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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: July 27, 2004
(Date of earliest event reported)
-------------------------
TRANSACTION SYSTEMS ARCHITECTS, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-25346 47-0772104
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
224 South 108th Avenue,
Omaha, Nebraska 68154
(Address of principal executive offices, including zip code)
(402) 334-5101
(Registrant's telephone number, including area code)
-------------------------
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit
Number Description
99.1 Transcript of quarterly financial performance teleconference
and web cast, held on July 27, 2004.
Item 12. Results of Operations and Financial Condition.
On July 27, 2004, Transaction Systems Architects, Inc. held a
teleconference and web cast discussing its financial performance for the
quarterly period ending June 30, 2004. A copy of the teleconference/web cast
transcript is attached hereto as Exhibit 99.1.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
TRANSACTION SYSTEMS ARCHITECTS, INC.
Date: August 2, 2004 By: /s/ David R. Bankhead
-------------------------------------
David R. Bankhead
Senior Vice President,
Chief Financial Officer and Treasurer
EXHIBIT INDEX
Exhibit
Number Description
99.1 Transcript of quarterly financial performance teleconference
and web cast, held on July 27, 2004.
Exhibit 99.1
TRANSACTION SYSTEMS ARCHITECT, INC.
Moderator: Bill Hoelting
July 27, 2004
4:00 pm CT
Operator: Good afternoon, my name is (Michael). And, I will be your
conference facilitator today. At this time, I would like
to welcome everyone to the Transaction Systems Architect
Third Quarter Financial Results Conference Call.
All lines have been placed on mute to prevent any
background noise. After the speaker's remarks, there will
be a question and answer period. If you would like to ask
a question during this time, simply press star then the
number one on your telephone keypad.
If you would like to withdraw your question, press star
then the number two. I would now like to turn the call
over to Mr. Bill Hoelting, Vice President of Investor
Relations. Sir, you may begin your conference.
Bill Hoelting: Thank you and good afternoon. The participants for TSA's
third quarter earnings conference call are Greg Derkacht,
President and CEO; David Bankhead, CFO; and Mark Vipond,
President of ACI Worldwide.
This conference call could contain forward-looking
statements pursuant to the safe harbor provisions of
Section 21E of the Securities and Exchange Act of 1934.
Actual results might differ materially from those
projected in the forward-looking statements.
Statements during the conference call that are not
strictly historical statements could constitute forward
looking statements which involve risks and uncertainties
which could cause actual results to materially differ from
those in forward looking statements.
Forward-looking statements include the following. Any
statement dealing with the future prospects or results of
the company. And, the forward looking statements
identified in our press releases and Form 10K and 10Q
filings.
The agenda for the call will be as follows. Dave Bankhead
will discuss the Q3 financials for TSA. Mark Vipond will
then discuss the Q3 highlights for ACI Worldwide. And,
Greg Derkacht will provide some closing comments at which
time we will open up the call to your questions. At this
time, I would like to introduce Dave Bankhead, CFO of TSA.
David Bankhead: Thanks Bill and good afternoon. Today I'll be discussing
our fiscal 2004 third quarter financial results. I'll
start by highlighting some key milestones that we achieved
during the quarter.
Total revenue was $72.5 million, a 2% decrease from the
third quarter of last fiscal year. Operating expenses were
$59.6 million, a 14% decrease from the same period last
year. Operating expenses last year reflected a goodwill
impairment charge of $9.3 million.
Operating income was $13 million for the current quarter
with an operating margin of 17.9%. Net income was $18.7
million resulting in basic earnings per share of 50 cents
and diluted earnings per share of 49 cents.
Net income and earnings per share amounts include a
one-time net tax benefit of $10.6 million and 28 cents per
share, respectively. Operating cash flow was $23.1
million. Our cash balance at quarter end was $158.9
million.
The $72.5 million of revenue is comprised of the
following: software license fees of $37.5 million,
maintenance fees of $23.1 million, and services of $11.9
million. License fee revenue of $37.5 million was
comprised of $17.3 million in initial license fees and
$20.2 million of monthly license fees.
Revenues for each of the geographic channels were as
follows: United States, $30.1 million; Americas
International, $10.1 million; Europe, Middle East, and
Africa, $23 million; and Asia Pacific, $9.3 million.
