Attached files
| file | filename |
|---|---|
| 8-K - 8-K - ACI WORLDWIDE, INC. | d811081d8k.htm |
| EX-99.1 - EX-99.1 - ACI WORLDWIDE, INC. | d811081dex991.htm |
 September 30, 2014 Quarterly Results Presentation
October 30, 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
Q3 2014 in Review
4
•
SNET bookings up 6% in the quarter; up 22% YTD
•
Non-GAAP Revenue up 16%
•
Adjusted EBITDA up 7%
•
Strong market interest in Universal Payments
•
Large contracts in pipeline progressing
•
60 month backlog now greater than $4 billion
•
Completed acquisition of Retail Decisions (ReD)
•
Updating guidance |
 FINANCIAL REVIEW
Scott Behrens
Chief Financial Officer |
 MEETS THE CHALLENGE OF CHANGE
6
Key Takeaways from the Quarter
Q3 SNET up 6%, YTD SNET up 22%
YTD organic SNET up 8%
YTD organic hosted SNET to large financial institutions and retailers up 23%
YTD Offset by decline in licensed software SNET
Impacts timing of revenue recognition resulting in decline in non-recurring
license and services revenue offset by growth in recurring hosted revenues
ratable over 5 years YTD organic growth of 63% in new account and new
application sales Impacts timing of revenue recognition due to time to
install 12-month backlog of $898 million, down $22 million from Q2 2014,
after adjusting for foreign currency fluctuations
60-month backlog of $4.1 billion, up $25 million from Q2 2014, after adjusting
for foreign currency fluctuations
ReD acquisition contributed $42 million and $205 million to 12-month and
60-month backlog, respectively
•
Sales Bookings
•
Backlog |
 MEETS THE CHALLENGE OF CHANGE
Key
Takeaways from the Quarter
•
Revenue Growth
•
Operating Expense
7
Operating expense increase driven primarily from inclusion of OPAY and ReD
Incurred $7 million of significant transaction-related expenses
Continued to see increases in recurring revenues offset by declines in
non-recurring revenues
Non-GAAP revenue growth of 16%, or flat organically
Revenue increase driven from inclusion of Official Payments (OPAY) and ReD
SaaS subscription and transaction revenues up 49% over prior year quarter
representing 40% of total revenue
Recurring revenue grew 23% to $186 million, or 74% of total revenue
|
 MEETS THE CHALLENGE OF CHANGE
•
EBITDA
Adjusted EBITDA of $66 million grew 7% from Q3 last year
•
Operating Free Cash Flow
Operating free cash flow of $18 million decreased from $27 million Q3 last
year •
Debt and Liquidity
Ended the quarter with $60 million in cash and $946 million in debt, with the
increase coming from the incremental debt to acquire ReD
•
ReD acquisition completed August 12, 2014
Purchase price of $205 million cash; financed with existing revolving credit
facility and an incremental term loan
8
Key
Takeaways from the Quarter
EBITDA
Adjusted EBITDA of $66 million grew 7% from Q3 last year
|
 MEETS THE CHALLENGE OF CHANGE
2014 Guidance
9
2014 Guidance
Key Metrics
Prior
Current
Low
High
Low
High
Non-GAAP Revenue
$1,078
$1,098
$1,025
$1,045
Adjusted EBITDA
$294
$304
$265
$275
$s in millions
Guidance assumes estimates for non-cash purchase accounting adjustments,
intangible valuations and deferred revenue adjustment
These metrics exclude approximately $18 to $20 million in significant
transaction-related
expenses
and
include
$2
million
for
the
deferred
revenue
adjustments
•
Notes
Sales
bookings,
net
of
term
extensions,
growth
rate
for
the
year
is
expected
to
be
in the double digits
•
Guidance |
 APPENDIX |
 MEETS THE CHALLENGE OF CHANGE
Monthly Recurring Revenue
11
Quarter Ended
Monthly Recurring Revenue (millions)
September 30,
2014
2013
Monthly Software license fees
$21.8
$22.1
Maintenance fees
63.8
60.5
Processing services
100.0
68.4
Monthly Recurring Revenue
$185.6
$151.0 |
 MEETS THE CHALLENGE OF CHANGE
12
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
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%
9/30/2014
$250,802
$63,396
$94,071
$93,336
25%
38%
37%
Sales
New Accounts /
New Applications
Add-on Business
inc. Capacity
Upgrades &
Services
Term Extension
SEP YTD 14
$655,360
$144,644
$285,101
$225,616
SEP YTD 13
$503,522
$81,840
$271,805
$149,877
Variance
$151,838
$62,804
$13,295
$75,738 |
 MEETS THE CHALLENGE OF CHANGE
Sales Bookings, Net of Term Extensions (SNET)
13
Sales Net of Term Extensions
Channel
Qtr Ended
Sep 14
Qtr Ended
Sep 13
% Growth or
Decline
Americas
$105,408
$82,768
27.4%
EMEA
38,292
39,644
-3.4%
Asia-Pacific
13,767
25,541
-46.1%
Total Sales (Net of Term Ext.)
