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MarketScreener Homepage  >  Equities  >  Nasdaq  >  ACI Worldwide, Inc.    ACIW

ACI WORLDWIDE, INC.

(ACIW)
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ACI Worldwide : Analyst Day Presentation 2020

11/10/2020 | 08:55am EST

Analyst Day

November 10, 2020

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

Welcome

John Kraft

VP, Investor Relations & Strategic Analysis

3

Launching a New ACI

Odilon Almeida

President & CEO

4

ACI Assessment

Strengths

  • Large, dynamic and growing market
  • Blue chip customers and mission- critical products
  • R&D center of excellence
  • Successful track record of value creation through M&A

Areas for Improvement

  • Profitable organic growth
  • Go-to-marketexecution
  • Predictability
  • Simpler story and operating model

5 5

Key Message for Today

ACI is a Significant

Value Creation Opportunity

Continuous

A more

Step-change

A simpler

profitable

predictable

value

story

organic

business on

creation with

growth

an annual

M&A

basis

6

Today's Agenda

Fit for Growth

Tony Dinkins, Chief Human Resources Officer

Al Monserrat, Chief Revenue Officer

Focused on Growth

Jeremy Wilmot, Chief Product Officer

Eve Aretakis, Chief Technology Officer

Step-Change Value Creation

Craig Maki, EVP, Corporate Development

Panel Discussion

Barclays Payments, Mastercard, Federal Reserve Bank

Simplifying Our Story

Mike Braatz, Chief Strategy & Marketing Officer

Long-Term Outlook

Scott Behrens, Chief Financial Officer

Closing Comments

Odilon Almeida, President & CEO

Q&A

7

FitWelcomefor Growth

Tony Dinkins

Chief Human Resources Officer

8

We are moving from 2 business units to a more efficient functional organizational model

Old ACI

New ACI

CEO

CEO

ACI On Demand

ACI On Premise

Product

Commercial

Product

Technology &

Development

Management

Operations

Product

Sales

Product

Ops

Sales

Ops

Redundancies in Sales, Product

Simpler, more nimble and agile

Management and Operations

9 9

9

We are making a step-change in organizational simplification

  • Flat, delayered structure
  • Leaders closer to front line
  • Eliminate redundancy
  • Fewer managers, more individual contributors

Old ACI

New ACI

Manager

Individual Contributor

10 10

10

The ACI team is more efficiently deployed

Impact

From

To

Layers reduced

8

5

Span of control

6

8

Managers to frontline ratio

1:6

1:7

Directors and above

7%

6%

11 11

The new organizational design results in $35M annual savings

  • $35M savings in 2021
  • Eliminated redundant costs
  • Streamlined management layers
  • Redefined key organizational processes

12 12

We are rationalizing office space based on expected demand, delivering an additional $4M of savings

Closing or right-sizing 40% of offices

From

To

  • Improves office utilization to 85+%
  • Headquarters downsized by half and moved to Miami

# offices

56

39

Square footage

870K

680K

Headquarters

Naples

Miami

50K ft2

26K ft2

  • Flexible work environment

13 13

Fit for Growth

Al Monserrat

Chief Revenue Officer

14

We are reinvesting $35M to drive growth in the new ACI

Focused investment

New Commercial

Increased investment

in high-growth areas

organization

in sales and marketing

with greatest return

15

We are investing to increase sales capacity

25%35%

increase in sales and

increase in sales

marketing investment

"feet on the street"

aligned with product strategy

16

We are flattening the Commercial organization to decrease levels between CEO and sales reps

From

To

Increased speed of decisions

Layers

8

5

Improved communication

More sales reps, fewer

managers

17 17

Commercial teams will be organized by geography and customer segment

Improved local execution

More consistent message

Leverage ACI brand and strengths

18 18

Sales investment is prioritized based on the intersection of geography, segment and solution

Solution

Geography

  • Improved investment prioritization and ROI
  • Highly targeted marketing
  • More efficient people allocation

