Aci Worldwide, Inc. · NASDAQ:ACIW
Aci Worldwide — Investor Day (November 2020)
64 slides from Aci Worldwide's investor day presentation, Nov 10, 2020
Slide 1: Analyst Day November 10, 2020
Analyst Day November 10, 2020
Slide 2: Safe Harbor for Forward-Looking Statements
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
Slide 3: Welcome
Welcome John Kraft VP, Investor Relations & Strategic Analysis 3
Slide 4: Launching a New ACI
Launching a New ACI Odilon Almeida President & CEO 4
Slide 5: ACI Assessment
ACI Assessment Strengths Areas for Improvement ▪ Large, dynamic and growing market ▪ Profitable organic growth ▪ Blue chip customers and mission- ▪ Go-to-market execution critical products ▪ Predictability ▪ R&D center of excellence ▪ Simpler story and operating model ▪ Successful track record of va
Slide 6: Key Message for Today
Key Message for Today ACI is a Significant Value Creation Opportunity ▪ Continuous ▪ A more ▪ Step-change ▪ A simpler profitable predictable value story organic business on creation with growth an annual M&A basis 6
Slide 7: Today's Agenda
Today’s Agenda Fit for Growth Tony Dinkins, Chief Human Resources Officer Al Monserrat, Chief Revenue Officer Focused on Growth Jeremy Wilmot, Chief Product Officer Eve Aretakis, Chief Technology Officer Step-Change Value Creation Craig Maki, EVP, Corporate Development Panel Discussion Barclays Paym
Slide 8: Fit for Growth
FitWelcome for Growth Tony Dinkins Chief Human Resources Officer 8
Slide 9: Moving from business units to a functional organizational model
We are moving from 2 business units to a more efficient functional organizational model Old ACI New ACI CEO CEO Product Product Technology & ACI On Demand ACI On Premise Commercial Development Management Operations Sales Product Ops Sales Product Ops ▪ Redundancies in Sales, Product ▪ Simpler, more
Slide 10: Step-change in organizational simplification
We are making a step-change in organizational simplification Old ACI New ACI ▪Flat, delayered structure ▪Leaders closer to front line ▪Eliminate redundancy ▪Fewer managers, more individual contributors Manager Individual Contributor 10 10 10
Slide 11: The ACI team is more efficiently deployed
The ACI team is more efficiently deployed Impact From To Layers reduced 8 5 Span of control 6 8 Managers to frontline ratio 1:6 1:7 Directors and above 7% 6% 11 11
Slide 12: New organizational design results in $35M annual savings
The new organizational design results in $35M annual savings ▪$35M savings in 2021 ▪Eliminated redundant costs ▪Streamlined management layers ▪Redefined key organizational processes 12 12
Slide 13: Rationalizing office space for $4M savings
We are rationalizing office space based on expected demand, delivering an additional $4M of savings ▪ Closing or right-sizing 40% of offices From To ▪ Improves office utilization to 85+% # offices 56 39 Square footage 870K 680K ▪ Headquarters downsized by half and moved to Miami Headquarters Naples
Slide 14: Fit for Growth
Fit for Growth Al Monserrat Chief Revenue Officer 14
Slide 15: Reinvesting $35M to drive growth
We are reinvesting $35M to drive growth in the new ACI Focused investment New Commercial Increased investment in high-growth areas organization in sales and marketing with greatest return 15
Slide 16: Investing to increase sales capacity
We are investing to increase sales capacity 25% 35% increase in sales and increase in sales marketing investment “feet on the street” aligned with product strategy 16
Slide 17: Flattening the Commercial organization
We are flattening the Commercial organization to decrease levels between CEO and sales reps From To ▪ Increased speed of decisions Layers 8 5 ▪ Improved communication ▪ More sales reps, fewer managers 17 17
Slide 18: Commercial teams organized by geography and customer segment
Commercial teams will be organized by geography and customer segment ▪ Improved local execution ▪ More consistent message ▪ Leverage ACI brand and strengths 18 18
Slide 19: Sales investment prioritized by geography, segment and solution
Sales investment is prioritized based on the intersection of geography, segment and solution ▪ Improved investment Solution prioritization and ROI ▪ Highly targeted marketing ▪ More efficient people Geography allocation Segment 19 19
Slide 20: Creating a focused, best-in-class sales organization
We are creating a focused, best-in-class sales organization New Retain Growth Monitor Sales and Expand Grow pipeline and Increase bookings Deliver high Optimize execution accelerate closing of and revenue from customer satisfaction; through business deals new sales increase adoption intelligence and
Slide 21: Sales efficiency and productivity will improve
Sales efficiency and productivity will improve through focus, discipline and analytics Compensation Opportunity Back-office Sales performance or incentives identification optimization management and prioritization 21
Slide 22: Becoming a trusted advisor to our customers
We will become a trusted advisor to our customers From To Pricing Cost Value Customer engagement At renewal Ongoing nurture Account planning Reactive Proactive Sales approach Product-centric Customer-centric Relationship Tactical Strategic 22 22