$157,467
$147,953
6.4% |
 MEETS THE CHALLENGE OF CHANGE
Non-GAAP Operating Income
14
Quarter Ended
Non-GAAP Operating Income (millions)
September 30,
2014
2013
Operating income
$31.9
$29.6
Plus:
Deferred revenue fair value adjustment
0.4
1.7
Employee related actions
3.3
5.2
Significant transaction related expenses
4.0
3.5
Non-GAAP Operating Income
$
39.6
$
40.0 |
 MEETS THE CHALLENGE OF CHANGE
Adjusted EBITDA
15
Quarter Ended
Adjusted EBITDA (millions)
September 30,
2014
2013
Net income
$15.7
Plus:
Income tax expense
9.4
Net interest expense
10.4
Net other expense (income)
(3.6)
Depreciation expense
4.5
Amortization expense
17.6
Non-cash compensation expense
4.6
Adjusted EBITDA
$58.6
Deferred revenue fair value adjustment
0.4
Employee related actions
3.3
Significant transaction related expenses
4.0
Adjusted EBITDA excluding significant transaction
related expenses
$
66.3 $13.8
5.3
7.3
3.2
5.6
13.1
3.4
$51.7
1.7
5.2
3.5
$
62.1 |
 MEETS THE CHALLENGE OF CHANGE
Operating Free Cash Flow
16
* Tax effected at 35%
Reconciliation of Operating Free Cash Flow (millions)
Quarter Ended September 30,
2014
2013
Net cash provided by operating activities
$23.7
$28.9
Payments associated with acquired opening balance
sheet liabilties
0.3
-
Net after-tax payments associated with employee-related
actions
2.1
1.5
Net after-tax payments associated with lease terminations
0.2
0.5
Net after-tax payments associated with significant
transaction related expenses
2.6
0.9
Less capital expenditures
(10.7)
(4.7)
Operating Free Cash Flow
$18.2
$27.1 |
 MEETS THE CHALLENGE OF CHANGE
60-Month Backlog
17
Quarter Ended
Backlog 60-Month (millions)
September 30,
September 30,
2014
2013
Americas
$3,000
$2,125
EMEA
826
704
Asia/Pacific
288
283
Backlog 60-Month
$4,114
$3,112
Deferred Revenue
$183
$196
Other
3,931
2,916
Backlog 60-Month
$4,114
$3,112 |
 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
18
Backlog as Contributor of Revenue (thousands)
Quarter Ended September 30,
% Growth
2014
2013
Revenue from Backlog
$
$ 202,709
17.0%
Revenue from Sales
11.4%
Total Revenue
$
$ 213,939
16.7%
Revenue from Backlog
95%
95%
Revenue from Sales
5%
5%
12,507
11,230
237,137
249,644 |
 MEETS THE CHALLENGE OF CHANGE
Non-Cash Compensation, Acquisition Intangibles and
Software, and Significant Transaction Related Expenses
19
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. Acquisition Intangibles & Software, Non-cash equity
based compensation
Quarter Ended
(millions)
September 30,
2014
2013
EPS Impact
$ in Millions
(Net of Tax)
EPS Impact
$ in Millions
(Net of Tax)
Significant transaction related expenses
$
0.05
$
5.6 Deferred revenue fair value
adjustment -
0.3
0.01
1.1
Amortization of acquisition-related intangibles
0.03
4.0
0.03
3.1
Amortization of acquisition-related software
0.03
3.7
0.03
3.0
Non-cash equity-based compensation
0.03
3.0
0.02
2.2
Total
$ 0.13
* Tax Effected at 35%
$
0.13
$
15.0
$
0.04
$
4.8
$
15.8 |
 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
20
2.40
2.46
2.41
2.85
2.71
2.56
2.47
2.68
2.62
2.53
2.52
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
Q2
2014
Q3
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 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: 21
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. Adjusted EBITDA: net income 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 operating income: operating income 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. |
 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, payments associated with acquired
opening balance sheet liabilities, 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.
22 |
 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. 23
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:
•
•
•
•
24
24
Strong market interest in Universal Payments;
Large contracts in pipeline progressing;
expectations regarding 2014 financial guidance related to revenue and adjusted
EBITDA; and expectations regarding full year SNET.
|
 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,
OPAY
and
ReD,
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.
25
25 |
 |