Segment

19 19

We are creating a focused, best-in-class sales organization

Growth

New

Retain

Monitor

Sales

and Expand

Grow pipeline and

Increase bookings

Deliver high

Optimize execution

accelerate closing of

and revenue from

customer satisfaction;

through business

deals

new sales

increase adoption

intelligence and

and retention

predictive analytics

20

Sales efficiency and productivity will improve through focus, discipline and analytics

Compensation

Opportunity

Back-office

Sales performance

or incentives

identification

optimization

management

and prioritization

21

We will become a trusted advisor to our customers

From

To

Pricing

Cost

Value

Customer engagement

At renewal

Ongoing nurture

Account planning

Reactive

Proactive

Sales approach

Product-centric

Customer-centric

Relationship

Tactical

Strategic

22 22

We are aligning Sales and Marketing strategy with Product strategy

Alignment results in

19%

15%

MarketingSales

*

*

faster

higher

revenue growth

profitability

Product

*SiriusDecisions Summit '19, Keynote, Marisa Kopec, VP of Innovation and Product Management, Research Fellow

23

Focused on Growth

Jeremy Wilmot

Chief Product Officer

24

We are focusing our investments in areas that will yield double-digit growth

Real-Time

Global

Emerging

Payments

Merchants

Markets

Global banks and central

Large, sophisticated

High-growth countries in

infrastructures

global merchants

emerging markets globally

25

ACI is well positioned to take advantage of growing real-time payment volumes

184

billion

transactions*

double-digit

annual growth

Market Size

How ACI Will Win and Grow

Connect banks

Cross-sell to large existing

to real-time

customer base of global banks

Power central

Targeting countries investing in real-

infrastructures

time rails

Enrich offer with

Services like Request-to-Pay drive

value-added services

real-time adoption

* Annual real-time(account-to-account) transactions in ACI target markets globally

26 26

ACI solutions help global merchants grow and capitalize on the digital transformation of commerce

80

billion

transactions*

double-digit annual growth

Market Size

How ACI Will Win and Grow

Secure eCommerce 300+ payment methods and multi-layered fraud management for global merchants

Omni-Commerce

Flexibility and acquirer independence for

global merchants

Global Acquirers and

Extend ACI reach to small and medium

merchants through global acquirers and

Merchant Processors

processors

* Annual global eCommerce transactions in target markets

27 27

We are increasing our focus and investment in Emerging Markets

How ACI Will Win and Grow

2x

Africa

Real-timecross-sell

growth rate

Asia

of mature

Issuing and Acquiring

markets

Latin America

Large merchants

Middle East

Market Growth

28 28

Focused on Growth

Eve Aretakis

Chief Technology Officer

29

We will protect and grow our large, global Issuing and Acquiring business

1.4

How ACI Will Win and Grow

trillion

transactions*

Protect and grow retail banking franchise

  • Modernize payments infrastructure and migrate to the cloud
  • Cross-sellreal-time, acquiring, fraud management

mid-single-digit annual growth

Market Size

Focused new

Increased sales resources in emerging

markets

logo opportunities

Cloud-first solutions

* Annual global card issuing and acquiring transactions

30 30

We will protect and grow our large Bill Payments business

How ACI Will Win and Grow

15

billion

transactions*

mid-single-digit annual growth

Market Size

Double down

Utilities, Credit, Higher Education,

on key verticals

Insurance

Increased sales

Doubling sales resources in target

coverage

verticals

Student portal

End-to-end solutions

Disbursements

Subscriptions

Innovation

Mobile bill presentment

Delay my payment

* Annual U.S. direct bill payment transactions in target verticals

31 31

Platform consolidation will drive cost synergies and enhanced capabilities

Single Biller Platform

Combining the best of ACI and Speedpay platforms

Converging Digital Commerce Platforms

Integrated omni-commerce solution

32 32

We are accelerating the digital transformation of payments

Open

Cloud

Open source

Flexible cloud

deployment

Microservices

Microsoft

APIs

Digital

partnership

Payments

Transformation

Last mile

Shared endpoints

  • Rapid endpoint creation

33 33

Step-Change Value Creation

Craig Maki

EVP, Corporate Development Officer

34

We will use acquisitions and divestitures to unlock step-change value creation

Inorganic Value-Creation Themes

  • Software-ledpayment assets
  • Bolster organic revenue growth and/or enhance scale
  • Valuation discipline and integration execution
  • Actionable, realistic synergies