Slide 23: Aligning Sales and Marketing strategy with Product strategy
We are aligning Sales and Marketing strategy with Product strategy Alignment results in Marketing Sales 19%* 15%* faster higher revenue growth profitability Product *SiriusDecisions Summit ’19, Keynote, Marisa Kopec, VP of Innovation and Product Management, Research Fellow 23
Slide 24: Focused on Growth
Focused on Growth Jeremy Wilmot Chief Product Officer 24
Slide 25: Focusing investments on double-digit growth areas
We are focusing our investments in areas that will yield double-digit growth Real-Time Global Emerging Payments Merchants Markets Global banks and central Large, sophisticated High-growth countries in infrastructures global merchants emerging markets globally 25
Slide 26: Positioned for growing real-time payment volumes
ACI is well positioned to take advantage of growing real-time payment volumes How ACI Will Win and Grow 184 Connect banks ▪ Cross-sell to large existing to real-time customer base of global banks billion ▪ transactions* Power central Targeting countries investing in real- infrastructures time rails
Slide 27: Helping global merchants capitalize on digital commerce
ACI solutions help global merchants grow and capitalize on the digital transformation of commerce How ACI Will Win and Grow Secure eCommerce ▪ 300+ payment methods and multi-layered fraud management for 80 global merchants ▪ Flexibility and acquirer independence for Omni-Commerce billion global merc
Slide 28: Increasing focus and investment in Emerging Markets
We are increasing our focus and investment in Emerging Markets How ACI Will Win and Grow Africa 2x ▪ Real-time cross-sell growth rate Asia of mature ▪ Issuing and Acquiring markets Latin America ▪ Large merchants Middle East Market Growth 28 28
Slide 29: Focused on Growth
Focused on Growth Eve Aretakis Chief Technology Officer 29
Slide 30: Protect and grow Issuing and Acquiring business
We will protect and grow our large, global Issuing and Acquiring business How ACI Will Win and Grow 1.4 ▪ Modernize payments infrastructure and Protect and grow retail migrate to the cloud trillion banking franchise ▪ Cross-sell real-time, acquiring, fraud transactions* management mid-single-digit ▪
Slide 31: Protect and grow Bill Payments business
We will protect and grow our large Bill Payments business How ACI Will Win and Grow Double down ▪ Utilities, Credit, Higher Education, 15 on key verticals Insurance Increased sales ▪ Doubling sales resources in target billion coverage verticals transactions* ▪ Student portal ▪ Disbursements mid-sing
Slide 32: Platform consolidation drives cost synergies
Platform consolidation will drive cost synergies and enhanced capabilities Single Biller Platform Converging Digital Combining the best of ACI Commerce Platforms and Speedpay platforms Integrated omni-commerce solution 32 32
Slide 33: Accelerating the digital transformation of payments
We are accelerating the digital Open Cloud ▪ Open source ▪ Flexible cloud deployment transformation ▪ Microservices ▪ APIs ▪ Microsoft of payments Digital partnership Payments Transformation Last mile ▪ Shared endpoints ▪ Rapid endpoint creation 33 33
Slide 34: Step-Change Value Creation
Step-Change Value Creation Craig Maki EVP, Corporate Development Officer 34
Slide 35: Acquisitions and divestitures to unlock value creation
We will use acquisitions and divestitures to unlock step-change value creation Inorganic Value-Creation Themes Inorganic Areas of Focus ▪ Software-led payment assets ▪ Strengthen Biller leadership ▪ Bolster organic revenue growth and/or ▪ Cloud capabilities and value-added enhance scale services in
Slide 36: Real-Time Payments Panel Discussion
Real-Time Payments Panel Discussion Jeremy Wilmot Moderator Rob Cameron Stephen Grainger Tim Boike CEO EVP, Cross-Border VP, Industry Relations Barclays Payments Services & Engagement Mastercard Federal Reserve Bank 36
Slide 37: Simplifying Our Story
Simplifying Our Story Mike Braatz Chief Strategy & Marketing Officer 37
Slide 38: MC Worldwide
MC Worldwide
Slide 39: The ACI brand now has a simpler message
The ACI brand now has a simpler message ACI Worldwide is a global software company that delivers mission-critical real-time payment solutions to corporations. 39 39
Slide 40: Serving customers is the focus of our story
Serving customers is the focus of our story Customers use our proven, scalable solutions to process and manage digital payments, enable omni-commerce payments, present and process bill payments, and manage fraud and risk. We combine our global footprint with local presence to drive the real-time dig
Slide 41: Solutions address specific customer needs
Our proven, scalable and secure solutions address specific customer needs Customer Process and Enable omni- Present and Manage fraud Needs manage digital commerce process bill and risk payments payments payments Our ▪ Issuing ▪ Secure ▪ Bill Payments ▪ Fraud Solutions ▪ Acquiring eCommerce Managemen
