FNGN Investor Ppt Q42011 120221 Web

8/2/2019 FNGN Investor Ppt Q42011 120221 Web

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Investor PresentationQ4 2011


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Forward-Looking Statements

The following information contains forward-looking statements. These forward-lookingstatements are based on the Companys current expectations and beliefs, as well as a number ofassumptions concerning future events and market trends and opportunities. These forward-looking statements include, but are not limited to, anticipated features, benefits and success ofIncome+, descriptions of potential market and/or growth opportunities and trends, as well asgeneral business objectives. The Company makes no representations regarding its intentions orplans to enter or pursue any such opportunities or trends, or the likelihood of achieving anypenetration into these potential markets or of successfully pursuing any such opportunities,

trends or objectives. These statements are subject to risks, uncertainties, assumptions and otherimportant factors, many of which are outside the Companys control, that could cause actualresults to differ materially from the results discussed in the forward-looking statements. Factorswhich may cause actual results to differ from those discussed in the forward-looking statementsinclude, but are not limited to, those discussed in our most recent SEC filings as describedbelow, as well as changes in market opportunities, demographics and trends, in the financialmarkets and economy as a whole, and in the Companys business plans, initiatives or strategies.You are cautioned not to place undue reliance on such forward-looking statements becauseactual results may vary materially from those expressed or implied. All forward-looking

statements are based on information available to the Company as of the date specified for suchinformation, if a date is given, or on this date and Financial Engines assumes no obligation to,and expressly disclaims any obligation to, update or revise any forward-looking statements,whether as a result of new information, future events or otherwise. For more information on therisks and uncertainties affecting the Company please see our most recent SEC filings, includingour Form 10-Q for period ending September 30, 2011 and our Form 10-K filed for our fiscal yearended December 31, 2011. This data is presented for information only and is not intended toconstitute an offer or solicitation with respect to any securities issued by the Company.


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Providing investment adviceto those who have been ignored

Personalized, independent

investment management and advice

through theworkplace

using proprietary, scalabletechnology

People who get help are better off

Source: Hewitt Associates and Financial Engines research: Help in Defined Contribution Plans: 2006 Through 2010, Sept 2011.


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Top DC managed account provider(1)

(1) Based on Cerulli Quantitative UpdateRetirement Markets Update 2011 (2011 Cerulli Study). Data as of Sept 30, 2011.


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Company highlights

Leader in a large market driven by powerful trends

Services help invest before and spend during retirement

Scalable, proprietary investment technology platform

High growth, recurring revenue, high operating leverage


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Powerful trends driving growth

Workplace access519,000 plans overall

Retirement$9.6 trillion dollars

Investing expertiseNobel laureate founder

TechnologyPersonalization at scale

Demographics78 million Baby Boomers

Source: 2011 Cerulli Study (retirement assets (DC and IRA) and plans data); U.S. Census Bureau July 1, 2006 (baby boomer data).


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Scalable technologydelivers high quality at low cost

Retirement Evaluationfor everyone

Online AdviceYou do the work

401(k) account

Professional ManagementWe do the work


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401(k) Plans Participants 401(k) Assets

Focused workplace distributionbroad opportunity in large plans

519,000 56 million $3 trillion

0.4%50%

54%

Current partners

ACS

Aon Hewitt

Fidelity

ING

J.P. Morgan

Mercer

T. Rowe Price

Vanguard

80% of large plan market and > $2.1 trillion of all 401(k) assets

Source: 2011 Cerulli Study (plan, participants, 401(k) assets); Pensions & InvestmentsTop DC record keepers as of Dec 31, 2010 and one of our partnersas of Dec 31, 2010 (current partners data). See our Forward-Looking Statements earlier in this presentation.


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Largest installed baseof Americas largest 401(k) plans

Based on Financial Engines data as of Dec 31, 2011. These Financial Engines customers have consented to disclosure of their relationships withFinancial Engines. This does not constitute an endorsement or approval of the advisory services provided. All trademarks are the property of theirrespective owners. Financial Engines full suite of services includes Professional Management, Online Advice, and the Retirement Evaluation.

Market leader among large 401(k) plans

Advice available to 8 million participants

137 FORTUNE 500

477 full suite employers; $467 billion in plan assets

Managing 567,000 accounts worth $48 billion

Half of members have less than $38,000 balance


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Exclusive accesswith high barriers to entry

Independence

Blue chip customers

Technology to personalize Data connectivity

Access for all employees

97% employer retention(1)

Employers require:

Based on Financial Engines data as of Dec 31, 2011.All employers who make available our Professional Management service have made us the sole in-plan provider.(1) Based on the average employer retention for the 3 years ending 12/31/11 for employers offering Professional Management services.

