![]() Analyst Day 2014 Wednesday, November 12, 2014 Naples, Florida Exhibit 99.1 |
![]() ANALYST DAY NOVEMBER 12, 2014 Confidential 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. Private Securities Litigation Reform Act of 1995 Safe Harbor For Forward-Looking Statements |
![]() 2 ANALYST DAY NOVEMBER 12, 2014 Agenda Welcome Market Scan and Overarching Strategy ACI Vision Break Market and Solutions Strategy Taking UP to Market ACI Financials Q&A Lunch |
![]() Market Scan and Overarching Strategy Carl Gustin EVP, Chief Marketing Officer |
![]() Understanding the Market and Setting the Strategic Imperatives |
![]() 5 ANALYST DAY NOVEMBER 12, 2014 Understanding the Market Leads to Strategic Imperatives Distilling months of research and hundreds of pages of information and data down to 12 strategic imperatives upon which to build our master, overarching strategy. Market Trends and Dynamics Scenarios/ Options Strategic Imperatives Gap Analysis/Actions Assessment Alternatives and Actions |
![]() 6 ANALYST DAY NOVEMBER 12, 2014 ACI Strategic Imperatives Online, single message payments represents true ubiquity for customers in terms of both access and real-time decisions and actions. ACI will show customers that a real-time, online strategy is their most compelling business rationalization to move to UP. It transcends other trends: execution of real- time payments encompasses other trends (e.g., mobile). ACI will have a pervasive and differentiated path to cloud or SaaS solutions that embraces the promise and power of UP (offering UP as a hosted or SaaS- based service could accelerate ACI’s opportunity). In order to leverage online, real-time solutions, ACI will demonstrate compelling business value to upgrade legacy systems while maintaining the security and peace of mind expected in payments. The value proposition and execution will make the migration simple with a strong business value. ACI leads financial institutions back to being price makers, not price takers, through the implementation of network and product solutions unique to ACI. This will address high expenses and stagnant top- line revenue. Similarly, processors with software- centric payment solution strategies are differentiated and sell on value, not cost. This has been proven repeatedly through the consolidation in the processor market through acquisition multiples. Online, real- time trumps all other trends. Cloud as a delivery model for payment systems is inevitable. Value proposition to replace legacy systems must be clear. Technology is key in addressing market pricing pressure. |
![]() 7 ANALYST DAY NOVEMBER 12, 2014 ACI Strategic Imperatives Customers are prioritizing easy, intuitive, self-driven interactions with the company, and messaging through this channel must be personalized and focused. Best-in-class consumer support experiences are quickly becoming the expectation of B2B customers. Organizations that are not online, transparent, responsive and engaged with their customers will lose out. The consumer shopping experience is changing. ACI will help retailers realize the opportunity to leverage mobile technologies and big data and raise the perceived value of payments technology within retailers. Real-time payments and direct connections are the facilitators of the buying cycle disruption. By 2020, Asia-Pacific will carry the largest volumes of payments and the make up of the G20 will radically change. ACI will invest in solutions that help capture these markets early to participate in the growth. Global regulation is a key market driver and customer influencer; this impacts our GTM efforts with solutions packages, UP and how our customers upgrade legacy systems. Customer experience and brand are highly correlated. Online and brick-and- mortar experience is blurring and retailers must respond. Rapid growth in emerging markets will change the global payments landscape. Regulation is a pervasive, strategic driver of payments and an opportunity for ACI to lead the market. |
