Attached files
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| 8-K - 8-K - ACI WORLDWIDE, INC. | d637120d8k.htm |
 December 2013
ACI Worldwide Investor Conferences
December, 2013
Exhibit 99.1 |
 December 2013
Private Securities Litigation Reform Act of 1995
Safe Harbor for Forward-Looking Statements
This presentation contains forward-looking statements based on
current expectations that involve a number of risks and uncertainties.
The forward-looking statements are made pursuant to safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. A
discussion of these forward-looking statements and risk factors that
may affect them is set forth at the end of this presentation. The
Company assumes no obligation to update any forward-looking
statement in this presentation, except as required by law.
1 |
 December 2013
2
About ACI Worldwide
•
High quality products and services drive strong renewal
rates on a large installed user base of over 5,000 customers
•
Long-term, blue-chip, geographically diverse customer base
with low customer concentration
•
Subscription-based model drives recurring revenue and
provides stability and predictability to our operations
•
Large contractual backlog provides earnings visibility and
allows our management to optimally manage the size and
infrastructure of the business
•
Leading payments transformation with Universal Payments
(UP)
•
Management team has an established track record of
operational excellence and significant industry experience
2013
Pro Forma Revenue
$1035 Million
2013
Pro Forma Adjusted EBITDA
$291 Million
9/30/2013
60-Month Backlog
$3.1 Billion
Founded in 1975,
ACI is a leading
provider of
electronic
payments and
transaction banking
software solutions
for financial
institutions,
retailers,
processors and
billers worldwide
Note: Pro Forma Revenue is presented on a Non-GAAP basis that adds back the Deferred Revenue
Fair Value
Adjustment.
Pro
Forma
Adjusted
EBITDA
excludes
transaction
and
litigation
expenses.
Both
metrics
are
presented
on
a
pro
forma
basis
for
the
ORCC
and
OPAY
acquisitions. |
 December 2013
Global Distribution and Customer Base:
The Leader in the Mega and Large FIs Market
Headquarters Regional
Offices Distributors AMERICAS
1,950+ customers
EMEA
500+ customers
ASIA/PACIFIC
150+ customers
5,000+ customers in over 80
countries rely on ACI solutions
Customers: ~ 180
processors globally
Customers: ~ 290
retailers globally
3
Customers: 3600+
US billers
18 of the top 20 and 67 of the top 100 global banks are customers
~ 4,500
employees in 36 countries |
 December 2013
4
ACI is a Leading Provider of Electronic Payments and Transaction
Banking Solutions
•
Tools to prevent payment transaction
fraud and enterprise financial crimes
•
Case management
Fraud
•
Internet-based electronic bill payment and
presentment
•
Transaction-based, hosted services for
banks and billers
•
Automated collection application
Bill Pay / Collections
•
Consumer and Business Internet Banking,
Mobile, Trade Finance and Branch
Automation sold to large banks globally as
license or hosted subscription services
•
Consumer and small biz Internet and
mobile banking sold to US community FIs
and credit unions as hosted, subscription
Online Banking
•
Software sold to global banks that enables
the providing of treasury services to large
corporates
•
High value wire transfers, Low Value Bulk
Payments and SWIFT messaging
Wholesale Payments
•
Software sold directly to banks and
payment processors
•
Solutions help authenticate, authorize,
acquire, clear and settle electronic
consumer payments
•
Payments acquiring and authorization
solution for retailers
Retail Payments
1
Financial
Insights
-
Worldwide
Payments
Market
Sizing
2012
and
3
rd
Party
Consultant
Note: Revenue figures represent Pro Forma FY 2012 GAAP Revenue on a pro forma basis for the ORCC
and S1 acquisitions. Figures exclude OPAY acquisition.
ACI Product Family Revenue %
Highlights
In a highly fragmented
market, we control 6%
of the market spend¹
Software facilitates over
120 billion consumer
transaction per year;
scales to thousands per
second
~1/3 of all domestic
SWIFT transactions
Enables over $13 trillion
in payments each day
Software designed for
“Five nines availability”
2/3 of all Fed wires |
 December 2013
5
Diverse Customer Base of Top Global Banks, Processors, Billers and
Retailers Provide Significant Cross Sell Opportunities
Customer
% of Total
Customer #1
3.3%
Customer #2
1.7%
Customer #3
1.7%
Customer #4
1.4%
Customer #5
1.1%
Customer #6
1.1%
Customer #7
0.9%
Customer #8
0.9%
Customer #9
0.9%
Customer #10
0.9%
Top 20 Customers
21.4%
Other Customers
78.6%
Total ACI Pro Forma 2012 Revenue
100.0%
Pro Forma FY 2012 Revenue by Customer
No single customer represents more than 4%
of pro forma 2012 revenue
On average, customers use 3 ACI products or
less representing a large cross sell opportunity
Note: Revenue figures represent Pro Forma FY 2012 GAAP Revenue on a pro forma basis for the ORCC
and S1 acquisitions. Figures exclude OPAY contribution.
