Attached files
| file | filename |
|---|---|
| EX-99.1 - EX-99.1 - ACI WORLDWIDE, INC. | d881636dex991.htm |
| 8-K - FORM 8-K - ACI WORLDWIDE, INC. | d881636d8k.htm |
 Quarterly and Year-End Results
December 31, 2014
ACI Worldwide
February 26, 2015
Exhibit 99.2 |
 2
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.
MEETS THE CHALLENGE OF CHANGE |
 ANNUAL OVERVIEW
Phil Heasley
Chief Executive Officer |
 2014 in
Review 4
•
SNET bookings up 17%
•
Strong market interest in Universal Payments
•
Better-than-expected demand for new applications and hosted solutions
•
Large UP contracts in pipeline progressing
•
Completed acquisition of Retail Decisions (ReD)
•
Non-GAAP Revenue up 17%
•
Adjusted EBITDA up 9%
•
Repurchased 3.6 million shares
•
Providing 2015 guidance
MEETS THE CHALLENGE OF CHANGE |
 FINANCIAL REVIEW
Scott Behrens
Chief Financial Officer |
 6
Key Takeaways from the Quarter
•
Sales Bookings
Q4 SNET up 10%
•
Backlog
60-month backlog of $4.2 billion, up $79 million from Q3 2014, after adjusting
for foreign currency fluctuations
12-month backlog of $903 million, up $13 million from Q3 2014, after adjusting
for foreign currency fluctuations
•
Revenue Growth
Non-GAAP revenue was $291 million, up $6 million from Q4 last year
Recurring revenue grew 16% to $203 million, representing 70% of total revenue,
and offset a decline in non-recurring revenue
•
Adjusted EBITDA
Adjusted EBITDA of $107 million declined 9% from Q4 last year
•
Operating Free Cash Flow
Operating free cash flow of $72 million increased 16% from $62 million in Q4 last
year
•
Debt and Liquidity
Ended the year with $77 million in cash and $892 million in debt
MEETS THE CHALLENGE OF CHANGE |
 Key
Takeaways from the Year
Operating free cash flow of $134 million decreased from $151 million last
year 7
MEETS THE CHALLENGE OF CHANGE
•
Sales Bookings
2014 new sales bookings up 17%, or 10% excluding Official Payments and ReD
Total sales bookings exceed $1 billion
Hosted bookings growth up 61% over last year
Impacts timing of revenue recognition
•
Revenue Growth
Non-GAAP revenue growth of 17%, down 2% organically
Continuing trend of higher recurring revenues offset by decline in
non-recurring revenues as we transition to a higher hosted mix
SaaS subscription and transaction revenues up 59% over prior year representing 41%
of total revenue
•
Strong Adjusted EBITDA
Adjusted EBITDA of $261 million, up 9% from 2013
•
Operating Free Cash Flow
•
Share Repurchase Activity
Repurchased ~ 3.6 million shares in 2014
$138 million remaining on share buy-back authorization
|
  2015
Guidance •
Guidance
-
2014 Pro forma adjusted to reflect full year impact of ReD acquisition and fx rate
changes -
Sales, net of term extensions, growth in the high single digits
-
Revenue and margin phasing by quarter consistent with seasonal history
-
Q1 non-GAAP revenue expected to represent $225 to $235 million
•
Other Guidance Assumptions:
-
Interest expense of $42 million and cash interest of $36 million
-
Capital expenditures to be $40-$50 million
-
Depreciation and amortization expected to approximate $95-$100 million
-
Non-cash compensation expense of approximately $20 million
-
Pass through interchange revenues to approximate $115 million
-
GAAP tax rate of 35% and cash taxes paid of $25-$30 million
-
Diluted
share
count
to
approximate
117
million
(excluding
future
share
buy-back
activity)
-
These metrics exclude approximately $8-$10 million in significant
transaction-related expenses for datacenter and facilities consolidation
and bill payment platform rationalization 8
2014
Incremental
FX
2014
Key Metrics
Actual
ReD Impact
Impact*
Pro Forma
Guidance
Low
High
Non-GAAP Revenue
1,018
28
(23)
1,023
1,050
1,080
Adjusted EBITDA
261
6
-
267
280
290
$s in millions, foreign currency rates as of 12/31/14
2015 Non-GAAP
MEETS THE CHALLENGE OF CHANGE |
 APPENDIX |
 Monthly Recurring Revenue
10
MEETS THE CHALLENGE OF CHANGE
Quarter Ended
Monthly Recurring Revenue (millions)
December 31,
2014
2013
Monthly Software license fees
$22.9
$23.4
Maintenance fees
67.4
60.3
Processing services
112.6
91.9
Monthly Recurring Revenue
$202.8
$175.6 |
 MEETS THE CHALLENGE OF CHANGE
11
Historic Sales Bookings By Quarter 2012-2014
Quarter-End
Total Economic
Value of Sales
Sales Mix by Category
inc. Capacity
Upgrades &
Services
Term Extension
New Accounts /
New Applications
12/31/2012
$309,143
$52,206
$145,917
$111,020
12%
53%
34%
3/31/2013
$111,588
$5,778
$70,736
$35,074
5%
63%
31%
6/30/2013
$180,107
$33,717
$95,461
$50,929
19%
