended payment terms that is attributed to the significant financing component. Interest income for the three months ended March 31, 2020, decreased $0.1 million, or 4%, as compared to the same period in 2019.
Other, net consists of foreign currency gain or loss. Foreign currency loss for the three months ended March 31, 2020 and 2019, was $9.8 million and $1.9 million, respectively. The higher foreign currency loss in 2020 was due to the market volatility in the wake of the COVID-19 pandemic.
Income Taxes
See Note 11, Income Taxes, to our unaudited condensed consolidated financial statements in Part I of this Form 10-Q for additional information.
Segment Results
We report financial performance based on our segments, ACI On Demand and ACI On Premise, and analyze Segment Adjusted EBITDA as a measure of segment profitability.
Our Chief Executive Officer is also our chief operating decision maker (“CODM”). The CODM, together with other senior management personnel, focus their review on consolidated financial information and the allocation of resources based on operating results, including revenues and Segment Adjusted EBITDA, for each segment, separate from the corporate operations.
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ACI On Demand serves the needs of banks, merchants, and billers who use payments to facilitate their core business. These on-demand solutions are maintained and delivered through the cloud via our global data centers and are available in either a single-tenant environment for SaaS offerings, or in a multi-tenant environment for PaaS offerings.
ACI On Premise serves customers who manage their software on site or through a third-party cloud services provider. These on-premise customers use the Company’s software to develop sophisticated solutions, which are often part of a larger system located and managed at the customer specified site. These customers require a level of control and flexibility that ACI On Premise solutions can offer, and they have the resources and expertise to take a lead role in managing these solutions.
Revenue is attributed to the reportable segments based upon the product sold and mechanism for delivery to the customer. Expenses are attributed to the reportable segments in one of three methods, (1) direct costs of the segment, (2) labor costs that can be attributed based upon time tracking for individual products, or (3) costs that are allocated. Allocated costs are generally marketing and sales related activities as well as information technology and facilities related expense for which multiple segments benefit. We also allocate certain depreciation costs to the segments.
Segment Adjusted EBITDA is the measure reported to the CODM for purposes of making decisions on allocating resources and assessing the performance of our segments and, therefore, Segment Adjusted EBITDA is presented in conformity with ASC 280, Segment Reporting. Segment Adjusted EBITDA is defined as earnings (loss) from operations before interest, income tax expense (benefit), depreciation and amortization (“EBITDA”) adjusted to exclude stock-based compensation, and net other income (expense).
Corporate and unallocated expenses consist of the corporate overhead costs that are not allocated to reportable segments. These overhead costs relate to human resources, finance, legal, accounting, merger and acquisition activity, and other costs that are not considered when management evaluates segment performance.
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The following is selected financial data for our reportable segments for the periods indicated (in thousands):

|  |  |  |  | Three Months Ended March 31, |  |
|  |  |  |  | 2020 |  | 2019
Revenue |  |  |  |  |  |  |
ACI On Demand |  |  |  |  | $ | 192,950 |  |  | $ | 109,848 |
ACI On Premise |  |  |  |  | 98,535 |  |  | 96,007 |
Total revenue |  |  |  |  | $ | 291,485 |  |  | $ | 205,855 |
Segment Adjusted EBITDA |  |  |  |  |  |  |
ACI On Demand |  |  |  |  | $ | 23,121 |  |  | $ | (262) |
ACI On Premise |  |  |  |  | 30,909 |  |  | 28,268 |
Depreciation and amortization |  |  |  |  | (33,822) |  |  | (24,852) |
Stock-based compensation expense |  |  |  |  | (6,950) |  |  | (6,585) |
Corporate and unallocated expenses |  |  |  |  | (24,541) |  |  | (24,662) |
Interest, net |  |  |  |  | (14,271) |  |  | (8,581) |
Other, net |  |  |  |  | (9,758) |  |  | (1,912) |
Loss before income taxes |  |  |  |  | $ | (35,312) |  |  | $ | (38,586) |
Depreciation and amortization |  |  |  |  |  |  |
ACI On Demand |  |  |  |  | $ | 9,332 |  |  | $ | 7,562 |
ACI On Premise |  |  |  |  | 3,106 |  |  | 3,030 |
Corporate |  |  |  |  | 21,384 |  |  | 14,260 |
Total depreciation and amortization |  |  |  |  | $ | 33,822 |  |  | $ | 24,852 |
Stock-based compensation expense |  |  |  |  |  |  |
ACI On Demand |  |  |  |  | $ | 2,026 |  |  | $ | 1,951 |
ACI On Premise |  |  |  |  | 2,030 |  |  | 1,956 |
Corporate |  |  |  |  | 2,894 |  |  | 2,678 |
Total stock-based compensation expense |  |  |  |  | $ | 6,950 |  |  | $ | 6,585 |

