Aci Worldwide, Inc. · NASDAQ:ACIW
Aci Worldwide — Investor Day (November 2018)
95 slides from Aci Worldwide's investor day presentation, Nov 14, 2018
Slide 1: Universal Payments Making Possibilities Happen: Analyst Day 2018
UNIVERSAL iX\e@ PAYMENTS. MAKING HAPPEN ANALYST DAY 2018
Slide 2: Welcome
John Kraft Vice President, Investor Relations and Strategic Analysis welcome
Slide 3: 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-look
Slide 4: Agenda
Welcome Making Possibilities Happen Financial Discussion ACI Growth Strategy Delivered by 6-4-2-1 UP® Solutions Strategy BREAK Execution Through 2 P&L Model Q&A AGENDA
Slide 5: Making Possibilities Happen
Philip Heasley President and CEO Making possibilities Happen
Slide 6: Our Vision
OUR VISION ACI® is a highly focused and unified payments software enterprise that enables any-to-any payment transactions to occur regardless of time, location or type, supporting multi-party payments with the notion that the purchaser directs the payments to his/her provider of choice to satisfy th
Slide 7: UP Investment Journey
Any Payment, Every Possibility.® UP Investment Journey 2012 S1, DISTRA RETAIL PAYMENTS UNIVERSAL PAYMENTS TECHNOLOGY More Ways to Pay (endpoints) More Payment Capabilities (services) Payments Orchestration Industry-leading Non-Functional Requirements (NFRs) 2014 UP BASE24-EPS RED CNP FRAUD PREVENTIO
Slide 8: Key Themes for Today's Event
MARKET GROWTH OPPORTUNITY Key Themes for Today’s Event MARKET VALIDATION ACI LEADERSHIP AND FINANCIAL STRENGTH
Slide 9: Financial Discussion
Scott Behrens Chief Financial Officer Financial discussion
Slide 10: Multiple Drivers to Accelerate Revenue Growth and Margin Expansion
Migrate customers to modernized IP UP Retail Payments Solution (RPS) New UP Real-Time Payments Solution (RTPS) Cross-selling to existing customers Secular transaction growth Maintain low attrition Multiple Drivers to Accelerate Revenue Growth and Margin Expansion *Sum of percentage revenue growth an
Slide 11: Compelling Transaction-based Business Model
* In millions. Excludes CFS divestiture. FY 2018 - 2020 based on mid-point of guidance and longer-term targets. Expect margin expansion to accelerate Compelling Transaction-based Business Model Adjusted ebitda* Nearly 300 basis point improvement from 2016 - 2018 E E E
Slide 12: Balanced Capital Allocation Creates Value
*Activity since 2005 Disciplined history of share repurchases $577 million repurchased* Average price of $12.50/share* Shares outstanding flat* $177 million remaining on authorization Acquisitions Focus on payments capabilities aligned with our strategy Gain scale and expand market opportunities Ris
Slide 13: Solid Balance Sheet
Target leverage of 2.5x Solid Balance Sheet Debt* Leverage ratio* Credit facility matures Q1 2022, $500m revolver undrawn $400m 5.75% unsecured senior notes due Q3 2026 4.0x 3.5x 3.0x 2.5x 2.0x 1.5x 1.0x 0.5x 0.0x *Ratio represents total debt over current year adjusted EBITDA Floating rate Long-term
Slide 14: 2018–2020 Outlook
2018–2020 Outlook 2018 GUIDANCE UNDER ASC 605 and 606* Revenue of $1.05 billion to $1.075 billion Adjusted EBITDA of $270 million to $285 million New bookings growth expected to be in the low double digits Operating free cash flow to be in a range of $140 million to $155 million 2019 & 2020 GUIDANCE
Slide 15: Financial Summary: Five-Year Targets
New bookings growth High single digits Organic revenue growth Mid-to-upper single digits Adjusted EBITDA margin 100+ bps expansion per year Operating free cash flow Track adjusted EBITDA growth Target leverage ratio 2.5x EBITDA Financial Summary: Five-Year Targets
Slide 16: Investment Highlights
1 Long-term, blue-chip, geographically diverse customer base with low customer concentration and strong renewal rates Large contractual backlog provides revenue and earnings visibility 2 3 Transaction-based software contracts drive high-quality, recurring revenue 4 High-margin software and platform
Slide 17: ACI Growth Delivered by 6-4-2-1
Jeremy Wilmot Chief Marketing and Revenue Officer ACI Growth delivered by 6-4-2-1
Slide 18: Any Payment, Every Possibility
ANY PAYMENT, EVERY POSSIBILITY. ACI makes fast, simple and secure payments possible around the world by connecting more ways to pay with more payment capabilities than any other provider.