Revenues for the three business units were as follows:
ACI, $55.3 million; Insession, $9.4 million; and IntraNet,
$7.8 million. Operating expenses for the quarter were
$59.6 million which, represents a decrease from $69.1
million for the third quarter of last fiscal year.
When comparing the two quarters, the following should be
noted. Last year's number included a goodwill impairment
charge of $9.3 million which reflected the write down of
the last component of the goodwill associated with our
Messaging Direct business.
This quarter reflects an increase in selling and marketing
expense associated with increased sales activity when
compared to the same quarter last year and the decrease in
cost of maintenance and services expense reflects the
results of restructuring efforts completed during the last
12 months.
During the quarter, the company completed a tax
restructuring and made the associated tax elections with
respect to our Messaging Direct Ltd. subsidiaries.
These actions resulted in a $12 million deferred tax
benefit which is reflected in the increase in deferred
income taxes on the balance sheet, as well as, in the
third quarter tax provision.
This benefit, which has significantly reduced the
company's effective tax rate for book purposes in 2004, is
expected to be realized in cash savings to the company
from future tax deductions taken through 2016.
The book benefit, as required by GAAP, is recognized in
it's entirety in the third quarter. The company also
reflected two other one-time items amounting to $1.4
million.
These offset the $12 million benefit from the MDL
restructuring and resulted in a net one-time tax benefit
for the quarter of $10.6 million or 28 cents per share.
Our assumed effective tax rate for the fourth quarter is
41% and is reflected in our revised guidance.
We are continuing to experience increases in deferred
revenue. This is reflected in the $10 million net increase
during the 9 months ended June 30. This is due to a number
of factors.
For example, in regard to sales of emerging products,
revenue recognition is different than that for established
products and generally is deferred until final acceptance
or first production use by the customer.
At that point, revenues may be recognized immediately or
ratably over an extended period. In addition, in instances
where customers are migrating to emerging products and the
migration results in a modification of an existing
agreement, currently recognized revenues may be deferred
to coincide with the delivery and acceptance of the newer
products.
As sales of these newer products make up a large
percentage of our total sales - larger percentage of our
total sales, the amounts of revenue deferred until later
dates may increase until such time that these products
achieve the maturity in the market place to allow us to
recognize the revenue on delivery.
Our ending backlog was $232.8 million. We include in
backlog all fees, specified and signed contracts to the
extent we believe at this time that recognition of the
related revenue will occur within the next 12 months.
Backlog is comprised of recurring backlog of $173.6
million and non-recurring backlog of $59.2 million. The
recurring components are monthly license fees of $73
million, maintenance fees of $89.5 million, and facilities
management fees of $11.1 million.
Non-recurring components are license fees of $34.4 million
and services of $24.8 million. Thank you very much for you
time this afternoon. I'll now turn the call over to Mark
Vipond for his comments on the ACI business unit.
Mark Vipond: Thank you, Dave. Good afternoon, everyone. I am here to
give you an update on the third quarter results for ACI
Worldwide. ACI's revenue for the quarter was $55.3
million.
We signed a number of new contracts during the quarter.
Some of the highlights include system and capacity
upgrades over $100,000 at 13 customers; ACI licensed
products to 7 new customers in the quarter.
Those products included BASE24, BASE24-es, Proactive Risk
Manager, and WINPAY24. We had good sales results in the
past quarter with particular strength in the EMEA market
place in North America.
ACI licensed seven new applications to existing customers
during the quarter. These include licenses of our
BASE24-es, BASE24, Proactive Risk Manager, Mobile
Commerce, and Automated Key Distribution Systems software.
One of the more notable contracts in the quarter was
signed with Hewlett Packard for the operation of Toronto
Dominion's ATM network in Canada. Toronto Dominion had
been a customer of ACI since 1985 using our BASE24
software to operate their POS system and to support the
Interac network in Canada.
In 2003, they began evaluating options for operating their
ATM network which is supported with an in-house managed
system. Against a variety of competitors, a contract was
signed in June with HP to operate the system using ACI's
BASE24 and BASE24-es software.