Inorganic Areas of Focus

  • Strengthen Biller leadership
  • Cloud capabilities and value-added services in Real-Time,Acquiring and
    Omni-Commerce
  • Divestiture opportunities

35

Real-Time Payments

Panel Discussion

Jeremy Wilmot

Moderator

Rob Cameron

Stephen Grainger

Tim Boike

CEO

EVP, Cross-Border

VP, Industry Relations

Barclays Payments

Services

& Engagement

Mastercard

Federal Reserve Bank

36

Simplifying Our Story

Mike Braatz

Chief Strategy & Marketing Officer

37

38

The ACI brand now has a simpler message

ACI Worldwide is a global software company

that delivers mission-critical

real-timepayment solutions to corporations.

39 39

Serving customers is the focus of our story

Customers use our proven, scalable solutions to process and manage digital payments, enable omni-commercepayments, present and process bill payments, and manage fraud and risk.

We combine our global footprint with local presence to drive

the real-time digital transformation of payments and commerce.

40 40

Our proven, scalable and secure solutions address specific customer needs

Customer

Process and

Enable omni-

Present and

Manage fraud

Needs

manage digital

commerce

process bill

and risk

payments

payments

payments

Our

Issuing

Secure

Bill Payments

Fraud

Solutions

Acquiring

eCommerce

Management

Omni-Commerce

Real-Time

Payments

Digital Business

Banking

41 41

ACI serves the largest corporations in payments, and has market reach to all players

Global

Merchants

Large

Small & Medium

Acquirers

Merchants

Large

Banks

Large

Small & Medium

Processors

Banks

Billers

42 42

Our brand has been updated and modernized

43 43

Long-Term Outlook

Scott Behrens

Chief Financial Officer

44

ACI's portfolio includes both double-digit and

single-digit growth solutions

Aggressively Grow

Protect and Grow

Double-digit growers

Single-digit growers

Real-Time Payments

Issuing and Acquiring

Global Merchants

Bill Payments

Emerging Markets

45 45

We have identified significant cost-savings

Cost Savings

2021

2022

Fit for Growth

$39M

$39M

Focused on Growth

$21M

$36M

Total Savings*

$60M

$75M

Reinvestment and Improved Profitability

2021

2022

Sales & Marketing

$20M

$20M

R&D

$10M

$15M

Improved Profitability**

$30M

$40M

Total

$60M

$75M

*Represents savings generated from organizational simplification, office

** Permanently replaces $30M of temporary COVID-related cost savings achieved in 2020

consolidation and R&D rationalization. Requires estimated $60-65M of one-

time expenses; 2/3 opex and 1/3 capex

46 46

Our plan will continue to use cash in three ways

Reduce

Stock

Accretive

debt

buy-back

M&A

47 47

What to expect going forward

From

To

Financial Reporting

2 P&Ls

1 P&L

Customer Segments

4

3

Bookings Metric

Total Contract Value

Annual Recurring

Revenue

Growth Focus

Lumpy non-recurring

Predictable Recurring

license fees*

Revenue

* We will gradually move contracts from lumpy non-recurring license fees to annual recurring license fees.

48 48

Recurring revenue growth will become our most important KPI

  • Recurring revenue is customer-centered and the market trend
  • We will gradually move contracts from lumpy non-recurring license fees to annual recurring license fees
  • Makes the business more predictable
  • This will improve the health of the business

49 49

We are updating our long-term outlook with an emphasis on recurring revenue

  • Mid to high-single-digitrecurring revenue growth
  • Mid-single-digitorganic revenue growth
  • Gradually improve adjusted EBITDA margin
  • Step-changevalue creation through M&A investments and divestitures
  • Target leverage ratio of 2.5x net debt/EBITDA