Slide 19: Growth Trends Transforming Transaction Opportunity
Growth Trends Transforming Transaction Opportunity Cloud/ Open Source eCommerce Growth Real-Time Payments Payments Intelligence Rise of Intermediaries Billions Not Millions
Slide 20: 2023 Addressable Transaction Opportunity
2023 Addressable Transaction Opportunity 3.6 TRILLION Transactions 2023
Slide 21: 2023 Addressable Transaction Opportunity
2023 Addressable Transaction Opportunity 2.1 TRILLION Transactions 2023 3.6 TRILLION Transactions 2023 1.5 TRILLION Transactions 2023 Addressable with Current Solution and Segment Focus White Space Opportunity
Slide 22: ACI's Addressable Transaction Opportunity by Segment
ACI’s Addressable Transaction Opportunity by Segment 1.3 TRILLION Transactions 2018 2.1 TRILLION Transactions 2023 Corporates 8 B Merchants 137 B Intermediaries 598 B Banks 560 B Corporates 10 B Merchants 210 B Intermediaries 1050 B Banks 865 B ACI % share: High teens to low 20s ACI % share: Low-to-
Slide 23: Monetizing the Transaction Opportunity
Monetizing the Transaction Opportunity Corporates Merchants Banks Intermediaries C2B end-to-end hosted payment processing C2B payment at merchant POS or via eCommerce Payment access to funds Wide range of payment services $0.2-$1.0 $0.01-$0.07 <$0.01 (Volume discount price curve applied) Full range,
Slide 24: Operationalizing Our Strategy with 6-4-2-1
Operationalizing Our Strategy with 6-4-2-1
Slide 25: ACI's Segment and Solutions Focus
ACI’s Segment and Solutions Focus BANKS INTERMEDIARIES CORPORATES MERCHANTS
Slide 26: Segment Focus: Banks
Segment Focus: Banks BANKS: TRENDS Real-time and open banking catalyzing payments transformation Accelerating cloud adoption in response to innovation drive and increasing cost pressures Security and fraud risk management remaining top priority for banks ACI FOCUS AREAS Cards and Real-Time Gross Set
Slide 27: Segment Focus: Merchants and Corporates
Segment Focus: Merchants and Corporates MERCHANTS: TRENDS Globalization driven by eCommerce Omni-channel acceptance of payments Mobile-first experience Constantly changing risk environment ACI FOCUS AREAS eCommerce direct to travel/gaming/telco Omni-channel for large complex merchants Omni-channel s
Slide 28: Segment Focus: Intermediaries
Segment Focus: Intermediaries INTERMEDIARIES: TRENDS Regulatory and technological changes reducing barriers to entry Inefficient and lackluster customer experience, payment services being disrupted Economies of scale in mid-market payment players Investment dollars seek quality assets ACI FOCUS AREA
Slide 29: Why Will ACI Win?
Why Will ACI Win? Brand With a 40+ year heritage of powering mission-critical transactions, ACI is trusted to deliver secure, risk-compliant solutions in a highly regulated payments environment. Software ACI’s UP solutions connect more ways to pay with more payment capabilities than any other provid
Slide 30: UP Solutions Strategy
Mike Braatz Chief Solutions Officer Up solutions strategy
Slide 31: UP Solutions Strategy Agenda
UP Solutions Strategy ACI Solutions Payments Intelligence eCommerce Payments Real-Time Payments Demo Agenda
Slide 32: ACI's Segment and Solution Focus
ACI’s Segment and Solution Focus BANKS INTERMEDIARIES CORPORATES MERCHANTS PAYMENTS INTELLIGENCE RETAIL PAYMENTS MERCHANT PAYMENTS DIGITAL CHANNELS BILL PAYMENTS REAL-TIME PAYMENTS
Slide 33: Key Elements of Our Strategy to Increase Customer Value
Linux Platform Open, modern, efficient platform Non-Functional Requirements (NFRs) Competitive differentiator Any Payment, Every Possibility Building services and endpoints to achieve orchestration Key Elements of Our Strategy to Increase Customer Value
Slide 34: Growth Trends Transforming Transaction Opportunity
Growth Trends Transforming Transaction Opportunity Cloud/ Open Source eCommerce Growth Real-Time Payments Payments Intelligence Rise of Intermediaries Billions Not Millions
Slide 35: Payments Intelligence
UNIVERSAL NAC PAYMENTS. PAYMENTS INTELLIGENCE
Slide 36: Next-Gen Payments Intelligence
Next-Gen Payments Intelligence REAL-TIME TRANSACTION PATH ANALYTICS & DATA PAYMENTS INTEGRATION SHARED INTELLIGENCE DEPLOYMENT FLEXIBILITY License or platform AI and adaptive machine learning Payments and fraud Global fraud insights Fraud screening in real time Built on ACI Non-Functional Requiremen
