December 2013 ACI Worldwide Investor Conferences December, 2013 Exhibit 99.1 |
December 2013 Private Securities Litigation Reform Act of 1995 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-looking statements and risk factors that may affect them is set forth at the end of this presentation. The Company assumes no obligation to update any forward-looking statement in this presentation, except as required by law. 1 |
December 2013 2 About ACI Worldwide • High quality products and services drive strong renewal rates on a large installed user base of over 5,000 customers • Long-term, blue-chip, geographically diverse customer base with low customer concentration • Subscription-based model drives recurring revenue and provides stability and predictability to our operations • Large contractual backlog provides earnings visibility and allows our management to optimally manage the size and infrastructure of the business • Leading payments transformation with Universal Payments (UP) • Management team has an established track record of operational excellence and significant industry experience 2013 Pro Forma Revenue $1035 Million 2013 Pro Forma Adjusted EBITDA $291 Million 9/30/2013 60-Month Backlog $3.1 Billion Founded in 1975, ACI is a leading provider of electronic payments and transaction banking software solutions for financial institutions, retailers, processors and billers worldwide Note: Pro Forma Revenue is presented on a Non-GAAP basis that adds back the Deferred Revenue Fair Value Adjustment. Pro Forma Adjusted EBITDA excludes transaction and litigation expenses. Both metrics are presented on a pro forma basis for the ORCC and OPAY acquisitions. |
December 2013 Global Distribution and Customer Base: The Leader in the Mega and Large FIs Market Headquarters Regional Offices Distributors AMERICAS 1,950+ customers EMEA 500+ customers ASIA/PACIFIC 150+ customers 5,000+ customers in over 80 countries rely on ACI solutions Customers: ~ 180 processors globally Customers: ~ 290 retailers globally 3 Customers: 3600+ US billers 18 of the top 20 and 67 of the top 100 global banks are customers ~ 4,500 employees in 36 countries |
December 2013 4 ACI is a Leading Provider of Electronic Payments and Transaction Banking Solutions • Tools to prevent payment transaction fraud and enterprise financial crimes • Case management Fraud • Internet-based electronic bill payment and presentment • Transaction-based, hosted services for banks and billers • Automated collection application Bill Pay / Collections • Consumer and Business Internet Banking, Mobile, Trade Finance and Branch Automation sold to large banks globally as license or hosted subscription services • Consumer and small biz Internet and mobile banking sold to US community FIs and credit unions as hosted, subscription Online Banking • Software sold to global banks that enables the providing of treasury services to large corporates • High value wire transfers, Low Value Bulk Payments and SWIFT messaging Wholesale Payments • Software sold directly to banks and payment processors • Solutions help authenticate, authorize, acquire, clear and settle electronic consumer payments • Payments acquiring and authorization solution for retailers Retail Payments 1 Financial Insights - Worldwide Payments Market Sizing 2012 and 3 rd Party Consultant Note: Revenue figures represent Pro Forma FY 2012 GAAP Revenue on a pro forma basis for the ORCC and S1 acquisitions. Figures exclude OPAY acquisition. ACI Product Family Revenue % Highlights In a highly fragmented market, we control 6% of the market spend¹ Software facilitates over 120 billion consumer transaction per year; scales to thousands per second ~1/3 of all domestic SWIFT transactions Enables over $13 trillion in payments each day Software designed for “Five nines availability” 2/3 of all Fed wires |
December 2013 5 Diverse Customer Base of Top Global Banks, Processors, Billers and Retailers Provide Significant Cross Sell Opportunities Customer % of Total Customer #1 3.3% Customer #2 1.7% Customer #3 1.7% Customer #4 1.4% Customer #5 1.1% Customer #6 1.1% Customer #7 0.9% Customer #8 0.9% Customer #9 0.9% Customer #10 0.9% Top 20 Customers 21.4% Other Customers 78.6% Total ACI Pro Forma 2012 Revenue 100.0% Pro Forma FY 2012 Revenue by Customer No single customer represents more than 4% of pro forma 2012 revenue On average, customers use 3 ACI products or less representing a large cross sell opportunity Note: Revenue figures represent Pro Forma FY 2012 GAAP Revenue on a pro forma basis for the ORCC and S1 acquisitions. Figures exclude OPAY contribution. |
December 2013 Attractive trends will drive growth opportunities for ACI 1 Source: Financial Insights - Worldwide Payments Market Sizing 2012 and 3rd Party Consultant 2 Source: McKinsey “Dynamic Changes in the Global Payments Industry”, 2012 6 Industry Dynamics 2 Customer Trends Market Sizing 1 • Shift from paper to electronic • Compounding regulatory requirements • Revenue and profitability pressures • Complexity from globalization FIs looking to transform their businesses by: • Driving down unit costs • Launching new products quicker • Reducing risks • Improving customer satisfaction and loyalty • Vendor Consolidation • Total addressable market is ~$20bn in 2013 and growing 7-8% overall • ~50% of addressable market is in-sourced (homegrown) applications • Global transaction volume growth expected to be 9% CAGR through 2020 • Increasing fraud costs • Convergence of payments; real-time • Legacy systems increasingly difficult to update Favorable Industry and Customer Trends |