|
 December 2013
Attractive trends will drive growth opportunities for ACI
1
Source: Financial Insights -
Worldwide Payments Market Sizing 2012 and 3rd Party Consultant
2
Source: McKinsey “Dynamic Changes in the Global Payments Industry”, 2012
6
Industry
Dynamics
2
Customer
Trends
Market
Sizing
1
•
Shift from paper to electronic
•
Compounding regulatory
requirements
•
Revenue and profitability pressures
•
Complexity from globalization
FIs looking to transform their businesses by:
•
Driving down unit costs
•
Launching new products quicker
•
Reducing risks
•
Improving customer satisfaction and loyalty
•
Vendor Consolidation
•
Total addressable market is ~$20bn in 2013 and growing 7-8% overall
•
~50% of addressable market is in-sourced (homegrown) applications
•
Global transaction volume growth expected to be 9% CAGR through 2020
•
Increasing fraud costs
•
Convergence of payments; real-time
•
Legacy systems increasingly difficult to
update
Favorable Industry and Customer Trends |
 December 2013
7
Strategy to Drive Superior Performance
Continued Focus on Control, Profitability and Growth
•
Continue to increase recurring revenue base
•
Expand customer relationships by cross-selling (on average customers
use 3 ACI products or less)
•
Lead payments transformation with Universal Payments Platform
delivering technology-enabled efficiencies
•
Expand geographically
Growth
Drivers
•
Expand margins through operating leverage and process-driven operating
philosophy
•
Realize cost synergies derived from recent acquisitions
Continuous
Improvements
to Drive Margin
Expansion
•
Buy, build or partner to fill-in product gaps or expand customer base
•
Recent acquisitions have added product, scale and market breadth
•
ORCC acquisition provides ACI with a full-service Bill Payment platform
for Online Banking and Billers
•
OPAY acquisition expands bill payment reach into key new verticals
incl. Federal, State & Local government, taxes and higher education
Disciplined
Acquisition /
Investment
Strategy |
 December 2013
Financial Overview |
 December 2013
9
ACI Term
Extensions
•
Renewal rates across ACI products >96%
•
>95% of our contracts are transaction-based
SALES BOOKINGS
HISTORICAL 60-MONTH BACKLOG
Bookings Growth Leads to Large Backlog
Provides Revenue and Earnings Visibility
ACI Sales, Net of
Term Extensions
(SNET) |
 December 2013
10
NON-GAAP REVENUE
ADJUSTED EBITDA
Adjusted EBITDA
% Margin
•
LTM 9/30/13 revenue geographic mix: 70% Americas, 20% EMEA and 10%
Asia Pacific
ACI’s Financial Summary
2009 –
LTM 9/30/2013 |
 December 2013
11
Ongoing Services, Implementations, Increased Capacity Sales & Other
Recurring Revenue: Hosting, Maintenance & License
Fees (Paid Monthly, Quarterly or Annually)
•
Recurring revenue has increased in dollar amount and as a percent of revenue
•
Virtually all components of revenue are seasonally stronger in the latter half of the
year >70% Recurring Revenue and Growing
STRONG RECURRING REVENUE GROWTH |
 December 2013
OPERATING FREE CASH FLOW
CAPITAL EXPENDITURES
Low capital expenditures needed to
maintain existing client base
ACI consistently generates strong free cash
flow
12
Low Cap Ex and Strong Cash Flow
•
NOLs starting to contribute and cash taxes
much lower than GAAP
•
Current net leverage ratio 2.8x |
 December 2013
2013 Pro Forma Non-GAAP Revenue Bridge
$883
$30
$122
$1035
ORCC
Stub
OPAY
Stub
2013
Pro Forma
2013
*(millions)
Represents low end of guidance
Stub additions normalize for full year contribution
13
•
Normalized 2013 revenue mix:
•
40% Hosting (SaaS), 24% Maintenance and 36% License &
Services
•
75% recurring revenue |
 December 2013
2013 Pro Forma Adjusted EBITDA Bridge
$12
$5
$291
ORCC
Stub and
incremental
synergies
S1
Synergies
Pro Forma
2013
$257
2013
OPAY
Stub and
synergies
$17
*(millions)
Represents low end of guidance
Stub additions normalize for full year contribution
14 |
 December 2013
Summary
FINANCIAL SUMMARY –
FIVE YEAR TARGETS
•
Organic revenue growth –
Mid to upper single digits
•
Adjusted EBITDA margin –
100 bps expansion per year
•
Operating free cash flow –
Track adjusted EBITDA growth
•
Sales net of term extension growth –
High single digits
15 |
 December 2013
To
supplement
our
financial
results
presented
on
a
GAAP
basis,
we
use
the
non-GAAP
measure
indicated
in
the
tables,
which
exclude
certain
business
combination
accounting
entries
related
to
the
acquisitions
of
ORCC
and
S1
and
significant
transaction
related
expenses,
as
well
as
other
significant
non-cash
expenses
such
as
depreciation,
amortization
and
share-based
compensation,
that
we
believe
are
helpful
in
understanding
our
past
financial
performance
and
our
future
results.