This is a seven year contract that extends our long
standing relationship in providing software to support
Toronto Dominion's environment. We are very pleased to be
adding ATM support to our existing client relationship
with this customer.
As always, there a number of factors that are influencing
ACI's business. We believe the following opportunities and
issues may impact our business in the future. We believe
that demand within our market space is steady.
And, we are well positioned to respond to those
opportunities with our multi-platform ACI Commerce
Framework solution set. We believe that activity to
replace in-house support of EFT solutions will continue as
financial institutions and processors are forced to
respond to mandatory and market driven changes.
The recent contract with HP in support of Toronto Dominion
is evidence of this trend. We believe that sales for some
of our more recent product investments including
BASE24-es, Smart Chip Manager, and Payments Manager will
make up a larger percentage of our new sales.
We are pleased to see market acceptance of these new
products. In summary, ACI had good sales and solid results
for Q3. We believe we are well positioned in the EFT
software market with our current product strategies.
Thanks for your continued interest. And, I will now
introduce Greg Derkacht.
Greg Derkacht: Thank you very much, Mark. I'm pleased with our quarterly
and year to date results. For the first 9 months of fiscal
2004, our revenue was up 9%. Our operating margin has
increased from 11.4% to 19.1%.
And, our net income up - is up significantly. As we have
stated, our Q3 EPS results of 49 cents included a net one
time tax benefit of 28 cents. This is one of several tax
planning initiatives that we've undertaken.
These tax initiatives began in second quarter of the last
fiscal year when our effective tax rate was in excess of
60%. Tax projects can be complex and expensive. And, ours
were no exceptions.
While we've encouraged significant expenses associated
with these projects, we continue to make good progress.
Our balance sheet continues to reflect our financial
strength with cash flow of approximately $159 million and
very little debt.
We continue to evaluate the best strategic use of our cash
including appropriate acquisitions. We continue to be
patient as we seek to identify candidates that will allow
us to leverage our key strengths, in particular, our
strong international direct channels which provide us
global sales and service coverage; a customer list that
includes some of the largest financial institutions around
the world; and proven software solutions for mission
critical systems.
As you also know, there has been a fair amount of M&A
activity in the financial services industry. The effect of
any bank merger on the company depends on many factors
including the role, if any, of a TSA customer in the
transaction.
Some recently announced mergers involve TSA customers on
both sides of the transactions. In these situations, we
anticipate losing some maintenance and some licensing fees
over a period of time but potentially increasing capacity
license fees, though the effect is difficult to determine.
The demand for our solution remains steady as we
experience good sales across most of our geographic
regions. We begin the fourth quarter with a 12 month
backlog of $232.8 million.
As a reminder, we continue to have contracts and portion
of contracts which are outside the current rolling 12
month backlog. In closing, we look forward to Q4 and the
completion of a strong fiscal 2004.
Assuming no significant change in the foreign exchange
rates, our annual revenue guidance range is being revised
from $282 to $292 million to a range of $291 to $296
million.
The company's also revising its EPS guidance from 74 cents
to 83 cents to a range of $1.10 to $1.17 which includes
the net one time tax benefit of $10.6 million or 28 cents
per diluted share.
We thank you very much for your continued interest in TSA.
And, at this time, we'll open up the conference call for
your questions. Thank you.
Operator: At this time, I would like to remind everyone, in order to
ask a question, please press star then the number one on
your telephone keypad. We'll pause for just a moment to
compile the Q&A roster. Your first question comes from
Franco Turrinelli with William Blair and Company.
Franco Turrinelli: Gentlemen, good afternoon.
Greg Derkacht: Hi Franco.
Franco Turrinelli: Just looking at a couple of things, more sequentially, I
guess. Relative to the March quarter, it looks as though
all the geographies and all the business segments were
slightly down.
And, I'm wondering if you could just give me a sense of
how much of that was just an unusually strong second
quarter, maybe some seasonal factors? Or, maybe something
that you're seeing in the other markets. Thanks.
Mark Vipond: This if Mark. My reaction to that is, you know, as we've
talked a lot of times about the chunkiness and capacity
upgrades. While we had 13 capacity upgrades in the
quarter, there were no big sizable ones in there.
