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8-K

 

 

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 (Date of earliest event reported): November 14, 2013 (November 14, 2013)

 

 

ACI WORLDWIDE, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   0-25346   47-0772104

(State or other jurisdiction

of incorporation)

  

(Commission

File Number)

  

(IRS Employer

Identification No.)

3520 Kraft Rd, Suite 300

Naples, FL 34105

(Address of principal executive offices) (Zip Code)

Registrant’s Telephone Number, Including Area Code: (239) 403-4600

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

Item 7.01. Regulation FD Disclosure

On November 14, 2013, ACI Worldwide, Inc. posted investor relations materials on its website (www.aciworldwide.com) to be used in connection with Investor Day 2013. A copy of the presentation materials is attached hereto as Exhibit 99.1 and is incorporated by reference into this Item 7.01. The foregoing information (including the exhibits hereto) is being furnished under “Item 7.01- Regulation FD Disclosure.” Such information (including the exhibits hereto) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

The filing of this report and the furnishing of this information pursuant to Item 7.01 do not mean that such information is material or that disclosure of such information is required.

Item 9.01. Financial Statements and Exhibits.

99.1 Investor Presentation Materials dated March 2013

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

ACI WORLDWIDE, INC.

/s/ Scott W. Behrens

Scott W. Behrens, Executive Vice President, Chief Financial Officer, and Chief Accounting Officer

Date: November 14, 2013

EXHIBIT INDEX

 

Exhibit
No.

   

Description

99.1    Investor presentation materials dated November 14, 2013
EX-99.1
1
WELCOME
Exhibit 99.1

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.
2

Corporate Vision and Strategy
Phil Heasley
President & CEO
November 14, 2013
3

Corporate Marketing
Carl Gustin
SVP, Chief Marketing Officer
November 14, 2013
4

ACI Business Plan Models
Differentiation,
value, gold standard
–
leading solutions
PRODUCT
INNOVATION
Highest efficiency,
lowest cost, high
value and flexible
solutions
OPERATIONAL
EXCELLENCE
Low attrition,
high satisfaction,
maximize margins
CUSTOMER
INTIMACY
5
Corporate
Marketing

ACI Business Plan Models
Global Markets
PRODUCT
INNOVATION
OPERATIONAL
EXCELLENCE
CUSTOMER
INTIMACY
ACI On Demand
Customer
Management
6
Corporate
Marketing

7
Market Profile: Sizing
IDC analysis shows ACI is
in about a $20B market,
growing to about $26B in
2018, a projected CAGR of
7-8%*
Biller market for EBPP services
represents a new significant
opportunity for ACI of ~$6B
(bottom-up analysis)
Per IDC data, ACI share does
not exceed 10% in any segment
ACI has significant room to grow
market share in all current
segments, regardless of market
growth rates
*Variability of data due to segment definitions and
classifications, combinations of data.

8
Market Profile: Competition
CORE
–
Traditional
competitors operating closely
to ACI in certain regions e.g.
OpenWay, Clear2Pay, Alaric
TANGENTIAL
–
Significant
industry players, occasional
customer, might be a threat
SECONDARY
–
Larger
competitors, occasionally
customers
Corporate Marketing

9
Market Profile: Competition
FUNDTECH
ACTIMIZE
ALARIC
LUSIS
OPENWAY
IBM
VISA
MASTERCARD
SAP
CSC
JACK HENRY
LOGICA
BPC
DOVETAIL
C2P
BOTTOMLINE
FIS
FISERV
Corporate
Marketing

Market Profile Summary
•
Category growing at about
7-8% overall.*
•
ACI growing at a mid to high
single digit rate overall.
•
ACI is gaining share with fastest
growth in AOD (hosted SaaS
solutions).
•
IDC projects growth rates to
maintain trajectory through 2018.
*Variability of data due to segment definitions and
classifications, combinations of data.
Corporate
Marketing
10

Market Trends
MACRO
THE BUSINESS OF PAYMENTS
Corporate
Marketing
11
•
Return to normal growth for
global economy not yet realized.
•
Emerging economies no longer
simply “emerging”.
•
FI’s under pressure to overhaul their
business models.
•
Online, real-time and ubiquitous
access will transform Retail and
Wholesale banking.

