Aci Worldwide, Inc. · NASDAQ:ACIW
Aci Worldwide — Investor Day (November 2014)
68 slides from Aci Worldwide's investor day presentation, Nov 12, 2014
Slide 1: Analyst Day 2014
Analyst Day 2014 Wednesday, November 12, 2014 Naples, Florida Exhibit 99.1
Slide 2: Safe Harbor For Forward-Looking Statements
Confidential 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
Slide 3: Agenda
Welcome Market Scan and Overarching Strategy ACI Vision Break Market and Solutions Strategy Taking UP to Market ACI Financials Q&A Lunch NOVEMBER 12, Agenda
Slide 4: Market Scan and Overarching Strategy
Market Scan and Overarching Strategy Carl Gustin EVP, Chief Marketing Officer
Slide 5: Understanding the Market and Setting the Strategic Imperatives
Understanding the Market and Setting the Strategic Imperatives
Slide 6: Understanding the Market Leads to Strategic Imperatives
Market Trends and Dynamics Scenarios/ Options Strategic Imperatives Gap Analysis/Actions Understanding the Market Leads to Strategic Imperatives Distilling months of research and hundreds of pages of information and data down to 12 strategic imperatives upon which to build our master, overarching st
Slide 7: ACI Strategic Imperatives
Online, real- time trumps all other trends. Cloud as a delivery model for payment systems is inevitable. Value proposition to replace legacy systems must be clear. Technology is key in addressing market pricing pressure. ACI Strategic Imperatives Online, single message payments represents true ubiqu
Slide 8: ACI Strategic Imperatives
Customer experience and brand are highly correlated. Online and brick-and- mortar experience is blurring and retailers must respond. Rapid growth in emerging markets will change the global payments landscape. Regulation is a pervasive, strategic driver of payments and an opportunity for ACI to lead
Slide 9: ACI Strategic Imperatives
Rapidly changing demographics will challenge bank marketing strategies. Bank account switching will increase without intervention. The payments ecosystem is vast and more localized. Impact of government- sponsored payment networks is significant. ACI Strategic Imperatives In the developed markets, t
Slide 10: Evolution of Strategy
Evolution of Strategy
Slide 11: Pervasive, Multi-year, Multi-layer, Company-wide Initiative
Every year brings new layers to address new issues or opportunities. Future versions do not obsolete or replace current or previous versions; they build on them. Is a Pervasive, Multi-year, Multi-layer, Company-wide Initiative That is the Heart of Our Strategy August 2014: Layer 3 ReD plus UP provid
Slide 12: ACI Universal Payments
Ubiquitous Information Rich Any Participant Any Channel Integrated Risk Mgmt Real-Time/ Instant Any Payment Type Any Geography ACI created in response to accelerated change in the payments industry. empowers customers to quickly leverage and profit from the disruption opportunity. ACI Universal Paym
Slide 13: ACI View Validated in Recent Media
ACI View Validated in Recent Media ACI has a multi-year lead in delivering immediate payments solutions today
Slide 14: Before: Customer Core Systems & Architecture
CUSTOMER CORE SYSTEMS & ARCHITECTURE Wholesale Retail … Networks Channels Before Customers are burdened with difficult integration tasks: • Massive customization needs • High cost of maintenance • Slow time to market • Trouble achieving differentiation
Slide 15: The Advantage: Layer 1
CUSTOMER CORE SYSTEMS & ARCHITECTURE Wholesale Retail … Networks Channels The Advantage: Layer 1 Universal Payments solves integration issues: • Lower unit costs • Speed time to market • Increase global readiness • Enable data mining and cross-sell opportunities • Controlled migration UNIVERSAL PAYM
Slide 16: The Advantage: Layer 2 - Real-Time, A-to-A
Real-Time, A-to-A (Fast Payments): • Direct connections • Eliminate toll takers, lower costs • Greater customer satisfaction • Maximum control, choice, flexibility After The Advantage: Layer 2 Before
Slide 17: Video Summary
Video Summary 4 - QUICK INSTANT - VERIFICATION ~ UNIVERSAL ~ DW sisi ep, 8 — = = SSSSSS AAC eximents:
Slide 18: The Advantage: Layer 3
The Advantage: Layer 3 Merchant Retailer Solution • Enhanced fraud protection – especially CNP transactions exploding with the 20% per year growth of eCommerce • Compelling omni-channel solution for greater customer satisfaction • True SaaS implementation
Slide 19: The Advantage: Year After Year
The Advantage: Year After Year Powerful, Extensible, Scalable • Restores customer control, choice, flexibility • Fast, efficient, customized solutions • Robust tool set to address today’s issues as well as issues yet to be known • Equally effective on-premise or hosted • Highly differentiated over c
Slide 20: 2015-2019 Overarching Strategy
2015-2019 Overarching Strategy
Slide 21: Key Business Trend
Capital markets’ rapid growth and complexity will be increasingly enabled and managed by strong vertical/integration software technology. Key Business Trend • One such vertical will be payments in general. • The model will be similar to the transformation brought about in the 90’s by an integration
Slide 22: Key Business Trend
Key Business Trend This transformation will stimulate the destruction of the current payments business model and replace it with a more efficient alternative based on real-time, any-to-any infrastructure. • Services revenue will recede rapidly and be replaced with products/solutions revenue. The mar
Slide 23: Key Business Trend
Key Business Trend This transformation is stimulated by the pervasive market conditions of ubiquity and the movement of commerce to the cloud. • The need for businesses and consumers to be able to initiate and complete transactions anywhere, anytime within any device, and do so quickly, calls for th
Slide 24: A New Payments Paradigm Has Emerged
A New Payments Paradigm Has Emerged Real-time, any-to-any, immediate payments in an omni-channel environment.
