Aci Worldwide, Inc. · NASDAQ:ACIW
Aci Worldwide — Wedbush Morgan Conference (May 2008)
40 slides from Aci Worldwide's conference presentation, May 21, 2008
Slide 1: Wedbush Morgan Conference
Wedbush Morgan Conference Phil Heasley, Chief Executive Officer May 21, 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: Topics
3 Topics • Business Overview • ACI-IBM alliance market opportunity • Financial Metrics
Slide 4: The Global Leader in Payment Solutions
4 The Global Leader in Payment Solutions
Slide 5: ACI Worldwide Payments Market Forecast
5 Global Electronic Transactions (bn per year) 1999 2004 2009 World 117.4 209.8 384.2 Nafta 44.9 78.3 140.0 South America 3.8 12.5 24.7 Western Europe 50.2 74.8 111.9 Eastern Europe 3.8 9.7 25.8 Asia Pacific 12.9 31.1 74.8 Middle East/Africa 1.8 3.3 6.9 Electronic Transactions – Growth by Region 12.
Slide 6: Market Needs
6 Market Needs • Productivity and efficiency – Convergence of payment system silos – Reduced complexity – Cost elimination • Enhancement of services – New channels (e.g., mobile payments) – Chip technology – High-availability attributes • Comprehensive solutions in lieu of products • Integrated/ente
Slide 7: ACI is the Clear Gold Standard for Payments
7 ACI is the Clear Gold Standard for Payments Top 500 Banks – Retail Payment Hubs 25% Outsource 41% Software Vendors 34% In-house Developed ACI • Plus 47 of the top 500 banks running ACI Proactive Risk Manager for fraud detection • Plus 14 of the top 25 U.S. banks running the ACI Money Transfer Syst
Slide 8: ACI has customers in countries
8 ACI has customers in 88 countries Strategic Centers Regional Sales Office Distributors/Sales Agents Country with ACI customers Americas 1284 Employees 428 Customers 18 Countries Asia/Pacific 296 Employees 159 Customers 14 Countries EMEA 615 Employees 236 Customers 56 Countries
Slide 9: ACI Product History
9 ACI Product History 1975 1982 1985 1990 1995 2000 2005 2008 BASE24-atm TRANS24 Payments Manager ICE Smart Chip Manager Proactive Risk Manager OCM24 MTS ASx Trade Finance Enterprise Banker ON/2 OpeN/2 Retail Banking Wholesale Banking Risk Management Tools & Infrastructure BASE24-eps Network Express
Slide 10: ACI Solutions Today
10 ACI Solutions Today • Common services – Message processing – Work flow processing – Service bus and registry – Foundation services • Reporting • Application management • Operational services – Audit and event management – System command and control • Database services – Information management – D
Slide 11: ACI Future Solution - Enterprise Payments Solution (EPS)
11 ACI Future Solution - Enterprise Payments Solution (EPS) • SOA based solution and architecture • Convergence of Wholesale, Retail and Risk Management Payment services • Long-term vision for ACI and ACI customers • Evolution and risk management will be the key tenets of deployment
Slide 12: ACI Customers by Geography/Product Q1 2008
12 ACI Customers by Geography/Product Q1 2008 Product Customers Payment Engines Retail Banking Wholesale Banking Banking United States 64 93 24 45 56 1 Canada/Latin America 55 2 21 11 33 0 EMEA 144 6 65 57 91 3 Asia/Pacific 82 14 27 28 72 1 Retail United States 60 0 2 3 23 0 Canada/Latin America 22
Slide 13: Serving the Largest Banks in the World
13 Serving the Largest Banks in the World
Slide 14: ACI has 808 customers across segments and solutions
14 0 50 100 150 200 250 300 350 400 450 Customers Finance Retail Processors Other ACI has 808 customers across segments and solutions 0 50 100 150 200 250 300 350 400 450 500 Customers Retail Payment Engines Wholesale Payment Engines/EB Risk Mgt • ACI customers use an average of 2.7 products • ACI h