Market Trends
MARKET PRESSURES
TECHNOLOGY
Corporate Marketing
12
•
Consumer expectations changing
dramatically.
•
Global regulation continues to
pressure ACI customers’
margins.
•
FI’s SOA and ISO2022 are the
architectural preference of the
technology buyer.
•
Expensive legacy systems in
maintenance mode stalling migration
to new technologies.

Strategic Imperatives
Online, real-time
transcends all
other trends.
1
Hosting, SaaS,
and various Cloud
alternatives will
continue to develop.
2
Value Proposition
to replace legacy
systems must be
clear and
compelling.
3
FI’s must become
price-makers, not
price-takers.
4
Processors are in
a race to the bottom
in fees they can
charge.
6
Online and brick-
and-mortar
experience is
blurring and
retailers must
respond.
Rapid growth in
emerging markets
will change the
Global Payments
landscape.
7
8
Regulation is a
pervasive, strategic
driver of payments
and an opportunity
for ACI to lead the
market.
Corporate
Marketing
13
5

Strategic Imperatives
Online, real-time
transcends all
other trends.
1
Hosting, SaaS,
and various Cloud
alternatives will
continue to develop.
2
Value Proposition
to replace legacy
systems must be
clear and
compelling.
3
FI’s must become
price-makers, not
price-takers.
4
Processors are in
a race to the bottom
in fees they can
charge.
5
6
Online and brick-
and-mortar
experience is
blurring and
retailers must
respond.
Rapid growth in
emerging markets
will change the
Global Payments
landscape.
7
Regulation is a
pervasive, strategic
driver of payments
and an opportunity
for ACI to lead the
market.
8
Corporate
Marketing
14
5

The UP Advantage –
BEFORE
FI CORE SYSTEMS & REFERENCE ARCHITECTURE
Wholesale
Retail
…
Networks
Channels
•
Massive customization needs
•
High cost of maintenance
•
Slow time-to-market
•
Difficulty achieving differentiation
Today’s financial
institutions are
burdened with
integration tasks:
Corporate
Marketing
15

The UP Advantage –
BEFORE
FI CORE SYSTEMS & REFERENCE ARCHITECTURE
Wholesale
Retail
…
Networks
Channels
•
Complex systems
•
Little control
•
Little choice
•
Inflexible
Integration:
16

The UP Advantage –
AFTER
UNIVERSAL PAYMENTS
FI CORE SYSTEMS & REFERENCE ARCHITECTURE
Wholesale
Retail
…
Networks
Channels
•
Lower unit costs
•
Speed time-to-market
•
Increase global readiness
•
Enable data mining and
cross-sell opportunities
•
Controlled migration
Universal Payments
aligns with existing
and target
infrastructure to:
17

The UP Advantage –
AFTER
FI CORE SYSTEMS & REFERENCE ARCHITECTURE
Wholesale
Retail
…
Networks
Channels
WHY
•
Control
•
Choice
•
Flexibility
•
Peace of mind
HOW
WHAT
18
UNIVERSAL PAYMENTS

The UP Advantage –
REACTIONS
ACI positioned to
lead the enterprise
payments space…
Best in class
payments
engine…
We see the future
with UP…
We develop and
integrate services
quickly (with UP)
while saving
costs…
Peter Elliot, Head of
Solutions Design, Vocalink
Vincent Querrette, BNPP
CEB TowerGroup
Adrian Hauser,
PayX International
19
Corporate Marketing

The UP Brand: Go to Market Plan
WHY
Control, Choice,
Flexibility &
Peace-of-mind
HOW
Universal Payments
WHAT
Strategic Products
(BASE24-eps, PRM, MTS, Mobility,
Universal Online
Banking, etc.)
20
Corporate Marketing

The UP Brand: Go to Market Plan
21

The UP Brand: Go to Market Plan
22

No one unleashes
the promise and power
of payment systems
like ACI.
NO ONE.
Corporate Marketing
24

Application Development
Tony Scotto
EVP, Application Development
November 14, 2013
25

•
Responsible for timely delivery of product and
customer development projects
•
Average of 346 projects per month
(132 product, 214 customer)
•
1,650 application development professionals
•
Team members in 19 countries
•
11 primary development locations
•
More than 18% of revenue applied to R&D
OVERVIEW
INVESTMENT
SCALE
ACI Application Development Overview
26
Application Development

