Attached files
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| 8-K - 8-K - ACI WORLDWIDE, INC. | d719851d8k.htm |
| EX-99.1 - EX-99.1 - ACI WORLDWIDE, INC. | d719851dex991.htm |
 March
31, 2014 Quarterly Results Presentation May 1, 2014
Exhibit 99.2 |
 MEETS THE CHALLENGE OF CHANGE
2
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. |
 QUARTERLY OVERVIEW
Phil Heasley
Chief Executive Officer |
 MEETS THE CHALLENGE OF CHANGE
Q1 2014 in Review
4
•
Revenue up 37%
•
Recurring revenue represented 84% of total revenue in Q1
•
SNET bookings up 59%
•
Launched UP BASE24-eps 2.0
•
Significant market interest in Universal Payments (UP)
•
Pipeline strong across all regions
•
Repurchased ~1.2 million shares of ACI stock in Q1 2014
•
Positioned well to achieve full-year forecast |
 FINANCIAL REVIEW
Scott Behrens
Chief Financial Officer |
 MEETS THE CHALLENGE OF CHANGE
6
Key Takeaways from the Quarter
•
Record Q1 new sales bookings
Q1 new sales bookings up 59%, or 51% ex contribution from Official Payments
•
Selected customer wins
UP BASE24-eps sale to large European bank combined with Payments
Infrastructure and Card Management solutions
UP BASE24-eps sale to large South American bank combined with our
Payments Infrastructure solutions
UP hub solution sale subsequent to quarter end to a large European bank which
combines multiple payment engines using our UP technology
Online Banking sale to a large US bank combined with our Mobile Channel and
Fraud Detection capabilities and operated within our ACI On-Demand environment
Online Banking sale to a top global bank for an on-premise application
in their US operations |
 MEETS THE CHALLENGE OF CHANGE
Key Takeaways from the Quarter
•
Backlog versus Q4 2013
12-month backlog of $883 million, up $13 million
60-month backlog of $3.91 billion, up $49 million
•
Solid Revenue Quarter
Revenue
increased
driven
from
inclusion
of
Official
Payments
and
full
quarter
of
ORCC
SaaS subscription and transaction revenues up 164% over prior year quarter
representing 46% of total revenue
License revenues saw growth in recurring revenue offset by decline in
non- recurring
Recurring revenue grew to $186 million, or 84% of total revenue
•
Strong Operating Income and EBITDA
Non-GAAP operating income of $7 million grew 78% from Q1 last year
Adjusted EBITDA of $32 million grew 46% from Q1 last year
•
Debt and liquidity
Ended quarter with $59 million in cash and $779 million in debt
Repurchased 1.2 million shares and have $138 million remaining on
authorization
7 |
 MEETS THE CHALLENGE OF CHANGE
2014 Guidance
Key Metrics
2014 Guidance
Low
High
Non-GAAP Revenue
$1,060
$1,080
Adjusted EBITDA
$290
$300
$s in millions
8
Sales, net of term extension, growth in the upper single digits
Revenue and margin phasing by quarter consistent with seasonal history
Q2 non-GAAP
revenue
expected
to
be
in
the
range
of
$240
-
$250
million
Guidance
Notes
These metrics exclude approximately $13-$15 million in one-time
integration related
expenses
and
include
$2
million
for
the
deferred
revenue
adjustments
Guidance assumes estimates for non-cash purchase accounting adjustments,
intangible valuations and deferred revenue adjustment
|
 APPENDIX |
 MEETS THE CHALLENGE OF CHANGE
Monthly Recurring Revenue
10
Monthly Recurring Revenue ($s in millions)
Quarter Ended March 31
2014
2013
Monthly software license fees
$23.3
$24.7
Maintenance fees
61.0
58.6
Processing services
101.4
35.3
Monthly Recurring Revenue
$185.7
$118.6 |
 MEETS THE CHALLENGE OF CHANGE
11
Historic Sales Bookings By Quarter 2012-2014
Quarter-End
Total Economic
Value of Sales
($s in thousands)
Sales Mix by Category
New Accounts /
New Applications
Add-on Business inc.
Capacity Upgrades &
Services
Term
Extension
03/31/2012
$108,462
$5,958
$58,602
$43,902
06/30/2012
$156,188
$9,855
$102,417
$43,916
09/30/2012
$192,310
$23,802
$102,576
$65,932
12/31/2012
$309,143
$52,206
$145,917
$111,020
03/31/2013
$111,588
$5,778
$70,736
$35,074
06/30/2013
$180,107
$33,717
$95,461
$50,929
09/30/2013
$211,827
$42,345
$105,609
$63,874
12/31/2013
$384,322
$45,846
$200,748
$137,729
03/31/2014
$170,212
$36,928
$84,974
$48,311
22%
50%
28%
MAR YTD 14
$170,212
$36,928
$84,974
$48,311
MAR YTD 13
$111,588
$5,778
$70,736
$35,074
Variance
$58,624
$31,150
$14,238
$13,237 |
 MEETS THE CHALLENGE OF CHANGE
Sales Bookings, Net of Term Extensions (SNET)
12
Sales Net of Term Extensions ($s in thousands)
Channel
Quarter Ended
March 2014
Quarter Ended
March 2013
% Growth or
Decline
Americas
$81,005
$35,122
130.6%
EMEA
33,653
22,664
48.5%
Asia-Pacific
7,243
18,728
-61.3%
Total Sales (Net of Term Ext.)
