ACI Worldwide delivered a strong Q2 FY2026 with revenue of $430 million (+7% reported), Adjusted EBITDA of $91 million (+12%) at a 34% margin, and adjusted diluted EPS of $0.54 (+54%), prompting a raise to full-year revenue ($1.895B-$1.925B) and Adjusted EBITDA ($545M-$560M) guidance. Payment Software led growth (+9%, with issuing and acquiring +33% cc), while Biller grew 5% but saw EBITDA pressure from tough prior-year comparisons and a terminated-partnership charge. Strategically, ACI signed its first two U.S.-based ACI Connetic customers, its fastest-growing pipeline, and highlighted tangible AI-driven efficiency gains, while returning ~$107 million YTD to shareholders via buybacks against a 40/60 second-half revenue cadence.
Good morning, everyone. Thanks for joining us. On today's call, we will discuss ACI Worldwide's second quarter 2026 results, as well as our updated financial outlook for the remainder of the year. We will then open the line for your questions. Slides and press release accompanying this webcast can be found at aciworldwide.com under the investor relations tab and will remain available after the call. As always, today's call is subject to safe harbor and forward-looking statements. You can find the full text of these statements in our earnings materials and SEC filings. Joining me this morning are Thomas Warsop, our President and CEO, and Robert Leibrock, our Chief Financial Officer. Before I turn it over to Tom, I'd like to highlight several upcoming conferences where members of management will be participating.
The KeyBanc Technology Leadership Forum on August 11, the Seaport Research Partners Annual Summer Investor Conference on August 18, and the FT Partners Fintech Conference on September 15. We look forward to meeting many of you at these events. With that, I'll turn the call over to Tom. Tom?
Thanks, John. Good morning, everyone. As always, I appreciate you joining us for our earnings call. Today, we'll talk about our second quarter 2026. Let me start by saying financial performance was strong, and the quarter was fulfilling in many ways, in addition to those strong financial results. I want to share a few examples of the things we at ACI are proud of as we continue to deliver on our promises and transform for the future. Let me start with the headline financial results. Then I'll discuss the operational progress driving the momentum we're seeing across the business. Today, we reported 7% revenue growth, 12% Adjusted EBITDA growth, and 54% adjusted diluted EPS growth. We're again raising our full year guidance. Perhaps even more importantly, we continued to make progress on our key strategic initiatives, the things we believe drive long-term growth and shareholder value creation.
We signed our first U.S.-based ACI Connetic customer in the quarter, and we've already signed another in Q3. The traction with ACI Connetic is a result of our ongoing strategic growth investments and the privileged position we have in the payments ecosystem around the world. We remain well-positioned to benefit from the ongoing need for payments modernization. I'm going to discuss this in more detail shortly. Our margin expansion is a result of disciplined expense management while continuing to invest in innovation and returning capital to shareholders. Before I discuss our business segments, I'll spend a few minutes on what's happening in the payments industry. Across financial services, payment ecosystems are becoming significantly more complex. Financial institutions are managing more payment types, more payment rails, increasing real-time payments adoption, rising fraud threats, evolving regulatory requirements, and continually increasing expectations from consumers and businesses.
At the same time, many organizations are operating on infrastructure that was designed for a very different payments environment. As a result, modernization has become one of the most important strategic priorities for customers around the world. Increasingly, the discussion is no longer whether institutions will modernize, but how they will modernize and who they will partner with to help them get there. That trend continues to create meaningful opportunities for us at ACI. As I mentioned, one of the most significant accomplishments during the quarter was the signing of our first U.S.-based ACI Connetic customers. We signed one customer during Q2 and a second customer shortly after the quarter ended. We view these wins as further validation of the ACI Connetic strategy.
Customers are increasingly looking to simplify complex payments environments through a modern cloud-native platform that provides connectivity across payment types while positioning them for the next generation of payment intelligence and orchestration. Our ACI Connetic pipeline continues to expand faster than any other solution set. In the Biller business, our ACI Speedpay ONE platform continues to advance with new customers being implemented on this cloud-native leading-edge solution. We now have more than 100 customers live on this platform, and our continuing investments are improving performance and flexibility. Our ACI Connetic solution and our ACI Speedpay ONE Biller solution are broadly AI-enabled, meaning we're building AI-powered capabilities directly into the solution from day one. I've previously mentioned a little bit about how ACI is taking advantage of the potential of AI.
I want to give you a little bit more flavor in terms of how AI is really impacting us and our customers. We're already seeing tangible benefits from these efforts. Here's a few examples. In terms of test automation, our AI mandate analyzer is reducing the time required to interpret payment scheme mandates from two to three weeks to minutes or hours. That's shifting roughly two weeks of effort earlier in each cycle across schemes and products and creating an incremental person year of engineering capacity over time. That's just the beginning. In our Biller business, AI-supported re-architecture work on one of our common products has reduced the effort by about 50%, and that's already saved over 6,000 hours of engineering time. In customer support, we built a retrofit agent team.