FI CORE SYSTEMS & REFERENCE ARCHITECTURE
Wholesale
Retail
…
Networks
Channels
UP Overview
•
Lower unit costs
•
Speed time-to-market
•
Increase global readiness
•
Enable data mining and cross-sell
opportunities
•
Reduce maintenance costs
ACI Universal Payments
aligns with existing and
target infrastructure to:
27
UNIVERSAL PAYMENTS
Application Development

UP Technical Differentiators
Support for all
payment types
Service-oriented
architecture
Flexible
service
orchestration
Common
payment object
(Payment Information Model)
28

Customer Benefits of Control, Choice and Flexibility
•
Utilize and leverage existing investments:
renovation does not equal replacement
•
Get
to
market
more
quickly:
up
to
50%
faster
•
Reduce operations and maintenance costs:
up to 40% savings
•
Future-proof
investment:
embrace
continued
industry
disruption
29

UP Use Case
PERSON-TO-PERSON (P2P) AND MOBILE PAYMENTS
CHALLENGE
RESULTS
“[ACI] has increased our agility as a
company and improved our ability to
respond effectively to changing market
conditions and increasing customer
demands like mobile payments.”
–
Rafick Cassim, business manager,
self service at Absa
•
Extend existing payment systems to
generate:
–
New revenue opportunities for
developed markets
–
New ways to deliver payments
to underserved and unbanked
markets
•
UP-enabled cardless authorization
using a user ID, mobile phone number,
customer ID or email address
•
ABSA Bank mobile P2P solution –
120,000 transactions per month,
growing
at
10-15%
monthly

UP Use Case
WHOLESALE BANKING EXAMPLES
CHALLENGES
“After a rigorous evaluation process,
we found that ACI uniquely provides a
robust, scalable and flexible payments
infrastructure to manage all of our
payments needs.”
-leading Middle Eastern Bank
RESULTS
•
Capitalize on new revenue
opportunities
•
Renovation vs. replacement of
legacy systems
•
35% faster user interface
development
•
42% faster development of new
connection types
•
Middle Eastern Bank capitalizes on
new
revenue
opportunity
for
unbanked workers

UP Use Case
UK FASTER PAYMENTS
RESULTS
•
Reduces settlement to 30 minutes
•
UP orchestration enables any-to-any
payments
•
Clear and immediate financial
visibility
CHALLENGE
Real-time Payments Solution
•
Replace traditional 3-day
settlement process with real-
time settlement

•
UP deployed within ACI products
•
Customers achieving significant
benefits
•
Talent, scale and investment to
drive continued innovation
Summary
UP VISION REALIZED TODAY
33

34
BREAK

Global Markets
Dan Frate
EVP, Global Markets and Products
November 14, 2013
35

Developing Long-Term Value
Winning business develops
growing backlog
Managing
maintenance for
profitability
Recurring revenue
through hosting
operations
36

Opportunity for ACI
North America
Europe
Asia Pacific
Latin America
Middle East
& Africa
TRENDS IN NONCASH TRANSACTION VOLUMES
NONCASH TRANSACTION VOLUMES (IN MILLIONS) BY REGION, 2005-2016 (E)
Source: CEB TowerGroup Payment Database (TGPD), 2011
37

Opportunity for ACI
SOLUTIONS PER ACI CUSTOMER
# of Existing Customers in the
Top Banks and Retailers
Average ACI
Customer
2.5
Products
5+ Products
Goal:
38

ACI Worldwide: A Global Payments Company
Canada
1 locations
USA
14 locations
Latin America
2 locations
Brazil
1 location
Africa
2 locations
Continental
Europe
3 locations
Northern
Europe
3 locations
Australia &
New Zealand
2 locations
North Asia
2 locations
ASEAN
2 locations
South Asia
2 locations
Middle East
3 locations
4,500 employees in 35 countries
R+D ~18%
39

CONSUMER/BUSINESS
ACI Universal Payments
SOLUTIONS ACROSS THE PAYMENTS VALUE CHAIN
DEBIT
CREDIT
WIRE
SWIFT
FRAUD
AML
BILL PAYMENT
POS
ACQUIRING
PAYMENT TYPES
PAPER BILLS/
CHECKS
MOBILE
ONLINE
BRANCH
POS
ATM
CHANNELS
40

