Aci Worldwide, Inc. · NASDAQ:ACIW
Aci Worldwide — Q3 2008 Earnings Presentation
38 slides from Aci Worldwide's earnings presentation, Nov 6, 2008
Slide 1: September 30, 2008 Quarterly Results
September 30, 2008 Quarterly Results November 6, 2008
Slide 2: Agenda
3 • Ron Totaro, Senior Vice President, Office of the COO • Scott Behrens, Principal Financial Officer • Phil Heasley, Chief Executive Officer • Q&A: Phil Heasley, Ron Totaro and Scott Behrens Agenda
Slide 3: Business Sales Review
4 Ron Totaro, Senior Vice President, Office of the COO Business Sales Review
Slide 4: General Market Update
5 General Market Update • Marketplace bank M&A activity is not hindering our ability to close transactions with acquirer / acquired companies – Some large acquired companies are currently operating in a ‘business as usual’ environment for software procurement – Continue to make progress on renewal o
Slide 5: Customer M&A Activity is neutral to positive
6 Customer M&A Activity is neutral to positive Wholesale (MTS) only Wholesale (EB) only Retail (B24 / B24-eps) only Both Wholesale & Retail Application Tools Only Product Key (1) - Received $25B from US Government for 5% preferred stock investment (2) - Received $5B from Berkshire Hathaway for 10% p
Slide 6: Customer Revenue by Industry Type
7 Customer Revenue by Industry Type • Our product is a necessary feature of the e-payment processing infrastructure • Believe that the banking market upheaval makes software productivity improvements even more important to the end user • Q3 year to date, we have a $97 million business with processor
Slide 7: Q3 2008 Sales Results
8 Q3 2008 Sales Results • Q3 2008 demonstrated strong add on/term renewals sales performance – Capacity business, BASE24-eps migrations drove larger deals in Add-ons – Top 5 customers accounted for 23% of sales performance in the quarter as compared to 33% in Q2 2008 and 26% of sales in the precedin
Slide 8: Q3 2008 Channel Sales Results
9 Q3 2008 Channel Sales Results Channel Qtr. Ended Sept. 08 Qtr. Ended Sept. 07 % Growth or Decline Americas 28,755 27,857 3% EMEA 39,124 30,924 27% Asia-Pacific 5,779 6,506 -11% Total Sales (Net of Term Ext.) 73,657 65,287 13% Sales Net of Term Extensions Channel Qtr. Ended Sept. 08 Qtr. Ended Sept
Slide 9: Historic Sales By Quarter 2007-2008
10 Historic Sales By Quarter 2007-2008 Quarter-Ended Total Economic Value of Sales New Accounts New Applications Add-On Business inc. Capacity Upgrades & Services Term Extensions 3/31/2007 $125,480 $20,333 $18,295 $43,192 $43,660 16% 15% 34% 35% 6/30/2007 $85,220 $7,780 $12,048 $49,803 $15,588 9% 14
Slide 10: IBM Alliance
11 IBM Alliance • Product investment – BASE24-eps (retail payments) and Proactive Risk Manager (fraud) • System z optimization projects completed, now generally available – MTS-eps (wholesale payments) roadmap announced at SIBOS • Service-oriented transformation of bulk payments, wire transfers • In
Slide 11: Product Solutions Updates – Q3 2008
12 Product Solutions Updates – Q3 2008 • Retail Payment Solutions – IBM enablement continues according to plan – Deposit-gathering has new urgency for our financial clients • Wholesale Payment Solutions – Major announcement at SIBOS to invest in next generation solution • IBM endorsement and develop
Slide 12: Americas Q3 Update
13 Americas Q3 Update • Q3 Revenue of $53.1 million, an increase of 21% over Q3 2007 • Heavy focus on key renewals; beginning to sign customers to BASE24-eps migrations • Tuning U.S. focus to top accounts • Continued growth in Latin America • Emphasis on selling value-added services at higher rates
Slide 13: Asia-Pacific Q3 Update
