Aci Worldwide, Inc. · NASDAQ:ACIW
Aci Worldwide — Investor Day (March 2016)
100 slides from Aci Worldwide's investor day presentation, Mar 10, 2016
Slide 1: Analyst Day 2016
ANALYST DAY 2016 THURSDAY, MARCH 10, 2016 NAPLES, FLORIDA
Slide 2: Welcome
WELCOME JOHN KRAFT VICE PRESIDENT INVESTOR RELATIONS
Slide 3: Analyst Day Agenda
ANALYST DAY AGENDA ACI Financial Update: 8:35 am – 9:05 am Reinvention of Payments: ACI Opportunity: 9:05 am – 9:20 am Solutions for a Changing World of Payments: 9:20 am – 10:00 am Break: 10:00 am – 10:20 am ACI Software as a Service Opportunity: 10:20 am – 11:00 am Executive Q&A: 11:00 am – 11:15
Slide 4: ACI Financial Update
ACI FINANCIAL UPDATE SCOTT BEHRENS SENIOR EXECUTIVE VICE PRESIDENT CHIEF FINANCIAL OFFICER
Slide 5: Financial Overview
FINANCIAL OVERVIEW Strategic moves for growth Financial look-back Recurring revenue growth Strong financial flexibility Guidance and five-year targets
Slide 6: Strategic Moves for Growth
STRATEGIC MOVES FOR GROWTH Official Payments ReD PAY.ON Online Resources Distra S1 Sell Yodlee Divest CFS Improved growth rates Divest non-core assets + Strategic M&A = & margin profile* Sale of CFS business ReD: 35% growth Net new bookings growth improves nearly 300 bps Sale of Yodlee stake PAY.ON:
Slide 7: New Trend Line
NEW TREND LINE NON-GAAP REVENUE ADJUSTED EBITDA 1020 275 $ $ 1,005 270 270 1000 265 980 5% CAGR 5% CAGR ) 960 $ 952 ) 255 millions 940 250 $ millions $ 247 ( $ $917 ( 245 $ 243 920 240 900 235 880 230 860 225 2014 2015 2016E 2014 2015 2016E Notes: Represents results adjusted for the divestiture of t
Slide 8: Recurring Revenue Growth Drives Stability
RECURRING REVENUE GROWTH DRIVES STABILITY Overall monthly recurring revenues now exceed 70% $1,000 $952 $900 $800 $700 Recurring segments Recurring millions) $600 ( $ segments $500 $418 71% $400 Recurring $300 60% segments $200 29% $100 40% Non-recurring Non-recurring segments segments $0 2010 2015
Slide 9: Recurring Revenue Growth Drives Stability
RECURRING REVENUE GROWTH DRIVES STABILITY Strong growth in SaaS—10% to nearly 40% $1,000 $952 $900 $800 37% SaaS $700 Recurring segments Recurring millions) $600 ( $ segments $500 $418 71% $400 10% SaaS Recurring $300 60% segments $200 29% $100 40% Non-recurring Non-recurring segments segments $0 20
Slide 10: Fixed Costs Provide Leverage in Model
FIXED COSTS PROVIDE LEVERAGE IN MODEL $350 Non Recurring Revenue: Ongoing Implementations, Services, Capacity Sales and Annual License Fees Monthly Recurring Revenue: SaaS Subscriptions & Transactions, Maintenance and License Fees (Paid Monthly, Quarterly only) $300 Adjusted EBITDA $250 $200 (millio
Slide 11: Strong Cash Flow Provides Financial Flexibility
STRONG CASH FLOW PROVIDES FINANCIAL FLEXIBILITY Disciplined use of leverage drives growth – debt repayment follows acquisitions o Current net debt ratio ~2.5x* o Target ratio ~2.5x Strong OFCF yield ~6% $138 million remaining on stock repurchase agreement (2/25/16) OPERATING FREE CASH FLOW STOCK REP
Slide 12: New Starting Point: Revenue Walk
NEW STARTING POINT: REVENUE WALK Non-GAAP revenue 990 – 1,020 ($ millions) 4-7% 1,047 Growth (95) (10) 2016E 2015 Deduct Annualize FX 2015 Actual CFS PAY.ON Impact Pro Forma
Slide 13: 2016 Guidance
2016 GUIDANCE 12-month backlog of $838 million = 85% of guidance 2016 2016 Implied 2015 Deduct Annualize FX 2015 Non-GAAP Non-GAAP Growth Actual CFS PAY.ON Impact Pro Forma (Low) (High) Rate Non-GAAP Revenue $1047 (95) 12 (10) 954 990 1020 4-7% Adjusted EBITDA $260 (13) — 247 265 275 7-11% Adjusted