Slide 42: ACI serves the largest corporations in payments
ACI serves the largest corporations in payments, and has market reach to all players Global Merchants Large Small & Medium Acquirers Merchants Large Banks Large Small & Medium Processors Banks Billers 42 42
Slide 43: Our brand has been updated and modernized
Our brand has been updated and modernized 43 43
Slide 44: Long-Term Outlook
Long-Term Outlook Scott Behrens Chief Financial Officer 44
Slide 45: Portfolio of double-digit and single-digit growth solutions
ACI’s portfolio includes both double-digit and single-digit growth solutions Aggressively Grow Protect and Grow Double-digit growers Single-digit growers ▪ Real-Time Payments ▪ Issuing and Acquiring ▪ Global Merchants ▪ Bill Payments ▪ Emerging Markets 45 45
Slide 46: Significant cost-savings identified
We have identified significant cost-savings Cost Savings Reinvestment and Improved Profitability 2021 2022 2021 2022 Fit for Growth $39M $39M Sales & Marketing $20M $20M Focused on Growth $21M $36M R&D $10M $15M Total Savings* $60M $75M Improved Profitability** $30M $40M Total $60M $75M *Represents
Slide 47: Plan will continue to use cash in three ways
Our plan will continue to use cash in three ways Reduce Stock Accretive debt buy-back M&A 47 47
Slide 48: What to expect going forward
What to expect going forward From To Financial Reporting 2 P&Ls 1 P&L Customer Segments 4 3 Annual Recurring Bookings Metric Total Contract Value Revenue Lumpy non-recurring Predictable Recurring Growth Focus license fees* Revenue * We will gradually move contracts from lumpy non-recurring license f
Slide 49: Recurring revenue growth will become most important KPI
Recurring revenue growth will become our most important KPI ▪ Recurring revenue is customer-centered and the market trend ▪ We will gradually move contracts from lumpy non-recurring license fees to annual recurring license fees ▪ Makes the business more predictable ▪ This will improve the health of
Slide 50: Updating long-term outlook with emphasis on recurring revenue
We are updating our long-term outlook with an emphasis on recurring revenue ▪ Mid to high-single-digit recurring revenue growth ▪ Mid-single-digit organic revenue growth ▪ Gradually improve adjusted EBITDA margin ▪ Step-change value creation through M&A investments and divestitures ▪ Target leverage
Slide 51: Balancing growth and profitability: Rule of 40
We will balance growth and profitability in creating long-term shareholder value ACI On Demand Segment Total Company 1 2 Rule of 40 Rule of 40 ~40% ~32% ~19% ~2% 2017 2019* 2019* 3-year Target 1Rule of 40 equals AOD segment revenue growth + AOD segment net adj. EBITDA 2Rule of 40 equals total compan
Slide 52: Closing Remarks
Closing Remarks Odilon Almeida President & CEO 52
Slide 53: ACI is a Significant Value Creation Opportunity
ACI is a Significant Value Creation Opportunity ✓ Continuous profitable organic growth ▪ A nimble, agile and fit for growth organization under empowered leaders ▪ A best-in-class sales process and structure ▪ Focus behind growing mission-critical solutions, segments and geographies ▪ We will achieve
Slide 54: ACI is a Significant Value Creation Opportunity
ACI is a Significant Value Creation Opportunity ✓ A more predictable business on an annual basis ▪ Recurring revenue growth, our most important KPI ▪ Gradually transition from lumpy non-recurring license fees to annual recurring license fees ▪ Operational discipline, our internal language 54
Slide 55: ACI is a Significant Value Creation Opportunity
ACI is a Significant Value Creation Opportunity ✓ Step-change value creation with M&A ▪ Accretive investments and divestures will drive step-change value creation ▪ ACI has a good track record in inorganic growth 55
Slide 56: ACI is a Significant Value Creation Opportunity
ACI is a Significant Value Creation Opportunity ✓ A simpler story ▪ Simple company definition and purpose ▪ Re-engineered brand architecture and positioning 56
Slide 57: Key Takeaway for Today
Key Takeaway for Today ACI is a Significant Value Creation Opportunity ✓ Continuous ✓ A more ✓ Step-change ✓ A simpler profitable predictable value story organic business on creation with growth an annual M&A basis 57
Slide 58: Q & A
Q & A 58
Slide 59: MC Worldwide
MC Worldwide
Slide 60: Appendix
Appendix ACI Worldwide
Slide 61: Non-GAAP Financial Measures
Non-GAAP Financial Measures To supplement our financial results presented on a GAAP basis, we use non-GAAP measures, including in this presentation, that we believe are helpful in understanding our past financial performance and our future results. The non-GAAP measures in this presentation include
Slide 62: Non-GAAP Financial Measures
Non-GAAP Financial Measures For the Years Ended Segment Information (millions) For the Years Ended December 31, Adjusted EBITDA (millions) December 31, 2016 2017 2018 2019 2018 2019 Revenue Net income $ 68.9 $ 67.1 ACI On Demand $ 399.0 $ 425.6 $ 433.0 $ 679.0 Plus: Speedpay proforma adjustment - -
Slide 63: 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 64: MC Worldwide
MC Worldwide