The
presentation
of
these
non-
GAAP
financial
measures
should
be
considered
in
addition
to
our
GAAP
results
and
are
not
intended
to
be
considered
in
isolation
or
as
a
substitute
for
the
financial
information
prepared
and
presented
in
accordance
with
GAAP.
Management
generally
compensates
for
limitations
in
the
use
of
non-GAAP
financial
measures
by
relying
on
comparable
GAAP
financial
measures
and
providing
investors
with
a
reconciliation
of
non-GAAP
financial
measures
only
in
addition
to
and
in
conjunction
with
results
presented
in
accordance
with
GAAP.
We
believe
that
these
non-GAAP
financial
measures
reflect
an
additional
way
of
viewing
aspects
of
our
operations
that,
when
viewed
with
our
GAAP
results,
provide
a
more
complete
understanding
of
factors
and
trends
affecting
our
business.
Certain
non-GAAP
measures
include:
16
Non-GAAP Financial Measures
•
Non-GAAP
revenue:
revenue
plus
deferred
revenue
that
would
have
been
recognized
in
the
normal
course
of
business
by
S1,
Online
Resources
and
Official
Payments
if
not
for
GAAP
purchase
accounting
requirements.
Non-GAAP
revenue
should
be
considered
in
addition
to,
rather
than
as
a
substitute
for,
revenue.
•
Non-GAAP
operating
income:
operating
income
(loss)
plus
deferred
revenue
that
would
have
been
recognized
in
the
normal
course
of
business
by
S1,
Online
Resources
and
Official
Payments
if
not
for
GAAP
purchase
accounting
requirements
and
significant
transaction
related
expenses.
Non-GAAP
operating
income
should
be
considered
in
addition
to,
rather
than
as
a
substitute
for,
operating
income.
•
Adjusted
EBITDA:
net
income
(loss)
plus
income
tax
expense,
net
interest
income
(expense),
net
other
income
(expense),
depreciation,
amortization
and
non-cash
compensation,
as
well
as
deferred
revenue
that
would
have
been
recognized
in
the
normal
course
of
business
by
S1,
Online
Resources
and
Official
Payments
if
not
for
GAAP
purchase
accounting
requirements
and
significant
transaction
related
expenses.
Adjusted
EBITDA
should
be
considered
in
addition
to,
rather
than
as
a
substitute
for,
operating
income. |
 December 2013
Non-GAAP Revenue (millions)
2009
2010
2011
2012
Q4 2012
9 months
9-30-13
LTM
9-30-13
Revenue
406
$
418
$
465
$
667
$
224
$
582
$
806
$
Deferred revenue fair value adjustment
-
-
-
22
4
4
8
Non-GAAP revenue
406
$
418
$
465
$
689
$
228
$
586
$
814
$
Adjusted EBITDA (millions)
2009
2010
2011
2012
Q4 2012
9 months
9-30-13
LTM
9-30-13
Net income (loss)
20
$
27
$
46
$
49
$
50
$
13
$
63
$
Plus:
Income tax expense (benefit)
13
22
18
16
24
5
29
Net interest expense
2
1
1
10
3
17
20
Net other expense
7
4
1
-
(1)
2
1
Depreciation expense
6
6
8
13
4
14
18
Amortization expense
17
20
21
38
10
36
46
Non-cash compensation expense
8
8
11
15
3
11
14
Adjusted EBIDTA
73
88
106
141
93
98
191
Deferred revenue fair value adjustment
-
-
-
22
4
5
9
Employee related actions
-
-
-
11
-
9
9
Facility closure costs
-
-
-
5
1
1
2
IT exit costs
-
-
-
3
-
-
-
Other significant transaction related
expenses
-
-
7
9
3
9
12
Adjusted EBIDTA excluding significant
transaction related expenses
73
$
88
$
113
$
191
$
101
$
122
$
223
$
17
Non-GAAP Financial Measures |
 December 2013
18
Non-GAAP Financial Measures
Reconciliation
of
Operating
Free
Cash
Flow
(millions)
2009
2010
2011
2012
Q4 2012
9 months
9-30-13
LTM
9-30-13
Net cash provided (used) by operating
activities
44
$
81
$
83
$
(9)
$
4
$
87
$
91
$
Net after-tax payments associated with
employee-related actions
3
-
-
6
-
5
5