Slide 14: Financial Summary: Five-Year Targets
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
Slide 15: High Quality Software Model
HIGH QUALITY SOFTWARE MODEL The Advantage Leading market position High retention and renewal rates Significant recurring revenue Scalable, fixed-cost model with improving margin Pricing power and large barriers to entry
Slide 16: Q&A
Q&A
Slide 17: Analyst Day 2016
Analyst Day 2016
Slide 18: Reinvention of Payments: ACI Opportunity
REINVENTION OF PAYMENTS: ACI OPPORTUNITY PHIL HEASLEY PRESIDENT & CEO
Slide 19: Analyst Day 2016
ANALYST DAY 2016
Slide 20: Solutions for a Changing World of Payments
SOLUTIONS FOR A CHANGING WORLD OF PAYMENTS CRAIG SAKS GROUP PRESIDENT, STRATEGIC PRODUCTS
Slide 21: Universal Payments
UP UNIVERSAL PAYMENTS
Slide 22: The Reinvention of Payments
THE REINVENTION OF PAYMENTS The payments industry is in the midst of a decade of disruption…
Slide 23: The Reinvention of Payments
THE REINVENTION OF PAYMENTS The payments world as we know it is changing forever The center of power is shifting back to the merchant and the consumer The historical pricing models that have funded the system are being challenged The distribution problem has been solved, undermining the traditional
Slide 24: The Reinvention of Payments
THE REINVENTION OF PAYMENTS ACI has the solutions, reach and business model to emerge as a leader by delivering on our vision of real-time, any-to-any payments.
Slide 25: Global Solutions Provider
GLOBAL SOLUTIONS PROVIDER Payments Payments Users Operators
Slide 26: Global Solutions Provider
GLOBAL SOLUTIONS PROVIDER Payments Payments Users Operators
Slide 27: Global Solutions Provider
GLOBAL SOLUTIONS PROVIDER Payments Payments Users Operators
Slide 28: Global Solutions Provider
GLOBAL SOLUTIONS PROVIDER Comprehensive PAY.ON Solutions ReD SaaS Retail Immediate Payments Payments Solution
Slide 29: Overcoming the Fear of Change
OVERCOMING THE FEAR OF CHANGE Navigating the five Cs: a path to the future Current Continuity Coexistence Consolidation Change Future Legacy Legacy Legacy Future Future ++
Slide 30: Solution Successes Around the Globe
SOLUTION SUCCESSES AROUND THE GLOBE Faster payments initiatives: propelling a very large investment cycle Western Europe U.S. Singapore Australia
Slide 31: Solution Successes Around the Globe
SOLUTION SUCCESSES AROUND THE GLOBE Payments transformation initiatives: a response to the changing environment U.S. Australia
Slide 32: Solution Successes Around the Globe
SOLUTION SUCCESSES AROUND THE GLOBE Enterprise risk management: protecting more complex payment environments Canada razil Australia
Slide 33: Solution Successes Around the Globe
SOLUTION SUCCESSES AROUND THE GLOBE Low operating cost environments: reinforcing the RPS value proposition Netherlands
Slide 34: Solution Successes Around the Globe
SOLUTION SUCCESSES AROUND THE GLOBE Cross-border eCommerce: adding 350+ connections to ACI’s solutions
Slide 35: Solution Successes Around the Globe
SOLUTION SUCCESSES AROUND THE GLOBE Card-not-present risk management: a large, global opportunity Middle Europe East Japan U.S. China Brazil Nigeria India Australia
Slide 36: Solution Successes Around the Globe
SOLUTION SUCCESSES AROUND THE GLOBE Merchant omni-channel: covering all customer touch points, during and after the sale Europe U.S.