Slide 25: ACI Overarching Strategy
Focus on the enablement of all market solutions and deploy them on- premise, hosted, as SaaS or in a private cloud for all segments served. ACI Overarching Strategy • All solution development and GTM efforts will address real-time commerce, any-to-any transactions and the implementation of “fast pay
Slide 26: ACI Vision
Phil Heasley President and CEO ACI Vision
Slide 27: AAC eavments:
AAC eavments:
Slide 28: Market and Solutions Strategy
Craig Saks EVP, Chief Product Officer Market and Solutions Strategy
Slide 29: What is Universal Payments
What is Universal Payments The breadth and depth of our solution set Our unique payments technology framework A future vision • ACI’s solution set and payments capabilities are unrivaled in the market • Retail to wholesale banking, consumers to the largest corporations, global and proven • Enables o
Slide 30: Payments Strategy Key Constructs
Payments Strategy Key Constructs
Slide 31: Two Sides of Strategy
Two Sides of Strategy
Slide 32: Solutions Meeting Market Needs Today
Retail Banking Transaction Banking Merchant Retail Billers Confidential Solutions Meeting Market Needs Today… Consumer Payments Transaction Banking Retailer Payments Bill Payments Payments Risk Management Hub
Slide 33: ...and Tomorrow
Retail Banking Transaction Banking Merchant Retail Billers National Switches Processors Confidential …and Tomorrow UP Consumer Payments Platform UP Commercial Payments Platform 31.1
Slide 34: Five Year ACI Go-to-Market Overview: Solution and Platform Roadmap
Five Year ACI Go-to-Market Overview Solution and Platform roadmap Solution and Platform roadmap Solution and Platform roadmap Horizon 2 Horizon 1 • Deliver new UP-based transaction banking payments engine • Accelerate implementations • Enhance retailer omni-channel solution with ReD • Extract new so
Slide 35: Five Year ACI Go-to-Market Overview: Key UP Framework Themes
Five Year ACI Go-to-Market Overview Key UP Framework themes Horizon 3 Horizon 2 Horizon 1 • Standardize on cross product infrastructure and data management architecture • Deliver cross-channel, responsive UIs • Enhance common services (security, manageability, entitlements, reporting, tokenization,
Slide 36: Five Year ACI Go-to-Market Overview: Customer Engagement
Five Year ACI Go-to-Market Overview Customer engagement Customer engagement Customer engagement Solution orientation Solution orientation Solution orientation Horizon 3 Horizon 2 Horizon 1 • Establish executive-level advisory boards, forums and ideation sessions • Broker direct connections relations
Slide 37: Five Year ACI Go-to-Market Overview: Implementation and Hosting
Five Year ACI Go-to-Market Overview Implementation lifecycle Global hosting capability Human capital Implementation lifecycle Global hosting capability • Expand hosting to other global centers Human capital Implementation lifecycle Global hosting capability Horizon 3 Horizon 2 Horizon 1 Human capita
Slide 38: Real-Time, Any-to-Any Payments Journey
Real-Time, Any-to-Any Payments Journey • Market solutions meeting key customer segments today • Evolution to Consumer and Commercial Payments Platforms • Vision and roadmap to equip customers for real-time, any-to-any payments
Slide 39: Taking UP to Market
Dan Frate Group President Strategic Products and Global Markets Taking UP to Market
Slide 40: Strategic, Consultative Sales Approach
Strategic, Consultative Sales Approach
Slide 41: AACE barman:
AACE barman:
Slide 42: How ACI and Our Customers Benefit
Larger, more strategic opportunities Improved customer loyalty Increased ability to cross-sell Faster realization of value and backlog to revenue conversion Competitive advantage Market leadership Competitive advantage More funds to innovate Reduced payback period Improved ROI Efficient use of opera
Slide 43: Driving Customer Loyalty and Satisfaction
Customers familiar with Universal Payments see ACI as an innovative, top-tier brand , and they rate ACI products and services higher than those unfamiliar with the UP strategy. SOURCE: ACI’s 2013 Customer Loyalty Study Driving Customer Loyalty and Satisfaction
Slide 44: Delivering an Omni-channel Customer Experience for One of the World's Largest Banks
CHALLENGE BENEFITS • Aspirations to be the primary bank of its customers held back by inconsistent experience caused by legacy technology • Improve cross sell and retention rates • Significant operating cost improvements • New channels deployed in 4 months instead of 18, reducing deployment costs by
Slide 45: Complex Payments Environment Leads to Inconsistent Customer Experience
Complex Payments Environment Leads to Inconsistent Customer Experience
Slide 46: Streamlined, Consistent Omni-channel Experience
Streamlined, Consistent Omni-channel Experience