December 2013 7 Strategy to Drive Superior Performance Continued Focus on Control, Profitability and Growth • Continue to increase recurring revenue base • Expand customer relationships by cross-selling (on average customers use 3 ACI products or less) • Lead payments transformation with Universal Payments Platform delivering technology-enabled efficiencies • Expand geographically Growth Drivers • Expand margins through operating leverage and process-driven operating philosophy • Realize cost synergies derived from recent acquisitions Continuous Improvements to Drive Margin Expansion • Buy, build or partner to fill-in product gaps or expand customer base • Recent acquisitions have added product, scale and market breadth • ORCC acquisition provides ACI with a full-service Bill Payment platform for Online Banking and Billers • OPAY acquisition expands bill payment reach into key new verticals incl. Federal, State & Local government, taxes and higher education Disciplined Acquisition / Investment Strategy |
December 2013 Financial Overview |
December 2013 9 ACI Term Extensions • Renewal rates across ACI products >96% • >95% of our contracts are transaction-based SALES BOOKINGS HISTORICAL 60-MONTH BACKLOG Bookings Growth Leads to Large Backlog Provides Revenue and Earnings Visibility ACI Sales, Net of Term Extensions (SNET) |
December 2013 10 NON-GAAP REVENUE ADJUSTED EBITDA Adjusted EBITDA % Margin • LTM 9/30/13 revenue geographic mix: 70% Americas, 20% EMEA and 10% Asia Pacific ACI’s Financial Summary 2009 – LTM 9/30/2013 |
December 2013 11 Ongoing Services, Implementations, Increased Capacity Sales & Other Recurring Revenue: Hosting, Maintenance & License Fees (Paid Monthly, Quarterly or Annually) • Recurring revenue has increased in dollar amount and as a percent of revenue • Virtually all components of revenue are seasonally stronger in the latter half of the year >70% Recurring Revenue and Growing STRONG RECURRING REVENUE GROWTH |
December 2013 OPERATING FREE CASH FLOW CAPITAL EXPENDITURES Low capital expenditures needed to maintain existing client base ACI consistently generates strong free cash flow 12 Low Cap Ex and Strong Cash Flow • NOLs starting to contribute and cash taxes much lower than GAAP • Current net leverage ratio 2.8x |
December 2013 2013 Pro Forma Non-GAAP Revenue Bridge $883 $30 $122 $1035 ORCC Stub OPAY Stub 2013 Pro Forma 2013 *(millions) Represents low end of guidance Stub additions normalize for full year contribution 13 • Normalized 2013 revenue mix: • 40% Hosting (SaaS), 24% Maintenance and 36% License & Services • 75% recurring revenue |
December 2013 2013 Pro Forma Adjusted EBITDA Bridge $12 $5 $291 ORCC Stub and incremental synergies S1 Synergies Pro Forma 2013 $257 2013 OPAY Stub and synergies $17 *(millions) Represents low end of guidance Stub additions normalize for full year contribution 14 |
December 2013 Summary 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 15 |
December 2013 To supplement our financial results presented on a GAAP basis, we use the non-GAAP measure indicated in the tables, which exclude certain business combination accounting entries related to the acquisitions of ORCC and S1 and significant transaction related expenses, as well as other significant non-cash expenses such as depreciation, amortization and share-based compensation, that we believe are helpful in understanding our past financial performance and our future results. The presentation of these non- GAAP financial measures should be considered in addition to our GAAP results and are not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Management generally compensates for limitations in the use of non-GAAP financial measures by relying on comparable GAAP financial measures and providing investors with a reconciliation of non-GAAP financial measures only in addition to and in conjunction with results presented in accordance with GAAP. We believe that these non-GAAP financial measures reflect an additional way of viewing aspects of our operations that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business. Certain non-GAAP measures include: 16 Non-GAAP Financial Measures • Non-GAAP revenue: revenue plus deferred revenue that would have been recognized in the normal course of business by S1, Online Resources and Official Payments if not for GAAP purchase accounting requirements. Non-GAAP revenue should be considered in addition to, rather than as a substitute for, revenue. • Non-GAAP operating income: operating income (loss) plus deferred revenue that would have been recognized in the normal course of business by S1, Online Resources and Official Payments if not for GAAP purchase accounting requirements and significant transaction related expenses. Non-GAAP operating income should be considered in addition to, rather than as a substitute for, operating income. • Adjusted EBITDA: net income (loss) plus income tax expense, net interest income (expense), net other income (expense), depreciation, amortization and non-cash compensation, as well as deferred revenue that would have been recognized in the normal course of business by S1, Online Resources and Official Payments if not for GAAP purchase accounting requirements and significant transaction related expenses. Adjusted EBITDA should be considered in addition to, rather than as a substitute for, operating income. |