Slide 37: Distribution Organized for Success
DISTRIBUTION ORGANIZED FOR SUCCESS Large markets, specified by customer segment, focused on cross sell and new logos North America & Europe Banks Financial North Intermediaries America Merchants Billers
Slide 38: Distribution Organized for Success
DISTRIBUTION ORGANIZED FOR SUCCESS Growth markets: strong drivers of future value Latin America
Slide 39: Distribution Organized for Success
DISTRIBUTION ORGANIZED FOR SUCCESS Growth markets: strong drivers of future value Middle East, Africa & South Asia
Slide 40: Distribution Organized for Success
DISTRIBUTION ORGANIZED FOR SUCCESS Growth markets: strong drivers of future value ASEAN & North Asia
Slide 41: Distribution Organized for Success
DISTRIBUTION ORGANIZED FOR SUCCESS Growth markets: strong drivers of future value Pacific
Slide 42: Global Reach
GLOBAL REACH Covering the world in-country, in-language but as 1ACI North America & Europe ASEAN & North Asia Latin Middle America East, Africa & South Asia Pacific
Slide 43: Global Reach
GLOBAL REACH Multinationals are ideally served by ACI’s reach
Slide 44: Positioned to Win in the Decade of Disruption
POSITIONED TO WIN IN THE DECADE OF DISRUPTION ACI is unique in the industry ACI has enriched its future with the addition of a strong, global merchant franchise ACI solutions enable more use cases in more markets ACI’s technology is more advanced, scalable and integrated ACI has the approach to evol
Slide 45: Positioned to Win in the Decade of Disruption
POSITIONED TO WIN IN THE DECADE OF DISRUPTION ACI is delivering the future through real-time, any-to-any payments
Slide 46: Analyst Day 2016
ANALYST DAY 2016
Slide 47: Break
BREAK
Slide 48: Analyst Day 2016
ANALYST DAY 2016
Slide 49: ACI Software as a Service Opportunity
ACI SOFTWARE AS A SERVICE OPPORTUNITY CAROLYN HOMBERGER GROUP PRESIDENT, ACI ON DEMAND
Slide 50: ACI Software as a Service Opportunity
ACI SOFTWARE AS A SERVICE OPPORTUNITY Key drivers of payments to the cloud Security and Speed Focus Compliance to Market
Slide 51: ACI Software as a Service Opportunity
ACI SOFTWARE AS A SERVICE OPPORTUNITY Diversity of solutions and clients Electronic Bill Payment Merchant Retail Large Financial Institutions and and Presentment • Retail and grocery Financial Intermediaries Financial institutions Fuel and transportation Retail and transaction banking IRS and govern
Slide 52: ACI Software as a Service Opportunity: Merchants
ACI SOFTWARE AS A SERVICE OPPORTUNITY Merchants Growth Drivers ACI Investments Today Today Merchants EMV, point-to-point Additional technical encryption resources to keep pace Legacy systems with growth Globalization through 2016+ European data center eCommerce, card-not- 2016+ present fraud Big dat
Slide 53: ACI Software as a Service Opportunity: Billers
ACI SOFTWARE AS A SERVICE OPPORTUNITY Billers Growth Drivers ACI Investments Today Today Billers Biller direct leads Data center migration Legacy systems Tran$act platform consolidation 2016+ Consumer payment 2016+ experience expectations Globalization Affordable Care Act Cross sell to merchants com
Slide 54: ACI Software as a Service Opportunity: Financial Institutions
ACI SOFTWARE AS A SERVICE OPPORTUNITY Financial institutions and intermediaries Growth Drivers ACI Investments Today Today Financial Institutions Mandates and compliance and Intermediaries Value proposition tools to Legacy systems demonstrate business value of ACI solutions 2016+ Globalization throu