![]() 8 ANALYST DAY NOVEMBER 12, 2014 ACI Strategic Imperatives In the developed markets, there are two forces emerging: Each demographic segment has unique demands, and financial institutions must rise to the challenge to meet them. The barriers to switching bank accounts continue to diminish. ACI will demonstrate how our solutions can decrease account churn and improve consumer loyalty. Financial institutions must improve cross selling by providing more value. As the payments ecosystem rapidly evolves, ACI will develop and nurture a broad partner strategy. This is essential to deliver solutions in all geographies, customized to local needs. The revamping of the ACI partner strategy will address tactical implementation partners and technology reviews. Government-sponsored payment networks in emerging economies will play a critical role in the future of payments. This will erode the power of the international branded networks and dilute market share. Rapidly changing demographics will challenge bank marketing strategies. Bank account switching will increase without intervention. The payments ecosystem is vast and more localized. Impact of government- sponsored payment networks is significant. 1. Baby boomers, the largest demographic, moving out of the workforce 2. Millennials, youngest and tech-savvy group, moving into the marketplace |
![]() Evolution of Strategy |
![]() 10 ANALYST DAY NOVEMBER 12, 2014 Every year brings new layers to address new issues or opportunities. Future versions do not obsolete or replace current or previous versions; they build on them. Is a Pervasive, Multi-year, Multi-layer, Company-wide Initiative That is the Heart of Our Strategy August 2014: Layer 3 ReD plus UP provides unparalleled (CNP) retail merchant security addressing eCommerce market with a SaaS/omni-channel solution. March 2014: Layer 2 Building on the UP Framework, BASE24-eps v2 is UP-enabled, bringing to market real-time commerce and any-to-any functionality. April 2013: Layer 1 The UP Framework and UP Hub concept is launched. September 2012 Distra acquisition provides tools to make the 2011 Agile Payments vision a reality. |
![]() 11 ANALYST DAY NOVEMBER 12, 2014 ACI Universal Payments Control, choice and flexibility Over four years ago ACI recognized the market dynamics that would disrupt the category and call for a whole new way of designing and implementing payment systems for real-time commerce in a secure, omni- channel environment. We reinvented ACI then to deliver the UP solution by the beginning of 2013. Ubiquitous Information Rich Any Participant Any Channel Integrated Risk Mgmt Real-Time/ Instant Any Payment Type Any Geography ACI created in response to accelerated change in the payments industry. empowers customers to quickly leverage and profit from the disruption opportunity. |
![]() 12 ANALYST DAY NOVEMBER 12, 2014 ACI View Validated in Recent Media ACI has a multi-year lead in delivering immediate payments solutions today |
![]() 13 ANALYST DAY NOVEMBER 12, 2014 CUSTOMER CORE SYSTEMS & ARCHITECTURE Wholesale Retail … Networks Channels Before Customers are burdened with difficult integration tasks: • Massive customization needs • High cost of maintenance • Slow time to market • Trouble achieving differentiation 13 |
![]() 14 ANALYST DAY NOVEMBER 12, 2014 CUSTOMER CORE SYSTEMS & ARCHITECTURE The Advantage: Layer 1 Universal Payments solves integration issues: • Lower unit costs • Speed time to market • Increase global readiness • Enable data mining and cross-sell opportunities • Controlled migration UNIVERSAL PAYMENTS Wholesale Retail … Networks Channels 14 |
![]() 15 ANALYST DAY NOVEMBER 12, 2014 Real-Time, A-to-A (Fast Payments): • Direct connections • Eliminate toll takers, lower costs • Greater customer satisfaction • Maximum control, choice, flexibility After The Advantage: Layer 2 Before |
![]() 16 ANALYST DAY NOVEMBER 12, 2014 The Advantage: Layer 2 |
![]() 17 ANALYST DAY NOVEMBER 12, 2014 The Advantage: Layer 3 Merchant Retailer Solution • Enhanced fraud protection – especially CNP transactions exploding with the 20% per year growth of eCommerce • Compelling omni-channel solution for greater customer satisfaction • True SaaS implementation |
![]() ANALYST DAY NOVEMBER 12, 2014 The Advantage: Year After Year Powerful, Extensible, Scalable • Restores customer control, choice, flexibility • Fast, efficient, customized solutions • Robust tool set to address today’s issues as well as issues yet to be known • Equally effective on-premise or hosted • Highly differentiated over competition • Responsive to all strategic imperatives • Our “secret sauce” competitive advantage 18 |
![]() 2015-2019 Overarching Strategy |