ACI On Demand Segment Adjusted EBITDA increased $23.4 million for the three months ended March 31, 2020, compared to the same period in 2019, of which $20.8 million was due to the acquisition of Speedpay. Excluding the impact of the acquisition of Speedpay, ACI On Demand Segment Adjusted EBITDA increased $2.6 million, primarily due to a decrease in cash operating expense, partially offset by a decrease in revenue within the Company's Biller business.
ACI On Premise Segment Adjusted EBITDA increased $2.6 million for the three months ended March 31, 2020, compared to the same period in 2019, primarily due to a $2.5 million increase in revenue and a $0.1 million decrease in cash operating expense.
Liquidity and Capital Resources
General
Our primary liquidity needs are: (i) to fund normal operating expenses; (ii) to meet the interest and principal requirements of our outstanding indebtedness; and (iii) to fund acquisitions, capital expenditures, and lease payments. We believe these needs will be satisfied using cash flow generated by our operations, our cash and cash equivalents, and available borrowings under our revolving credit facility.
Our cash requirements in the future may be financed through additional equity or debt financings. However, the disruption in the capital markets caused by the COVID-19 pandemic could make any new financing more challenging, and there can be no assurance that such financings will be obtained on commercially reasonable terms, or at all. We believe our liquidity will allow us to manage the anticipated impact of COVID-19 on our business operations for the foreseeable future, which could include reductions in revenue and delays in payments from customers and partners. We are compliant with our debt covenants and do not anticipate an inability to service our debt. As the challenges posed by COVID-19 on our business and the economy as a whole evolve rapidly, we will continue to evaluate our liquidity and financial position in light of future developments, particularly those relating to COVID-19.
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Available Liquidity
The following table sets forth our available liquidity for the periods indicated (in thousands):

| March 31, 2020 |  | December 31, 2019
Cash and cash equivalents | $ | 119,124 |  |  | $ | 121,398 |
Availability under revolving credit facility | 270,000 |  |  | 261,000 |
Total liquidity | $ | 389,124 |  |  | $ | 382,398 |

The increase in total liquidity is primarily attributable to positive operating cash flows of $57.5 million, partially offset by $28.9 million of payments related to stock repurchases and $10.1 million of payments to purchase property and equipment and software and distribution rights.
The Company and ACI Payments, Inc., a wholly owned subsidiary, maintain a $140.0 million uncommitted overdraft facility with Bank of America, N.A. The overdraft facility acts as a secured loan under the terms of the Credit Agreement to provide an additional funding mechanism for timing differences that can occur in the bill payment settlement process. As of March 31, 2020, the full $140.0 million was available.
Cash and cash equivalents consist of highly liquid investments with original maturities of three months or less. As of March 31, 2020, we had $119.1 million of cash and cash equivalents, of which $52.0 million was held by our foreign subsidiaries. If these funds were needed for our operations in the U.S., we may potentially be required to accrue and pay foreign and U.S. state income taxes to repatriate these funds. As of March 31, 2020, only the earnings in our Indian foreign subsidiaries are indefinitely reinvested. The earnings of all other foreign entities are no longer indefinitely reinvested. We are also permanently reinvested for outside book/tax basis difference related to foreign subsidiaries. These outside basis differences could reverse through sales of the foreign subsidiaries, as well as various other events, none of which are considered probable as of March 31, 2020.
Cash Flows
The following table sets forth summarized cash flow data for the periods indicated (in thousands):