$121,901
$76,514
59.3% |
 MEETS THE CHALLENGE OF CHANGE
Non-GAAP Operating Income
13
Non-GAAP Operating Income
($s in millions)
Quarter Ended March 31
2014
2013
Operating income (loss)
$0.3
($4.0)
Plus:
Deferred revenue fair value adjustment
0.6
1.1
Employee related actions
2.0
1.9
Significant transaction related expenses
3.7
4.7
Non-GAAP Operating Income
$6.6
$3.7 |
 MEETS THE CHALLENGE OF CHANGE
Adjusted EBITDA
14
Adjusted EBITDA
($s in millions)
Quarter
Ended
March
31
2014
2013
Net loss
($5.8)
($2.2)
Plus:
Income tax benefit
(4.0)
(2.4)
Net interest expense
9.0
3.8
Net other expense (income)
1.1
(3.2)
Depreciation expense
5.3
3.8
Amortization expense
15.3
10.4
Non-cash compensation expense
4.8
3.9
Adjusted EBITDA
$25.7
$14.1
Deferred revenue fair value adjustment
0.6
1.1
Employee related actions
2.0
1.9
Significant transaction related expenses
3.7
4.7
Adjusted EBITDA excluding significant transaction related
expenses
$32.0
$21.8 |
 MEETS THE CHALLENGE OF CHANGE
Operating Free Cash Flow
15
* Tax effected at 35%
Reconciliation of Operating Free Cash Flow
($s in millions)
Quarter Ended March 31
2014
2013
Net cash provided by operating activities
$15.3
$34.9
Payments associated with acquired opening balance sheet
liabilities
4.1
-
Net after-tax payments associated with employee-related
actions*
1.2
1.5
Net after-tax payments associated with lease terminations*
0.4
0.1
Net after-tax payments associated with significant
transaction related expenses*
1.8
4.9
Net after-tax payments associated with IBM IT Outsourcing
Transition*
-
1.9
Less capital expenditures
(7.8)
(9.0)
Operating Free Cash Flow
$15.0
$34.3 |
 MEETS THE CHALLENGE OF CHANGE
60-Month Backlog
16
60-Month Backlog
($s in millions)
Quarter Ended March 31
2014
2013
Americas
$2,858
$2,090
EMEA
767
691
Asia/Pacific
285
275
Backlog 60-Month
$3,910
$3,056
Deferred Revenue
$195
$205
Other
3,715
2,851
Backlog 60-Month
$3,910
$3,056 |
 MEETS THE CHALLENGE OF CHANGE
Backlog as a Contributor of Quarterly Revenue
•
Backlog from monthly recurring revenues and project go-lives continues to
drive current quarter GAAP revenue
•
Revenue from current quarter sales consistent with prior quarters
17
Backlog as Contributor of Revenue
($s in thousands)
Quarter Ended March 31
% Growth
2014
2013
Revenue from Backlog
$215,688
$155,964
38.3%
Revenue from Sales
5,785
6,033
-4.1%
Total Revenue
$221,473
36.7%
Revenue from Backlog
97%
96%
Revenue from Sales
3%
4%
$161,997 |
 MEETS THE CHALLENGE OF CHANGE
Non-Cash Compensation, Acquisition Intangibles and
Software, and Significant Transaction Related Expenses
18
Quarter Ended
March 31
2014
2013
EPS Impact
$ in Millions
(Net of Tax)
EPS Impact
$ in Millions
(Net of Tax)
Significant transaction related expenses
Deferred revenue fair value adjustment
Amortization of acquisition-related intangibles
Amortization of acquisition-related software
Non-cash equity-based compensation
Total
* Tax Effected at 35%
Acquisition Intangibles & Software,
($s in millions)
$
0.10 0.01
0.11
0.09
0.08
$
0.39 0.4
4.2
3.3
3.1
$
3.7
$
14.7 $
0.09 0.02
0.06
0.05
0.07
$ 0.29
$
3.6 0.7
2.5
1.9
2.6
$
11.3 Non-cash equity based compensation |
 MEETS THE CHALLENGE OF CHANGE
Contract Duration Metric
•
Represents
dollar
average
remaining
contract
life
(in
years)
for
term
license
software
contracts
•
Excludes perpetual contracts (primarily heritage S1 licensed software contracts)
•
Excludes all hosted contracts as both cash and revenue are ratable over the
contract term
19
2.40
2.46
2.41
2.85
2.71
2.56
2.47
2.68
2.62
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Q2 2013
Q3 2013
Q4 2013
Q1 2014 |
 MEETS THE CHALLENGE OF CHANGE
Non-GAAP Financial Measures
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:
20
•
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 (loss).
•
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
(loss). |
 MEETS THE CHALLENGE OF CHANGE
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.
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.
21 |
 MEETS THE CHALLENGE OF CHANGE
Non-GAAP Financial Measures
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. 22
•
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. |
 MEETS THE CHALLENGE OF CHANGE
Forward-Looking Statements
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:
23
23
•
significant market interest in Universal Payments (UP);
•
strong sales pipeline;
•
positioning relative to full-year forecasts;
•
expectations regarding 2014 financial guidance related to revenue and adjusted
EBITDA; •
expectations regarding full year SNET; and
•
expectations regarding Q2 2014 revenue. |
 MEETS THE CHALLENGE OF CHANGE
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.
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