$467 billionassets under contract


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Three sources of growth

1. Built-ingrowth

2. Increasedenrollment

3. Potentialnew markets

AUC

AUM

401(k)

IRA

Automatic enrollment

$3B ongoing contributions

Market appreciation

Annual campaigns

Integrated enrollment

Income+

Opt-out trends

Total income planning

Social Security & pensions

Other retirement assets

Based on Financial Engines data as of Dec 31, 2011.


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Potential new markets

GrowthOpportunity Assets(billions)

Current AUC $467

Current AUM $48

DC + IRA $9,600

DC + IRA + DB $15,800

Total DC $4,900

Source: 2011 Cerulli Study (DC, IRA, and DB data); Pensions & InvestmentsTop DC record keepers as of December 31, 2010 and one of our partners Dec 31,2010 (partners data). Based on Financial Engines data as of Dec 31, 2011 (AUM, AUC). See our Forward-Looking Statements earlier in this presentation.

$467B

$2.1T

$4.9T

$9.6T

$15.8T

Current partners $2,100


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Follow the Baby Boomersat work andthrough retirement

Pre-retirement Post-retirement

DB PensionThen

401(k)Now

Members age 50+ hold 66% of assets

When can I retire?

How do I avoid losses?

Will I run out of money?



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Employees want:

Safety

Flexibility

Growth

Help

Employers dont want:

Hassle

Counterparty risk

Conflicts

High fees

+

A retirement income solutionfor 401(k)s


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Financial Engines Income+

*Account balance minimums may apply.**Requires purchase of an out-of-plan annuity. Issuer minimum purchase requirements may apply.

Feature of Professional Management No additional fee for participants or sponsors

Uses plans existing investment optionsno in-plan annuity required

Helps prepare for retirement payouts Income Checkup with an advisor to develop an income plan

Gets portfolio income-ready via higher fixed income allocation

Maintains equity exposure for growth

Generates retirement payouts directly from a 401(k) account* Steady with limited downside

Last for life**

Can go up with the market

Flexible


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Income+: safe and easy for sponsors

Based on data as of Dec 31, 2011. For more information on the risks and uncertainties affecting the Company please see our most recent SEC filings,including our Form 10-Q for the period ending September 30, 2011 and our Form 10-K filed for the fiscal year ended December 31, 2011.


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Members(thousands)

AUM(billions)

Consistent growthacross key top line metrics



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Platform, other

Professional mgmt

Recurring revenue growth

Revenue(millions)

~99% of 2011 revenue came

from existing employers

Based on Financial Engines data as of Dec 31, 2011.See our Forward-Looking Statements earlier in this presentation.


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28%13% 12% 23% 25%

Adj.

EBITDA

Margin(2)

(1) See Exhibit 99.1 to the Companys Current Report on Form 8-K filed on February 21, 2012 for a reconciliation of Adjusted EBITDA. Non-GAAP AdjustedEBITDA is defined as net income before net interest expense (income), income tax expense (benefit), depreciation, amortization of internal use software,amortization of direct response advertising, amortization of deferred commission and stock-based compensation. (2) Adjusted EBITDA as a percent of revenue.

Non-GAAP Adjusted EBITDA(1)

(millions)

Demonstrated profitability trends

34%32%


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(1)Based on Financial Engines data as of Dec 31, 2011.(2) Non-GAAP Adjusted EBITDA is defined as net income before net interest expense (income), income tax expense (benefit), depreciation, amortization of

internal use software, amortization of direct response advertising, amortization of deferred commission and stock-based compensation.(3)Enrollment rates and the component AUC are described in the Companys most recent Form 10-Q. See our Forward-Looking Statements earlier in thispresentation.

