Attached files
| file | filename |
|---|---|
| 8-K - 8-K - ACI WORLDWIDE, INC. | d764686d8k.htm |
| EX-99.1 - EX-99.1 - ACI WORLDWIDE, INC. | d764686dex991.htm |
 June
30, 2014 Quarterly Results Presentation July 31, 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
Q2 2014 in Review
4
•
SNET bookings up 16%
•
Revenue up 24%
•
Adjusted EBITDA up 46%
•
Continued market interest in Universal Payments
•
Pipeline strong across all regions
•
Announced acquisition of ReD
•
Reiterating organic guidance |
 FINANCIAL REVIEW
Scott Behrens
Chief Financial Officer |
 MEETS THE CHALLENGE OF CHANGE
6
Key Takeaways from the Quarter
•
Sales Bookings
–
Q2
new
sales
bookings
up
16%,
or
14%
excluding
contribution
from
Official
Payments
•
Backlog
–
12-month backlog of $885 million, up $2 million from Q1 2014
–
60-month backlog of $3.92 billion, up $14 million from Q1 2014
•
Revenue Growth
–
Non-GAAP revenue growth of 23%, or 4% organically
–
Revenue increase driven from inclusion of Official Payments and strong
execution –
SaaS subscription and transaction revenues up 58% over prior year quarter
representing 42% of total revenue
–
Recurring revenue grew to $191 million, or 75% of total revenue
|
 MEETS THE CHALLENGE OF CHANGE
Key Takeaways from the Quarter
•
Operating Expense
–
Operating expense increase driven primarily from inclusion of OPAY operations
–
OPAY contributed $33 million
to Q2 operating expense
–
Incurred $4 million of expenses related to significant transaction related
expenses
•
Operating Income and EBITDA
–
Non-GAAP operating income of $31 million grew 76% from Q2 last year
–
Adjusted EBITDA of $56 million grew 46% from Q2 last year
•
Operating Free Cash Flow
–
Operating free cash flow of $28 million, up 29% over Q2 last year
•
Debt and Liquidity
–
Ended quarter with $55 million in cash and $753 million in debt
•
Acquisition of ReD announced July 21, 2014
–
Purchase price of $205 million cash; financed with existing credit facility and an
incremental term loan
–
Expected to close mid Q3 and contribute $18 million in revenue and $4 million
in EBITDA during remainder of 2014
7 |
 MEETS THE CHALLENGE OF CHANGE
2014 Guidance
•
Guidance
–
Sales, net of term extensions to grow in the upper single digits
–
Revenue and margin phasing by quarter consistent with seasonal history
–
Q3 non-GAAP revenue expected to be in the range of $250 -
$260 million
8
Key Metrics
2014 Guidance
Low
High
Non-GAAP Revenue
$1,060
$1,080
Adjusted EBITDA
$290
$300
$s in millions
•
Notes
–
We will update guidance for the ReD acquisition upon closing
–
These metrics exclude approximately $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
Quarter Ended
Monthly Recurring Revenue (millions)
June 30,
2014
2013
Monthly Software license fees
$23.0
$21.9
Maintenance fees
62.3
57.8
Processing services
105.6
68.6
Monthly Recurring Revenue
$190.9
$148.3 |
 MEETS THE CHALLENGE OF CHANGE
11
Historic Sales Bookings By Quarter 2012-2014
Quarter-End
Total Economic
Value of Sales
Sales Mix by Category
Add-on Business
inc. Capacity
Upgrades &
Services
Term Extension
New Accounts /
New
Applications
3/31/2012
$108,462
$5,958
$58,602
$43,902
5%
54%
40%
6/30/2012
$156,188
$9,855
$102,417
$43,916
6%
66%
28%
9/30/2012
$192,310
$23,802
$102,576
$65,932
12%
53%
34%
12/31/2012
$309,143
$52,206
$145,917
$111,020
12%
53%
34%
3/31/2013
$111,588
$5,778
$70,736
$35,074
5%
63%
31%
6/30/2013
$180,107
$33,717
$95,461
$50,929
19%
53%
28%
9/30/2013
$211,827
$42,345
$105,609
$63,874
20%
50%
30%
12/31/2013
$384,322
$45,846
$200,748
$137,729
12%
52%
36%
3/31/2014
$170,212
$36,928
$84,974
$48,311
22%
50%
28%
6/30/2014
$234,346
$44,321
$106,056
$83,969
19%
45%
36%
Sales
New Accounts /
New
Applications
Add-on Business
inc. Capacity
Upgrades &
Services
Term Extension
JUN YTD 14
$404,558
$81,248
$191,030
$132,280
JUN YTD 13
$291,695
$39,495
$166,197
$86,003
Variance
$112,863
$41,753
$24,833
$46,277 |
 MEETS THE CHALLENGE OF CHANGE
Sales Bookings, Net of Term Extensions (SNET)
12
Sales Net of Term Extensions
Channel
Qtr Ended
Jun 14
Qtr Ended
Jun 13
% Growth or
Decline
Americas
$97,188
$82,376
18.0%
EMEA
36,361
28,542
27.4%
Asia-Pacific
16,827
18,260
-7.8%
Total Sales (Net of Term Ext.)