Slide 15: EMEA – Three Discrete Sectors
15 EMEA – Three Discrete Sectors • Developed market – EU + Norway, Switzerland – Established (debit) card market – Established wholesale payment infrastructure • Emerging market – Eastern Europe, Middle East, Russia, North Africa – Rapidly growing volumes – Less established wholesale payment systems
Slide 16: Single Euro Payment Area (SEPA)
16 Single Euro Payment Area (SEPA) • SEPA spend by Europe's banks to top EUR8 billion • The top 100 banks in Europe are projected to spend more than EUR3 billion to comply with EU requirements for a SEPA, according to a survey conducted by Accenture. Researchers questioned 47 senior payments experts
Slide 17: The Asian Market Opportunity
17 The Asian Market Opportunity • China: “One country, two systems” – 30,000 banks – Fragmented and regionalized payment system – Chinese National Advanced Payment System or “CNAPS” – China Union Pay or “CUP” – SAR of Hong Kong – Bank consolidation and internationalization • India – Strong focus on
Slide 18: Emerging Latin America
18 Emerging Latin America • 21 countries, 535 million people, 60% unbanked • ATM penetration rates at 1/6 to 1/2 of U.S. • POS penetration rates at 1/30 to 1/10 of U.S. • Faster growth in electronic payments forecast Key opportunities: o Economic growth o Shift to electronic payments o Age of legacy
Slide 19: IBM Alliance
IBM Alliance
Slide 20: Alliance Overview
20 Alliance Overview • ACI enhancing its wholesale and retail payment solutions to take full advantage of IBM hardware, software and services • ACI and IBM dedicating a worldwide team of sales and technical specialists to sell combined solutions on System z • The formation of a "migration factory" t
Slide 21: What this Means to ACI
21 What this Means to ACI • Accelerates and strengthens ACI's strategy to deliver optimized end-to-end payments solutions – System z provides an ideal platform for the realization of our IT consolidation / payments convergence strategy – Proximity to core systems will enable more robust, efficient i
Slide 22: How Customers Benefit
22 How Customers Benefit • Comprehensive payments solution that reduces cost and complexity – Eliminates redundant payment services and data – Pre-packaged integration relieves the customer’s burden of integrating point solutions – Leverages existing operating environment – Reduces power consumption
Slide 23: ACI and IBM System z Market Coverage
23 Mega Large Medium Small Banks Running IBM System z Top 2000 Banks Worldwide • 164 Mega Banks (>$100BB) • 361 Large Banks (>$25BB) • 506 Medium Banks (>$10BB) • 969 “Small” Banks (>$3BB) ACI and IBM System z Market Coverage Banks Running ACI Payment Engines (Retail and Wholesale) Banks Running Pay
Slide 24: IBM Alliance Performance YTD
24 IBM Alliance Performance YTD • Deals – Signed Kasikorn bank on System p – A very large deal was signed with Sermepa, a large national switch in Spain. • selected BASE24-eps on System z, signed in May and will be recognized as Q2 sale • Sales Operations – Completed joint account planning for Prior
Slide 25: Financials
Financials Scott Behrens, Principal Financial Officer
Slide 26: The business is characterized by growing backlog and OFCF
26 The business is characterized by growing backlog and OFCF Q1 CY07 Q2 CY07 Q3 CY07 Q4 CY07 Q1 CY08 Sales 125,480 85,220 91,052 131,539 63,813 Revenue 89,948 98,109 84,872 101,282 92,591 60 Mo. Backlog 1,276,677 1,303,970 1,341,392 1,380,102 1,397,187 Rev-Log 34,447 40,637 34,064 46,702 19,729 OFCF
Slide 27: EBITDA (Adj.) & OFCF Trending
