ACI Worldwide, Inc. (ACIW) is one of the world’s leaders in the electronic payments software industry. The company has a broad line of products and services, which help facilitate global funds transfers and electronic commerce. The company has operations across the globe, with customers in over 104 countries, and receives revenues from multiple streams.

ACI Worldwide was founded in 1993 as Transaction Systems Architects, in an effort to provide technology for the nascent trend of payments being made electronically. It went public in 1995 and was brought into The Value Line Investment Survey in early 1998. By then, 100 of the world’s largest 500 banks were using some form of the company’s electronic payment systems. Although the company had some accounting problems, it emerged as one of the top players in the largely diverse electronic payments industry. Thanks to smart acquisitions and a global reach, this entity appears to be on the right track.

The revenue streams at ACI worldwide continue to be diverse. It receives initial license fees, monthly license fees, maintenance fees, software hosting fees, and services fees, and none of these categories accounted for more than 30% of sales in 2012. Looking forward, no individual contract loss would be likely to cause major damage due to the diversity of the top-line sources. ACI Worldwide’s customer base is so varied that it must divide its sales by locale into three reported segments: the Americas, EMEA (Europe, Middle East, and Africa), and Asia. The company has also historically done some health claims transaction processing.

The IT Services company partners with many global firms in its payment processing. Its BASE24-eps is an integrated payments processing product that allows electronic payments in the retail banking and retail industries. This offering runs on IBM’s (IBM Free IBM Stock Report) System Z or System P, and can also run on Hewlett-Packard’s (HPQ) NonStop, and Oracle’s (ORCL) Solaris servers. Historically, its deal with Deutsche Bank (DB) helped it enter the corporate banking market.

ACI Worldwide dealt with some issues in the past, including changes in top management and some accounting irregularities, but is much more stable now. Early in 2001, the Chairman and CEO somewhat unexpectedly stepped down, and another high-level executive followed suit.  It then took another four years, and a few CEOs, to find some stability at the position. The company found some accounting issues and decided to re-audit the 1999-2001 period, causing a large selloff in the stock. The re-audit caused the company to be out of compliance with the SEC and it was threatened with delistment by the NASDAQ (NDAQ). The company regained compliance, but then had an accounting issue in 2007 regarding its past issuances of stock options. It fixed the problem and replaced its auditor. Though these problems have since been resolved, we note them for historical perspective.

The company has averaged several acquisitions a year, furthering the product offerings. The ACI Brand outgrew the rest of the business and the company accordingly renamed itself. More recently, larger acquisitions have been a major reason for growth of the company. The ISD corporation, a payment management software provider for retail, was purchased in 2011. The 2012 acquisition of S1 Corp., and the 2013 purchase of Online Resources broadened the product lineup and have helped push total sales even higher.

Now the company’s newest product seems like it will be the one to beef up returns. With so many separate software offerings, ACI Worldwide created the Universal Payments Platform. This software will connect the many products and services that the company offers into a single cohesive unit. The rollout of this product, which is currently in progress, should allow for higher cross-selling of features. Feedback thus far has been good, and management expects this to be a driver of future growth. Enabling more customers to seamlessly use multiple features should lead to much-improved earnings. As its problems appear to be behind it, we expect the latest offering to facilitate the long-term strategy for ACI’s growth.

At the time of this article’s writing the author did not have positions in any of the companies mentioned.