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EX-99.1 - EX-99.1 - ACI WORLDWIDE, INC. | d89860dex991.htm |
8-K - FORM 8-K - ACI WORLDWIDE, INC. | d89860d8k.htm |
Quarterly Results June 30, 2015 ACI Worldwide July 30, 2015 Exhibit 99.2 |
MEETS THE CHALLENGE OF CHANGE 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. |
QUARTERLY OVERVIEW Phil Heasley Chief Executive Officer |
MEETS THE CHALLENGE OF CHANGE Q2 2015 in Review 4 Net new bookings up 18% Large customer commitment to UP Entered new mortgage processing vertical Signed important renewals, including IRS Linux-based BASE24 eps launch by year end Reiterating 2015 guidance |
FINANCIAL REVIEW Scott Behrens Chief Financial Officer |
MEETS THE CHALLENGE OF CHANGE 6 Key Takeaways from the Quarter Sales Bookings Q2 new sales bookings up 18% from Q2 2014, up 9% excluding impact of ReD acquisition Full year SNET growth tracking to high single digits Backlog 12-month backlog of $883 million, down $11 million from Q1 2015, after adjusting for fx fluctuations 60-month backlog of $4.1 billion, down $10 million from Q1 2015, after adjusting for fx fluctuations ACI-initiated exit of one EBPP vertical as a result of regulatory changes impacted 60-month backlog by $30 million.
Excluding this, 60-month backlog grew $20 million.
Revenue Growth Non-GAAP revenue of $266 million, up 4% from Q2 2014 or up 6% on a constant currency basis
Acquisition of ReD contributed $10 million Non-GAAP organic revenue grew 4% after adjusting for $8 million in foreign currency fluctuations
Recurring revenue grew to $194 million, representing 73% of total revenue
Adjusted EBITDA Adjusted EBITDA of $58 million increased 3% from Q2 2014 Operating Free Cash Flow (OFCF) OFCF declined from Q2 2014 primarily driven by timing of Q2 2015 sales receipts now expected in early Q3
Debt and Liquidity Ended the quarter with $50 million in cash and $808 million in debt, down $84 million YTD
Received cash proceeds of $35 million and recognized $24 million gain on the sale of
our ownership in Yodlee |
MEETS THE CHALLENGE OF CHANGE 2015 Guidance 7 Guidance - Reaffirming full year guidance. - Represents 3%-6% organic growth after adjusting for foreign currency fluctuations
- Sales, net of term extensions (SNET) growth in the high single digits - Q3 non-GAAP revenue expected to be in the range of $235 to $245 million - Pass through interchange revenues should approximate $125 million for the year - Adjusted EBITDA excludes approximately $12 million in significant transaction-related
expenses for datacenter and facilities consolidation and bill payment platform
rationalization
2015 Non-GAAP
Key Metrics Guidance Non-GAAP Revenue 1,040 - 1,070 Adjusted EBITDA 280 - 290 $s in millions 6/30/15 fx rates |
APPENDIX |
MEETS THE CHALLENGE OF CHANGE Monthly Recurring Revenue 9 Monthly Recurring Revenue (millions) 2015 2014 Monthly Software license fees $18.6 $23.0 Maintenance fees 60.1 62.3 Processing services 115.4 105.6 Monthly Recurring Revenue $190.9 Quarter Ended June 30, $194.1 |
MEETS THE CHALLENGE OF CHANGE 10 Historic Sales Bookings By Quarter New Accounts / New Applications 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% 3/31/2015 $210,200 $38,555 $72,977 $98,668 18% 35% 47% 6/30/2015 $291,657 $32,919 $144,054 $114,683 11% 49% 39% Sales New Accounts / New Applications Add-on Business inc. Capacity Upgrades & Services Term Extension JUN YTD 15 $501,856 $71,474 $217,031 $213,351 JUN YTD 14 $404,558 $81,248 $191,030 $132,280 Variance $97,298 ($9,774) $26,002 $81,071 Quarter-End Add-on Business inc. Capacity Upgrades & Services Term Extension Total Economic Value of Sales Sales Mix by Category |
MEETS THE CHALLENGE OF CHANGE Sales Bookings, Net of Term Extensions (SNET) 11 Channel Qtr Ended Jun 15 Qtr Ended Jun 14 % Growth or Decline Americas $95,134 $97,188 -2% EMEA 59,244 36,361 63% Asia-Pacific 22,595 16,827 34% Total Sales (Net of Term Ext.) $176,973 $150,377 18% Sales Net of Term Extensions |
MEETS THE CHALLENGE OF CHANGE Non-GAAP Operating Income 12 Non-GAAP Operating Income (millions) 2015 2014 Operating income $23.7 $26.7 Plus: Deferred revenue fair value adjustment 0.2 0.5 Employee related actions 1.4 1.4 Significant transaction related expenses 3.4 2.1 Non-GAAP Operating Income $ 28.7
$
30.7 June 30,
Quarter Ended |