Global Payment Trends Driving Customer Needs
41

An omni-channel platform
for handling all the engagement points with
consumers –
from branch to online to mobile.
Payment Channel Solutions
A complete business and
wholesale banking solution
Mobile, Online, Trade, and Payments
Win new clients
in fast-paced Asian
business market
Kaisikornbank
Driving profit through
customer centricity
Significant cost savings
to compete with major
US banks
42

Enabling consumer payments
securely from cards to mobile
Payment Engine Solutions
A complete business and
wholesale banking solution
Mobile, Online, Trade, and Payments
Driving fraud rates below
5 basis points
Turning tough regulations
into competitive advantage
Enabling innovation to win
new customers in India

Security and control over
multi-channel retail payments
Bringing the POS to the
consumer to maximize
satisfaction
Managing payments across
12 retail store brands
Retailer Solutions
LEADING CONSUMER
ELECTRONICS PROVIDER
44

Complete biller solutions
from mobile to online to physical to
drive up electronic payments
Biller Solutions
45

ACI Universal Payments
UP AHEAD OF THE INDUSTRY
46
•
Significant growth opportunity
•
Unparalleled global distribution
•
Leading integrated payments solutions

ACI On Demand
David Morem
EVP, ACI On Demand
November 14, 2013
47

AOD provides Software-as-a-Service (SaaS) hosted
payment systems featuring the ACI UP product portfolio
•
4119
financial institutions, retailers and billers
•
7 of the top 50 banks globally
•
3 of the top 10 brands globally
•
1 of the top 3
quick service restaurants in the world
•
5 of the top 10 banks in the U.S.
•
Large financial institutions and retailers
•
Community banks and credit unions
•
Billers
ACI On Demand (AOD) Overview
OVERVIEW
INVESTMENT
SCALE
48

•
Lower up-front investment,
more consistent costs
•
Faster time to market
•
Reduced operational and
regulatory burden
AOD Advantages Over On-Premise Operations
•
Operational excellence
•
Protection from code issues
•
Faster time to service restoration
•
Security and risk management

Retail Payment Solution
for one of the world’s largest fast food
retailers (14,200 stores, 60,000 tills)
RESULTS
•
2
billion
transactions
in
last
year
•
Transaction processing up 31%
over last 2 years
•
Mobile handheld processing
for in-store queue busting
Retail Payments Use Case
LARGE FAST FOOD RETAILER
CHALLENGE
•
Build electronic payments
infrastructure for a historically
cash-based business
•
Scale to address growing
transaction volume, and increase
in number of stores
50
ACI On Demand

Growth
Growth from 10% to 40% of ACI revenues
2011
2013
POST OPAY
2013
2012
APPLICATIONS SUPPORTED
5
10
18
19
2011
2013
POST OPAY
2013
2012
STAFF
120
260
500
575
2011
2013
POST OPAY
2013
2012
REVENUE
$45M
$110M
$260M
$400M
2011
2013
POST OPAY
2013
2012
CUSTOMERS
40
450
1100
4400
51

EBPP:
Grow
market
share
and
vertical reach in Electronic Bill
Presentment and Payment market
SOLUTIONS:
Grow
revenue
and
reach with targeted, high-value
solutions
Major Growth Opportunities
52

•
Displacing in-house solutions
is largest source of ACI
growth in biller-direct
•
80% of transactions are
processed by billers in-house
today
•
3.7 billion payments per year
are processed in-house
•
Compliance, efficiency and
speed to market are driving
growth in outsourcing
ACI Biller Market Opportunity
BILLER DIRECT IS FASTEST-GROWING
SEGMENT OF BILL PAY MARKET
Mail
Walk-in
Auto-debit
Consolidator
Biller-direct
Website
53
8%
6%
4%
-2%
-4%
2%
Source: Aite Group
0%

Acquisition of Online
Resources
EBPP Growth Highlights
25%
20%
15%
10%
5%
0%
2009
2010
2011
2012
ONLINE RESOURCES GREW
TRANSACTIONS AT MORE THAN DOUBLE
INDUSTRY RATE
Biller Direct Industry
Online Resources
Biller Direct
54
Source: Aite Group, 2013
•
Industry’s fastest growing
biller direct provider
•
600+ customers
•
$60 billion in payments
annually

OFFICAL PAYMENTS LEADS INDUSTRY
IN NUMBER OF CUSTOMERS
Acquisition of Official Payments
–
US Internal Revenue Service
–
23 state governments, Puerto Rico and
the District of Columbia
–
Municipal utilities
–
Higher education institutions
Source: Aite Group, 2013
EBPP Growth Highlights
55
•
$9+ billion in payments annually
•
Money transmitter licenses in all states
where required
•
3,000 customers