Net after-tax payments associated with facility
closures
-
-
-
3
2
1
3
Net after-tax payments associated with
significant transaction related expenses
-
-
4
9
-
7
7
Net after-tax payments associated with cash
settlement of S1 options
-
-
-
10
-
-
-
Net after-tax payments associated with IBM IT
Outsourcing Transition
1
1
1
-
-
-
Plus IBM Alliance liability repayment
-
-
-
21
21
-
21
Less capital expenditures
(10)
(13)
(19)
(17)
(3)
(18)
(21)
Less IBM Alliance technical enablement
expenditures
(7)
(6)
(2)
-
-
-
-
Operating Free Cash Flow
30
$
63
$
67
$
24
$
24
$
82
$
106
$ |
 December 2013
Reconciliation of Operating Free Cash Flow
(millions)
2009
2010
2011
2012
Q4 2012
9 months
9-30-13
LTM
9-30-13
Net cash provided (used) by operating
activities
44
$
81
$
83
$
(9)
$
4
$
87
$
91
$
Net after-tax payments associated with
employee-related actions
3
-
-
6
-
5
5
Net after-tax payments associated with facility
closures
-
-
-
3
2
1
3
Net after-tax payments associated with
significant transaction related expenses
-
-
4
9
-
7
7
Net after-tax payments associated with cash
settlement of S1 options
-
-
-
10
-
-
-
Net after-tax payments associated with IBM IT
Outsourcing Transition
1
1
1
-
-
-
Plus IBM Alliance liability repayment
-
-
-
21
21
-
21
Less capital expenditures
(10)
(13)
(19)
(17)
(3)
(18)
(21)
Less IBM Alliance technical enablement
expenditures
(7)
(6)
(2)
-
-
-
-
Operating Free Cash Flow
30
$
63
$
67
$
24
$
24
$
82
$
106
$
19
Non-GAAP Financial Measures
ACI
is
also
presenting
operating
free
cash
flow,
which
is
defined
as
net
cash
provided
by
operating
activities,
plus
net
after-tax
payments
associated
with
employee-related
actions
and
facility
closures,
net
after-tax
payments
associated
with
significant
transaction
related
expenses,
net
after-tax
payments
associated
with
IBM
IT
outsourcing
transition
and
termination,
and
less
capital
expenditures.
Operating
free
cash
flow
is
considered
a
non-GAAP
financial
measure
as
defined
by
SEC
Regulation
G.
We
utilize
this
non-GAAP
financial
measure,
and
believe
it
is
useful
to
investors,
as
an
indicator
of
cash
flow
available
for
debt
repayment
and
other
investing
activities,
such
as
capital
investments
and
acquisitions.
We
utilize
operating
free
cash
flow
as
a
further
indicator
of
operating
performance
and
for
planning
investing
activities.
Operating
free
cash
flow
should
be
considered
in
addition
to,
rather
than
as
a
substitute
for,
net
cash
provided
by
operating
activities.
A
limitation
of
operating
free
cash
flow
is
that
it
does
not
represent
the
total
increase
or
decrease
in
the
cash
balance
for
the
period.
This
measure
also
does
not
exclude
mandatory
debt
service
obligations
and,
therefore,
does
not
represent
the
residual
cash
flow
available
for
discretionary
expenditures.
We
believe
that
operating
free
cash
flow
is
useful
to
investors
to
provide
disclosures
of
our
operating
results
on
the
same
basis
as
that
used
by
our
management. |
 December 2013
ACI
also
includes
backlog
estimates,
which
include
all
software
license
fees,
maintenance
fees
and
services
specified
in
executed
contracts,
as
well
as
revenues
from
assumed
contract
renewals
to
the
extent
that
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.
Backlog
is
considered
a
non-GAAP
financial
measure
as
defined
by
SEC
Regulation
G.
Our
60-month
backlog
estimate
represents
expected
revenues
from
existing
customers
using
the
following
key
assumptions:
Estimates
of
future
financial
results
are
inherently
unreliable.
