Slide 1: June 30, 2008 Quarterly Results
June 30, 2008 Quarterly Results August 12, 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 • Phil Heasley, Chief Executive Officer • Ron Totaro, Senior Vice President, Office of the COO • Scott Behrens, Principal Financial Officer • Q&A: Phil Heasley, Richard Launder, Mark Vipond, Ron Totaro and Scott Behrens Agenda
Slide 4: Strategic Plan and Management Updates
4 Strategic Plan and Management Updates Phil Heasley, Chief Executive Officer
Slide 5: Business Performance Quarter and YTD
5 Business Performance Quarter and YTD • Business performing well from revenue/sales perspective – Committed to moving revenue out of deferred / backlog into current period revenue – Focused on margin improvement – The sales pipeline remains strong, though sales cycle is extended – We are now live o
Slide 6: Management Updates & Restructuring
6 Management Updates & Restructuring • Departure of Richard Launder (Feb 2009) and Mark Vipond (Aug 2008) – Global sales and product businesses remain ready for future growth • Ron Totaro- who joined ACI in March 2008- is moving towards implementation of our strategic plan – Geographic channels and
Slide 7: Business Sales Review
7 Ron Totaro, Senior Vice President, Office of the COO Business Sales Review
Slide 8: Q2 2008 Sales Results
8 Q2 2008 Sales Results • Q2 2008 demonstrated strong new account/new app sales performance – Increased smaller transactions signed, indicative of both broader client reach as well as focus on large new account deals with IBM – Top 5 customers accounted for 23% of sales performance in the quarter as
Slide 9: Q2 2008 Channel Sales Results
9 Q2 2008 Channel Sales Results Sales (net of Term Extensions) Term Extension Sales Total Sales Channel Qtr. Ended June 08 Qtr. Ended June 07 % Growth or Decline Americas 38,643 37,136 4% EMEA 40,406 26,549 52% Asia-Pacific 5,728 5,946 -4% Total Sales (Net of Term Ext.) 84,778 69,632 22% Sales Net o
Slide 10: IBM Alliance Performance
10 IBM Alliance Performance • Results meeting expectations through 1H08 – System z optimized versions of BASE24-eps, Proactive Risk Manager now generally available – IBM-related sales ahead of plan • Q2 key deals closed: EMEA: 1 on System z , Asia- Pacific: 2 on System p – High levels of sales activ
Slide 11: Historic Sales By Quarter 2007-2008
11 Historic Sales By Quarter 2007-2008 Quarter-Ended Total Economic Value of Sales New Accounts New Applications Add-On Business inc. Capacity Upgrades & 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 $49,803 $15,588 9% 14
Slide 12: Customers by Geography/Product Q2 2008
12 Customers by Geography/Product Q2 2008 Product Customers Payment Engines Retail Banking Wholesale Banking Banking United States 63 93 25 44 55 1 Canada/Latin America 58 1 22 11 33 0 EMEA 146 6 66 60 91 4 Asia/Pacific 83 14 27 29 72 1 Retail United States 60 0 2 3 24 0 Canada/Latin America 21 0 0
Slide 13: ACI Solution Updates – Q2 2008
13 ACI Solution Updates – Q2 2008 • Retail Payment Solutions – BASE24-eps Release 8.2 available • Optimized on IBM System z and Blue Stack – Legacy payment migration effort continues as planned • Wholesale Payment Solutions – Refinement of 3-5 year plan for solutions – SEPA and Convergence remain do
Slide 14: Geography Business Update – Q2 2008
14 Geography Business Update – Q2 2008 • Americas – Latin/South America market remains strong- sold new payment engine solutions in both Ecuador and in Brazil – North American market is stable – two Enterprise BankerTM deals signed (Sterling and large investment bank) – E-payment transaction volumes
Slide 15: Financials Review
Financials Review Scott Behrens, Principal Financial Officer
Slide 16: Key Takeaways from the Quarter
16 Key Takeaways from the Quarter . Revenue growth of 11% at $109.2 million in the current quarter versus $98.1 million in June 2007 quarter . $13.5 million attributable to Faster Payments (license fees + services) . Growth of $3.7 million in monthly recurring revenues versus prior year quarter . De
Slide 17: Takeaways from the Quarter (cont)
17 Takeaways from the Quarter (cont) . Overall rate of deferred revenue growth has slowed as we move backlog into current period GAAP • Short term deferred revenue shrunk to $121.1 million as we booked Faster Payments deals in the UK and Middle East switch revenue as well as Mastercard in US . Expen
Slide 18: Backlog is Still a Significant Contributor to Current Period Revenue
18 Backlog is Still a Significant Contributor to current period Revenue • Continue to see backlog generating most of GAAP revenue in Q2 2008 due to: – Services release as large deals moved out of backlog – Implementation & professional services contributing 28% of Q2 2008 revenue versus an 18% contr