Online Resources
Official Payments
Future Opportunities
Vertical Market Opportunities
Federal, State & Local
Municipal Utilities
Higher Education
Real Property Taxes
Consumer Finance
(Mortgage, card, auto,
other loans)
Insurance
Utilities
ARM
(Collection agencies,
debt buyers)
Healthcare
Charities
International
Telecom
(TV, phone, Internet)
56

Integrated Bill Payments
One-time and recurring payments, and
consolidated remittances across Web,
IVR and call center
EBPP Use Case
LARGE U.S. MORTGAGE LENDER
RESULTS
CHALLENGE
57
•
Reduce high costs associated with
paper-based payments
•
Integration of remittance channels
•
73%
of
payments
received
electronically vs. industry average
of 44%
•
Turned
off
21%
of
paper
statements
vs. industry average of 16%

ACI Universal Payments
SOLUTIONS ACROSS THE VALUE CHAIN
DEBIT
CREDIT
WIRE
SWIFT
FRAUD
AML
BILL PAYMENT
POS
ACQUIRING
PAYMENT TYPES
PAPER BILLS/
CHECKS
MOBILE
ONLINE
BRANCH
POS
ATM
CHANNELS
58

Community Bank
Competes with Big Banks
Integrated mobile, online and voice
banking solution 
Solutions Use Case
THE PALMETTO BANK
RESULTS
CHALLENGE
59
•
Ability to compete with big bank
offerings for online and mobile
solutions
•
Difficulty keeping up with security,
redundancy and compliance concerns
•
24x7x365
customer
self-service
capabilities
•
Consumer online banking increased by 15%
•
Business online banking increased by 10%
•
Fully
secure,
compliant

•
High-growth, high margin part of
ACI business
•
Source of recurring revenue
•
Operational excellence
•
EBPP represents key opportunity
for growth and vertical expansion
•
Solutions focus to develop
deeper, bigger relationships
Summary
60

Customer Management
and Maintenance
Carolyn Homberger
SVP, Customer Management
November 14, 2013
61

Our focus
What is Customer Management and Maintenance?
Brand
Relationship
Products & Solutions
62
•
Profitability management
•
Customer satisfaction
•
Customer loyalty and
retention

•
Post-implementation support
•
100% recurring revenue
comprised of standard and
premium customer support
•
Expenses are driven by:
-
Production support
-
Software mandates
-
Customer management
shared services (billing,
invoicing, etc.)
Maintenance and Premium
Customer Support (PCS)
•
Sunset products
•
Revenue model driven by:
-
License fees and
maintenance
-
Services
•
Expenses are driven by product
extension (CSMs)
Extended Support
Services (ESS)
Customer Management and Maintenance
PROFITABILITY MANAGEMENT
P&L Model focused on recurring revenue and margin management
63

Customer Management and Maintenance
CUSTOMER SATISFACTION
Customer satisfaction driven by world-class SLA performance
64

Customer Management and Maintenance
CUSTOMER LOYALTY & RETENTION
Customer loyalty drivers…
•
“Cares about customers”
and
“Ease of doing business”
•
Solutions and innovation
•
Operational excellence
$3,112
2009
2010
2011
2012
9-30-13
LOW SINGLE DIGIT ATTRITION AND IMPROVING
(millions)
60-month backlog
65
Customer Management and Maintenance
$1,517
$1,566
$1,617
$2,416
21% CAGR

66
Customer Management and Maintenance
GROWTH
Organic License Fee &
Maintenance Growth
•
High electronic
transaction growth
rates
•
Add-on sales
Cross-Sell
•
UP & solutions focus
•
2X products / customer
Migration to Strategic
Products
•
Best-in-class
migration tools
Premium Customer
Support
•
Customized support –
annual system reviews,
etc.
•
Learning services
Customer Management and Maintenance

•
Focus on profitability…
high margin, high predictability
•
100% satisfaction
with
every customer interaction
•
An experience that “delights”
driving customer loyalty and
retention
Summary
67
Customer Management and Maintenance

Financials
Scott Behrens
Executive Vice President
Chief Financial Officer
November 14, 2013
68