15 Asia-Pacific Q3 Update • Q3 Revenue of $10.1 million, an decrease of 0.5% over Q3 2007 • Strong professional services sales across the Wholesale and Retail businesses • Significant new pipeline activity linked to the ACI/IBM Alliance in Pacific, Greater China and Japan • 2 new BASE24-eps sales in
Slide 14: Restructuring Update
16 Restructuring Update • Completed restructuring in the Americas during Q3 2008 – Annualized cost savings of $25 million • Additional headcount reductions in international locations during Q4 2008 – Annualized cost savings of $7.1 million • 2009 cost savings – Further savings identified to cuts in
Slide 15: Services Delivery Project Improvement
17 Services Delivery Project Improvement • Organizational Alignment – Accountability driven by appropriate matching of functionality with reporting (eg, engineers reporting into engineering group, business managers within the business reporting structure) • Evolution to Lower Cost Hubs – 2007 Rollou
Slide 16: Financials Review
Financials Review Scott Behrens, Principal Financial Officer
Slide 17: Key Takeaways from the Quarter
19 Key Takeaways from the Quarter Revenue growth of 28% at $108.6 million in the current quarter versus $84.9 million in September 2007 quarter $12.4 million increase attributable to ILFs and capacity Growth of $7.6 million in monthly recurring revenues versus prior year quarter Rise of $3.9 million
Slide 18: Takeaways from the Quarter (cont)
20 Takeaways from the Quarter (cont) Overall deferred revenue growth has decreased from $144.3 million to $128.6 million as we move backlog into current period GAAP revenue • Short term deferred revenue shrunk to $105.4 million from $121.1 million as we completed installation of Faster Pay and other
Slide 19: Backlog is Still a Significant Contributor to current period Revenue
21 Backlog is Still a Significant Contributor to current period Revenue • Significantly higher contribution of period sales into GAAP revenue compared to prior quarters in this calendar year: – Higher level of both capacity and term renewal deals contributing 31% of the quarter’s sales, mainly due t
Slide 20: 2008 Guidance remains unchanged
22 2008 Guidance remains unchanged • OFCF Guidance of $45-50 million – Unchanged from previous guidance issued in August • Sales Guidance unchanged; yet there is a risk factor of $60-70 million in timing of renewals – Risk of Some renewals might move into Q1-09 as we prioritize receipt of economic p
Slide 21: CEO Outlook on 2009
23 CEO Outlook on 2009 • ACI software is a non-discretionary purchase for banks • Anticipate an attrition rate the same as this year or lower • Expect to see consistent growth in GAAP revenue as deferred and backlog move into current period • Think sales opportunities will remain very good globally
Slide 22: Appendix
Appendix
Slide 23: Operating Free Cash Flow
25 Operating Free Cash Flow ($ millions) 0.7 0.6 Net after-tax payments associated with IBM IT Outsourcing/Severance 0.7 0.4 Net after-tax payments associated with Empl. Related Actions $2.3 $(0.3) Operating Free Cash Flow 3.7 0.0 Net after-tax cash payments associated with stock option cash settlem
Slide 24: 60-Month Backlog
26 60-Month Backlog ($ millions) $1,341 $1,427 $1,403 Backlog 60-Month 1,214 1,283 1,275 ACI Other $127 $144 $129 ACI Deferred Revenue $1,341 $1,427 $1,403 Backlog 60-Month 135 157 157 Asia/Pacific 490 533 509 EMEA $717 $737 $737 Americas 2007 2008 2008 September 30, June 30,, September 30, Quarter
Slide 25: Revenues by Channel
27 Revenues by Channel ($ millions) $84.9 $108.6 Revenues 10.2 10.1 Asia/Pacific 30.9 45.4 EMEA $43.8 $53.1 Americas 13.1 13.3 Americas International $30.7 $39.8 United States Revenues: 2007 2008 Quarter Ended September 30,
