Attached files
| file | filename |
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| 8-K - 8-K - ACI WORLDWIDE, INC. | d685841d8k.htm |
 Spring 2014
ACI Worldwide Investor Conferences
Spring, 2014
Exhibit 99.1 |
 Spring 2014
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 |
 Spring 2014
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
$1023 Million
2013
Pro Forma Adjusted EBITDA
$273 Million
12/31/2013
60-Month Backlog
$3.9 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.
2 |
 Spring 2014
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
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
3 |
 Spring 2014
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 3rd Party
Consultant Note: Revenue figures represent Pro Forma FY 2013 GAAP Revenue on a pro forma
basis for the ORCC and OPAY acquisitions.
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
4 |
 Spring 2014
Diverse Customer Base of Top Global Banks, Processors, Billers and
Retailers Provide Significant Cross Sell Opportunities
FY 2013 Revenue by Customer
No single customer represents more than 3%
of consolidated 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.
5 |
 Spring 2014
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
Industry
Dynamics²
Customer
Trends
Market
Sizing¹
•
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
6 |
 Spring 2014
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 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
7 |
 Spring 2014
Financial Overview |
 Spring 2014
$1,517
$1,566
$1,617
$2,416
$3,860
2009
2010
2011
2012
2013
2009
2010
2011
2012
2013
ACI Term
Extensions
$425
$525
$556
$766
$888
SNET 20% CAGR
$132
$210
$226
$265
$288
Renewal rates across ACI products >96%
>95% of our contracts are transaction-based
SALES BOOKINGS
HISTORICAL 60-MONTH BACKLOG
26% CAGR
(millions)
(millions)
Bookings Growth Leads to Large Backlog
Provides Revenue and Earnings Visibility
ACI Sales, Net of
Term Extensions
(SNET)
9
$600
$293
$315
$330
$501 |
 Spring 2014
$406
$418
$465
$689
$871
$73
$88
$113
$191
$239
2009
2010
2011
2012
2013
NON-GAAP REVENUE
2009
2010
2011
2012
2013
ADJUSTED EBITDA
18%
21%
24%
28%
29%
Adjusted EBITDA
% Net Margin
21% CAGR
35% CAGR
(millions)
(millions)
2013 revenue geographic mix: 63% Americas, 26% EMEA and 11%
Asia Pacific
ACI’s Financial Summary
2009 –
2013
Note: Net Margin based on net revenues, or gross revenues
adjusted for $38 million in pass through interchange fees
10 |
 Spring 2014
STRONG RECURRING REVENUE GROWTH
•
All components of non recurring revenue are seasonally stronger in the latter half of the
year •
Monthly recurring revenue is predictable and less seasonal
>70% Recurring Revenue
11 |
 Spring 2014
SaaS Subscriptions and Transactions Contribution Up Sharply
2009 segment contribution
2013 segment contribution
•
SaaS Subscriptions & Transactions have grown from ~10% to over 40%
•
Overall monthly recurring revenues have grown from ~60% to over 70%
•
Note: 2013 percentages based normalized for ORCC and OPAY
Monthly recurring segments
Non recurring segments
12
SaaS
subscriptions
&
transactions,
10%
Maintenance,
32%
Services,
20%
Initial
licenses fees,
20%
Monthly
license fees,
18%
SaaS
subscriptions
&
transactions
41%
Maintenance
24%
Services
12%
Initial
licenses fees
14%
Monthly
license fees
9% |
 Spring 2014
$30
$63
$67
$24
$151
2009
2010
2011
2012
2013
OPERATING FREE CASH FLOW
2009
2010
2011
2012
2013
$10
$13
$19
$17
$33
CAPITAL EXPENDITURES
3%
3%
4%
3%
4%
% of Non-GAAP Revenue
Low capital expenditures needed to
maintain existing client base
ACI generates strong free cash flow
•
NOLs starting to contribute and cash
taxes much lower than GAAP
(millions)
(millions)
Low Cap Ex and Strong Cash Flow
13 |
 Spring 2014
CUMULATIVE SHARE REPURCHASES
Average price $32/share
$156 million remains authorized
*YTD 2014 data as of February 26, 2014
2012 Includes $30m in IBM warrant purchases
Efficient Use of Cash -
Aggressive Share Repurchases
$409m
$1090m
14 |
  Spring
2014 2014 Guidance
Guidance
•
Sales, net of term extension, growth in the upper single digits
•
Revenue and margin phasing by quarter consistent with seasonal history
•
Q1 revenue expected to represent $220 -
$230 million
Other assumptions:
•
Interest expense of $35 million and cash interest of $30 million
•
Capital expenditures to be $35-$40 million
•
Depreciation and amortization expected to approximate $88 -
$92 million
•
Non-cash compensation expense of approximately $18 -$20 million