2009
2010
2011
2012
LTM
9-30-13
ACI Sales, Net of
Term Extensions
(SNET)
ACI Term
Extensions
$425
$525
$556
$766
$813
SNET 19% CAGR
$132
$210
$226
$265
$261
$293
$315
$330
$501
$552
•
Renewal rates across ACI products >96%
•
>95% of our contracts are transaction-based
SALES BOOKINGS
Bookings Growth Leads to Large Backlog
PROVIDES REVENUE AND EARNINGS VISIBILITY
(millions)
$3,112
2009
2010
2011
2012
9-30-13
HISTORICAL 60-MONTH BACKLOG
(millions)
$1,517
$1,566
$1,617
$2,416
21% CAGR
69
Financials

ACI’s Financial Summary
2009 –
LTM 9/30/2013
$814
$73
$88
$113
$191
$223
2009
2010
2011
2012
LTM
9-30-13
NON-GAAP REVENUE
2009
2010
2011
2012
LTM
9-30-13
ADJUSTED EBITDA
18%
21%
24%
28%
27%
Adjusted EBITDA
% Margin
20% CAGR
35% CAGR
+900 bps
(millions)
(millions)
70
•
No customer accounts for >3% of revenue
•
LTM 9/30/13 revenue geographic mix: 70% Americas, 20% EMEA and 10% Asia Pacific
$406
$418
$465
$689
Financials

Ongoing Services, Implementations, Increased Capacity Sales & Other
Recurring Revenue: Hosting, Maintenance & License Fees
(Paid Monthly, Quarterly or Annually)
>70% Recurring Revenue and Growing
STRONG RECURRING REVENUE GROWTH
•
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
71
2009
2010
2011
2012
2013
Financials

Transaction growth (both in SaaS revenue
and incremental capacity licenses)
Price increases
Annual CPI increases
60-month backlog (recurring only)
Financials
Economic Value of Existing Customer Base is Growing
72

Low Cap Ex and Strong Cash Flow
$30
$63
$67
$24
$106
2009
2010
2011
2012
LTM
9-30-13
OPERATING FREE CASH FLOW
2009
2010
2011
2012
LTM
9-30-13
$10
$13
$19
$17
$22
CAPITAL EXPENDITURES
3%
3%
4%
2%
3%
Low capital expenditures needed to maintain
existing client base
ACI consistently generates strong free cash flow
•
NOLs starting to contribute and cash taxes
much lower than GAAP
(millions)
(millions)
% of Non-GAAP Revenue
Financials

HISTORICAL USE OF CASH/BORROWINGS
SINCE 2005
CUMULATIVE SHARE REPURCHASES
Average price $29.96/share
•
$108 million remains authorized
•
Current leverage ratio 2.8x
*2012 Includes $30m in IBM warrant purchases
Cumulative Amount Purchased ($millions)
Cumulative Shares (millions)
Efficient Use of Cash
AGGRESSIVE SHARE REPURCHASES
Share Repurchases
Acquisitions (excludes
shares issued)
$355m
$1090m
74
Financials

2013 Pro Forma Non-GAAP Revenue Bridge
2013
Pro Forma
2013
*(millions)
Represents low end of guidance
Stub additions normalize for full year contribution
75
•
Normalized 2013 revenue mix:
•
40% Hosting (SaaS), 24% Maintenance and 36% License & Services
•
75% recurring revenue
$883
$30
$122
$1035
ORCC
Stub
OPAY
Stub
Financials

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
76
Financials

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
77
Financials

High Quality Software Model
Drives Superior Performance
•
Leading market position
•
High retention and renewal rates
•
Pricing power and large barriers to entry
•
Significant recurring revenue
•
Scalable model with improving margin
•
Low cash investment required
•
Strong cash flow and balance sheet
•
Value enhancing capital allocation
78
Financials

QUESTIONS AND ANSWERS

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
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:
•
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.
Non-GAAP Financial Measures
80

Non-GAAP Financial Measures
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
$    
Non-GAAP Financial Measures
81

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
$    
Non-GAAP Financial Measures
Non-GAAP Financial Measures
82

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.
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
$    
Non-GAAP Financial Measures
83

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:
•
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
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.
Non-GAAP Financial Measures
Non-GAAP Financial Measures
84

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
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.
Forward-Looking Statements
Forward-Looking Statements
85

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.
Forward-Looking Statements
Forward-Looking Statements
86