![]() 20 Capital markets’ rapid growth and complexity will be increasingly enabled and managed by strong vertical/integration software technology. Key Business Trend • One such vertical will be payments in general. • The model will be similar to the transformation brought about in the 90’s by an integration approach in business management that eventually consolidated with Oracle and SAP. Other examples of similar transformations for consumer businesses include Amazon, Google and Apple. • In the case of payments, ACI is emerging as the leader in this transformation through the adoption of the UP Framework deployed widely on premise, hosted, SaaS and eventually in secured private clouds. ANALYST DAY NOVEMBER 12, 2014 |
![]() 21 Key Business Trend This transformation will stimulate the destruction of the current payments business model and replace it with a more efficient alternative based on real-time, any-to-any infrastructure. ANALYST DAY NOVEMBER 12, 2014 • Services revenue will recede rapidly and be replaced with products/solutions revenue. The market today is 60% services, 40% products and that will invert to 40% services, 60% products within five years. The trend will be even more dramatic in 10 years. • This could cause a category constriction from $20B today to possibly $14B versus a projected growth to $29B. • Given ACI’s UP approach as a disintermediation and replacement technology, ACI share could double over the same period in which the value of the market decreases. |
![]() 22 Key Business Trend This transformation is stimulated by the pervasive market conditions of ubiquity and the movement of commerce to the cloud. • The need for businesses and consumers to be able to initiate and complete transactions anywhere, anytime within any device, and do so quickly, calls for the destruction of the current payments model not suitable for single message, real- time, any-to-any transactions. • The UP Framework not only addresses this transformation, but accelerates it. • UP enables customers in all segments (financial institutions, retailers, billers, etc.) to leverage this transformation for faster and more profitable growth. ANALYST DAY NOVEMBER 12, 2014 |
![]() A New Payments Paradigm Has Emerged Real-time, any-to-any, immediate payments in an omni-channel environment. ANALYST DAY NOVEMBER 12, 2014 23 |
![]() 24 ANALYST DAY NOVEMBER 12, 2014 Focus on the enablement of all market solutions and deploy them on- premise, hosted, as SaaS or in a private cloud for all segments served. ACI Overarching Strategy • All solution development and GTM efforts will address real-time commerce, any-to-any transactions and the implementation of “fast payments”. • Solutions will be developed to answer all emerging needs quickly and efficiently (i.e., eCommerce/fraud, omni-channel) within any targeted segment globally. • Investment strategies will be refocused to “double down” efforts on key initiatives that support this strategy and harvest or divest those that do not. |
![]() Phil Heasley President and CEO ACI Vision |
![]() Break |
![]() Craig Saks EVP, Chief Product Officer Market and Solutions Strategy |
![]() 28 ANALYST DAY NOVEMBER 12, 2014 What is Universal Payments The breadth and depth of our solution set Our unique payments technology framework A future vision • ACI’s solution set and payments capabilities are unrivaled in the market • Retail to wholesale banking, consumers to the largest corporations, global and proven • Enables our customers to adopt an enterprise payments approach • Realizing the vision of real-time, any-to-any payments • The frameworks, designs, tools and infrastructure that underpin flexibility, responsiveness, differentiation and productivity |
![]() 29 ANALYST DAY NOVEMBER 12, 2014 Payments Strategy Key Constructs |
![]() 30 ANALYST DAY NOVEMBER 12, 2014 Two Sides of Strategy |
![]() Confidential ANALYST DAY NOVEMBER 12, 2014 Solutions Meeting Market Needs Today… Retail Banking Transaction Banking Merchant Retail Billers Consumer Payments Transaction Banking Retailer Payments Bill Payments Payments Risk Management Hub 31 |
![]() Confidential …and Tomorrow UP Consumer Payments Platform UP Commercial Payments Platform Retail Banking Transaction Banking Merchant Retail Billers National Switches Processors 31.1 ANALYST DAY NOVEMBER 12, 2014 |