•
Pass through interchange revenues in the range of $120 -
$125 million
•
GAAP tax rate of 35% and cash taxes paid of $30-$35 million
•
Diluted share count to approximate 40 million
•
Guidance does not assume future share buy-back activity
•
These metrics exclude approximately $13-$15 million in one-time integration related
expenses and $2 million of deferred revenue haircut
•
Guidance assumes estimates for non-cash purchase accounting adjustments, intangible
valuations and deferred revenue haircut
Key Metrics
2013 Actual
2014 Guidance
Low
High
Non-GAAP Revenue
$871
$1,060
$1,080
Adjusted EBITDA
$239
$290
$300
$s in millions
15 |
 Spring 2014
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
16 |
 Spring 2014
High Quality Software Model Drives Superior Performance
•
Leading market position
•
High retention and renewal rates
•
Pricing power and large barriers to entry
•
Significant recurring revenue
•
Scalable model with improving margin
•
Low cash investment required
•
Strong cash flow and balance sheet
•
Value enhancing capital allocation
17 |
 Spring 2014
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
Official
Payments,
Online
Resources
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:
•
Non-GAAP
revenue:
revenue
plus
deferred
revenue
that
would
have
been
recognized
in
the
normal
course
of
business
by
S1
and
Online
Resources
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
and
Online
Resources
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
and
Online
Resources
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.
Non-GAAP Financial Measures
18 |
 Spring 2014
Non-GAAP Financial Measures
Non-GAAP Revenue (millions)
2009
2010
2011
2012
2013
Revenue
406
$
418
$
465
$
667
$
865
$
Deferred revenue fair value adjustment
-
-
-
22
6
Non-GAAP revenue
406
$
418
$
465
$
689
$
871
$
19
Adjusted EBITDA (millions)
2009
2010
2011
2012
2013
Net income (loss)
20
$
27
$
46
$
49
$
64
$
Plus:
Income tax expense (benefit)
13
22
18
16
29
Net interest expense
2
1
1
10
27
Net other expense
7
4
1
-
3
Depreciation expense
6
6
8
13
19
Amortization expense
17
20
21
38
51
Non-cash compensation expense
8
8
11
15
14
Adjusted EBIDTA
73
88
106
141
207
Deferred revenue fair value adjustment
-
-
-
22
6
Employee related actions
-
-
-
11
11
Facility closure costs
-
-
-
5
2
IT
exit
costs
-
-
-
3
-
Other significant transaction related
expenses
-
-
7
9
13
Adjusted EBIDTA excluding significant
transaction related expenses
73
$
88
$
113
$
191
$
239
$ |
 Spring 2014
ACI
is
also
presenting
operating
free
cash
flow,
which
is
defined
as
net
cash
provided
by
operating
activities,
plus
payments
associated
with
the
cash
settlement
of
acquisition
related
options
and
significant
acquired
opening
balance
sheet
liabilities,
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.
Non-GAAP Financial Measures
Reconciliation of Operating Free Cash Flow
(millions)
2009
2010
2011
2012
2013
Net cash provided (used) by operating
activities
44
$
81
$
83
$
(9)
$
138
$
Net after-tax payments associated with
employee-related actions
3
-
-
6
10
Net after-tax payments associated with facility
closures
-
-
-
3
1
Net after-tax payments associated with
significant transaction related expenses
-
-
4
9
18
Net after-tax payments associated with cash
settlement of acquisition related options
-
-
-
10
10
Payments associated with acquired opening
balance sheet liabilties
-
-
-
-
5
Net after-tax payments associated with IBM IT
Outsourcing Transition
1
1
1
2
Plus IBM Alliance liability repayment
-
-
-
21
-
Less capital expenditures
(10)
(13)
(19)
(17)
(33)
Less IBM Alliance technical enablement
expenditures
(7)
(6)
(2)
-
-
Operating Free Cash Flow
30
$
63
$
67
$
24
$
151
$
20 |
 Spring 2014
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:
•
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.
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.
Non-GAAP Financial Measures
21 |
 Spring 2014
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:
(i)
expectations
regarding
2014
financial
guidance,
including
non-GAAP
revenue,
adjusted
EBITDA,
and
net
new
sales
bookings;
(ii)
expectations
regarding
Q1
2014
revenue;
(iii)
expectations
regarding
five
year
targets,
including
future
increases
in
organic
revenue,
adjusted
EBITDA
margin,
operating
free
cash
flow,
and
sales
net
of
term
extension.
Forward-Looking Statements
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 |
 Spring 2014 |