MEETS THE CHALLENGE OF CHANGE Adjusted EBITDA (millions) 2015 2014 Net Income $27.1 $11.2 Plus: Income tax expense 5.8 2.4 Net interest expense 10.4 9.2 Net other expense (income) (19.7) 3.9 Depreciation expense 5.3 5.2 Amortization expense 18.3 15.3 Non-cash compensation expense 5.4 4.4 Adjusted EBITDA $52.6 $51.6 Deferred revenue fair value adjustment 0.2 0.5 Employee related actions 1.4 1.4 Significant transaction related expenses 3.4 2.1 Adjusted EBITDA excluding significant transaction related expenses $ 57.6
$
55.6 Quarter Ended
June 30, Adjusted EBITDA 13 |
MEETS THE CHALLENGE OF CHANGE Operating Free Cash Flow 14 * Tax effected at 35% Reconciliation of Operating Free Cash Flow (millions) 2015 2014 Net cash provided by operating activities $0.8 $33.1 Payments associated with acquired opening balance sheet liabilties - 0.3 Net after-tax payments associated with employee-related actions 0.4 0.9 Net after-tax payments associated with lease terminations 0.2 0.2 Net after-tax payments associated with significant transaction related expenses 1.0 1.2 Less capital expenditures (9.4) (7.5) Operating Free Cash Flow ($7.0) $28.2 Quarter Ended June 30, |
MEETS THE CHALLENGE OF CHANGE 60-Month Backlog 15 Quarter Ended Backlog 60-Month (millions) June 30, June 30, 2015 2014 Americas $3,013 $2,874 EMEA 840 765 Asia/Pacific 295 285 Backlog 60-Month $4,148 $3,924 Deferred Revenue $182 $190 Other 3,966 3,734 Backlog 60-Month $4,148 $3,924 |
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 16 Revenue Qtr Ended Jun 15 Qtr Ended Jun 14 % Growth or Decline Revenue from Backlog $248,815 $244,240 1.9% Revenue from Sales 17,007 10,568 60.9% Total Revenue $265,822 $254,808 4.3% Revenue from Backlog 94% 96% Revenue from Sales 6% 4% Revenue |
MEETS THE CHALLENGE OF CHANGE EPS Impact of Non-Cash and Significant Transaction Related Items 17 EPS impact of non-cash and signficant transaction related items (millions) EPS Impact $ in Millions (Net of Tax) EPS Impact $ in Millions (Net of Tax) Significant transaction related expenses $ 0.03
$
3.1
$ 0.02
$
2.3 Deferred revenue fair value
adjustment -
0.1 0.01 0.3 Amortization of acquisition-related intangibles 0.03 3.7 0.03 3.8 Amortization of acquisition-related software 0.03 4.0 0.03 3.3 Non-cash equity-based compensation 0.03 3.5 0.02 2.9 Total $ 0.12
$
14.4
$ 0.11
$
12.6 * Tax Effected at 35%
June 30, 2015 2014 Quarter Ended |
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 18 2.40 2.46 2.41 2.85 2.71 2.56 2.47 2.68 2.62 2.53 2.52 2.60 2.54 2.61 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 |
MEETS THE CHALLENGE OF CHANGE Non-GAAP Financial Measures To supplement our financial results presented on a GAAP basis, we use the non-GAAP measures indicated in the tables, which exclude certain business combination accounting entries related to the acquisition of Online Resources Corporation 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 to view 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: Non-GAAP revenue: revenue plus deferred revenue that would have been recognized in the normal course of business by 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 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 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. 19 |
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 acquired 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 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 service fees 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. 20 |
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: 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. 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, but not limited to, reasons outside of managements 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 customers 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. 21 |
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: Expectations regarding 2015 financial guidance related to non-GAAP revenue, adjusted EBITDA; Expectations regarding full year SNET; Expectations regarding Q3 2015 non-GAAP revenue; and Expectations regarding full year pass through interchange revenues 22 |
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 managements 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 Retail Decisions, 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 and our Quarterly Report on Form 10-Q. 23 |
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