Slide 55: ACI Software as a Service Opportunity: Technology
ACI SOFTWARE AS A SERVICE OPPORTUNITY Technology On-Premise SaaS Agile / DevOps Process Maturing software development model for SaaS Process Multi-tenancy / Active-Active / Customer Onboarding Architecture Multi-tenancy, high availability, disaster recovery; efficient, self- Architecture service cus
Slide 56: Data Center Footprint—Today
ACI SOFTWARE AS A SERVICE OPPORTUNITY Data center footprint—today ACI data centers Colos – acquisitions and planned consolidation Migrated out of within the last two years
Slide 57: Data Center Footprint—2017
ACI SOFTWARE AS A SERVICE OPPORTUNITY Data center footprint—2017 ACI data centers Colos – acquisitions and planned consolidation
Slide 58: AOD Customer Experience and Operations
ACI SOFTWARE AS A SERVICE OPPORTUNITY AOD customer experience and operations Service Delivery Payment Services Management Capabilities Implementation Audits and and Onboarding Operational Compliance 58
Slide 59: ACI Software as a Service Opportunity: Conclusion
ACI SOFTWARE AS A SERVICE OPPORTUNITY Conclusion Accelerating Value-added double-digit security, sales and revenue compliance and growth NFRs 2.5X+ deal size
Slide 60: Analyst Day 2016
ANALYST DAY 2016
Slide 61: Executive Q&A
EXECUTIVE Q&A PHIL HEASLEY PRESIDENT & CEO SCOTT BEHRENS SENIOR EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER CRAIG SAKS GROUP PRESIDENT, STRATEGIC PRODUCTS CAROLYN HOMBERGER GROUP PRESIDENT, ACI ON DEMAND
Slide 62: Analyst Day 2016
ANALYST DAY 2016
Slide 63: Payments Perspectives Roundtable
PAYMENTS PERSPECTIVES ROUNDTABLE ROB HOPPER DIRECTOR, INDIVIDUAL BUSINESS OPERATIONS BLUE CROSS BLUE SHIELD OF MICHIGAN PAUL THOMALLA MODERATOR ROBERT FLYNN SVP, CORPORATE RELATIONS MANAGING DIRECTOR AND DEVELOPMENT ACCENTURE PAYMENT SERVICES, NORTH AMERICA ACI WORLDWIDE BYRON SNIDER CIO SCHEELS
Slide 64: Lunch
LUNCH
Slide 65: Analyst Day 2016
ANALYST DAY 2016
Slide 66: Segment Update: Merchant, Biller and Payments Risk
SEGMENT UPDATE: MERCHANT, BILLER AND PAYMENTS RISK MIKE BRAATZ SENIOR VICE PRESIDENT, CHIEF PRODUCT OFFICER
Slide 67: ACI Solution Footprint
ACI SOLUTION FOOTPRINT Merchant, biller and payments risk Payments users Payments are expensive Consumer experience is key Fear of breaches Payments are not core Fraud liability shift
Slide 68: Merchants Embrace Payments Innovation
MERCHANTS EMBRACE PAYMENTS INNOVATION Consumer engagement Margin growth Elegant consumer experience Higher conversion rates Consistency Increased loyalty Rewards and offers More revenue Single or no-click payments Mobility Robust security
Slide 69: The Importance of Alternative Payments
THE IMPORTANCE OF ALTERNATIVE PAYMENTS It’s not all about credit cards… Emerging payment types Local payment methods Higher conversion rates Cross-border opportunity Stronger security
Slide 70: Global Coverage
GLOBAL COVERAGE Hi +20 comecons Hi He. on 50 Comratons 70
Slide 71: How Merchants Want to Buy
HOW MERCHANTS WANT TO BUY Large Global Merchants Medium and Small Merchants Omni-channel vision Multiple channels Bespoke consumer experience Feature-rich Flexibility and choice Modern, consistent consumer Global acceptance experience Hosted/SaaS Turnkey payment solution Direct relationship with sol
Slide 72: Biller and Merchant Synergies
BILLER AND MERCHANT SYNERGIES Online bill payment looks increasingly like eCommerce Billers embrace consumer engagement in the bill payment process Merchants are billers ?? billers are merchants ACI core competencies in common technologies and processes