50 50

We will balance growth and profitability in creating long-term shareholder value

ACI On Demand Segment

Total Company

Rule of 401

Rule of 402

~40%

~19%

~2%

2017

2019*

~32%

2019*

3-year Target

1Rule of 40 equals AOD segment revenue growth + AOD segment net adj. EBITDA

2Rule of 40 equals total company organic revenue growth + net adj.

margin, which excludes pass through interchange revenue and corporate overhead

EBITDA margin, which excludes pass through interchange revenue

*Represents full year 2019 and is pro forma and inclusive of Speedpay acquisition

51

51

Closing Remarks

Odilon Almeida

President & CEO

52

ACI is a Significant Value Creation Opportunity

  • Continuous profitable organic growth
    • A nimble, agile and fit for growth organization under empowered leaders
    • A best-in-class sales process and structure
    • Focus behind growing mission-critical solutions, segments and geographies
    • We will achieve the Rule of 40*

*Rule of 40 = Organic revenue growth plus net adjusted EBITDA margin, which excludes pass through interchange revenue

53

ACI is a Significant Value Creation Opportunity

  • A more predictable business on an annual basis
    • Recurring revenue growth, our most important KPI
    • Gradually transition from lumpy non-recurring license fees to

annual recurring license fees

  • Operational discipline, our internal language

54

ACI is a Significant Value Creation Opportunity

  • Step-changevalue creation with M&A
    • Accretive investments and divestures will drive step-change value creation
    • ACI has a good track record in inorganic growth

55

ACI is a Significant Value Creation Opportunity

  • A simpler story
    • Simple company definition and purpose
    • Re-engineeredbrand architecture and positioning

56

Key Takeaway for Today

ACI is a Significant

Value Creation Opportunity

Continuous

A more

Step-change

A simpler

profitable

predictable

value

story

organic

business on

creation with

growth

an annual

M&A

basis

57

Q & A

58

59

AppendixAPPENDIX

60

Non-GAAP Financial Measures

To supplement our financial results presented on a GAAP basis, we use non-GAAP measures, including in this presentation, that we believe are helpful in understanding our past financial performance and our future results. The non-GAAP measures in this presentation include pro forma adjustments for our Speedpay acquisition as well as excluding the effects of significant transaction related expenses, and significant non-cash expenses such as stock-based compensation, depreciation, and amortization. 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:

  • Adjusted EBITDA: net income (loss) plus income tax expense (benefit), net interest income (expense), net other income (expense), depreciation, amortization and stock-based compensation, as well as significant transaction-related expenses, and pro forma Speedpay EBITDA. Adjusted EBITDA should be considered in addition to, rather than as a substitute for, net income (loss).
  • Net Adjusted EBITDA Margin: Adjusted EBITDA divided by revenue net of pass through interchange revenue. Net Adjusted EBITDA Margin should be considered in addition to, rather than as a substitute for, net income (loss).
  • Adjusted Revenue: total revenue plus the Speedpay pro forma adjustment. Adjusted Revenue should be considered in addition to, rather than as a substitute for, total revenue.
  • Adjusted ACI On Demand Interchange: total interchange expense plus the Speedpay pro forma adjustment. Adjusted ACI On Demand Interchange should be considered in addition to, rather than as a substitute for, interchange.

61

Non-GAAP Financial Measures

For the Years Ended

Adjusted EBITDA (millions)

December 31,

2018

2019

Net income

$

68.9

$

67.1

Plus:

Income tax expense

22.9

5.1

Net interest expense

30.4

52.1

Net other (income) expense

3.7

(0.5)

Depreciation expense

23.8

24.1

Amortization expense

73.5

98.5

Non-cashstock-based compensation expense

20.4

36.8

Adjusted EBITDA before significant transaction-

related expenses

243.6

283.2

Significant transaction-related expenses

7.4

24.9

Speedpay proforma adjustment

95.7

30.5

Adjusted EBITDA

$

346.7

$

338.6

Segment Information (millions)