| Three Months Ended March 31, |  |
| 2020 |  | 2019
Net cash provided by (used by): |  |  |
Operating activities | $ | 57,500 |  |  | $ | 42,427 |
Investing activities | (10,138) |  |  | (9,828) |
Financing activities | (60,837) |  |  | (5,361) |

Cash Flows from Operating Activities
Net cash flows provided by operating activities during the three months ended March 31, 2020, were $57.5 million as compared to $42.4 million during the same period in 2019. Net cash provided by operating activities primarily consists of net loss adjusted to add back depreciation, amortization, and stock-based compensation. Cash flows provided by operating activities were $15.1 million higher for the three months ended March 31, 2020, compared to the same period in 2019, due to the timing of working capital. Our current policy is to use our operating cash flow primarily for funding capital expenditures, lease payments, stock repurchases, and acquisitions.
Cash Flows from Investing Activities
During the first three months of 2020, we used cash of $10.1 million to purchase software, property, and equipment, as compared to $9.8 million during the same period in 2019.
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Cash Flows from Financing Activities
Net cash flows used by financing activities for the three months ended March 31, 2020, were $60.8 million as compared to net cash flows used by financing activities of $5.4 million during the same period in 2019. During the first three months of 2020, we repaid $39.0 million on the Revolving Credit Facility and $9.7 million on the Initial Term Credit Loan, partially offset by proceeds of $30.0 million on the Revolving Credit Facility. In addition, we used $28.9 million to repurchase common stock and $11.0 million for the repurchase of stock-based compensation awards for tax withholdings. We also received proceeds of $1.3 million from the exercise of stock options and the issuance of common stock under our 2017 Employee Stock Purchase Plan, as amended. During the first three months of 2019, we repaid $5.9 million on the Initial Term Loan. In addition, we received proceeds of $5.7 million from the exercise of stock options and the issuance of common stock under our 2017 Employee Stock Purchase Plan, as amended, and used $2.6 million for the repurchase of stock-based compensation awards for tax withholdings. We also used $0.6 million to repurchase common stock.
We may decide to use cash to acquire new products and services or enhance existing products and services through acquisitions of other companies, product lines, technologies, and personnel, or through investments in other companies.
We believe our existing sources of liquidity, including cash on hand and cash provided by operating activities, will satisfy our projected liquidity requirements, which primarily consists of working capital and debt service requirements, for the next twelve months and foreseeable future.
Debt
As of March 31, 2020, we had $230.0 million and $746.3 million outstanding under our Revolving Credit Facility and Term Loans, respectively, with up to $270.0 million of unused borrowings under the Revolving Credit Facility. The interest rate in effect for the Credit Facility as of March 31, 2020, was 3.17%. As of March 31, 2020, we also had $400.0 million outstanding of the 2026 Notes. See Note 4, Debt, to our unaudited condensed consolidated financial statements in Part I of this Form 10-Q for additional information.
Stock Repurchase Program
We repurchased 1,000,000 shares for $28.9 million under the program during the three months ended March 31, 2020. Under the program to date, we have repurchased 46,357,495 shares for approximately $612.3 million. As of March 31, 2020, the maximum remaining amount authorized for purchase under the stock repurchase program was approximately $112.1 million. See Note 7, Common Stock and Treasury Stock, to our unaudited condensed consolidated financial statements in Part I of this Form 10-Q for additional information.
Contractual Obligations and Commercial Commitments
For the three months ended March 31, 2020, there have been no material changes to the contractual obligations and commercial commitments disclosed in Item 7 of our Form 10-K for the fiscal year ended December 31, 2019.
We are unable to reasonably estimate the ultimate amount or timing of settlement of our reserves for income taxes under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 740, Income Tax. The liability for unrecognized tax benefits as of March 31, 2020, is $30.0 million.
Critical Accounting Estimates