Slide 26: Monthly Recurring Revenue
28 Monthly Recurring Revenue ($ millions) $55.8 $63.4 Monthly Recurring Revenue 8.4 8.1 Processing Services 31.3 34.0 Maintenance fees $16.1 $21.3 Monthly license fees 2007 2008 Quarter Ended September 30,
Slide 27: Deferred Revenue & Expense
29 Deferred Revenue & Expense ($ millions) $122.8 $127.3 $144.3 $128.7 Total Deferred Revenue $6.3 $7.4 $11.0 $10.3 Total Deferred Expense $25.7 $30.3 $23.2 $23.3 Long Term Deferred Revenue $97.1 $97.0 $121.1 $105.4 Short Term Deferred Revenue 2007 2008 2008 2008 June 30, September 30, June 30, Sept
Slide 28: Non-Cash Compensation, Acquisition Intangibles and Non-Recurring Items
30 Non-Cash Compensation, Acquisition Intangibles and Non-Recurring Items 2.1 0.06 2.3 0.07 Employee Related 0.0 0.00 0.3 0.01 IBM IT Outsourcing Severance/Retention Cost 0.0 0.00 2.8 0.08 IBM IT Outsourcing transition cost * Tax Effected at 35% $4.6 $0.13 $9.0 $0.26 Total: 1.7 0.05 1.7 0.05 Non-cas
Slide 29: Other Income/Expense
31 Other Income/Expense ($ millions) ($2.0) ($2.5) $2.0 $0.4 Total Other Income (Expense) (0.0) 0.0 0.2 0.0 Other 0.0 (2.1) 2.9 (0.8) FAS 133 Derivative (1.5) 0.5 (0.7) 1.6 FX Gain / Loss (1.4) (2.2) (1.0) (1.1) Interest Expense $0.9 $1.2 $0.7 $0.6 Interest Income June 30, 2007 September 30, 2007 Ju
Slide 30: Sales by Channel and Product Division
32 Sales by Channel and Product Division ($ millions) $106.6 13.5 5.5 17.6 $70.0 $106.6 6.8 53.0 $46.8 September 30, 2008 $91.1 $131.6 $63.8 $99.9 Total Sales 9.6 5.3 14.0 7.6 Asia Pacific 42.4 43.3 30.6 42.4 EMEA $39.0 $83.0 $19.2 $49.9 Americas Sales by Channel: September 30, 2007 December 31, 200
Slide 31: Non-GAAP Financial Measures
33 Non-GAAP Financial Measures • ACI is presenting operating free cash flow, which is defined as net cash provided (used) by operating activities, excluding cash payments associated with the cash settlement of stock options, cash payments associated with one-time employee related actions, less capit
Slide 32: Non-GAAP Financial Measures: Reconciliation of EPS
34 Non-GAAP Financial Measures Reconciliation of EPS, excluding one time items ($ millions) September 30, September 30, 2008 2007 GAAP EPS 0.05 $ (0.24) $ Plus: Stock Options (Prof. Fees & Vested Shares) - (0.03) Employee Related 0.07 0.06 IBM IT Outsourcing Severance/Retention 0.01 - IBM IT Outsour
Slide 33: Non-GAAP Financial Measures
35 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 and facilities management arrangements are assumed to renew at the end of their c
Slide 34: Forward Looking Statements
36 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 “be
Slide 35: Forward Looking Statements (cont)
37 Forward Looking Statements (cont) Expectations regarding 2009 cost savings identified in cuts in budget expenditures and in facilities and non-core products; • Expectations of reinvestment of up to $16 million in product management, senior channel and operations leadership and services delivery t
Slide 36: Forward Looking Statements (cont)
38 Forward Looking Statements (cont) • Risks associated with our ability to successfully and effectively compete in a highly competitive and rapidly changing industry; • Risks inherent in making an estimate of our backlogs which may not be accurate and may not generate the predicted revenue; • Risks
Slide 37: Forward Looking Statements (cont)
39 Forward Looking Statements (cont) • Risks associated with system failures which could delay the provision of products and services and damage our reputation with our customers; • Risks associated with our restructuring plan which may not achieve expected efficiencies; • Risks associated with mate
Slide 38: EVERY SECOND. EVERY DAY.
MI EVERY SECOND. EVERY DAY.