They were relatively small, all over $100,000. But, we
didn't have any extraordinarily large capacity upgrades.
And, realize relative to the license fees, you know, we
made more comments are about the new products.
So, that has had a tendency across the board, across the
company to push out the revenue associated with those
deals because of the delays of recognition based upon
acceptance or repression use from our customers. So, that
has actually equally impacted everybody across the - all
our regions across the globe.
Franco Turrinelli: Yes Mark, I mean, it looks as though, you know - I mean,
you're getting on the one hand, you know, pretty decent
strength really across all geographies and all business
lines. I mean, it seems like a pretty balanced
performance from the entire business.
Mike Vipond: Yes, I think, it's pretty steady across the line.
I mean, we've - Asia Pacific has still continued to be our
weakest region relative to sales success. And, it's
something that we're trying to address. But, EMEA has
particular strength.
And, in North America really came in on the heels of that
Toronto Dominion deal had very good sales success. And, so
we've had a fairly consistent performance across all
regions except for - with the exclusion of AP in terms of
sales.
Franco Turrinelli: A couple of questions more on the numbers. You
commented on the deferred revenue balance noting, you
know, up growth into September 30. But, if I have my
numbers correct, it was about flat relative to March 31.
Is that correct?
David Bankhead: This is Dave Bankhead. Relatively flat compared to March
31, but it has grown by about $10 million over the 9
months of this year. And, the point that we're making
there, Franco, we also saw some growth in deferred
revenue in fiscal year 2003.
And, that just again goes to the chunkiness of revenues.
And, as I mentioned earlier in the script, as we see more
sales that involve implementation of newer products that
tends to push our revenue out further. And, you see
evidence of that in the growth in deferred income, as well
as, cash being generated at a faster pace than income at
this point in time.
Franco Turrinelli: Yes, that's a good point. David, is there any way to think
through a relationship? Indeed, is there any that would be
useful for us to understand the relationship between
deferred revenue backlog and actual in period revenue.
David Bankhead: Well, as you know, Franco, it's complex. And, you've named
really all of the components that get effected any time
that you - that we enter into an agreement. You enter into
the agreement. It affects backlog obviously.
As we start to build that customer, amounts go into either
unbilled receivables and then billed receivables. And, if
there are deals that I've talked about earlier that
involve deferral of revenue, you see a build up in the
deferred revenue accounts.
So, it's all affected. You can go nuts trying to tie them
all together without really all of the individual pieces
including backlog. But, you hit the nail right on the
head. They're all affected.
Franco Turrinelli: You're telling me to stop banging my head against a brick
wall, aren't you?
David Bankhead: Well, you can do anything you want.
Mark Vipond: You can come bang it with us.
David Bankhead: It's pretty complex.
Franco Turrinelli: Okay, one final question. David, do I have it right, year
to date - well, year to date, 69 cents excluding the
28 cent tax benefit, let's see, 97 cents right including
the tax benefit year to date, which would suggest your
fourth quarter number, you know, between 13 and 20 cents
to get to the guidance that you've given us.
You're obviously famously conservative. But, in the good
old days, the September quarter did tend to be, you know,
maybe the strongest quarter. Anything that we should be
aware of kind of going into the September quarter that
might be a little bit unusual one way or the other?
Greg Derkacht: I don't think so, Franco. Historically, yes it has been
one of our better quarters. But, I think that, as Mark
mentioned on numerous occasions, our businesses
unfortunately is really difficult to predict because of
the chunkiness.
One of the things in the second quarter last - of this
fiscal year, there was a very large capacity upgrade which
basically caused that the revenue to be up some.
And, so - and, again it's just starting the quarter, it's
really difficult for us to predict what kind of activity
there's going to be, whether it be Mark's area or
Insession or IntraNet, etc., etc. So, I think, we're
famously conservative. I think, the business kind of
dictates that a little bit.
Mark Vipond: This is Mark. I would expect sales would be just like it
always has historically been, Franco, and that in the last
quarter of our fiscal year. And, so sales personnel are
highly motivated to get as much as they can in. And, I
wouldn't expect that to change.
