Slide 1: December 31, 2008 Quarterly and Year End Results
December 31, 2008 Quarterly and Year End Results
Slide 2: 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- lo
Slide 3: Agenda
Phil Heasley, Chief Executive Officer Ron Totaro, Chief Operating Officer Scott Behrens, Chief Financial Officer Q&A: Phil Heasley, Ron Totaro and Scott Behrens Agenda
Slide 4: Business Review
Ron Totaro, Chief Operating Officer Business Review
Slide 5: General Market Update
General Market Update Financial crisis has spread to most markets Cost pressures on our customers Inefficient technologies and processes Exacerbated by M&A activity seen over past half year Heavy focus on compliance, fraud and risk management Good for the ACI hub multi-product solution sales Our Ent
Slide 6: Base Classic Sunset Announced in 2008
Base 24 Classic Sunset Announced in 2008 SUNSET was announced in March 2008 Not End-of-Life announcement Sunset will be effective in November 2011 Sunset means: Standard maintenance will increase significantly We still fix product defects Enhancements must be customer-funded Mandates must be custome
Slide 7: BASE24-eps - Ready for Primetime
BASE24-eps - Ready for Primetime Licensed over 70 times (new accounts, new apps) Live over 35 times Live in many different operating environments ATM driving, merchant acquiring, switching, merchant retail, multi-channel Live on all of our supported platforms And now, with version 8.2, optimized for
Slide 8: In 2008 we began moving towards a Hub Strategy
In 2008 we began moving towards a Hub Strategy Example: A Retail Payments Hub Integrated Retail Payments Processing Hub Internal Bank Host Systems CIF/CRM Revolving Credit Prepaid Cust Service Brokerage DDA External Networks and Hosts Transaction Acquiring Integrated Fraud Detection Authorization an
Slide 9: IBM Alliance
IBM Alliance Key Deals Strategic wins for Base24-eps (Americas) Proactive Risk Manager (Asia) on IBM System z Enterprise Banker On Demand (Americas) Sales Summary Strong finish in Q4, led by wholesale payments FY 2008 performance doubled IBM platform business as compared to prior year Achieved expec
Slide 10: Customer Revenue by Industry Type
Customer Revenue by Industry Type We maintained a similar product line segmentation year-over-year Strong revenue from banks and processors in 2008 Growing activity in the retailer segment in the United States Contraction in the 'other' category led by loss of large Canadian processing deal in 2007
Slide 11: Q4 2008 Sales Results
Q4 2008 Sales Results Q4 2008 demonstrated strong add on / term renewals sales performance compared to last year Positive pricing gains in add-on business and term extensions in this quarter as evidenced by growth in retail payments Top 5 customers accounted for 45% of sales performance in the quart
Slide 12: Q4 2008 Channel Sales Results
Q4 2008 Channel Sales Results Sales (net of Term Extensions) Term Extension Sales Total Sales Q4 2008 v Q4 2007 Channel Performance: Americas ... Top 5 customers accounted for $84.6 million of sales in Q4 08 vs. $44.3 million of sales in Q4 07. Americas sales figures driven by the extremely sizable
Slide 13: Historic Sales By Quarter 2007-2008
Historic Sales By Quarter 2007-2008 Sales Mix by Category Quarter-End Total Economic Value of Sales New Accounts New Applications Add-on Business inc. Capacity Upgrades & Services Term Extensions 3/31/2007 $125,408 $20,333 $18,295 $43,192 $43,660 16% 15% 34% 35% 6/30/2007 85,220 $7,780 $12,048 $49,8
Slide 14: Americas Q4/Year in Review
Americas Q4/Year in Review Q4 Revenue of $57.8 million, an increase of 16% over Q4 2007 driven by two large term renewals Annual revenue of $207.4 million, an increase of 5% over prior year Sales in the year were very strong New business sales up 14% year-over-year Term extension sales flat although
Slide 15: 2009 Opportunities- Americas
2009 Opportunities- Americas North American Banks Top bank ATM systems currently on processors Hub consolidation and cross-sell Online banking consolidation Risk Management cross-sell and upsell Wholesale payments in Canada North American Retailers Replace redundant, fragmented legacy technologies P
Slide 16: EMEA Q4/Year in Review