2011 highlights(1)

2011 Financial Highlights Revenue increased 29% to $144.1 million year over year

Professional Management revenue increased 37% year over year to $108.2 million

Non-GAAP Adjusted EBITDA increased 44% year over year to $40.8 million(2)

Business Highlights Introduced Income+ and advice on multiple retirement accounts

Dec 31, 2011 AUC $467 billion, AUM $48 billion

Managing over 567,000 individual portfolios

26+ month enrollment 12.6% (12.4% had AUC been marked-to-market)(3)


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Summary

Leader in a large market driven by powerful trends $9.6trillion retirement market driven by Boomer demographics

Over 50% of $3.0 trillion 401(k) assets concentrated in large employer plans

Financial Engines enjoys sole access to signed clients of $467 billion AUC

Substantial growth AUM twice the size of the closest DC managed account competitor

Untapped potential in existing customer base

Growth opportunities from Income+ and adjacent retirement markets

Recurring revenue growth with high margins Professional management revenue CAGR 40%

~ 99% of revenue came from existing employer customers in last 4 years

Non-GAAP Adjusted EBITDA margin of 28% TTM

Source: 2011 Cerulli Study (401(k) asset data and AUM vs. competitors); U.S. Census Bureau July 1, 2006 (baby boomer data); Financial Engines data asof Dec 31, 2011 (AUC and AUM). See our Forward-Looking Statements earlier in this presentation.


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Appendix


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Definitions

AUM is defined as the amount of retirement plan assets that we manageas part of our Professional Management service. Our quarter-end AUMis the value of assets under management as reported by plan providersat or near the end of each quarter. Our members are the planparticipants who are enrolled in our Professional Management service asreported by plan providers at or near the end of each quarter.

AUC is defined as the amount of assets in retirement plans undercontract for which the Professional Management service has been madeavailable to eligible participants. Our AUC and eligible participants do notinclude assets or participants in plans where we have signed contractsbut for which we have not yet made the Professional Managementservice available. Eligible participants are reported by plan providers asof various points in time

For further detail and definitions of other terms used in this presentation,please refer to the Companys most recent quarterly and annual filingswith the SEC.

Financial Enginesand Retirement Help for Lifeare registered trademarks or service marks of Financial Engines, Inc. Advisory services provided byFinancial Engines Advisors L.L.C., a federally registered investment advisor and wholly owned subsidiary of Financial Engines, Inc. Financial Enginesdoes not guarantee future results.


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Reconciliation of GAAP to Non-GAAPOperating Results

(1) For the calculation of Adjusted Net Income, an estimated statutory tax rate of 38.2% has been applied to stock-basedcompensation for all periods presented.

Non-GAAP Adjusted EBITDA 2010 2011 2010 2011

Net income 7,290$ 5,772$ 63,575$ 15,145$

Interest expense (income) (61) (8) 25 (10)

Income tax expense (benefit) (785) 2,958 (50,729) 7,900

Depreciation 466 583 1,816 2,191

Amortization of internal use software 1,146 1,550 3,703 5,577

Amortization and impairment of direct response advertising 488 865 1,185 2,734

Amortization of deferred sales commissions 302 417 1,155 1,423Stock-based compensation 1,861 1,901 7,659 5,823

Non-GAAP Adjusted EBITDA 10,707$ 14,038$ 28,389$ 40,783$

(In thousands)

Three Months Ended

December 31,

Year Ended

December 31,

Non-GAAP Adjuste d Ne t Income 2010 2011 2010 2011

Net income 7,290$ 5,772$ 63,575$ 15,145$

Stock-based compensation, net of tax (1) 1,150 1,175 4,733 3,598

Income tax benefit from release of valuation allowance (389) (160) (50,242) (160)

Non-GAAP Adjusted Net Income 8,051$ 6,787$ 18,066$ 18,583$

Non-GAAP Adjusted Earnings Per Share 0.17$ 0.14$ 0.39$ 0.38$

Shares of common stock outstanding 42,337 45,596 41,601 44,820

Dilutive restricted stock and stock options 5,181 3,954 4,831 4,587

Non-GAAP adjusted common shares outstanding 47,518 49,550 46,432 49,407

Three Months Ended

December 31,

Year Ended

December 31,

(In thousands, e xcept per share data)


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Income+Provides steady payouts for life

For illustration only. Results may vary under different market conditions. Financial Engines does not guarantee future performance. Lifetime incomeassumes purchase of an optional out-of-plan fixed immediate annuity before age 85. Financial Engines is not affiliated with any annuity providers.


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Income+Sell stocks, buy bonds to increase floor

For illustration only. In each subsequent year, any additional increases in income would be evaluated based on market performance and current marketconditions. Results may vary under different market conditions. Financial Engines does not guarantee future performance. Lifetime income assumes

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FNGN Investor Ppt Q42011 120221 Web