![]() 32 ANALYST DAY NOVEMBER 12, 2014 Five Year ACI Go-to-Market Overview Solution and Platform roadmap Solution and Platform roadmap Solution and Platform roadmap Horizon 2 Horizon 1 • Deliver new UP-based transaction banking payments engine • Accelerate implementations • Enhance retailer omni-channel solution with ReD • Extract new sources of value from the EBPP asset • Bring first direct connections customer to market • Grow ReD Exchange industry consortium • Deliver UP Consumer Payments Platform, incorporating: • Consumer omni-channel • Branch services • EBPP • Retailer omni-channel • Consumer payments • UP Hub • Payments risk • Settlement and reconciliation • Deploy new offerings utilizing big data in ReD Exchange • Deliver UP Commercial Payments Platform, incorporating: • Online banking • Mobile • Trade • UP Hub • Payments Risk • Transaction banking • Incorporate big payments data as an important part of our value proposition Horizon 3 |
![]() 33 ANALYST DAY NOVEMBER 12, 2014 Five Year ACI Go-to-Market Overview Key UP Framework themes Horizon 3 Horizon 2 Horizon 1 • Standardize on cross product infrastructure and data management architecture • Deliver cross-channel, responsive UIs • Enhance common services (security, manageability, entitlements, reporting, tokenization, simulation, testing) • Continue SDK and API focus for platform extensibility |
![]() 34 ANALYST DAY NOVEMBER 12, 2014 Five Year ACI Go-to-Market Overview Customer engagement Customer engagement Customer engagement Solution orientation Solution orientation Solution orientation Horizon 3 Horizon 2 Horizon 1 • Establish executive-level advisory boards, forums and ideation sessions • Broker direct connections relationships between customers (target examples in EMEA and APAC markets) • Work with executive advisory boards to generate joint innovation projects • Extend direct connections relationships to next 5 markets • Package approach to foster coexistence and migrations to UP BASE24-eps 2.0 • Increase average number of products used by customers by 5% due to solutions • Increase number of large deals by 20% • Continue development of stronger annuity-based pricing models • Achieve strong SNET growth for real- time any-to-any offerings • Participate consistently in all major faster payments initiatives • Increase average number of products used by customers by a further 5% • Increase number of large deals by a further 20% • Establish a strong culture of joint payments innovation with our customers leading to new solution creation • Extend direct connections relationships to 10 markets in total • Implement UP BASE24-eps co- existence at majority of BASE24 Classic customers • Achieve recognition as the leading payments software platform provider • Increase average number of products used by customers by a further 5% • Increase number of large deals by a further 20% |
![]() 35 ANALYST DAY NOVEMBER 12, 2014 Five Year ACI Go-to-Market Overview Implementation lifecycle Global hosting capability Human capital Implementation lifecycle Global hosting capability • Expand hosting to other global centers Human capital Implementation lifecycle Global hosting capability Horizon 3 Horizon 2 Horizon 1 Human capital • Grow implementation partner program to enable rapid scaling • Establish European data center • Selectively partner with third-party data center operators • Align product management leadership around market and platform focuses • Improve global diversity of the product management function • Invest in faster payments product management skills • Improve alignment between product management and solution consulting • Equip strategic implementation partners to be independently effective • Achieve recognition for product leaders and solution consulting leads as thought leaders on the global stage • Leverage partner network to implement quickly to accelerate the software platform business • Have a hosting presence around the globe • Achieve recognition for product leaders and solution consulting leads as powerful payments innovators |
![]() 36 ANALYST DAY NOVEMBER 12, 2014 Real-Time, Any-to-Any Payments Journey • Market solutions meeting key customer segments today • Evolution to Consumer and Commercial Payments Platforms • Vision and roadmap to equip customers for real-time, any-to-any payments |
![]() Dan Frate Group President Strategic Products and Global Markets Taking UP to Market |
![]() 38 ANALYST DAY NOVEMBER 12, 2014 Strategic, Consultative Sales Approach |