$150,377
$129,178
16.4% |
 MEETS THE CHALLENGE OF CHANGE
Non-GAAP Operating Income
13
Quarter Ended
Non-GAAP Operating Income (millions)
June 30,
2014
2013
Operating income
$26.7
$11.5
Plus:
Deferred revenue fair value adjustment
0.5
2.0
Employee related actions
1.4
2.4
Significant transaction related expenses
2.1
1.5
Non-GAAP Operating Income
$
30.7 $
17.4 |
 MEETS THE CHALLENGE OF CHANGE
Adjusted EBITDA
14
Quarter Ended
Adjusted EBITDA (millions)
June 30,
2014
2013
Net income
$11.2
$1.9
Plus:
Income tax expense
2.4
2.3
Net interest expense
9.2
5.8
Net other expense
3.9
1.5
Depreciation expense
5.2
4.2
Amortization expense
15.3
12.7
Non-cash compensation expense
4.4
3.8
Adjusted EBITDA
$51.6
$32.2
Deferred revenue fair value adjustment
0.5
2.0
Employee related actions
1.4
2.4
Significant transaction related expenses
2.1
1.5
Adjusted EBITDA excluding significant
transaction related expenses
$
55.6
$
38.1 |
 MEETS THE CHALLENGE OF CHANGE
Operating Free Cash Flow
15
* Tax effected at 35%
Reconciliation of Operating Free Cash Flow
(millions)
Quarter Ended June 30,
2014
2013
Net cash provided (used) by operating activities
$33.1
$22.7
Payments associated with acquired opening
balance sheet liabilties
0.3
-
Net after-tax payments associated with employee-
related actions
0.9
2.1
Net after-tax payments associated with lease
terminations
0.2
0.2
Net after-tax payments associated with significant
transaction related expenses
1.2
1.4
Less capital expenditures
(7.5)
(4.6)
Operating Free Cash Flow
$28.2
$21.8 |
 MEETS THE CHALLENGE OF CHANGE
60-Month Backlog
16
Quarter Ended
Backlog 60-Month (millions)
June 30,
June 30,
2014
2013
Americas
$2,874
$2,117
EMEA
765
691
Asia/Pacific
285
276
Backlog 60-Month
$3,924
$3,084
Deferred Revenue
$190
$209
Other
3,734
2,875
Backlog 60-Month
$3,924
$3,084 |
 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 (thousands)
Quarter Ended June
30,
% Growth
2014
2013
Revenue from Backlog
$ 244,240
$ 188,291
29.7%
Revenue from Sales
10,568
17,539
-39.7%
Total Revenue
$ 254,808
$ 205,830
23.8%
Revenue from Backlog
96%
91%
Revenue from Sales
4%
9% |
 MEETS THE CHALLENGE OF CHANGE
Non-Cash Compensation, Acquisition Intangibles and
Software, and Significant Transaction Related Expenses
18
Acquisition Intangibles & Software, Non-cash
equity based compensation
Quarter Ended
(millions)
June 30,
2014
2013
EPS Impact
$ in Millions
(Net of Tax)
EPS Impact
$ in Millions
(Net of Tax)
Significant transaction related expenses
$
0.02 $
2.3
$
0.02
$
2.5
Deferred revenue fair value adjustment
0.01
0.3
0.01
1.3
Amortization of acquisition-related intangibles
0.03
3.8
0.03
3.1
Amortization of acquisition-related software
0.03
3.3
0.02
3.0
Non-cash equity-based compensation
0.02
2.9
0.02
2.5
Total
$
0.11 $ 12.6
$
0.10
$
12.4
* Tax Effected at 35%
All references to per share amounts have been retroactively adjusted to reflect
the July 10, 2014 three-for-one stock split for all periods
presented. |
 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 |
 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:
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.
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
terminat
e 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. |
 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:
•
continued
market
interest
in
Universal
Payments;
•
strong
sales
pipeline;
•
Expectations
relating
to
the
timing
of
the
close
of
ReD
and
the
revenue
and
EBITDA
contributions
during
the
remainder
of
2014.
•
expectations
regarding
2014
financial
guidance
related
to
revenue
and
adjusted
EBITDA;
•
expectations
regarding
full
year
SNET;
and
•
expectations
regarding
Q3
2014
revenue.
23
23 |
 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.
24
24 |
 |