It really just comes down to which of those sales can
translate into revenue. And, depending on the mix of the
sales, it had a lot of preponderance for increase
percentage of new product sales that he can be well
assured there will be no revenue associated with it.
And, then it comes back, the real wild card, is do you
have any big capacity upgrade in there. And, those things
are binary, either they happen or they don't. I'm sure
there's things that we're looking at. But, you never know
if you're going to get them until you get them.
So, I don't think the sales number will - the sales
production will necessarily change in terms of the
seasonality. But, the way the revenue is recognized has
definitely changed.
Franco Turrinelli: Okay. I have a couple of follow ups. But, I'll let other
people jump in. And, I'll stop hogging the line, thanks.
Greg Derkacht: Thank you, Franco.
Operator: Your next question comes from George Sutton with Craig
Hallum Capital.
George Sutton: Hi guys. Wanted to address a couple of the statements made
on the call. First, the capacity upgrade piece, Mark, you
had mentioned that there were no sizable pieces in the
quarter. I view this like your gasoline tanks, sometimes
you're not going to fill your tank completely to the
extent you don't, you`re going to need gas more quickly.
Is that a fair way to look at this?
Mark Vipond: Yes, and some other ones depending upon the ones that
trigger. If it's a - try to use your analogy, if they
drive a Volkswagen as opposed to an SUV, their gas tank is
smaller. Well, maybe it's a bad analogy. But, some of
these guys - you have to pass the upgrades. They don't do
100 million transaction a month. They might go from 10 to
12 million.
George Sutton: But, if the underlying - I hate to keep with the analogy,
the underlying gas need, in this case, debit cards, smart
cards, etc., continues to be better than net, you know,
the net number over a period of time will be positive.
Mark Vipond: Yes.
George Sutton: Okay. You also mentioned with respect to Asia Pacific,
you were trying to address the issues there. What
specifically are you doing with respect to Asia Pacific?
Mark Vipond: Without getting - well, in general, what we have done, we
reorganized about three months ago to basically make sure
that we have our entire products. We're being represented
across the entire region.
Because, we've come from the BASE24 mentality, a lot of
our distributors down there really only have the
wherewithal or, the capabilities of distributing that
product.
And, with the investments we've made throughout the ACI
Commerce Framework, we may have to rethink our
distribution mechanism, our partners. And, so we're
re-looking at the entire area in terms of how we go
forward to promote the entire breathe of our solutions.
George Sutton: And, this is something we should look for having an impact
in the next 6 to 12 months? Is that a fair way to...
Mark Vipond: Well, I certainly am looking for more sales, whether or
not again, that translates into revenue in terms of the
P&L, you know, especially in Asia Pacific, we also have
from a revenue recognition standpoint that we do a lot of
things on a cash basis also.
That we want to make sure we get the cash, even if we have
the ability to recognize based upon the accounting
principles, we want to make sure we have the cash before
we do so.
George Sutton: Got you. You - it seemed to have initiated an advertising
program just in the last month or so from what we can tell
in a lot of the trade rights. Can you give us any early
indication on how that's going?
Mark Vipond: Well, that's - I mean, really to the BASE24...
George Sutton: Yes.
Mark Vipond: It's really more of a educational thing. One of the things
that we've found with our marketing surveys with clients,
as well as, prospects is that we're still predominantly
known for BASE24 on Tandem and not everybody understands
our strategy and our ability to provide multi-platform
solutions.
So, it's going to be one of those things that's hard to
measure the success, as always, with advertising. But,
it's more of an informational type thing and interest
drawing thing, as opposed to specific results as we're
going to get this many leads.
George Sutton: Now, the total dollars involved, I assume, are relatively
small?
Mark Vipond: Well, anything over a buck seems like a lot to me. I
think, in the end, for our overall campaign which will
last through next year, on a periodic basis is somewhere
around $500,000.
George Sutton: Okay. The - if you just give us an update on the update or
the process of the BASE-es or BASE24 installs? So, that
we've got some sense - those are on time? It's a revenue
recognition issue more than a timing of implementation.
Mark Vipond: In this last quarter, in Q3 results, one of the - some of
the revenue was associated with one of those clients
being recognized. We have a number of projects going on.