53%
28%
9/30/2013
$211,827
$42,345
$105,609
$63,874
20%
50%
30%
12/31/2013
$384,322
$45,846
$200,748
$137,729
12%
52%
36%
3/31/2014
$170,212
$36,928
$84,974
$48,311
22%
50%
28%
6/30/2014
$234,346
$44,321
$106,056
$83,969
19%
45%
36%
9/30/2014
$250,802
$63,396
$94,071
$93,336
25%
38%
37%
12/31/2014
$391,120
$99,972
$172,387
$118,761
26%
44%
30%
Sales
New Accounts /
New Applications
Add-on Business
inc. Capacity
Upgrades &
Services
Term Extension
DEC YTD 14
$1,046,479
$244,616
$457,487
$344,377
DEC YTD 13
$887,844
$127,685
$472,553
$287,606
Variance
$158,635
$116,930
($15,066)
$56,771
Add-on Business |
 MEETS THE CHALLENGE OF CHANGE
Sales Bookings, Net of Term Extensions (SNET)
12
Sales Net of Term Extensions
Channel
Qtr Ended
Dec 14
Qtr Ended
Dec 13
% Growth or
Decline
Americas
$144,422
$117,011
23.4%
EMEA
105,631
104,408
1.2%
Asia-Pacific
22,306
25,175
-11.4%
Total Sales (Net of Term Ext.)
$272,358
$246,594
10.4% |
 MEETS THE CHALLENGE OF CHANGE
Non-GAAP Operating Income
13
Quarter Ended
Non-GAAP Operating Income (millions)
December 31,
2014
2013
Operating income
$79.3
$86.0
Plus:
Deferred revenue fair value adjustment
0.3
0.9
Employee related actions
3.4
1.2
Facility closure costs
-
1.2
Significant transaction related expenses
2.9
4.5
Non-GAAP Operating Income
$
85.9 Year Ended
Non-GAAP Operating Income (millions)
December 31,
2014
2013
Operating income
$138.2
$123.0
Plus:
Deferred revenue fair value adjustment
1.8
5.8
Employee related actions
10.4
10.7
Facility closure costs
-
2.2
Significant transaction related expenses
12.5
13.2
Non-GAAP Operating Income
$ 162.9
$ 154.9
$
93.8 |
 MEETS THE CHALLENGE OF CHANGE
Year Ended
Adjusted EBITDA (millions)
December 31,
2014
2013
Net income
$67.6
$63.9
Plus:
Income tax expense
31.2
29.3
Net interest expense
39.2
26.6
Net other expense (income)
0.2
3.3
Depreciation expense
20.5
18.8
Amortization expense
66.2
51.2
Non-cash compensation expense
11.0
13.6
Adjusted EBIDTA
$235.9
$206.7
Deferred revenue fair value adjustment
1.8
5.8
Employee related actions
10.4
10.7
Facility closure costs
-
2.2
Significant transaction related expenses
12.5
13.2
Adjusted EBIDTA excluding one-time transaction expenses
260.6
Adjusted EBITDA
14
Quarter Ended
Adjusted EBITDA (millions)
December 31,
2014
2013
Net income
$46.4
$50.4
Plus:
Income tax expense
23.3
24.1
Net interest expense
10.7
9.7
Net other expense (income)
(1.1)
1.8
Depreciation expense
5.4
5.2
Amortization expense
18.0
15.0
Non-cash compensation expense
(2.7)
2.5
Adjusted EBITDA
$100.0
$108.7
Deferred revenue fair value adjustment
0.3
0.9
Employee related actions
3.4
1.2
Facility closure costs
-
1.2
Significant transaction related expenses
2.9
4.5
Adjusted EBITDA excluding significant transaction related expenses
$
$
$
106.6
$
116.5
238.6 |
 MEETS THE CHALLENGE OF CHANGE
Reconciliation of Operating Free Cash Flow (millions)
Quarter Ended December 31,
2014
2013
Net cash provided by operating activities
$77.0
$51.9
Payments associated with cash settlement of acquisition related options
-
10.2
Payments associated with acquired opening balance sheet liabilties
0.2
4.5
Net after-tax payments associated with employee-related actions
1.5
1.8
Net after-tax payments associated with lease terminations
-
0.4
Net after-tax payments associated with significant transaction related
expenses 1.8
6.9
Less capital expenditures
(8.9)
(14.2)
Operating Free Cash Flow
$71.6
$61.5
Operating Free Cash Flow
15
* Tax effected at 35%
Reconciliation of Operating Free Cash Flow (millions)
Year Ended December 31,
2014
2013
Net cash provided by operating activities
$149.0
$138.4
Payments associated with cash settlement of acquisition related options
-
10.2
Payments associated with acquired opening balance sheet liabilities
4.8
4.5
Net after-tax payments associated with employee-related actions
6.3
9.7
Net after-tax payments associated with lease terminations
1.0
1.0
Net after-tax payments associated with significant transaction related
expenses 8.1
18.1
Net after-tax payments associated with IBM IT Outsourcing Transition
-
1.9
Less capital expenditures
(34.9)
(32.5)
Operating Free Cash Flow
$134.3
$151.3 |
 MEETS THE CHALLENGE OF CHANGE
60-Month Backlog
16
Quarter Ended
Backlog 60-Month (millions)
December 31,
December 31,
2014
2013
Americas
$3,014
$2,831
EMEA
855
747
Asia/Pacific
291
283
Backlog 60-Month
$4,160
$3,861
Deferred Revenue
$181
$168
Other
3,979
3,693
Backlog 60-Month
$4,160
$3,861 |
 MEETS THE CHALLENGE OF CHANGE
Backlog as a Contributor of Quarterly Revenue
•