Slide 37: Expanding Global Footprint
Expanding Global Footprint 350+ direct customers 5,000+ indirect customers Millions of payments protected daily
Slide 38: Customer Benefits Realized
Customer Benefits Realized More than 10x TPS capacity 50% improvement in response time AI and machine learning for best-in-class detection “Five 9s” platform uptime and availability Payments Intelligence
Slide 39: ACI Stream Analytics Engine
ACI Stream Analytics Engine A faster, more efficient way to process higher volumes of data Big data technology brings speed and volume for faster throughput Leveraging the power of ACI consortium database Based on thousands of global merchants’ customer and transactional data Offering nearly 100 add
Slide 40: Stream Analytics Engine's Positive Profiling
Stream Analytics Engine’s Positive Profiling Increased Conversions Reduced Fraud and Chargebacks Reduced Friction Superior Omni-Channel Experience Stronger Customer Relationships Single merchant transaction profiling can be limiting — often lacking critical customer data High-risk product Next-day d
Slide 41: Payments Intelligence in Action: Customer Results
Next-Gen Payments Intelligence in Action: Customer Results $100,000 worth of additional accepted transactions The use of positive profiling during peak season reduced decline rates by 59%. Applying this feature results in $100,000 worth of additional accepted transactions each month. Increased reven
Slide 42: Payments Intelligence in Action: Customer Results
Next-Gen Payments Intelligence in Action: Customer Results $450,000 more per month in transactions Using the Global Time on File Profile indicator, this customer was able to accept $450,000 more per month in transactions. $2.8 million in additional transaction value Applying positive profiling, this
Slide 43: Payments Intelligence in Action: Customer Results
Next-Gen Payments Intelligence in Action: Customer Results $13.7 million being allowed to flow through without friction The use of four positive profiling rules identified that 25% of this customer’s volume was proven to be SAFE transactions (accuracy rate of 99.66%). This equated to $13.7 million b
Slide 44: eCommerce Payments
UNIVERSAL NAC PAYMENTS. eCOMMERCE PAYMENTS
Slide 45: Market Growth in eCommerce and mCommerce
Market Growth in eCommerce and mCommerce 2020 Nearly one-third of U.S. smartphone users will use proximity payments at least once every six months In China, mobile payments represent 68.4% of the market share of total eCommerce eCommerce and mCommerce growth globally 19% CAGR 70+% of global cross-bo
Slide 46: ACI Omni-Channel Payments Solution
Omni-channel payments services ACI Omni-Channel Payments Solution In-Store Payments eCommerce and mCommerce EMV P2PE Tokenization Asset Manager Check Processing Proprietary Charge Gift Card Integrated Fraud Protection Network Interfaces Secure Payment Forms Device Driving Advanced Least Cost Routing
Slide 47: Delivering Global Coverage
The largest number of endpoints, connecting to traditional payments, alternative payments and acquirers – enabling rapid cross-border expansion Delivering Global Coverage ALTERNATIVE PAYMENTS OTHERS PREPAYMENT WALLET ONLINE TRANSFER MOBILE INVOICE CARDS CREDIT DEBIT PRE-PAID DIRECT DEBIT INSTALLMENT
Slide 48: Enabling a Compelling Shopper Experience
Enabling a Compelling Shopper Experience One-click checkout gives repeat shoppers a simpler experience. Responsive web design ensures shoppers they are buying from a legitimate business. Mobile- and tablet-optimized payment solutions that support all relevant payment methods increase conversion rate
Slide 49: ACI mCommerce SDK
Mobile is becoming the leading commerce channel favored by consumers. Native apps are ideal for repeat customers (with highest spend). Provide the best possible customer checkout experience in a native app Optimize brand perception and maximize conversion Merchants need help to keep up with the rapi
Slide 50: ACI Merchant Payments Value Proposition
ACI Merchant Payments Value Proposition ESTABLISHED LEADER MAXIMUM FLEXIBILITY SECURE PLATFORM Trust NFRs Core Competencies Time-to-Market One-Stop Shop Ecosystem PCI Descoping Fraud Management Cloud Delivery Omni-Channel Global Multi-acquirer Open APIs APMs
Slide 51: The Forrester Wave: Global Merchant Payment Providers