For the Years Ended December 31,

2016

2017

2018

2019

Revenue

ACI On Demand

$

399.0

$

425.6

$

433.0

$

679.0

Speedpay proforma adjustment

-

-

351.9

124.7

Total adjusted ACI On Demand

$

399.0

$

425.6

$

784.9

$

803.7

ACI On Premise

591.3

598.6

576.8

579.3

Corporate and other

15.4

-

-

-

Total adjusted revenue

$

1,005.7

$

1,024.2

$

1,361.7

$

1,383.0

Interchange

ACI On Demand

$

143.7

$

163.4

$

170.2

$

321.5

Speedpay proforma adjustment

-

-

184.0

71.1

Total adjusted ACI On Demand interchange

$

143.7

$

163.4

$

354.2

$

392.6

Net Revenue

ACI On Demand

$

255.3

$

262.2

$

430.7

$

411.1

ACI On Premise

591.3

598.6

576.8

579.3

Total

$

846.6

$

860.8

$

1,007.5

$

990.4

Segment Adjusted EBITDA

ACI On Demand

$

(2.6)

$

(1.8)

$

12.0

$

66.5

Speedpay proforma adjustment

-

-

95.7

30.5

Total adjusted ACI On Demand

$

(2.6)

$

(1.8)

$

107.7

$

97.0

ACI On Premise

$

312.2

$

347.1

$

323.9

$

321.3

Segment Net Adjusted EBITDA Margin

ACI On Demand

-1%

-1%

25%

24%

ACI On Premise

53%

58%

56%

55%

62

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 costs savings in 2021 and 2022,
  • Expectations regarding how costs savings will be reinvested in 2021 and 2022,
  • Expectations around financial reporting, customer segments, bookings metric, and growth focus,
  • Expectations for recurring revenue growth, organic revenue growth, improvement in adjusted EBITDA margin, value creation through M&A investments and divestitures, and target leverage ratio,
  • Expectations on ACI On Demand and total company Rule of 40.

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 success of our Universal Payments strategy, demand for our products, consolidations and failures in the financial services industry, customer reluctance to switch to a new vendor, 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, 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, our ability to protect customer information from security breaches or attacks, our ability to adequately defend our intellectual property, exposure to credit or operating risks arising from certain payment funding methods, 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, adverse changes in the global economy, worldwide events outside of our control, failure to attract and retain key personnel, litigation, future acquisitions, strategic partnerships and investments, integration of and achieving benefits from the Speedpay acquisition, impairment of our goodwill or intangible assets, restrictions and other financial covenants in our debt agreements, our existing levels of debt, replacement of LIBOR benchmark interest rate, the accuracy of management's backlog estimates, exposure to unknown tax liabilities, 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, volatility in our stock price, and the COVID-19 pandemic. 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 Reports on Form 10-Q.

63

64

Disclaimer

ACI Worldwide Inc. published this content on 10 November 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 10 November 2020 13:54:02 UTC


© Publicnow 2020
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Financials (USD)
Sales 2020 1 261 M - -
Net income 2020 49,2 M - -
Net Debt 2020 1 107 M - -
P/E ratio 2020 104x
Yield 2020 -
Capitalization 4 705 M 4 705 M -
EV / Sales 2020 4,61x
Capi. / Sales 2021 3,52x
Nbr of Employees 4 018
Free-Float 81,2%
Chart ACI WORLDWIDE, INC.
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ACI Worldwide, Inc. Technical Analysis Chart | ACIW | US0044981019 | MarketScreener
Technical analysis trends ACI WORLDWIDE, INC.
Short TermMid-TermLong Term
TrendsBullishBullishBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus BUY
Number of Analysts 7
Average target price 43,29 $
Last Close Price 40,30 $
Spread / Highest target 16,6%
Spread / Average Target 7,41%
Spread / Lowest Target -0,74%
EPS Revisions
Managers and Directors
NameTitle
Odilon Almeida President, Chief Executive Officer & Director
David A. Poe Chairman
Scott William Behrens Chief Financial & Accounting Officer
Eve Aretakis Chief Technology Officer
Charles E. Peters Independent Director
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