Slide 73: Opportunities in Big Data and Analytics
OPPORTUNITIES IN BIG DATA AND ANALYTICS Business Data Mining Predictive Analytics Intelligence Vast amounts of data flowing through payment systems Large investments in big data management, analytics and data science Fraud management is our starting point Additional opportunities in payments cost op
Slide 74: Segment Update: Global Omni-Channel Payments
SEGMENT UPDATE: GLOBAL OMNI-CHANNEL PAYMENTS MARKUS RINDERER SENIOR VICE PRESIDENT, PRODUCT LINE MANAGER MERCHANT PAYMENT SOLUTIONS
Slide 75: Global Omni-Channel Payments
GLOBAL OMNI-CHANNEL PAYMENTS Shoppers expect localized solutions, payment methods and currencies
Slide 76: Cross-Border Payments
CROSS-BORDER PAYMENTS Cross-border commerce is growing at an accelerated pace 2020 $1000 950 billion million 2014 $230 309 billion million Cross-border Cross-border transaction volume shoppers
Slide 77: Global Omni-Channel Payments
GLOBAL OMNI-CHANNEL PAYMENTS Enabling merchants to accept payments from all channels globally Channels Software as a Service Global Network PAY.ON Postilion ReD
Slide 78: Global Network Expansion
GLOBAL NETWORK EXPANSION Connecting existing platforms to 350+ new endpoints Acquirers & Banks PAY.ON Existing ACI Solutions
Slide 79: Q&A
Q&A MIKE BRAATZ SENIOR VICE PRESIDENT, CHIEF PRODUCT OFFICER MERCHANT, BILLER AND PAYMENTS RISK MANAGEMENT SOLUTIONS MARKUS RINDERER SENIOR VICE PRESIDENT, PRODUCT LINE MANAGER MERCHANT PAYMENT SOLUTIONS ANDREW SAJESKI DIRECTOR, SOLUTION CONSULTING BILLER SOLUTIONS ANDREAS SUMA VICE PRESIDENT, PRODU
Slide 80: Analyst Day 2016
ANALYST DAY 2016
Slide 81: Segment Update: Banks and Financial Intermediaries
SEGMENT UPDATE: BANKS AND FINANCIAL INTERMEDIARIES BILL HERNANDEZ SENIOR VICE PRESIDENT, CHIEF PRODUCT OFFICER
Slide 82: ACI Solution Footprint
ACI SOLUTION FOOTPRINT Retail banking, transaction banking and immediate payments Consumer Transaction Consumer Merchant Payment Solutions Bill Payment Solutions Payment Solutions Banking Solutions ments Solutions Payments Risk Management Immediate Payments Payments Integration Payments operators Mu
Slide 83: Overcoming the Fear of Change
OVERCOMING THE FEAR OF CHANGE Navigating the five Cs: a path to the future Current Continuity Coexistence Consolidation Change UP BASE24 BASE24 BASE24 UP BASE24-eps UP BASE24-eps BASE24-eps High availability, Risk reduction with Next-generation technology Significantly reduce Enterprise-class reliab
Slide 84: UP Retail Payments Solution Benefits
UP RETAIL PAYMENTS SOLUTION BENEFITS Improve top-line Increase transaction volume and revenue through cross revenue selling and upselling Grow market share through Rapidly add new payment types, devices and channels innovation with less effort and cost to stay ahead of the competition Deliver any-to
Slide 85: Transaction Banking Corporate Customers: Banking Needs
TRANSACTION BANKING CORPORATE CUSTOMERS: BANKING NEEDS Purchasing supplies from suppliers Banking functions need to be simple and efficient to gain control and provide Advertising Banking flexibility Managing Expand global reach Employees Information needs to be up to date with Selling goods immedia
Slide 86: What Banks Must Do Now
WHAT BANKS MUST DO NOW Deliver differentiated and value-added products and services that are accessible across all channels Mobile Simple Online Migrate from siloed and legacy systems to banking banking banking create a more flexible solution that is more responsive to customers’ expectations Expand