The Forrester Wave™: Global Merchant Payment Providers, Q3 2018 “ACI Worldwide provides vast global reach with superior flexibility.” “ACI is a best fit for retailers that want a global ‘payments integration hub’ that provides maximum flexibility to manage multiple acquirers, payment methods, and te
Slide 52: Real-Time Payments
UNIVERSAL NAC PAYMENTS. REAL-TIME PAYMENTS
Slide 53: Real-Time Payments Around the Globe
Real-Time Payments Around the Globe Live real-time countries Planned go-live in 2018-2019 In discussion or design
Slide 54: UP Real-Time Payments Strategy
Four key pillars of our strategy UP Real-Time Payments Strategy RTGS plus immediate payments and SWIFT gpi Additional central infrastructure endpoints License and platform offering Expanded partner ecosystem
Slide 55: ACI: Proven in Real-Time Payments Globally
FASTER PAYMENTS: U.K. Over 60% of U.K. direct participants On-premise and multi-tenant cloud access Live since 2008 Vast experience in implementing and managing real-time payments ACI: Proven in Real-Time Payments Globally FAST: SINGAPORE Gateway plus business packs Stand-in, offline processing Live
Slide 56: Solution Overview
Solution overview UP Real-Time Payments Solution is available today, including a starter pack for TCH and Zelle Maintained to industry standards, globally and locally In use and proven around the world for multiple schemes ISO 8583, ISO 20022 and proprietary messaging frameworks ACI products are bui
Slide 57: For a Long Time, Payments in Banking Looked Like This
WHOLESALE RETAIL For a Long Time, Payments in Banking Looked Like This
Slide 58: But the Lines Are Blurring
WHOLESALE RETAIL But the Lines Are Blurring...
Slide 59: And Change Is Coming
And Change Is Coming… A2A Real-Time Digitization Analytics Radical Transparency Open APIs Distributed Ledgers Internet of Things Always On Cloud eCommerce
Slide 60: Demo: Real-Time Payments
UNIVERSAL NAC PAYMENTS. DEMO: REAL-TIME PAYMENTS
Slide 61: UP Solutions In Action
UP Solutions In Action Great user experience Powerful services API management and orchestration ACI technologies
Slide 62: Demo: Gift Certificate
UNIVERSAL NAC PAYMENTS. DEMO: GIFT CERTIFICATE
Slide 63: UP Solutions In Action
UP Solutions In Action Omni-channel commerce Great user experience Powerful services Mobile point of sale API management and orchestration ACI technologies
Slide 64: Executing through our P&L Model
Craig Saks Chief Operating Officer Executing through our 2 P&L Model
Slide 65: Solution Customer Segments
AC UNIVERSAL PAYMENTS. SOLUTION CUSTOMER SEGMENTS
Slide 66: ACI On Demand and ACI On Premise Transformation
ACI On Demand: Transformation to Platform Business ACI On Premise: Public Cloud Option, Lower TCO Maturation of Customer Success Focus on Speed and Responsiveness
Slide 67: ACI On Premise Customer Insights
Mandy Killam Group President, ACI On Premise ACI On Premise Customer Insights
Slide 68: Delivering Value to Our Customers Globally
Any payment Delivering Value to Our Customers Globally Activating UP Retail Payments UP Real-Time Payments & UP Retail Payments Legacy Retail and MTS footprint
Slide 69: Customer Priorities for Value Creation
Every possibility Customer Priorities for Value Creation INNOVATE MANAGE GROW Open APIs Real-Time
Slide 70: Customer Priorities for Value Creation
Every possibility Customer Priorities for Value Creation INNOVATE MANAGE GROW Open APIs Real-Time LINUX CONSOLIDATION CLOUD REAL-TIME CONVERGENCE AGILE DIGITAL CO-INNOVATION SOCIAL
Slide 71: Leveraging Common Assets
Leveraging common assets Technology Modernization Delivering Transaction Growth Endpoints Services Non-Functional Requirements
Slide 72: BMO Customer Profile
BMO Customer Profile CHALLENGE Drive payments modernization and improve customer experience, delivered through a world-class payment hub. SOLUTION ACI’s UP Real-Time Payments solution allows BMO to address its Real-Time Gross Settlement SWIFT messaging, ACH and real-time payment needs with a single,
Slide 73: ABN AMRO Customer Profile
ABN AMRO Customer Profile CHALLENGE Accelerate payments innovation and better satisfy the demands of growing consumer and corporate customer bases. SOLUTION ABN AMRO is a long-term ACI customer that also utilizes the UP Payments Risk Management solution. With UP Retail Payments, ABN AMRO achieved co
