Aci Worldwide, Inc. · NASDAQ:ACIW
Aci Worldwide — Q3 2008 Earnings Presentation
40 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: 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 provision
Slide 3: Agenda
Agenda • 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 3
Slide 4: Business Sales Review
Business Sales Review Ron Totaro, Senior Vice President, Office of the COO 4
Slide 5: General Market Update
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 of
Slide 6: Customer M&A Activity is neutral to positive
Customer M&A Activity is neutral to positive ) # % $ & $$ : A / $ + BC $7 A & 7 / / ? $7 & A 7$ / & ' % & 8 $7 & 8- ) # 9 + D $) & Notes : &4 * ! " #$ % & ' $ % # $ "( $ # $$ ) % !" #$ % $) $ * + # $ ,( $ # $$ ) % ) # &4 - !. #$ % /0 # $ .( $ # $$ ) % $ &4 : % & 1-2 !3" #$ % & 4 ' $ % # $ 5/ ) 9 %/$
Slide 7: Customer Revenue by Industry Type
Customer Revenue by Industry Type Industry Type CY 2007 Revenue % Finance 253,155 68% Banks and credit unions Other 26,695 7% Healthcare, Colleges, Government, Social Svcs, etc Processor 71,632 19% Processors and credit card companies Retail 22,730 6% Retail Grand Total 374,211 100% Industry Type Q3
Slide 8: Q3 2008 Sales Results
Q3 2008 Sales Results Total Sales Product Division Qtr. Ended Qtr. Ended % Growth or Qtr. Ended Qtr. Ended % Growth or Sales Type Sept. 08 Sept. 07 Decline Product Division Sept. 08 Sept. 07 Decline New Account 8,284 8,246 0% Retail Payments 70,003 58,275 20% New Application 7,180 21,616 -67% Applic
Slide 9: Q3 2008 Channel Sales Results
Q3 2008 Channel Sales Results Sales (net of Term Extensions) Q3 2008 v Q3 2007 Channel Performance: Sales Net of Term Extensions Qtr. Ended Qtr. Ended % Growth or • Americas … Channel Sept. 08 Sept. 07 Decline Americas 28,755 27,857 3% – Top 5 customers accounted for $16.0 million of EMEA 39,124 30,
Slide 10: Historic Sales By Quarter 2007-2008
Historic Sales By Quarter 2007-2008 Sales Mix by Category Add-On Business Total inc. Capacity Economic Upgrades & Quarter-Ended Value of Sales New Accounts New Applications 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 $4
Slide 11: IBM Alliance
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 • Initi
Slide 12: Product Solutions Updates – Q3 2008
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 developmen
Slide 13: Americas Q3 Update
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 – g
Slide 14: EMEA Q3 Update
EMEA Q3 Update • Q3 Revenue of $45.4 million, an increase of 47% over Q3 2007 • Q3 Sales impacted by higher number of term extension deals and capacity deals compared to same quarter 07 – Capacity volume deals are indication that client market still expects transaction volume to grow • Some customer
Slide 15: Asia-Pacific Q3 Update
Asia-Pacific Q3 Update • Q3 Revenue of $10.1 million, a decrease of 0.5% compared to 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
Slide 16: Restructuring Update
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 bud
Slide 17: Services Delivery Project Improvement
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 Rollout o
Slide 18: Financials Review
Financials Review Scott Behrens, Principal Financial Officer
Slide 19: Key Takeaways from the Quarter
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 in
Slide 20: Takeaways from the Quarter (cont)
Takeaways from the Quarter (cont) Overall deferred revenue has decreased from $144.3 million to $128.6 million as we move backlog into current period GAAP revenue • Short term deferred revenue decreased to $105.4 million from $121.1 million as we completed installation of Faster Pay and other large
Slide 21: Backlog is Still a Significant Contributor to current period Revenue
Backlog is Still a Significant Contributor to current period Revenue Revenue Qtr. Ended Qtr. Ended % Growth or Revenue Sept. 08 Sept. 07 Decline Revenue from Backlog 88,398 81,484 8% Revenue from Sales 20,162 3,388 495% Total Revenue 108,560 84,872 28% Revenue from Backlog 81% 96% Revenue from Sales
Slide 22: 2008 Guidance remains unchanged
2008 Guidance remains unchanged Prior Year Key Metrics Current Guidance Prior Guidance Actuals OFCF $45-50 $45-50 $53 Sales 430-440 430-440 433 Rev-Log 190-195 190-195 157 • OFCF Guidance of $45-50 million – Unchanged from previous guidance issued in August • Sales guidance unchanged – Risk of some