Slide 47: Improving Security and Reducing Payments Fraud for an International Transportation Company
BENEFITS CHALLENGE • Unacceptable security-related risk across multiple systems • Inefficient, manual chargebacks • Fragmented and inefficient settlement reporting • Real-time fraud detection authorized from one system • Automated dispute processing • Multiple payment types processed from one transa
Slide 48: Multiple and Complex Systems Present Unacceptable Risk
Multiple and Complex Systems Present Unacceptable Risk
Slide 49: Streamlined, Secure, Hosted Retailer Solution
Streamlined, Secure, Hosted Solution Hosted Retailer Solution
Slide 50: Digital Business Banking
• Inflexible product that was extension of core banking solution • No unique branding options • Need to add mobility • High touch, high tech digital and mobile experience wins target customers • Brand protection with proven data center • Accelerate back-office integration by 50% CHALLENGE BENEFITS D
Slide 51: Branded, Customizable Business Banking Experience
Branded, Customizable Business Banking Experience
Slide 52: Saving Millions with Integrated e-Billing for a Local Utility Co-operative
BENEFITS CHALLENGE • High costs associated with manual billing • Employee and customer satisfaction at risk due to strains caused by system • Saved $3M with integrated e-billing • 40 percentage point drop in mail-in payments • Improved satisfaction Saving Millions with Integrated e-Billing for a Loc
Slide 53: jLCEC
jLCEC PEOPLE. POWER. POSSIBILITIES. G ACH wees
Slide 54: Driving Customer Success
• Consultative, solution-led, business- oriented executive relationships • Focus on customer success, from pre-scales through rapid implementation • UP driving transformational projects today Driving Customer Success
Slide 55: ACI Financials
Scott Behrens Senior Executive VP Chief Financial Officer ACI Financials
Slide 56: Overview
Software model with growing recurring revenue Backlog: value of our existing customer base The high margin reward of a product, not services model Overview
Slide 57: Monthly Recurring Revenue Predictable & Growing
Monthly Recurring Revenue Predictable & Growing • Monthly recurring revenue now represents >70%
Slide 58: Seasonality of Non-recurring Revenue
• Non-recurring revenue is strongest in Q4. Revenue recognition triggers include: • Planned “go lives” often scheduled to occur prior to start of the year • Incremental capacity sales given “use it or lose it” budgets • Customers with annual billings contracts have opted to pay in Q4 Se asonality of
Slide 59: Fixed Costs Provide Leverage in Model
• Fixed cost infrastructure given software, not processing model • EBITDA margin spikes follow revenue Fixed Costs Provide Leverage in Model
Slide 60: Revenue Model Shifts with SaaS Adoption
SaaS subscription and transaction revenue now represent >40%, up from 10% in 2009 ACI Revenue Model Shifts with SaaS Adoption • Higher percentage realized at go-live • Steady recurring revenues
Slide 61: Backlog Provides Strong Foundation for Growth
• 60 month backlog is >$4 billion • Existing customer base and low customer attrition provide baseline for future revenue Backlog Provides Strong Foundation for Growth
Slide 62: Price Increases Boost Future Value of Backlog
• Competitive positioning provides pricing power • High R&D spending creates large competitive moat • Price increases not included in backlog calculation Price Increases Boost Future Value of Backlog
Slide 63: Transaction Growth Provides Incremental Value
• Electronic payment growth at 6-8% CAGR • Existing license customers typically purchase incremental capacity licenses during term Transaction Growth Provides Incremental Value
Slide 64: Cross-selling and Signing New Customers Allows ACI to Achieve Growth
• Cross sales typically account for 2/3 of net new business • Average customer uses 2.5 products Cross-selling and Signing New Customers Allows ACI to Achieve Mid-to-upper Single Digit Growth
Slide 65: Financial Summary – Five-year Targets
Financial Summary – Five-year Targets • Organic revenue growth Mid-to-upper single digits • Adjusted EBITDA margin 100 bps expansion per year • Operating free cash flow Track adjusted EBITDA growth • Sales net of term extension growth High single digits
Slide 66: High-quality Software Model Drives Superior Performance
• Leading market position • High retention and renewal rates • Significant recurring revenue • Scalable, fixed-cost model with improving margin • Low cash investment required High-quality Software Model Drives Superior Performance
Slide 67: ACI Executives Q&A
ACI Executives Q&A
Slide 68: Forward-Looking Statements
Confidential 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. Such factors include but are not limited to, increased competition, the performance of our strateg