EMEA Q4/Year in Review Q4 Revenue of $39.5 million, a decrease of 8% over Q4 2007 revenue of $43.1 million largely due to FX impact of approximately $5-6 million Q4 Major Term Extensions in Italy and Slovakia Q4 Large Services deals at El Corte Ingles and HBOS for Base24-eps Annual Revenue of $169.0
Slide 17: 2009 Opportunities- EMEA
2009 Opportunities- EMEA BASE24-eps - Focus on Tier 1 migrations and new names Payments HUB consolidation opportunities Build Operate Transfer model creates opportunity during a difficult economic climate and with major M&A activity Wholesale focus on SEPA-express with market regulations driver, exp
Slide 18: Asia-Pacific Q4/Year in Review
Asia-Pacific Q4/Year in Review Q4 revenue of $12.0 million, an increase of 40% due to wholesale service customers Term extension contracts signed for AP's 2 largest revenue customers. Two new customers - 1st PRM license on IBM System Z in the world Significant capacity contracts in China, India, Kor
Slide 19: 2009 Opportunities- Asia
2009 Opportunities- Asia North Asia is the growth opportunity Japan upgrading retail/wholesale infrastructure China banks looking for payment hubs & upgrade risk India volumes continue to grow Indian banks rapidly extend coverage in consumer payments Australia consolidates Drives urgency to implemen
Slide 20: Cost Management
Cost Management Annualized gross cost savings of $30 million achieved in 2008 Rationalized headcount in mature markets and reinvested in growth regions A further $8 million in cost savings which will complete restructuring in 2009 Approximately $11.5 million to be re-invested in products, services a
Slide 21: Continuing to Deepen Ops Management Bench
Continuing to Deepen Ops Management Bench Filling out the second level of management expertise... Chief Product Officer VP Global Risk Solutions APAC Strategy & Planning Leader EMEA VP of Services EMEA Strategy & Planning Leader Global Help24 Leader VP Human Resources Key Hires to Date: APAC Head of
Slide 22: Corporate Management Office (CMO)
The CMO is the "nerve center" for program excellence and coordination of projects across the enterprise CMO Measurement Governance Organization Tools Reporting Methodology Corporate Management Office (CMO) CMO Purpose Define processes / methodologies Provide governance / oversight Provide tools / in
Slide 23: Deal Review Process (DRP)
DRP Purpose Created to monitor and manage the sales and services teams All deals will be run through a formal requirements and delivery estimation process Deal Review Committee (DRC) will discuss and approve specific deals meeting pre-set criteria before formal pricing terms are offered to the custo
Slide 24: Financial Review
Financial Review Scott Behrens, Chief Financial Officer
Slide 25: Key Takeaways from the Quarter
Key Takeaways from the Quarter Revenue growth of 8%; achieved $109.2 million in the current quarter versus $101.3 million in December 2007 quarter Increase largely attributable to implementation and professional services $2 million growth in recurring revenue Sales were up 44%; achieved $189 million
Slide 26: Takeaways from the Quarter (cont)
Takeaways from the Quarter (cont) 12-month backlog reduction of $11 million year over year due to FX 12-month backlog impacted by currency fluctuation of ~$18 million versus Q4- 07's backlog currency rate Sterling equates to approximately 15% of all backlog and £ dropped from $1.99 to $1.45 in the y
Slide 27: OFCF Walk Q4 2007 vs Q4 2008
OFCF Walk Q4 2007 vs Q4 2008 Cash Receipts Stronger AR management plus strong Latin American cash collections Increase in recurring monthly license fees largely due to de-emphasis on PUF deals across the business Payroll expenditures benefit from restructuring IBM IT Outsourcing use of cash in 2008
Slide 28: Backlog is Still a Significant Contributor to current period Revenue
Backlog is Still a Significant Contributor to current period Revenue Larger reliance on term renewals as a percentage of revenue on a year- over-year basis Rise in revenue contributed by current period sales was due to ILFs and capacity related to large retail system term renewals and add-on sales 6
Slide 29: Financials- Year in Review
Financials- Year in Review Financials- Year in Review Revenues up 12% on very strong term extensions and add-on sales and in spite of FX depreciation of revenue in European currencies Expenses up 6% Better than our 7-8% guidance given in March 2008 Favorably impacted in EMEA by currency exchange rat