December 2013 Non-GAAP Revenue (millions) 2009 2010 2011 2012 Q4 2012 9 months 9-30-13 LTM 9-30-13 Revenue 406 $ 418 $ 465 $ 667 $ 224 $ 582 $ 806 $ Deferred revenue fair value adjustment - - - 22 4 4 8 Non-GAAP revenue 406 $ 418 $ 465 $ 689 $ 228 $ 586 $ 814 $ Adjusted EBITDA (millions) 2009 2010 2011 2012 Q4 2012 9 months 9-30-13 LTM 9-30-13 Net income (loss) 20 $ 27 $ 46 $ 49 $ 50 $ 13 $ 63 $ Plus: Income tax expense (benefit) 13 22 18 16 24 5 29 Net interest expense 2 1 1 10 3 17 20 Net other expense 7 4 1 - (1) 2 1 Depreciation expense 6 6 8 13 4 14 18 Amortization expense 17 20 21 38 10 36 46 Non-cash compensation expense 8 8 11 15 3 11 14 Adjusted EBIDTA 73 88 106 141 93 98 191 Deferred revenue fair value adjustment - - - 22 4 5 9 Employee related actions - - - 11 - 9 9 Facility closure costs - - - 5 1 1 2 IT exit costs - - - 3 - - - Other significant transaction related expenses - - 7 9 3 9 12 Adjusted EBIDTA excluding significant transaction related expenses 73 $ 88 $ 113 $ 191 $ 101 $ 122 $ 223 $ 17 Non-GAAP Financial Measures |
December 2013 18 Non-GAAP Financial Measures Reconciliation of Operating Free Cash Flow (millions) 2009 2010 2011 2012 Q4 2012 9 months 9-30-13 LTM 9-30-13 Net cash provided (used) by operating activities 44 $ 81 $ 83 $ (9) $ 4 $ 87 $ 91 $ Net after-tax payments associated with employee-related actions 3 - - 6 - 5 5 Net after-tax payments associated with facility closures - - - 3 2 1 3 Net after-tax payments associated with significant transaction related expenses - - 4 9 - 7 7 Net after-tax payments associated with cash settlement of S1 options - - - 10 - - - Net after-tax payments associated with IBM IT Outsourcing Transition 1 1 1 - - - Plus IBM Alliance liability repayment - - - 21 21 - 21 Less capital expenditures (10) (13) (19) (17) (3) (18) (21) Less IBM Alliance technical enablement expenditures (7) (6) (2) - - - - Operating Free Cash Flow 30 $ 63 $ 67 $ 24 $ 24 $ 82 $ 106 $ |
December 2013 Reconciliation of Operating Free Cash Flow (millions) 2009 2010 2011 2012 Q4 2012 9 months 9-30-13 LTM 9-30-13 Net cash provided (used) by operating activities 44 $ 81 $ 83 $ (9) $ 4 $ 87 $ 91 $ Net after-tax payments associated with employee-related actions 3 - - 6 - 5 5 Net after-tax payments associated with facility closures - - - 3 2 1 3 Net after-tax payments associated with significant transaction related expenses - - 4 9 - 7 7 Net after-tax payments associated with cash settlement of S1 options - - - 10 - - - Net after-tax payments associated with IBM IT Outsourcing Transition 1 1 1 - - - Plus IBM Alliance liability repayment - - - 21 21 - 21 Less capital expenditures (10) (13) (19) (17) (3) (18) (21) Less IBM Alliance technical enablement expenditures (7) (6) (2) - - - - Operating Free Cash Flow 30 $ 63 $ 67 $ 24 $ 24 $ 82 $ 106 $ 19 Non-GAAP Financial Measures ACI is also presenting operating free cash flow, which is defined as net cash provided by operating activities, plus net after-tax payments associated with employee-related actions and facility closures, net after-tax payments associated with significant transaction related expenses, net after-tax payments associated with IBM IT outsourcing transition and termination, and less capital expenditures. Operating free cash flow is considered a non-GAAP financial measure as defined by SEC Regulation G. We utilize this non-GAAP financial measure, and believe it is useful to investors, as an indicator of cash flow available for debt repayment and other investing activities, such as capital investments and acquisitions. We utilize operating free cash flow as a further indicator of operating performance and for planning investing activities. Operating free cash flow should be considered in addition to, rather than as a substitute for, net cash provided by operating activities. A limitation of operating free cash flow is that it does not represent the total increase or decrease in the cash balance for the period. This measure also does not exclude mandatory debt service obligations and, therefore, does not represent the residual cash flow available for discretionary expenditures. We believe that operating free cash flow is useful to investors to provide disclosures of our operating results on the same basis as that used by our management. |
