Slide 1: December 31, 2007 Quarterly and Year End Results
December 31, 2007 Quarterly and Year End Results February 19, 2008
Slide 2: Safe Harbor For Forward-Looking Statements
2 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
3 • Richard Launder, President, Global Operations • Mark Vipond, President, Global Product • Henry Lyons, Chief Financial Officer • Q&A: Phil Heasley, Richard Launder, Henry Lyons and Mark Vipond Agenda
Slide 4: Business Operations Review - Richard Launder
4 December 31, 2007 Quarter Richard Launder, President, Global Operations Business Operations Review
Slide 5: Q4/2007 Sales Results
5 Q4/2007 Sales Results • Q4 sales exceeded expectations –EMEA continues to be strong –US improvement • 17 new customers • New country – Kenya • Customer loyalty and retention
Slide 6: 2007 Sales Results
6 2007 Sales Results • New Customers – 31 new customers in 2006 – 49 new customers in 2007 • New Applications – 147 new applications in 2006 – 212 new applications in 2007 • Focus on payments market
Slide 7: 2007 Channel Update
7 2007 Channel Update • Americas – Good progress with AOD in the US – Gaining traction in Latin America – A number of sizable renewals occurred despite overall banking sector market turbulence • EMEA – Another year of strong growth – Significant sales wins in the Middle East – Renewed momentum in Fr
Slide 8: Sales Outlook for 2008
8 Sales Outlook for 2008 • IBM sales – Huge potential, particularly replacing in house systems • well in excess of 100 major banks – ACI Base 24-eps in 23 IBM customers today – Geographic expansion • China, Japan, France, Spain, Germany – Joint planning, customer campaigns, etc – Increased bandwidth
Slide 9: Business Operations Review - Mark Vipond
9 December 31, 2007 Quarter Mark Vipond, President, Global Product Business Operations Review
Slide 10: ACI Customers by Geography/Product
10 ACI Customers by Geography/Product Q3 2007 Product Customers Payment Engines Retail Banking Wholesale Banking Banking United States 67 95 23 45 56 1 Canada/Latin America 57 2 21 11 32 0 EMEA 143 6 63 58 87 3 Asia/Pacific 82 12 26 28 73 1 Retail United States 59 0 2 3 23 0 Canada/Latin America 22
Slide 11: ACI Customers by Region, Industry and Solution Set
11 ACI Customers by Region, Industry and Solution Set – December 31, 2007 • ACI customers use an average of 2.7 products. • 17 new customers added in quarter ended December 31, 2007 • 49 new customers added in year ended December 31, 2007 • Total of 821 ACI customers. • Total of 2,202 products deplo
Slide 12: Commentary on 2007 Operations
12 Commentary on 2007 Operations • Areas of Progress – BASE24-eps deployments – AOD operation improvements – Global resource management (e.g. Romania, India, Malaysia) • Areas with Challenges – Solution deployments vs. product deployments – Implementation margins – Product Life Cycle management
Slide 13: 2008 Outlook
13 2008 Outlook • IBM Impacts to Operations – Product directions – Migration processes and services – Enablement • Technical headcount investment • Aggression in Product Life Cycle Management • Wholesale Payment Hub Opportunity • Solutions and Integration Focus • Implementation and Services Margin I
Slide 14: Financials Review - Henry Lyons
14 Financials Review December 31, 2007 Quarter Henry Lyons, Chief Financial Officer
Slide 15: Key Takeaways from the Quarter
15 Key Takeaways from the Quarter . Sales were strong overall; good contributions from UK and USA OFCF of $21.1 million in the quarter versus $6.7 million in December 2006 quarter Includes net $9.3 million from IBM Sequential backlog growth of $39 million Revenue of $101.3 million in the current qua
Slide 16: Key Takeaways from the Year
16 Key Takeaways from the Year Strong sales OFCF of $52.5 million for the 2007 year versus $39.3 million in calendar 2006, growth of 33% Includes net $9.3 million from IBM for 2007 Deferred revenue rose $41.9 million over prior year-end compared to 2006 deferred revenue increase of $0.7 million Defe
Slide 17: OFCF and Revenue Slippage into 2008
17 OFCF and Revenue Slippage into 2008 • Revenue impact of approximately $15-20 million from multiple banks who were participants in Faster Pay and middle east switch; deals were expected to be completed in 2H 2007 but expected to occur in 1H 2008 • Pay upfront deal renewals with large US banks in 2
Slide 18: 2008 Guidance
18 2008 Guidance – Approximately $200 million for the combined revenue and 60-month backlog metric in 2008 compared to combined revenue and backlog growth of $157 million in calendar year 2007 Revenue and Backlog Growth (“Rev-log”) – Approximately $65 million inclusive of ~$24 million of capex/inter
Slide 19: Items impacting 2008 financial model
19 Items impacting 2008 financial model • Total sales to grow ~5% year over year to ~ $450 million • ~80% of all 2008 sales to be new client/new applications versus term extensions as compared to ~70% new client/new apps in 2007 – Sales and revenue higher in second half of the year – First quarter a