The preparation of the condensed consolidated financial statements requires we make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and other assumptions we believe to be proper and reasonable under the circumstances. We continually evaluate the appropriateness of estimates and assumptions used in the preparation of our condensed consolidated financial statements. Actual results could differ from those estimates.
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The accounting policies that reflect our more significant estimates, judgments, and assumptions, and that we believe are the most critical to aid in fully understanding and evaluating our reported financial results, include the following:
•Revenue Recognition
•Intangible Assets and Goodwill
•Business Combinations
•Stock-Based Compensation
•Accounting for Income Taxes
During the three months ended March 31, 2020, there were no significant changes to our critical accounting policies and estimates. Please refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in Part II, Item 7 of our Annual Report on Form 10-K for our fiscal year ended December 31, 2019, for a more complete discussion of our critical accounting policies and estimates.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Excluding the impact of changes in interest rates and the uncertainty in the global financial markets, there have been no material changes to our market risk for the three months ended March 31, 2020. We conduct business in all parts of the world and are thereby exposed to market risks related to fluctuations in foreign currency exchange rates. The U.S. dollar is the single largest currency in which our revenue contracts are denominated. Any decline in the value of local foreign currencies against the U.S. dollar results in our products and services being more expensive to a potential foreign customer. In those instances where our goods and services have already been sold, receivables may be more difficult to collect. Additionally, in jurisdictions where the revenue contracts are denominated in U.S. dollars and operating expenses are incurred in the local currency, any decline in the value of the U.S. dollar will have an unfavorable impact to operating margins. At times, we enter into revenue contracts that are denominated in the country’s local currency, primarily in Australia, Canada, the United Kingdom, other European countries, Brazil, India, and Singapore. This practice serves as a natural hedge to finance the local currency expenses incurred in those locations. We have not entered into any foreign currency hedging transactions. We do not purchase or hold any derivative financial instruments for speculation or arbitrage.
The primary objective of our cash investment policy is to preserve principal without significantly increasing risk. If we maintained similar cash investments for a period of one year based on our cash investments and interest rates on these investments at March 31, 2020, a hypothetical ten percent increase or decrease in effective interest rates would increase or decrease interest income by less than $0.1 million annually.
We had approximately $1.4 billion of debt outstanding as of March 31, 2020, with $976.3 million outstanding under our Credit Facility and $400.0 million in 2026 Notes. Our Credit Facility has a floating rate, which was 3.17% as of March 31, 2020. Our 2026 Notes are fixed-rate long-term debt obligations with a 5.750% interest rate. A hypothetical ten percent increase or decrease in effective interest rates would increase or decrease interest expense related to the Credit Facility by approximately $3.1 million.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Management, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, performed an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded our disclosure controls and procedures are effective as of March 31, 2020.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) under the Exchange Act) during the quarter ended March 31, 2020, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we are involved in various litigation matters arising in the ordinary course of our business. We are not currently a party to any legal proceedings, the adverse outcome of which, individually or in the aggregate, we believe would be likely to have a material effect on our financial condition or results of operations.
ITEM 1A. RISK FACTORS
There have been no material changes to the risk factors disclosed in Item 1A of our Form 10-K for the fiscal year ended December 31, 2019, other than as disclosed below. Addi tional risks and uncertainties, including risks and uncertainties not presently known to us, or that we currently deem immaterial, could also have an adverse effect on our business, financial condition and/or results of operations.