Our
backlog
estimates
require
substantial
judgment
and
are
based
on
a
number
of
assumptions
as
described
above.
These
assumptions
may
turn
out
to
be
inaccurate
or
wrong,
including
for
reasons
outside
of
management’s
control.
For
example,
our
customers
may
attempt
to
renegotiate
or
terminate
their
contracts
for
a
number
of
reasons,
including
mergers,
changes
in
their
financial
condition,
or
general
changes
in
economic
conditions
in
the
customer’s
industry
or
geographic
location,
or
we
may
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
actually
recognized
in
future
periods.
Accordingly,
there
can
be
no
assurance
that
contracts
included
in
backlog
estimates
will
actually
generate
the
specified
revenues
or
that
the
actual
revenues
will
be
generated
within
the
corresponding
60-month
period.
Backlog
should
be
considered
in
addition
to,
rather
than
as
a
substitute
for,
reported
revenue
and
deferred
revenue.
20
Non-GAAP Financial Measures
•
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.
•
License,
facilities
management,
and
software
hosting
arrangements
are
assumed
to
renew
at
the
end
of
their
committed
term
at
a
rate
consistent
with
our
historical
experiences.
•
Non-recurring
license
arrangements
are
assumed
to
renew
as
recurring
revenue
streams.
•
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. |
 December 2013
This
presentation
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.
Forward-looking
statements
in
this
presentation
include,
but
are
not
limited
to,
statements
regarding:
21
Forward-Looking Statements
•
expectations
regarding
the
financial
impact
of
the
Official
Payments
acquisition;
•
expectations
regarding
future
increases
in
organic
revenue,
adjusted
EBITDA,
operating
free
cash
flow
and
sales
net
of
term
extension;
•
expectations
that
we
will
generate
annual
cost
synergies
with
respect
to
recent
prior
acquisitions;
and
•
expectations
regarding
2013
financial
guidance
related
to
revenue,
operating
income
and
adjusted
EBITDA. |
 December 2013
All
of
the
foregoing
forward-looking
statements
are
expressly
qualified
by
the
risk
factors
discussed
in
our
filings
with
the
Securities
and
Exchange
Commission.
Such
factors
include
but
are
not
limited
to,
increased
competition,
the
performance
of
our
strategic
product,
BASE24-eps,
demand
for
our
products,
restrictions
and
other
financial
covenants
in
our
credit
facility,
consolidations
and
failures
in
the
financial
services
industry,
customer
reluctance
to
switch
to
a
new
vendor,
the
accuracy
of
management’s
backlog
estimates,
the
maturity
of
certain
products,
our
strategy
to
migrate
customers
to
our
next
generation
products,
ratable
or
deferred
recognition
of
certain
revenue
associated
with
customer
migrations
and
the
maturity
of
certain
of
our
products,
failure
to
obtain
renewals
of
customer
contracts
or
to
obtain
such
renewals
on
favorable
terms,
delay
or
cancellation
of
customer
projects
or
inaccurate
project
completion
estimates,
volatility
and
disruption
of
the
capital
and
credit
markets
and
adverse
changes
in
the
global
economy,
our
existing
levels
of
debt,
impairment
of
our
goodwill
or
intangible
assets,
litigation,
future
acquisitions,
strategic
partnerships
and
investments,
risks
related
to
the
expected
benefits
to
be
achieved
in
the
transaction
with
Online
Resources,
the
complexity
of
our
products
and
services
and
the
risk
that
they
may
contain
hidden
defects
or
be
subjected
to
security
breaches
or
viruses,
compliance
of
our
products
with
applicable
legislation,
governmental
regulations
and
industry
standards,
our
compliance
with
privacy
regulations,
the
protection
of
our
intellectual
property
in
intellectual
property
litigation,
the
cyclical
nature
of
our
revenue
and
earnings
and
the
accuracy
of
forecasts
due
to
the
concentration
of
revenue
generating
activity
during
the
final
weeks
of
each
quarter,
business
interruptions
or
failure
of
our
information
technology
and
communication
systems,
our
offshore
software
development
activities,
risks
from
operating
internationally,
including
fluctuations
in
currency
exchange
rates,
exposure
to
unknown
tax
liabilities,
and
volatility
in
our
stock
price.
For
a
detailed
discussion
of
these
risk
factors,
parties
that
are
relying
on
the
forward-
looking
statements
should
review
our
filings
with
the
Securities
and
Exchange
Commission,
including
our
most
recently
filed
Annual
Report
on
Form
10-K,
Registration
Statement
on
Form
S-4,
and
subsequent
reports
on
Forms
10-Q
and
8-K.
22
Forward-Looking Statements |
 December 2013 |