Slide 74: Q&A
Adam Bremner SVP, Banking and Financial Services Q&A
Slide 75: Open Source and Cloud Advantages
Open Source and Cloud Advantages REDUCED TCO $ FASTER TIME TO MARKET $
Slide 76: Reduced TCO
Reduced TCO 43% savings vs. Oracle Systems, cTree 66% savings vs. Linux, Oracle 86% savings vs. HPE Non Stop, Enscribe 86% savings vs. IBM System-p, cTree 92% savings vs. IBM System-z, DB2 *For large customers (1,000 TPS average) Potential savings when switching to Linux + PostgreSQL from alternate
Slide 77: Public Cloud's Role in Payments Platform Modernization
Public cloud’s role in payments platform modernization Regulatory Risk –Formalization of regulatory support in specific markets Migration complexity of legacy platforms onto cloud Encryption – Availability of cloud ready HSM solutions Multi-tenancy – Added layer of complexity for payments as a servi
Slide 78: Selected Examples of Cloud Deployment
Selected examples of cloud deployment Wholesale Trading and Risk Modeling Solutions in the Cloud Retail Banking, / Mobile Banking App on the Cloud Online Payment Providers/Payment Switches in the Cloud Card Issuing and Acquiring Platform / Payments Processing in the Cloud
Slide 79: Elements Clients May Consider in Making a Choice
Elements clients may consider in making a choice Total cost of ownership Cost of license Cost of infrastructure Cost of operations Pricing model Upfront cost Performance Availability Ability to scale rapidly Ability to process peak transaction volume Regulation Location of data Regulatory access Pro
Slide 80: ACI On Demand Customer Insights
Dan Frate Group President, ACI On Demand ACI On Demand Customer Insights
Slide 81: Payments Intelligence: Balancing Fraud Prevention with Customer Experience
Payments Intelligence Balancing Fraud Prevention with Customer Experience Emerging fraud threats require response times with better data analytics More than 1 in 3 use compromised account less frequently after fraud Fraud costs 2.9% of revenue for financial services companies Sources: ACI, LexisNexi
Slide 82: ACI On Demand Customer Q&A
Amala Duggirala Enterprise Chief Information Officer ACI On Demand Customer Q&A
Slide 83: Omni-Channel Payments for an Any Channel World
Investments in eCommerce and mCommerce driving change Omni-Channel Payments for an Any Channel World 53% of merchants say that cloud models can increase their ability to launch new products and services Smartphone mCommerce will surpass $117 billion in 2018 — that’s 23% of U.S. online retail sales 1
Slide 84: ACI On Demand Customer Q&A
Josh Birdwell Senior Director Guest Systems & Applications Development ACI On Demand Customer Q&A
Slide 85: The Evolving Cash Management Industry
Digital payments The Evolving Cash Management Industry Cash management technology is evolving at a faster pace than ever before Banking platforms must be configurable without the need for heavy customization 81% of banks expect cash management technology spend to increase over the next 2 years Sourc
Slide 86: ACI On Demand Customer Q&A
Steve Fricano CIO, Corporate Banking ACI On Demand Customer Q&A
Slide 87: Executing through our P&L Model
Craig Saks Chief Operating Officer Executing through our 2 P&L Model
Slide 88: Solution Customer Segments
AC UNIVERSAL PAYMENTS. SOLUTION CUSTOMER SEGMENTS
Slide 89: Q&A
Q&A Philip Heasley President and CEO Scott Behrens Chief Financial Officer Craig Saks Chief Operating Officer
Slide 90: Closing
John Kraft Vice President, Investor Relations and Strategic Analysis Closing
Slide 91: Appendix
UNIVERSAL NAC PAYMENTS. APPENDIX
Slide 92: 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 significant transaction-related expenses, as well as other significant non-cash expenses such as depreciation, amortization, and non-cash compensation, that we believe a
Slide 93: Non-GAAP Financial Measures
Non-GAAP Financial Measures
Slide 94: 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 “believes,” “will,” “expects,” “a
Slide 95: Forward-Looking Statements Risk Factors
All of the foregoing forward-looking statements are expressly qualified by the risk factors discussed in our filings with the Securities and Exchange Commission. Such factors include, but are not limited to, increased competition, the success of our Universal Payments strategy, demand for our produc