I would expect some of those to be recognized this
quarter, this quarter being Q4. Some of them go into
fiscal year 2005, none of them go beyond FY 2005. We just
signed up another client yesterday here in the U.S.; a
mid-tier sized organization who's deploying it on a HP NSK
System surprisingly.
We have sold another system in the - we sold a system in
the Middle East last quarter which will be our first
Middle Eastern, that will be on a (Sun Solaris). So,
things are progressing, never as fast as we would like.
There's always moving parts, nothings changed in that
typical implementation for our software is a six to nine
month cycle, even for a BASE24. So, it's no different with
es in terms of internal processes that have to be
accommodated.
The biggest difference that we have is that we won't
necessarily have all the modules that we have on BASE24
readily available on BASE24-es. So, that adds some
additional time to have to go build the interchange
interfaces of the device handlers that are commonly
available on BASE 24.
We may have to build those within a given project. And,
that tends to elongate the six to nine months a little
further even. But, we are making progress.
And, well we're making good progress actually. And, so I'm
pretty well aware of all the customer projects that we
have going on. And, I expect more revenue to be recognized
as we go forward.
George Sutton: Great. One last thing for David. Just to be clear on your
tax rate, you benefit when you take this deferred tax
asset. And, you're, therefore, are seeing a reduction in
your tax rate over the next, well I guess in this case,
11 years or so. Is that correct?
David Bankhead: No, that's not correct.
George Sutton: Okay.
David Bankhead: The - let me add a little bit more color to this
transaction. This transaction is obviously a very large
transaction. And, we will have a cash benefit from the
deductions filed on our tax returns over the next 12 years
for approximately $1 million a year. GAAP accounting
requires that you recognize the entire benefit of that
transaction in the quarter in which you completed the
transaction.
George Sutton: Okay.
David Bankhead: The $12 million benefit for which we're setting up a
deferred tax asset in recognizing the benefit during the
third quarter. Now, the 41% effective tax rate for the
fourth quarter reflects some other strategic tax actions
that we've taken that will pull that rate down.
George Sutton: Okay, perfect. Thank you.
Operator: Your next question comes from Shane Diamant with
Stephens, Inc.
Shane Diamant: Good morning. I'm sorry, good afternoon.
Greg Derkacht: Good afternoon.
Shane Diamant: A couple of questions for you just to kind of follow up on
a previous call. Other than some additional advertising,
can you maybe provide some more color on your selling and
marketing activities looking, I guess, to year over year.
They're up about - the expenses are up about 17%.
Mark Vipond: Yes, okay. So, it's - we've had, I think, last quarter we
said the same thing. We had good sales. We have had two
very strong sales quarters. Q1 was okay. Q2 was good.
Q3 was good.
As a consequence, we're paying, which is a good problem to
have, we're paying out more commissions. And, the way we
do accounting for this, if we have commission that are due
or payable to our sales personnel based upon the sales
they generate, we accrue for that in the quarter upon
which the sale is made, even though we don't have the
revenue or any of that that necessarily goes along with
it.
So, what that increase reflects is good sales activity. I
mean, you take the Toronto Dominion deal as an example. I
mentioned that, the seven year commitment, a very healthy
sales compensation paid to the sales personnel involved
with that.
Revenue to be ratably recognized over seven years. But,
yes, we incur the expense this last quarter. So, that's a
negative but actually a positive side when we pay - I'm
happy to pay as much sales commission as we possibly can,
if that makes sense.
Shane Diamant: Makes total sense. Just kind of a follow up, I guess,
question that a broader look at the overall sales
environment. Have you seen anything, I guess, that
surprised you in the first half of this calendar year
versus maybe what you expected, I guess, starting in
January? And, then maybe looking forward to, at the second
half of the year, any changes that maybe you expect to see
or would hope to see?
Mark Vipond: I guess, the biggest surprise and I don't know if it's a
huge surprise, but a surprise was the strength of EMEA
market place. They have had a very, very powerful year
relative to sales.
Asia Pacific, I knew, would be struggling. It's struggling
probably a little bit more than I would have expected. So,
that's probably the only real big surprise. I mean, our
sales has been up from last year.
I think, above what our targets were so far for this year.