![]() ![]() ![]() 39 ANALYST DAY NOVEMBER 12, 2014 Streamlined Pre-sales Experience Overarching Implementation Strategy Implementation services are critical to the success of ACI Core Product Protection Quick Go-live • Rapid turnaround of quality estimates • Well understood and agreed commitments in partnership with customers • Customers can extend our products and solutions • Less risk • Less complexity • Rapid solution implementations using proven and repeatable methods • Standard product and service offerings and approaches |
![]() • Larger, more strategic opportunities • Improved customer loyalty • Increased ability to cross-sell • Faster realization of value and backlog to revenue conversion • Competitive advantage • Market leadership • Competitive advantage • More funds to innovate • Reduced payback period • Improved ROI • Efficient use of operating dollars How ACI and Our Customers Benefit Customer focus and strategic relationships 40 ANALYST DAY NOVEMBER 12, 2014 ACI is a Software Products Company |
![]() Customers familiar with Universal Payments see ACI as an innovative, top-tier brand, and they rate ACI products and services higher than those unfamiliar with the UP strategy. SOURCE: ACI’s 2013 Customer Loyalty Study Driving Customer Loyalty and Satisfaction 41 ANALYST DAY NOVEMBER 12, 2014 |
![]() Delivering an Omni-channel Customer Experience for one of the world’s largest banks CHALLENGE BENEFITS 42 ANALYST DAY NOVEMBER 12, 2014 • Aspirations to be the primary bank of its customers held back by inconsistent experience caused by legacy technology • Improve cross sell and retention rates • Significant operating cost improvements • New channels deployed in 4 months instead of 18, reducing deployment costs by 80% • Payment analytics improves cross sell and retention • Consistent payment experience |
![]() Complex Payments Environment Leads to Inconsistent Customer Experience 43 ANALYST DAY NOVEMBER 12, 2014 |
![]() Streamlined, Consistent Omni-channel Experience 44 ANALYST DAY NOVEMBER 12, 2014 |
![]() Improving Security and Reducing Payments Fraud for an international transportation company BENEFITS CHALLENGE 45 ANALYST DAY NOVEMBER 12, 2014 • Unacceptable security-related risk across multiple systems • Inefficient, manual chargebacks • Fragmented and inefficient settlement reporting • Real-time fraud detection authorized from one system • Automated dispute processing • Multiple payment types processed from one transaction • Security risk reduction, protecting the brand |
![]() Multiple and Complex Systems Present Unacceptable Risk 46 ANALYST DAY NOVEMBER 12, 2014 |
![]() Streamlined, Secure, Hosted Solution Hosted Retailer Solution 47 ANALYST DAY NOVEMBER 12, 2014 |
![]() 48 ANALYST DAY NOVEMBER 12, 2014 Digital Business Banking • Inflexible product that was extension of core banking solution • No unique branding options • Need to add mobility • High touch, high tech digital and mobile experience wins target customers • Brand protection with proven data center • Accelerate back-office integration by 50% CHALLENGE BENEFITS |
![]() 49 ANALYST DAY NOVEMBER 12, 2014 Branded, Customizable Business Banking Experience |
![]() 50 ANALYST DAY NOVEMBER 12, 2014 Saving Millions with Integrated e-Billing BENEFITS CHALLENGE for a Local Utility Co-operative • High costs associated with manual billing • Employee and customer satisfaction at risk due to strains caused by system • Saved $3M with integrated e-billing • 40 percentage point drop in mail-in payments • Improved satisfaction |
![]() 51 ANALYST DAY NOVEMBER 12, 2014 Video |
![]() 52 ANALYST DAY NOVEMBER 12, 2014 • Consultative, solution-led, business- oriented executive relationships • Focus on customer success, from pre-scales through rapid implementation • UP driving transformational projects today Driving Customer Success |
![]() Scott Behrens Senior Executive VP Chief Financial Officer ACI Financials |
![]() 54 ANALYST DAY NOVEMBER 12, 2014 Software model with growing recurring revenue Backlog: value of our existing customer base The high margin reward of a product, not services model Overview |
![]() 55 ANALYST DAY NOVEMBER 12, 2014 Monthly Recurring Revenue Predictable & Growing • Monthly recurring revenue now represents >70% |
![]() • Non-recurring revenue is strongest in Q4. Revenue recognition triggers include: • Planned “go lives” often scheduled to occur prior to start of the year • Incremental capacity sales given “use it or lose it” budgets • Customers with annual billings contracts have opted to pay in Q4 Seasonality of Non-recurring Revenue 56 ANALYST DAY NOVEMBER 12, 2014 |