Slide 19: Revenue by Product Category 05-06-07-08
19 Revenue by Product Category 05-06-07-08 • Business shifting away from non-recurring license driven revenue • Monthly recurring revenue is growing in absolute terms as is implementation and professional services – Monthly recurring revenue- inclusive of quarterly recurring revenue- has risen signi
Slide 20: Guidance Update
20 Guidance Update • Sales – 95-98% of original expectations – ~2-5% lower than earlier view or approximately $430-440 million due to extended sales cycles • OFCF lower due to sales mix; new accts/new apps require heavier use of cash in service implementation than term extensions • Rev-log reduced s
Slide 21: Appendix
Appendix
Slide 22: Operating Free Cash Flow
22 Operating Free Cash Flow ($ millions) $11.7 $(10.9) Operating Free Cash Flow 1.9 0.0 Net after-tax cash payments associated with stock option cash settlement 0.0 (1.5) Less alliance Technical enablement expenditures (1.2) (6.0) Less capital expenditures Selected non-recurring items: $ 11.0 $(3.4)
Slide 23: 60-Month Backlog
23 60-Month Backlog ($ millions) $1,304 $1,397 $1,427 Backlog 60-Month 1,181 1,241 1,283 ACI Other $123 $156 $144 ACI Deferred Revenue $1,304 $1,397 $1,427 Backlog 60-Month 133 151 157 Asia/Pacific 467 522 533 EMEA $704 $724 $737 Americas 2007 2008 2008 June 30, March 31, June 30, Quarter Ended
Slide 24: Revenues by Channel
24 Revenues by Channel ($ millions) $98.1 $109.2 Revenues 9.3 9.8 Asia/Pacific 36.5 46.9 EMEA $52.3 $52.5 Americas 19.3 12.3 Americas International $33.0 $40.2 United States Revenues: 2007 2008 Quarter Ended June 30,
Slide 25: Monthly Recurring Revenue
25 Monthly Recurring Revenue ($ millions) $54.6 $58.3 Monthly Recurring Revenue 7.8 7.6 Processing Services 31.3 32.9 Maintenance fees $15.5 $17.8 Monthly license fees 2007 2008 Quarter Ended June 30,
Slide 26: Deferred Revenue & Expenses
26 Deferred Revenue & Expenses ($ millions) $121.7 $122.8 $155.7 $144.3 Total Deferred Revenue $6.1 $6.3 $12.4 $11.0 Total Deferred Expenses $25.3 $25.7 $20.3 $23.2 Long Term Deferred Revenue $96.4 $97.1 $135.4 $121.1 Short Term Deferred Revenue 2007 2007 2008 2008 March 31, June 30, March 31, June
Slide 27: Business Performance
27 Business Performance ($ millions) -- -- (1.6) -- Employee-Related -- -- (4.7) -- Stock Options Prof Fees -- -- 3.7 -- IBM IT Outsourcing Transition Costs $(1.4) $(11.4) $108.0 $109.2 2008 Quarter $(1.6) $(12.5) $14.7 $11.1 Net Change (1.6) ($12.5) $21.0 $11.1 ACI excluding non-recurring items $0.
Slide 28: Other Income/Expense
28 Other Income/Expense ($ millions) ($0.9) ($2.0) ($1.0) $2.0 Total Other Income (Expense) 0.0 0.0 (0.2) 0.1 Other 0.0 0.0 (3.7) 2.9 FAS 133 Derivative (0.3) (1.5) 3.7 (0.7) FX Gain / Loss (1.6) (1.4) (1.4) (1.0) Interest Expense $1.0 $0.9 $0.6 $0.7 Interest Income March 31, 2007 June 30, 2007 Marc
Slide 29: Sales by Channel and Product Division
29 Sales by Channel and Product Division ($ millions) $99.9 14.2 5.2 24.9 $55.6 $99.9 7.6 42.4 $49.9 June 30, 2008 $85.2 $91.0 $131.6 $63.8 Total Sales 10.4 9.6 5.3 14.0 Asia Pacific 32.7 42.4 43.3 30.6 EMEA $42.1 $39.0 $83.0 $19.2 Americas Sales by Channel: June 30, 2007 September 30, 2007 December
Slide 30: Non-GAAP Financial Measures
30 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 operating free cash flow and backlog • ACI is presenting operating free cash flow,
Slide 31: Non-GAAP Financial Measures
31 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 32: Forward-Looking Statements
32 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 33: Forward-Looking Statements
33 Forward-Looking Statements All of the foregoing forward-looking statements are expressly qualified by the risk factors discussed in our filings with the Securities and Exchange Commission. For a detailed discussion of these risk factors, parties that are relying on the forward-looking statements
Slide 34: Forward-Looking Statements
34 Forward-Looking Statements • Risks associated with the IBM alliance, including our and/or IBM’s ability to perform under the terms of that alliance and customer receptiveness to the alliance • Risks associated with future acquisitions and investments which could materially adversely affect us; •
Slide 35: Forward-Looking Statements
35 Forward-Looking Statements • Risks associated with our announcement of the maturity of certain legacy retail payment products and our ability to migrate customers to our next generation products; and • Risks associated with the our recent outsourcing agreement with IBM which may not achieve the l
Slide 36: Every Second. Every Day.
MI EVERY SECOND. EVERY DAY.