And, I expect a good Q4. And, no I don't see anything else
that's changing. Demand is pretty steady. And, it's fairly
consistent.
The only thing I'm hoping for is that, we have some uptick
in our Asia Pacific over time, as we get some production
from our efforts to reinvigorate our selves down there.
Greg Derkacht: Yes, also, there's - as it's relates to Insession, the
sales the first three quarters of the year have been very
strong, also. And, maybe a little bit unexpectedly so.
But, they've had very, very good performance.
Shane Diamant: Okay, thank you.
Operator: Once again, I would like to remind everyone, in order to
ask a question, please press star then the number one on
your telephone keypad. Your next question is a follow up
from Franco Turrinelli with William Blair and Company.
Franco Turrinelli: Hey, it's me again. I stopped banging my head against the
wall. Two questions, one talking of, you know, partnership
arrangements, you know, new products and that sort of
stuff. Tell us a little bit more about this Visibility
deal with Insession.
Mark Vipond: The Visibility deal, I'm not sure what you're referring
to.
Greg Derkacht: Yes, Franco, I don't understand either.
Franco Turrinelli: Well, there was a press release, let's see July 6,
Visibility Corporation working with Insession, no.
Bill Hoelting: Yes, Franco, this is Bill Hoelting. Yes, I do remember the
press release. I don't remember the details of it.
Franco Turrinelli: Okay, well I think, you've answered the question. It
doesn't sound like...
Bill Hoelting: No, I will circle back to you. I think, we were moving
forward with a relationship with another partner within
the Insession group.
Franco Turrinelli: Right. But, it doesn't sound as...
Bill Hoelting: Well, it's early. You know, we tend to announce when we
first sign. But, it's early in the relationship. So - but,
we tend to announce new partnership relationships.
Franco Turrinelli: Okay. On a separate note, clearly we want more and more
electronic transactions. There's obviously been a lot of
hullabaloo about the checked 21 Act and what that might
do.
The reality is that ACH conversion is a much more real and
much more near term impact. Are you seeing any kind of
benefit from ACH or from other check electronification
programs that we might be factoring in to some of the
demand for a product? And, maybe some capacity upgrades?
Thanks.
Mark Vipond: This is a question we get frequently. As it sits today, I
don't see any - the best that I see as it relates to ACI's
business is that there may be more checks deposited in
ATM's, our points of service that we may benefit from the
capacity increasing from that - resulting from that.
But, in terms of the processing of the image, we're really
just a transport vehicle to get from that device back to
the software, the storage software, the imaging storing
software back to the bank or financial institution.
So, as it sits today, we have not been requested nor have
we seen an opportunity to provide much value to that
transaction other than just being a transport vehicle. I
don't think - or maybe I have a misread of it. But, I
don't think we're hearing it from our customer that
there's something else they've looking for from us to ride
in that value.
Franco Turrinelli: Do you go get an ACH transaction at some point would
filter through a TSA product, right?
Mark Vipond: If the ACH - there's some ACH product offerings that the
IntraNet business unit offers, correct.
Franco Turrinelli: Okay.
Mark Vipond: So, as they become electronic, you know, there's
potential that the volume can increase in terms of the
number of transactions from the ACH system that is a valid
statement. So, that may have some impact relative to the
volumes that IntraNet has processing through their
software.
Franco Turrinelli: Would an ACH transaction that ultimately needs to hit a
consumer DDA, also, end up hitting a BASE24 system if one
is installed?
Mark Vipond: Boy, I - the answer right now would be no. I don't think
- we don't have ACH traffic - the ACH traffic doesn't
typically go through BASE24 to get back access to the
account. They have direct interfaces into the accounting
systems or the core banking systems in a batch mode as
opposed to online mode with us.
Franco Turrinelli: Okay. Great, thank you.
Mark Vipond: All right.
Operator: Once again, ladies and gentlemen if you would like to ask
a question, please press star then the number one on
your telephone keypad. At this time, there are no further
questions.
Greg Derkacht: Thank you very much everyone.
Bill Hoelting: This concludes our quarter call, thank you.
Operator: This concludes today's Transaction Systems Architect
Third Quarter Financial Results Conference Call. You may
now disconnect.
END