That's a team of agents doing retrofitting work, and that will automate up to 85% of a previously completely manual process, saving approximately 10 hours per week per user, with additional benefits in related root cause workflows. That work has already been piloted with a large customer in our European business with broader rollout coming soon. We've integrated AI-powered functionality into products across our portfolio, and this is accelerating. Just a couple of examples. In ACI Connetic, we've implemented a dynamic context-dependent intelligent routing and scoring capability. This enables very fast adjustments to fraud and routing algorithms based upon up-to-the-second information. That is only possible with generative AI and related tools. On ACI Speedpay ONE in our Biller business, we've deployed tools to simplify and accelerate our customers' ability to deploy our standard APIs and to accelerate the customer implementation journey.
These are only two of the many solution capabilities we've implemented which are powered by AI. I do want to comment briefly on each of our operating segments. Obviously, Bobby will cover more detail, but let me start with Payment Software. Payment Software continued to perform well during this quarter. The segment delivered 9% revenue growth driven by strength in issuing and acquiring, where revenue increased 37%. Encouragingly, we're seeing customers move beyond evaluating modernization initiatives and increasingly begin executing against them. As transaction volumes continue to grow and payment environments become more complex, customers increasingly view ACI as a strategic technology partner rather than simply a software provider. Our merchant and anti-fraud solutions both grew in the mid-single digits, and both solutions are well-positioned to benefit from some interesting new AI, which is driving new technology opportunities and tools.
That includes a new collaboration with some of our merchant clients, where we have created an agentic commerce solution that can be used both by consumers making a purchase and by our customers' agents who are assisting consumers. We're playing both sides of that opportunity. In our Biller segment, revenue increased 5% during the quarter. While year-over-year comparisons in Q2 were challenging, following unusually strong volumes last year, as well as some unique margin benefits that did not recur, the underlying health of the business is strong. We continue to see growing adoption of our ACI Speedpay ONE platform through expansions across our installed base and success with new customer wins. We remain confident in our expectation for upper single-digit growth in Biller for the full year. We're also continuing to execute our balanced capital allocation strategy.
We deployed approximately $41 million of capital to share repurchases in Q2, and that brings our year-to-date repurchases to approximately $107 million. As we previously communicated, we expect to allocate between 50% and 60% of operating cash flow to share repurchases during 2026. At this level, we will maintain flexibility for further organic growth investments and potential strategic acquisitions, particularly focusing on those that accelerate our cloud-based payments modernization offerings. As we've said before, driving a superior return on capital deployed is a core tenet of our leadership team and a strategic imperative for our business. We take this capital stewardship seriously. As a part of this disciplined effort, our corporate development team regularly evaluates inorganic opportunities across a full spectrum of strategic actions, including opportunistic acquisitions, divestitures, and partnerships.
There are some interesting technologies in the marketplace that could help accelerate our growth. The valuations are more attractive than they've been in the recent past. Evaluation of those opportunities occurs in the normal course of business for us. I'm sure you understand that I will not comment directly on any recent speculation about us in the news. To be clear, our business is operating from a place of financial and competitive strength, positioning us to further establish ACI as a platform for profitable growth over time consistent with our proven track record as a value compounder. I'm pleased with our execution in the first half of the year, and I remain encouraged by the strength of our pipeline, which gives us confidence we are on track for a strong finish to the year.
Our recurring revenue profile, strong customer relationships, ongoing technology investments, and disciplined cost management have us well positioned to continue delivering profitable growth. This strategic framework, combined with our shareholder focus, returns-based capital deployment strategy, positions us well to continue to create long-term shareholder value. I want to thank our employees around the world for what they do every day. Their dedication to our customers and their commitment to operational excellence are what makes our success possible. I also want to thank our customers for their partnership. Our shareholders for their continued trust and support as we execute on our long-term value creation strategy. With that, I'll turn it over to Bobby.
Thank you, Tom, and good morning, everyone. I'll begin with a review of our second quarter financial results, then discuss our first half performance, capital allocation activities, and outlook for the remainder of 2026. Overall, we delivered another quarter of solid financial performance characterized by revenue growth, margin expansion, earnings growth, and strong cash generation. Second quarter revenue was $430 million, up 7% on a reported basis and up 6% in constant currency. Net income was $32 million, compared to $12 million a year ago. Adjusted diluted earnings per share was $0.54, up 54% from the prior year, reflecting strong operational performance and the benefits of our share repurchase program. Adjusted EBITDA was $91 million, up 12% on a reported basis and up 9% in constant currency.