The ongoing COVID-19 pandemic could adversely affect our business, results of operations and financial condition.
The outbreak of COVID-19 was declared a pandemic by the World Health Organization on March 11, 2020. Since that time, COVID-19 has spread around the world and throughout the United States, including in the regions and communities in which we operate. Federal, state and local governments in the U.S and around the world have imposed restrictions on travel and business operations and are advising or requiring individuals to limit or eliminate time outside of their homes. Temporary closures of businesses have also been ordered in certain jurisdictions, and other businesses have temporarily closed voluntarily. These actions expanded significantly in March and April of 2020 throughout the U.S. Consequently, the COVID-19 outbreak has severely restricted the level of economic activity in the U.S. and around the world.
The outbreak has resulted in authorities implementing numerous measures to try to contain the virus, such as quarantines and shelter in place orders. The spread of the virus has caused us to modify our business practices, including having most of our employees and contractors, with the exception of essential personnel (e.g. certain data center personnel), shelter in place; ceasing non-essential domestic and international travel; permitting essential travel for mission critical functions only by exception and followed by a 14-day self-quarantine period; and ceasing any travel to China, Hong Kong, Italy, or South Korea. These measures may remain in place for a significant period of time and adversely affect our business, operations and financial condition as well as the business, operations and financial condition of our customers and business partners. We may also be required to take further actions as a result of government mandates or because we determine further actions are in the best interests of our employees and customers, which actions may further adversely affect our business, results of operations, and financial condition. Notwithstanding any of these actions, there can be no assurance that any of the foregoing activities will be successful in mitigating or preventing significant adverse effects on our business, results of operations, or financial condition.
The disruptions to our operations or the operations of our customers or business partners may result in inefficiencies, delays and additional costs in our product development, sales, marketing, product implementations and customer service efforts that cannot be fully mitigated through remote or alternative work arrangements. The disruptions may also result in the delay or loss of sales as our customers and prospective customers evaluate and reconsider their business needs post-pandemic. Existing customers may seek to void or renegotiate their contracts with us as a result of changes in their anticipated future business needs or financial condition.
Certain of our contracts are transaction-based in which the revenue we derive is based on transaction volumes. The Merchant and Biller businesses of our ACI On Demand segment have experienced, and are expected to continue to experience, changes in consumer transaction volumes as a result of lower in-store retail transactions and delays in timing of bill payments by consumers. Significant declines in transaction volumes may have a material and adverse impact on our financial position, results of operations and cash flows.
Although we expect that current cash and cash equivalent balances and cash flows generated from operations will be sufficient to meet our domestic and international working capital needs and other capital and liquidity requirements, if our access to capital is restricted or our borrowing costs increase, our operations and financial condition could be adversely impacted.
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The pandemic may also have the effect of heightening many of the other risks described in Item 1A of our Form 10-K for the fiscal year ended December 31, 2019, including risks associated with slowing global economic conditions, demand for our products, delays or cancellations of customer projects, failures to obtain renewals of customer contracts, and reluctance of prospective customers to switch to a new vendor.
The effect of COVID-19 and related events, including those described above and those not yet known or knowable, could have a negative effect on our stock price, business prospects, financial condition, and results of operations.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Purchases of Equity Securities
The following table provides information regarding our repurchases of common stock during the three months ended March 31, 2020:

Period | Total Number of Shares Purchased |  | Average Price Paid per Share |  | Total Number of Shares Purchased as Part of Publicly Announced Program |  | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
January 1, 2020 through January 31, 2020 | — |  |  | $ | — |  |  | — |  |  | $ | 140,969,000 |
February 1, 2020 through February 29, 2020 | 296,500 |  | (1) |  | 31.54 |  |  | — |  |  | 140,969,000 |
March 1, 2020 through March 31, 2020 | 1,053,842 |  | (1) |  | 28.95 |  |  | 1,000,000 |  |  | 112,088,000 |
Total | 1,350,342 |  |  | $ | 29.52 |  |  | 1,000,000 |  |  |

(1)Pursuant to our 2016 Equity and Performance Incentive Plans, as amended, we granted LTIPs, RSAs, TSRs, and RSUs. Under each arrangement, shares are issued without direct cost to the employee. During the three months ended March 31, 2020, 1,284,057 shares of LTIPs, RSAs, TSRs, and RSUs vested. We withheld 350,342 of those shares to pay the employees’ portion of the applicable minimum payroll withholding taxes.
In 2005, our board approved a stock repurchase program authorizing us, as market and business conditions warrant, to acquire our common stock and periodically authorize additional funds for the program, with the intention of using existing cash and cash equivalents to fund these repurchases. In February 2018, the board approved the repurchase of the Company's common stock for up to $200.0 million, in place of the remaining purchase amounts previously authorized. As of March 31, 2020, the maximum remaining amount authorized for purchase under the stock repurchase program was approximately $112.1 million.
There is no guarantee as to the exact number of shares we will repurchase. Repurchased shares are returned to the status of authorized but unissued shares of common stock. In March 2005, our board approved a plan under Rule 10b5-1 of the Securities Exchange Act of 1934 to facilitate the repurchase of shares of common stock under the existing stock repurchase program. Under our Rule 10b5-1 plan, we have delegated authority over the timing and amount of repurchases to an independent broker who does not have access to inside information about the Company. Rule 10b5-1 allows us, through the independent broker, to purchase shares at times when we ordinarily would not be in the market because of self-imposed trading blackout periods, such as the time immediately preceding the end of the fiscal quarter through a period of three business days following our quarterly earnings release.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
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ITEM 6. EXHIBITS
The following lists exhibits filed as part of this quarterly report on Form 10-Q:

Exhibit No. |  |  | Description
3.01 | (1) |  | 2013 Amended and Restated Certificate of Incorporation of the Company
3.02 | (2) |  | Amended and Restated Bylaws of the Company
4.01 | (3) |  | Form of Common Stock Certificate (P)
10.01 | * |  | Form of Nonqualified Stock Option Agreement – Employee for the Company’s 2005 Equity and Performance Incentive Plan, as amended
10.02 | * |  | Form of 2015 Supplemental Nonqualified Stock Option Agreement - Employee for the Company’s 2005 Equity and Performance Incentive Plan, as amended
10.03 | * |  | Form of 2015 Nonqualified Stock Option Agreement - Employee for the Company’s 2005 Equity and Performance Incentive Plan, as amended
10.04 | * |  | Form of 2016 Nonqualified Stock Option Agreement for the Company’s 2016 Equity and Performance Incentive Plan, as amended
31.01 |  |  | Certification of Principal Executive Officer pursuant to SEC Rule 13a-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.02 |  |  | Certification of Principal Financial Officer pursuant to SEC Rule 13a-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.01 | ** |  | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.02 | ** |  | Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS |  |  | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH |  |  | XBRL Taxonomy Extension Schema
101.CAL |  |  | XBRL Taxonomy Extension Calculation Linkbase
101.LAB |  |  | XBRL Taxonomy Extension Label Linkbase
101.PRE |  |  | XBRL Taxonomy Extension Presentation Linkbase
101.DEF |  |  | XBRL Taxonomy Extension Definition Linkbase
104 |  |  | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

____________
* Denotes exhibit that constitutes a management contract, or compensatory plan or arrangement.
** This certification is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Company specifically incorporates it by reference.
(P)Paper Exhibit
(1)Incorporated herein by reference to Exhibit 3.1 to the registrant’s current report on Form 8-K filed August 17, 2017.
(2)Incorporated herein by reference to Exhibit 3.1 to the registrant’s current report on Form 8-K filed February 27, 2017.
(3)Incorporated herein by reference to Exhibit 4.01 to the registrant’s Registration Statement No. 33-88292 on Form S-1.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

| ACI WORLDWIDE, INC. (Registrant) |
Date: May 7, 2020 | By: | /s/ S COTT W. B EHRENS
|  | Scott W. Behrens
|  | Executive Vice President, Chief Financial Officer and Chief Accounting Officer (Principal Financial Officer)

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