Slide 23: CEO Outlook on 2009
CEO Outlook on 2009 • ACI software is a non-discretionary purchase for banks • Anticipate an attrition rate the same as this year or lower • Expect to see consistent growth in GAAP revenue as deferred and backlog move into current period • Think sales opportunities will remain very good globally – C
Slide 24: Appendix
Appendix
Slide 25: Operating Free Cash Flow ($ millions)
Operating Free Cash Flow ($ millions) Quarter Ended September 30, 2008 2007 Net cash provided by operating activities* $3.2 $ (1.5) Selected non-recurring items: Net after-tax cash payments associated with stock option cash settlement 0.0 3.7 Net after-tax payments associated with Empl. Related Acti
Slide 26: 60-Month Backlog ($ millions)
60-Month Backlog ($ millions) Quarter Ended September 30, June 30,, September 30, 2008 2008 2007 Americas $737 $737 $717 EMEA 509 533 490 Asia/Pacific 157 157 135 Backlog 60-Month $1,403 $1,427 $1,341 ACI Deferred Revenue $129 $144 $127 ACI Other 1,274 1,283 1,214 Backlog 60-Month $1,403 $1,427 $1,3
Slide 27: Revenues by Channel ($ millions)
Revenues by Channel ($ millions) Quarter Ended September 30, 2008 2007 Revenues: United States $39.8 $30.7 Americas International 13.3 13.1 Americas $53.1 $43.8 EMEA 45.4 30.9 Asia/Pacific 10.1 10.2 Revenues $108.6 $84.9 27
Slide 28: Monthly Recurring Revenue ($ millions)
Monthly Recurring Revenue ($ millions) Quarter Ended September 30, 2008 2007 Monthly license fees $21.3 $16.1 Maintenance fees 34.0 31.3 Processing Services 8.1 8.4 Monthly Recurring Revenue $63.4 $55.8 28
Slide 29: Deferred Revenue & Expense ($ millions)
Deferred Revenue & Expense ($ millions) Quarter Ended September 30, June 30, September 30, June 30, 2008 2008 2008 2007 Short Term Deferred Revenue $105.4 $121.1 $97.0 $97.1 Long Term Deferred Revenue $23.3 $23.2 $30.3 $25.7 Total Deferred Revenue $128.7 $144.3 $127.3 $122.8 Total Deferred Expense $
Slide 30: Non-Cash Compensation, Acquisition Intangibles and Non-Recurring Items
Non-Cash Compensation, Acquisition Intangibles and Non-Recurring Items 2008 2007 Non-recurring items EPS Impact* $ in Millions EPS Impact* $ in Millions Stock options review $0.00 $0.0 $(0.03) $(1.0) Employee Related 0.07 2.3 0.06 2.1 IBM IT Outsourcing Severance/Retention Cost 0.01 0.3 0.00 0.0 IBM
Slide 31: Other Income/Expense ($ millions)
Other Income/Expense ($ millions) Quarter Ended September 30, June 30, September 30, June 30, 2008 2008 2007 2007 Interest Income $0.6 $0.7 $1.2 $0.9 Interest Expense (1.1) (1.0) (2.2) (1.4) FX Gain / Loss 1.6 (0.7) 0.5 (1.5) FAS 133 Derivative (0.8) 2.9 (2.1) 0.0 Other 0.1 0.2 0.0 (0.0) Total Other
Slide 32: Sales by Channel and Product Division ($ millions)
Sales by Channel and Product Division ($ millions) Quarter Ended September 30, June 30, March 31, December 31, September 30, 2008 2008 2008 2007 2007 Sales by Channel: Americas $46.8 $49.9 $19.2 $83.0 $39.0 EMEA 53.0 42.4 30.6 43.3 42.4 Asia Pacific 6.8 7.6 14.0 5.3 9.6 Total Sales $106.6 $99.9 $63.
Slide 33: Non-GAAP Financial Measures
Non-GAAP Financial Measures • ACI is presenting operating free cash flow, which is defined as net cash provided (used) by operating activities, excluding cash payments associated with the cash settlement of stock options, cash payments associated with one-time employee related actions, less capital
Slide 34: Non-GAAP Financial Measures
Non-GAAP Financial Measures Reconciliation of EPS, excluding one time items ($ millions) Quarter Ended 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
Slide 35: Non-GAAP Financial Measures
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 comm
Slide 36: 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 37: Forward Looking Statements (cont)
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 to
Slide 38: Forward Looking Statements (cont)
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 as
Slide 39: Forward Looking Statements (cont)
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 materia
Slide 40: IMAI
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