Net Adjusted EBITDA margin expanded to 34% from 32% last year, even as we increased R&D spending by 17% to support innovation and future growth. This margin expansion was driven by strong operating leverage and reflects disciplined expense management. Year-to-date revenue was $956 million, up 8% on a reported basis and up 6% in constant currency. Year-to-date Adjusted EBITDA was $196 million, up 12% on a reported basis and up 8% in constant currency. While net Adjusted EBITDA margin for that period expanded approximately 200 basis points to 36%. In the Payment Software segment, second quarter revenue was $196 million, up 9% on a reported basis and up 7% in constant currency. The segment benefited from notable strength in issuing and acquiring, which grew 33% in constant currency versus the prior year period, driven by large expansions with renewing customers. Merchant and fraud management revenue also delivered year-over-year growth.
Real-time payments revenue declined versus the prior year period. While the number of renewal and expansion opportunities was lower than a year ago, retention and expansion performance remained strong, underscoring the healthy demand environment we continue to see in real-time payments. We continue to expect real-time payments to contribute to growth in 2026 and remain encouraged by customer demand and the strength of our pipeline. Segment Adjusted EBITDA for Payment Software was $94 million, up 12% on a reported basis and up 9% in constant currency, resulting in a net Adjusted EBITDA margin of 48%. The margin expansion reflects the inherent leverage of a highly recurring software model. In Biller, revenue was $234 million, up 5% on both a reported and constant currency basis.
As we noted last quarter, second quarter revenue net of interchange and Adjusted EBITDA were impacted by mix and difficult comparisons against unusually strong volume activity in the prior year, which also included certain credits that did not occur. Despite those near-term comparisons, underlying customer demand remains healthy. We continue to expect upper single-digit revenue growth for the Biller segment for the full year. While Adjusted EBITDA declined year-over-year, the pressure was primarily driven by prior year comparison items rather than any change in the underlying health of the business. Results in the current quarter were also impacted by a one-time charge related to a partnership that has since been terminated and is not expected to reoccur. The business continues to benefit from healthy transaction growth, strong customer retention, new customer additions, and continued adoption of Speedpay ONE.
We also expect net revenue growth to trend more closely with gross revenue growth over the balance of the year. Net new ARR bookings were $18 million during the quarter, while new license and services bookings were $59 million. ARR bookings were compared against a particularly strong prior year period that benefited from several large Payment Software contract signings. This year, strong Biller performance partially offset lower Payment Software bookings with a greater concentration of expected signings weighted towards the second half of the year. New license and services bookings reflect similar timing of anticipated Payment Software deals. While quarterly results can fluctuate based on the timing of large transactions, we remain encouraged by the strength of our pipeline. We continue to expect both net new ARR bookings and new license and services bookings to grow for the full year.
On the balance sheet, we ended the quarter with $167 million in cash and a net leverage ratio of 1.2x Adjusted EBITDA. Year-to-date operating cash flow was $135 million, reflecting the strength of the business and disciplined execution across the organization. As Tom mentioned, we continue to take a balanced and disciplined approach to capital allocation, investing in initiatives that support long-term growth while returning capital to shareholders. During the second quarter, we repurchased approximately 948,000 shares for $41 million. Year to date, we have repurchased approximately 2.5 million shares for $107 million and ended the quarter with approximately $349 million remaining under our authorization. Turning to guidance, based on the first half performance and the strength of our pipeline, we're increasing our full year 2026 outlook. We now expect revenue in the range of $1.895 billion-$1.925 billion, up from our prior range of $1.89 billion-$1.92 billion.
We expect Adjusted EBITDA in the range of $545 million-$560 million, up from $540 million-$555 million. For the second half of 2026, as we discussed last quarter, we continue and expect an approximately 40% and 60% revenue weighting between the third and fourth quarters respectively, driven by the timing of high-margin Payment Software license renewals. This implies third quarter revenue of $417 million-$427 million, and Adjusted EBITDA in Q3 '26 is expected to be $90 million-$95 million. Additional income statement, balance sheet, and cash flow guidance assumptions are available on the guidance slide in our earnings presentation. Our outlook continues to be supported by a strong recurring revenue base, healthy customer demand, and a robust pipeline across both Payment Software and Biller. The increase in our guidance reflects both our strong first half performance and our confidence in the opportunities we see ahead.
We remain committed to investing in innovation and our strategic growth priorities while maintaining a disciplined approach to profitability and cash generation. As we look to the balance of 2026, we remain focused on executing our strategy, investing in innovation, maintaining operational discipline, and generating strong cash flow. As customers continue to modernize their payment infrastructure, the needs for intelligent payment orchestration continues to grow. We believe ACI's unique combination of software, data, industry expertise positions us well to capitalize on that opportunity while continuing to deliver long-term shareholder value. With that, Tom and I will be happy to take your questions.