December 2013 ACI also includes backlog estimates, which include 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 within the corresponding backlog period. We have historically included assumed renewals in backlog estimates based upon automatic renewal provisions in the executed contract and our historic experience with customer renewal rates. Backlog is considered a non-GAAP financial measure as defined by SEC Regulation G. Our 60-month backlog estimate represents expected revenues from existing customers using the following key assumptions: Estimates of future financial results are inherently unreliable. Our backlog estimates require substantial judgment and are based on a number of assumptions as described above. These assumptions may turn out to be inaccurate or wrong, including for reasons outside of management’s control. For example, our customers may attempt to renegotiate or terminate their contracts for a number of reasons, including mergers, changes in their financial condition, or general changes in economic conditions in the customer’s industry or geographic location, or we may experience delays in the development or delivery of products or services specified in customer contracts which may cause the actual renewal rates and amounts to differ from historical experiences. Changes in foreign currency exchange rates may also impact the amount of revenue actually recognized in future periods. Accordingly, there can be no assurance that contracts included in backlog estimates will actually generate the specified revenues or that the actual revenues will be generated within the corresponding 60-month period. Backlog should be considered in addition to, rather than as a substitute for, reported revenue and deferred revenue. 20 Non-GAAP Financial Measures • Maintenance fees are assumed to exist for the duration of the license term for those contracts in which the committed maintenance term is less than the committed license term. • License, facilities management, and software hosting arrangements are assumed to renew at the end of their committed term at a rate consistent with our historical experiences. • Non-recurring license arrangements are assumed to renew as recurring revenue streams. • Foreign currency exchange rates are assumed to remain constant over the 60-month backlog period for those contracts stated in currencies other than the U.S. dollar. • Our pricing policies and practices are assumed to remain constant over the 60-month backlog period. |
December 2013 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,” “anticipates,” “intends,” and words and phrases of similar impact. The forward- looking statements are made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements in this presentation include, but are not limited to, statements regarding: 21 Forward-Looking Statements • expectations regarding the financial impact of the Official Payments acquisition; • expectations regarding future increases in organic revenue, adjusted EBITDA, operating free cash flow and sales net of term extension; • expectations that we will generate annual cost synergies with respect to recent prior acquisitions; and • expectations regarding 2013 financial guidance related to revenue, operating income and adjusted EBITDA. |
December 2013 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 strategic product, BASE24-eps, demand for our products, restrictions and other financial covenants in our credit facility, consolidations and failures in the financial services industry, customer reluctance to switch to a new vendor, the accuracy of management’s backlog estimates, the maturity of certain products, our strategy to migrate customers to our next generation products, ratable or deferred recognition of certain revenue associated with customer migrations and the maturity of certain of our products, failure to obtain renewals of customer contracts or to obtain such renewals on favorable terms, delay or cancellation of customer projects or inaccurate project completion estimates, volatility and disruption of the capital and credit markets and adverse changes in the global economy, our existing levels of debt, impairment of our goodwill or intangible assets, litigation, future acquisitions, strategic partnerships and investments, risks related to the expected benefits to be achieved in the transaction with Online Resources, the complexity of our products and services and the risk that they may contain hidden defects or be subjected to security breaches or viruses, compliance of our products with applicable legislation, governmental regulations and industry standards, our compliance with privacy regulations, the protection of our intellectual property in intellectual property litigation, the cyclical nature of our revenue and earnings and the accuracy of forecasts due to the concentration of revenue generating activity during the final weeks of each quarter, business interruptions or failure of our information technology and communication systems, our offshore software development activities, risks from operating internationally, including fluctuations in currency exchange rates, exposure to unknown tax liabilities, and volatility in our stock price. For a detailed discussion of these risk factors, parties that are relying on the forward- looking statements should review our filings with the Securities and Exchange Commission, including our most recently filed Annual Report on Form 10-K, Registration Statement on Form S-4, and subsequent reports on Forms 10-Q and 8-K. 22 Forward-Looking Statements |
December 2013 |