Slide 87: How ACI Delivers
HOW ACI DELIVERS Providing highest straight-through processing and proven reliability Compliance/Risk Large U.S. bank depends on Universal Online Banker for global payments Payment High-value, Simple real-time origination balances Transaction payments Banking Global bank processes SEPA, Target2 and
Slide 88: Immediate Payments: Situation and Opportunity
IMMEDIATE PAYMENTS Situation and opportunity SITUATION Legacy payment systems provide a solid foundation for payment services; however, most of these systems rely on paper-based and/or batch processes, which are not universally fast or efficient, while others are fast and efficient but inconvenient
Slide 89: Business Case for Immediate Payments
BUSINESS CASE FOR IMMEDIATE PAYMENTS Situation and opportunity WHY CHANGE, WHY NOW? BUSINESS CASE Real-time, any-to-any experience has become Retail the expected norm • Just–in-time stock control • Informal services Many relevant use cases across retail and • P2P – dinner, consumer use commercial to
Slide 90: Global Picture of Immediate Payments
GLOBAL PICTURE OF IMMEDIATE PAYMENTS UP Framework for Immediate Payments: a global solution Exploratory Live Canada U.K. European Union Brazil Finland Poland Kazakhstan Singapore Indonesia South Africa Thailand Mexico Chile Design China India Netherlands Korea Norway Japan Turkey Switzerland Colombi
Slide 91: ACI Experience Across the Globe
ACI EXPERIENCE ACROSS THE GLOBE VocaLink FPS-UK FAST-Singapore NPP-Australia ACI software serves 60% of U.K. Payment services, risk liability, High-volume batch files members acceptance services, currency Payment services Payment gateway for both central conversion, etc. Payment, payment with docume
Slide 92: Delivering the Path to the Future
DELIVERING THE PATH TO THE FUTURE Framework Integrating the power of UP Framework across all of ACI payment solutions Single enterprise platform for on-premise and SaaS customers Plug-in solutions to meet global customers’ unique and innovative needs Single integrated payments platform with all data
Slide 93: Q&A
Q&A BILL HERNANDEZ SENIOR VICE PRESIDENT, CHIEF PRODUCT OFFICER FINANCIAL INSTITUTIONS AND FINANCIAL INTERMEDIARIES NICK BARNES SENIOR VICE PRESIDENT, PRODUCT LINE MANAGER RETAIL BANKING AND FINANCIAL INTERMEDIARY SOLUTIONS JEN HOLTON VICE PRESIDENT, PRODUCT LINE MANAGER TRANSACTION BANKING SOLUTION
Slide 94: Analyst Day 2016
ANALYST DAY 2016
Slide 95: Appendix
APPENDIX
Slide 96: Non-GAAP Financial Measures
Non-GAAP Financial Measures To supplement our financial results presented on a GAAP basis, we use the non-GAAP measures indicated in the tables, which exclude certain business combination accounting entries related to the acquisition of Online Resources Corporation and significant transaction relate
Slide 97: Non-GAAP Financial Measures
Non-GAAP Financial Measures Non-GAAP Revenue (millions) 2010 2011 2012 2013 2014 2015 Revenue $ 418 $ 465 $ 667 $ 865 $ 1,016 $ 1,046 Deferred revenue fair value adjustment — — 22 6 2 1 Non-GAAP revenue $ 418 $ 465 $ 689 $ 871 $ 1,018 $ 1,047 418 465 689 871 1018 1047 Adjusted EBITDA (millions) 2010
Slide 98: Non-GAAP Financial Measures
Non-GAAP Financial Measures 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
Slide 99: Forward-Looking Statements
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 “belie
Slide 100: Universal Payments
y Cc UNIVERSAL 4 PAYMENTS..