27 EBITDA (Adj.) & OFCF Trending ~ MM Guidance Q1 CY07 Q2 CY07 Q3 CY07 Q4 CY07 Q1 CY08 Net cash flows from operating activities $16.3 $11.0 ($1.5) $12.1 $46.5 Less Capital Expenditures 1.4 1.2 1.3 3.9 2.6 Plus IBM Proceeds -- -- -- 9.3 0.3 OFCF (post Capex & IBM) 14.9 9.8 (2.8) 17.5 44.2 Non-Recurri
Slide 28: Base24 EPS Large Customer Renewal
28 Base24 EPS “Large” Customer Renewal Typical Renewal Business Model (MLF) 1 2 3 4 5 “Enhanced Support” or “Normal Maintenance” % Effort Years Capacity Event Capacity Event % Revenue % OFCF Post Go-Live Opportunities: • Additional Functionality • Additional Capacity • Additional Services • Upgrade
Slide 29: Backlog is a Significant Contributor to current period Revenue
29 Backlog is a Significant Contributor to current period Revenue • Shift in product mix combined with higher recurring revenue as well as decreased sales of short term products led to greater reliance on backlog in Q1 2008 – Fewer Application Services (tools) sales – those products mature into curr
Slide 30: Deferred Revenue Metrics & Trending
30 Deferred Revenue Metrics & Trending In $ Thousands 15,000 30,000 45,000 60,000 75,000 90,000 105,000 120,000 135,000 Q1 CY07 Q2 CY07 Q3 CY07 Q4 CY07 Q1 CY08 Revenue Total Deferred Revenue (ST) Total Deferred Revenue (LT) Q1 CY07 Q2 CY07 Q3 CY07 Q4 CY07 Q1 CY08 Revenue 89,948 98,109 84,872 101,282
Slide 31: Implementation Project Life Cycle
31 Implementation Project Life Cycle Project Scoping 1 2 3 4 5 Years Detail Design High Level Design Development Integration / System Testing ~ 3 Months Implementation / User Acceptance Testing 2 4 6 8 10 Go Live! Deliver “Vanilla” System 90 Days Warranty “Enhanced Support” or “Normal Maintenance” B
Slide 32: P&L Product Margin Trending
32 P&L Product Margin Trending Software - Maintenance & Services Margins (4pt SMA) 50% 55% 60% 65% 70% 75% 80% 85% 90% Q1 CY07 Q2 CY07 Q3 CY07 Q4 CY07 Q1 CY08 Software margin Maintenance & Service margin Software margin (SMA) Maintenance & Service margin (SMA)
Slide 33: P&L Margin Trending
33 P&L Margin Trending *G&A Adjusted to exclude Amortization of Acquisition Intangibles + Non-Recurring Items Percentage of Total Revenue (4pt Simple Moving Average) 10% 12% 14% 16% 18% 20% 22% Q1 CY07 Q2 CY07 Q3 CY07 Q4 CY07 Q1 CY08 Research & Development Selling & Marketing General & Administrativ
Slide 34: Historical Acquisition Expenditures
34 Historical Acquisition Expenditures Name Time Enterprise Value Geography Rationale S2 Systems Jul '05 $37 U.S., EMEA, AP • Payments software • Consolidation Electronic Payment Systems AG May '06 30 Germany, Romania • Payments software • Germanic market • Offshore development P&H Solutions Aug '06
Slide 35: Non-GAAP Financial Measures
35 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 36: Non-GAAP Financial Measures
36 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 37: Non-GAAP Financial Measures
37 Non-GAAP Financial Measures • This presentation includes non-GAAP information: EBITDA and EBITDA Adjusted. EBITDA is defined as net income before interest, taxes, depreciation and amortization. EBITDA Adjusted is EBITDA less non-recurring items that are not likely to be indicative of the ongoing
Slide 38: Forward Looking Statements
38 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 39: Forward Looking Statements
39 Forward Looking Statements The risks identified in our filings with the Securities and Exchange Commission include: • Risks associated with the restatement of our financial statements; • Risks associated with our performance which could be materially adversely affected by a general economic downt
Slide 40: Every Second. Every Day.
[LOGO] EVERY SECOND. EVERY DAY.