![]() • Fixed cost infrastructure given software, not processing model • EBITDA margin spikes follow revenue Fixed Costs Provide Leverage in Model 57 ANALYST DAY NOVEMBER 12, 2014 |
![]() ACI Revenue Model Shifts with SaaS Adoption • Higher percentage realized at go-live • Steady recurring revenues SaaS subscription and transaction revenue now represent >40%, up from 10% in 2009 58 ANALYST DAY NOVEMBER 12, 2014 |
![]() • 60 month backlog is >$4 billion • Existing customer base and low customer attrition provide baseline for future revenue Backlog Provides Strong Foundation for Growth 59 ANALYST DAY NOVEMBER 12, 2014 |
![]() • Competitive positioning provides pricing power • High R&D spending creates large competitive moat • Price increases not included in backlog calculation Price Increases Boost Future Value of Backlog 60 ANALYST DAY NOVEMBER 12, 2014 |
![]() • Electronic payment growth at 6-8% CAGR • Existing license customers typically purchase incremental capacity licenses during term Transaction Growth Provides Incremental Value 61 ANALYST DAY NOVEMBER 12, 2014 |
![]() • Cross sales typically account for 2/3 of net new business • Average customer uses 2.5 products Cross-selling and Signing New Customers Allows ACI to Achieve Mid-to-upper Single Digit Growth 62 ANALYST DAY NOVEMBER 12, 2014 |
![]() 63 ANALYST DAY NOVEMBER 12, 2014 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 |
![]() 64 ANALYST DAY NOVEMBER 12, 2014 • Leading market position • High retention and renewal rates • Significant recurring revenue • Scalable, fixed-cost model with improving margin • Low cash investment required High-quality Software Model Drives Superior Performance |
![]() ACI Executives Q&A |
![]() Confidential ANALYST DAY NOVEMBER 12, 2014 Forward-Looking Statements All of the foregoing forward-looking statements are expressly qualified by the risk factors discussed in our filings with the Securities and Exchange Commission. Such factors include but are not limited to, increased competition, the performance of our strategic product, BASE24-eps, demand for our products, restrictions and other financial covenants in our credit facility, consolidations and failures in the financial services industry, customer reluctance to switch to a new vendor, the accuracy of management’s backlog estimates, the maturity of certain products, our strategy to migrate customers to our next generation products, ratable or deferred recognition of certain revenue associated with customer migrations and the maturity of certain of our products, failure to obtain renewals of customer contracts or to obtain such renewals on favorable terms, delay or cancellation of customer projects or inaccurate project completion estimates, volatility and disruption of the capital and credit markets and adverse changes in the global economy, our existing levels of debt, impairment of our goodwill or intangible assets, litigation, future acquisitions, strategic partnerships and investments, risks related to the expected benefits to be achieved in the transaction with Online Resources, OPAY and ReD, the complexity of our products and services and the risk that they may contain hidden defects or be subjected to security breaches or viruses, compliance of our products with applicable legislation, governmental regulations and industry standards, our compliance with privacy regulations, the protection of our intellectual property in intellectual property litigation, the cyclical nature of our revenue and earnings and the accuracy of forecasts due to the concentration of revenue generating activity during the final weeks of each quarter, business interruptions or failure of our information technology and communication systems, our offshore software development activities, risks from operating internationally, including fluctuations in currency exchange rates, exposure to unknown tax liabilities, and volatility in our stock price. For a detailed discussion of these risk factors, parties that are relying on the forward-looking statements should review our filings with the Securities and Exchange Commission, including our most recently filed Annual Report on Form 10-K, Registration Statement on Form S-4, and subsequent reports on Forms 10-Q and 8-K. 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 recurring revenue, electronic payment growth and price increases, future increases in organic revenue and adjusted EBITDA margin, operating free cash flow and sales, net of term extension |