Slide 20: 2009-2011 Outlook
20 2009-2011 Outlook • Revenue/backlog growth in the low double digits • Operating free cash flow to grow at 1.5 x revenue growth – excludes impact of IBM incentives • Work towards ~20% operating margin over planning horizon
Slide 21: 2008 Opportunities and Risks
21 2008 Opportunities and Risks • Opportunities: – Higher sales of new products/new applications – IBM • Risk: – Sales mix/timing – Services Profitability/Implementation cost of new business
Slide 22: Appendix
Appendix
Slide 23: Operating Free Cash Flow
23 Operating Free Cash Flow ($millions) 5.9 0.0 Net after-tax cash payments associated with P &H 9.3 Net Proceeds from IBM Alliance 5.3 0.0 Net after-tax cash payments associated with class action settlement 0.0 0.8 Net after-tax cash payments associated with termination of jet lease 0.0 2.7 Employe
Slide 24: 60-Month Backlog
24 60-Month Backlog ($ millions) December 31, September 30, December 31, Table 2: Backlog 60- Month (millions) 2007 2007 2006 Americas $733 $717 $686 EMEA 504 489 431 Asia/Pacific 143 135 125 Backlog 60-Month $1,380 $1,341 $1,242 Backlog breakout ACI Organic $1,367 $1,331 $1,242 Acquisitions 13 10 0
Slide 25: Revenues by Channel
25 Revenues by Channel ($ millions) $93.3 $101.3 Revenues 8.6 8.6 Asia/Pacific 37.5 43.1 EMEA $47.2 $49.6 Americas 13.2 13.6 Americas International $34.0 $36.0 United States Revenues: 2006 2007 Quarter Ended December 31,
Slide 26: Monthly Recurring Revenue
26 Monthly Recurring Revenue ($ millions) $51.5 $56.6 Monthly Recurring Revenue 7.6 8.4 Processing Services 28.7 32.2 Maintenance fees $15.2 $16.0 Monthly license fees 2006 2007 Quarter Ended December 31,
Slide 27: Deferred Revenue
27 Deferred Revenue ($ millions) $99.4 $100.9 $127.3 $142.8 Total Deferred Revenue $20.4 $22.4 $30.3 $27.3 Long Term Deferred Revenue 20.4 $22.4 30.3 $27.3 ACI Organic $0.0 $0.0 $0.0 $0.0 Acquisitions $79.0 $78.5 $97.0 $115.5 Short Term Deferred Revenue 79.0 $78.5 96.0 $113.5 ACI Organic $0.0 $0.0 $
Slide 28: Deferred Expenses
28 Deferred Expenses ($ millions) $3.9 $5.9 $8.5 $11.4 Total Deferred Expenses 3.9 $5.9 8.4 $11.3 ACI Organic $0.0 $0.0 $0.1 $0.1 Acquisitions 2006 2006 2007 2007 September 30, December 31, September 30, December 31, Quarter Ended
Slide 29: Organic vs. Acquired Business Performance
29 Organic vs. Acquired Business Performance ($ millions) 0.5 IBM-related Pro Fees (2.1) 2006 LTIP Reversal 1.3 Corporate Jet (2.6) Stock Options Prof Fees -- -- 0.2 -- Other Employee $2.9 $15.5 $98.4 $101.3 2007 Quarter $0.9 $14.0 $10.1 $8.0 Net Change -- -- 0.5 -- Employee Related Costs -- -- (0.2
Slide 30: Non-Cash Compensation, Acquisition Intangibles and Non-Recurring Items
30 Non-Cash Compensation, Acquisition Intangibles and Non-Recurring Items * Tax Effected at 35% $4.9 $0.13 $2.1 $0.06 Total: 1.1 0.03 (0.0) (0.00) Non-cash equity-based compensation 2.1 0.05 1.9 0.05 Amortization of acquisition-related intangibles and software $1.7 $0.04 $0.2 $0.01 Non-recurring ite
Slide 31: Other Income/Expense
31 Other Income/Expense $1.3 ($0.9) ($2.5) ($1.0) Total Other Income (Expense) (0.1) 0.3 (0.1) 0.2 Other 0.0 0.0 (2.1) (2.5) SFAS 133 (0.2) (0.6) 0.5 1.9 FX Gain / Loss (0.1) (1.4) (2.0) (1.3) Interest Expense $1.7 $0.9 $1.2 $0.8 Interest Income September 30, 2006 December 31, 2006 September 30, 200
Slide 32: 2007 Share repurchase program
32 2007 Share repurchase program • Total Open Year 2007--1,622,386 – December 2007 quarter – 166,472 – Total Shares Repurchased in Program since 2005 -- 4,409,729 • CY 2007 Average Price per Share (open market): $28.65 • Total Vested Options Settled Calendar 2007- 521k
Slide 33: Non-GAAP Financial Measures
33 Non-GAAP Financial Measures • This presentation includes operating free cash flow and backlog estimates. ACI is presenting these non-GAAP guidance measures to provide more transparency to its earnings, focusing on operations before selected noncash items, operating free cash flow and backlog. • A
Slide 34: Non-GAAP Financial Measures
34 Non-GAAP Financial Measures • ACI also includes backlog estimates which are all software license fees, maintenance fees and services specified in executed contracts, as well as revenues from assumed contract renewals to the extent that we believe recognition of the related revenue will occur with
Slide 35: Forward Looking Statements
35 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 “be
Slide 36: Forward Looking Statements
36 Forward Looking Statements • The risks identified in the Company’s filings with the Securities and Exchange Commission include: • Risks associated with the restatement of the Company’s financial statements; • Risks associated with the Company’s performance which could be materially adversely affe
Slide 37: Every Second. Every Day.
MI EVERY SECOND. EVERY DAY.