Slide 30: Performance versus 2008 Guidance
Performance versus 2008 Guidance Exceeded OFCF expectations due to Stronger than expected cash collections on a global basis $3 million tax refund in Canada Achieved $460 million in sales Signed $189 million of business in Q4, term renewals came in larger and earlier than expected, primarily in the
Slide 31: 2009 Guidance
2009 Guidance Sales Flat to slightly down compared to prior year using constant budgeted FX rates from September 2008. FX Impact Beneficial to operating income percentage Revenue Growth rate excluding FX impact would have been 3-5% GAAP Operating Income Operating income to achieve 8-10% up from 5-6%
Slide 32: Other factors impacting Guidance
Other factors impacting Guidance Expenses Cash expenses should remain flat compared to 2008 calendar year Rise in professional fees driven by IBM IT outsourcing expected to offset drop in salaried headcount Annual net impact of $26 million restructuring will be realized in 2010; expect net $18 milli
Slide 33: Appendix
Appendix
Slide 34: Operating Free Cash Flow
Operating Free Cash Flow ($ millions) Quarter Ended December 31, Quarter Ended December 31, 2008 2007 Net cash provided by operating activities* $31.6 $ 12.1 Selected non-recurring items: Net after-tax cash payments associated with employee-related actions 2.0 2.7 Net after-tax payments associated w
Slide 35: 60-Month Backlog
60-Month Backlog ($ millions) Quarter Ended Quarter Ended Quarter Ended December 31, September 30, December 31, 2008 2008 2007 Americas $771 $744 $739 EMEA 480 511 505 Asia/Pacific 156 159 144 Backlog 60-Month $1,407 $1,414 $1,388 ACI Deferred Revenue $124 $131 $143 ACI Other 1,283 1,283 1,245 Backl
Slide 36: Revenues by Channel
Revenues by Channel ($ millions) Quarter Ended December 31, Quarter Ended December 31, 2008 2007 Revenues: United States $43.9 $36.0 Americas International 13.9 13.6 Americas $57.8 $49.6 EMEA 39.4 43.1 Asia/Pacific 12.0 8.6 Revenues $109.2 $101.3
Slide 37: Monthly Recurring Revenue
Monthly Recurring Revenue ($ millions) Quarter Ended December 31, Quarter Ended December 31, 2008 2007 Monthly license fees $18.3 $16.0 Maintenance fees 31.7 32.2 Processing Services 8.1 8.4 Monthly Recurring Revenue $58.2 $56.6
Slide 38: Deferred Revenue & Expense
Deferred Revenue & Expense ($ millions) Quarter Ended Quarter Ended Quarter Ended Quarter Ended December 31, September 30, December 31, September 30, 2008 2008 2007 2007 Short Term Deferred Revenue $99.9 $107.3 $115.5 $97.0 Long Term Deferred Revenue $24.3 $23.3 $27.3 $30.3 Total Deferred Revenue $1
Slide 39: Non-Cash Compensation, Acquisition Intangibles and Non-Recurring Items
Non-Cash Compensation, Acquisition Intangibles and Non-Recurring Items Quarter ended December 31, 2008 Quarter ended December 31, 2008 Quarter ended December 31, 2007 Quarter ended December 31, 2007 Non-recurring items EPS Impact* $ in Millions EPS Impact* $ in Millions Employee-related $0.05 $1.9 $
Slide 40: Other Income/Expense
Other Income/Expense ($ millions) Quarter Ended Quarter Ended Quarter Ended Quarter Ended December 31, 2008 September 30, 2008 December 31, 2007 September 30, 2007 Interest Income $0.7 $0.6 $0.8 $1.2 Interest Expense (1.5) (1.1) (1.3) (2.2) FX Gain / Loss 9.3 1.6 1.9 0.5 Interest Rate Swap Loss (4.3
Slide 41: Sales by Channel and Product Division
Sales by Channel and Product Division ($ millions) Quarter Ended Quarter Ended Quarter Ended Quarter Ended Quarter Ended December 31, 2008 September 30, 2008 June 30, 2008 March 31, 2007 December 31, 2007 Sales by Channel: Americas $119.6 $46.8 $49.9 $19.2 $83.0 EMEA 47.1 53.0 42.4 30.6 43.3 Asia Pa
Slide 42: 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 ex
Slide 43: Non-GAAP Financial Measures
Non-GAAP Financial Measures 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 pre
Slide 44: Non-GAAP Financial Measures
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: Maintenance fees are assumed to exist for the duration of the license
Slide 45: Non-GAAP Financial Measures
Non-GAAP Financial Measures 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 mana
Slide 46: 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 47: EVERY SECOND. EVERY DAY.
Ml EVERY SECOND. EVERY DAY.