Backlog from monthly recurring revenues and project go-lives continues to
drive current quarter GAAP revenue
•
Revenue from current quarter sales consistent with prior quarters
17
Backlog as Contributor of Revenue (thousands)
Quarter Ended December 31,
% Growth
2014
2013
Revenue from Backlog
$
268,586 $
268,845 -0.1%
Revenue from Sales
21,638
14,317
51.1%
Total Revenue
$
290,224 $
283,162 2.5%
Revenue from Backlog
93%
95%
Revenue from Sales
7%
5% |
 MEETS THE CHALLENGE OF CHANGE
Non-Cash Compensation, Acquisition Intangibles and
Software, and Significant Transaction Related Expenses
18
All references to per share amounts have been retroactively adjusted to reflect
the July 10, 2014 three-for-one stock split for all periods
presented. Acquisition Intangibles & Software, Non-cash equity
based compensation
Quarter Ended
(millions)
December 31,
2014
2013
EPS Impact
$ in Millions
(Net of Tax)
EPS Impact
$ in Millions
(Net of Tax)
Significant transaction related expenses
$
0.04
$
4.1
$
0.04 Deferred revenue fair value adjustment
0.00
0.2
0.01
0.6
Amortization of acquisition-related intangibles
0.04
4.1
0.03
3.4
Amortization of acquisition-related software
0.04
4.1
0.03
3.0
Non-cash equity-based compensation
(0.02)
(1.8)
0.01
1.6
Total
$
10.7
$ 0.11
* Tax Effected at 35%
Acquisition Intangibles & Software, Non-cash
equity based compensation
YTD
(millions)
December 31,
2014
2013
EPS Impact
$ in Millions
(Net of Tax)
EPS Impact
$ in Millions
(Net of Tax)
Significant transaction related expenses
$
0.13
$
14.9
$
0.14 Deferred revenue fair value
adjustment 0.01
1.2
0.03
3.8
Amortization of acquisition-related intangibles
0.14
16.0
0.10
12.1
Amortization of acquisition-related software
0.12
14.5
0.09
10.9
Non-cash equity-based compensation
0.06
7.2
0.07
8.9
Total
$
0.43
$ 52.6
* Tax Effected at 35%
$
4.5
$
13.1
$
0.09
16.9
$
53.8
$
0.46
$ |
 MEETS THE CHALLENGE OF CHANGE
Contract Duration Metric
•
Represents dollar average remaining contract life (in years) for
term license software
contracts
•
Excludes perpetual contracts (primarily heritage S1 licensed software contracts)
•
Excludes all hosted contracts as both cash and revenue are ratable over the
contract term
19 |
 MEETS THE CHALLENGE OF CHANGE
Non-GAAP Financial Measures
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 Online Resources 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: •
•
•
20
Non-GAAP
revenue:
revenue
plus
deferred
revenue
that
would
have
been
recognized
in
the
normal
course
of
business
by
S1
and
Online Resources 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 plus
deferred revenue that would have been recognized in the normal course of
business by S1 and Online Resources 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 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 and Online Resources 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. |
 MEETS THE CHALLENGE OF CHANGE
Non-GAAP Financial Measures
ACI is also presenting operating free cash flow, which is defined as net cash
provided by operating activities, plus payments
associated
with
cash
settlement
of
acquisition
related
options
and
opening
balance
sheet
liabilities,
net
after-
tax payments associated with employee-related actions and facility closures,
net after-tax payments associated with significant transaction related
expenses, payments associated with acquired opening balance sheet liabilities, 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. 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.
21 |
 MEETS THE CHALLENGE OF CHANGE
Non-GAAP Financial Measures
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. 22
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. |
 MEETS THE CHALLENGE OF CHANGE
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
“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: •
•
•
•
•
•
23
23
Strong market interest in Universal Payments;
Better-than-expected demand for new applications and hosted
solutions; Large UP contracts in pipeline progressing;
Expectations regarding 2015 financial guidance related to non-GAAP revenue,
adjusted EBITDA, Expectations regarding Q1 2015 non-GAAP revenue; and
Expectations regarding full year SNET and other guidance assumptions
|
 MEETS THE CHALLENGE OF CHANGE
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 strategic product, UP, 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,
OPAY
and
ReD,
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.
24
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