Temenos Ag · SIX:TEMN
Temenos — Q3 2010 Earnings Presentation
35 slides from Temenos's earnings presentation, Oct 27, 2010
Slide 1: Financial Results & Business Update
Financial Results & Business Update Quarter ended 30 September 2010 27 October 2010
Slide 2: Disclaimer
Disclaimer Any remarks that we may make about future expectations, plans and prospects for the company constitute forward-looking statements. Actual results may differ materially from those indicated by these forward-looking statements as a result of various factors. In particular, the forward-looki
Slide 3: Agenda
Agenda Introduction Sarah Bowman Investor Relations Strategy and Business update Andreas Andreades CEO Financial update David Arnott CFO Acquisition Update Max Chuard Director, M&A and IR Outlook and Summary Andreas Andreades CEO Q&A Slide 3
Slide 4: Agenda
Agenda Introduction Sarah Bowman Investor Relations Strategy and Business update Andreas Andreades CEO Financial update David Arnott CFO Acquisition Update Max Chuard Director, M&A and IR Outlook and Summary Andreas Andreades CEO Q&A Slide 4
Slide 5: Business update
Business update Market conditions continue to improve • Licence revenue growth accelerates... → Licence growth +41% in the quarter, +38% like-for-like → Pipeline continues to grow sequentially even after a strong quarter • ...on the back of increasing deal size… → Number of new clients unchanged vs
Slide 6: Business update
Business update • Organic growth drivers gain momentum... → Partner strategy delivers with continued joint signings and first partner sourced deals → Add-on products are increasingly integrated into T24 sales • Partners deliver a greater share of services → Over 50% of implementation activities curr
Slide 7: Update on Q3 Add-on sales
Update on Q3 Add-on sales Add-on revenues continue to grow as a percentage of licence revenues 2007 2008 2009 2010 % of licence <5% 5% 10% 15% revenues ARC Biometrics ARC Mobile T-Risk Insight AML STeP Compelling value proposition exists for combining add-on products to T24 licences – we successfull
Slide 8: Update on Partners
Update on Partners Microsoft – High performance benchmark sets new standards for speed and scalability. We are the “go to” vendor for lowest TCO offering. Strong demand seen in pipeline. Oracle – engaged in benchmark testing on Exadata platform. Over 50% of new T24 customers continue to take Oracle
Slide 9: Agenda
Agenda Introduction Sarah Bowman Investor Relations Strategy and Business update Andreas Andreades CEO Financial update David Arnott CFO Acquisition Update Max Chuard Director, M&A and IR Outlook and Summary Andreas Andreades CEO Q&A Slide 9
Slide 10: Income statement highlights – Q3 2010
Income statement highlights – Q3 2010 Q3 2010 Q3 2009 y-o-y (USDm) (USDm) Licence revenues 37.7 26.8 41% Total revenues 104.0 88.6 17% Adj. EBIT 29.2 25.2 16% Adjusted EPS* 0.40 0.34 18% * in USD; see appendix for reconciliation Slide 10
Slide 11: Financial statement highlights
Financial statement highlights in USDm Q3 10 Q3 09 LTM 10 LTM 09 Licences 37.7 26.8 41% 143.2 131.9 9% Maintenance 37.1 29.2 27% 138.7 113.9 22% Services 29.2 32.5 (10)% 134.9 128.1 5% Total Revenue 104.0 88.6 17% 416.8 373.9 11% Total operating costs (80.4) (68.2) 18% (339.7) (298.2) 14% Adj. E
Slide 12: Q3 like-for-like revenues
Q3 like-for-like revenues Like-for-like total revenue +10%... USDm +38% +13% (17)% Slide 12
Slide 13: Q3 like-for-like costs
Q3 like-for-like costs ...vs. like-for-like costs +9% USDm Restructuring Amortisation** Restructuring Amortisation** Acquisitions* FX Like -for-like Like -for-like Costs Costs *Includes Viveo standalone costs **This represents amortisation of acquired intangibles Slide 13
Slide 14: Income statement
Income statement Q3 2010 Q3 2009 y-o-y (USDm) (USDm) Adjusted EBIT 29.2 25.2 16% Net finance charge (2.3) (2.1) (9)% FX (loss)/gain 0.5 (0.6) n/a Tax (0.2) (0.1) n/a Adjusted Net 27.2 22.4 21% Adjusted EPS* 0.40 0.34 18% * USD per share; see appendix for reconciliation Slide 14
Slide 15: Update on cash
Update on cash Still on track to reach 100% cash conversion by year end Adjusted EBITDA conversion EBITDA conversion 70% 71% 99% 99% USDm 43% 42% 112% 113% Slide 15
Slide 16: New USD 350m bank facility
New USD 350m bank facility → In early October 2010 we refinanced our existing bank facility, (USD 220m, expiration 2012) with a new bank facility for USD 350m*. Royal Bank of Scotland led the successful bookbuilding process. → In addition to refinancing existing debt, the facility will be used to fu
Slide 17: Balance sheet – debt and financing
Balance sheet – debt and financing Q3 2010 Comments (USDm) Convertible bond 145.7 1.5% coupon, matures 2013 (converts at CHF18.6) Credit facilities* 161.0 Other 1.0 Obligations under finance leases TOTAL DEBT 307.7 CASH 177.0 Held in ST deposits & treasury shares NET CASH (excl. convert) 15.0 Treati
Slide 18: Agenda
Agenda Introduction Sarah Bowman Investor Relations Strategy and Business update Andreas Andreades CEO Financial update David Arnott CFO Acquisition Update Max Chuard Director, M&A and IR Outlook and Summary Andreas Andreades CEO Q&A Slide 18
Slide 19: Viveo Update
Viveo Update Restructuring is essentially complete → Court case vs Viveo Works Council decided in favour of Temenos → We expect the restructuring to be completed by year-end We have executed our restructuring plan well → Primarily through disposals we have improved margins by 15ppts → We are on trac
Slide 20: Introducing Odyssey
Introducing Odyssey Overview of Odyssey → Established in 1995 → 400 Full time employees → Headquartered in Luxembourg with 14 offices globally → Acquisition for an EV of USD 101.3m → Transaction closed on October 18, 2010 → Odyssey to be consolidated from closing date On projected 2011 revenues of U
Slide 21: Acquisition Rationale
Acquisition Rationale Through the acquisition of Odyssey we intend to: → Create the leader in private wealth platform solutions → Create scale in private banking → Gain market share in a growing market → Offer broader product portfolio → Offer significant synergies through complementary offering and
Slide 22: Agenda
Agenda Introduction Sarah Bowman Investor Relations Strategy and Business update Andreas Andreades CEO Financial update David Arnott CFO Acquisition Update Max Chuard Director, M&A and IR Outlook and Summary Andreas Andreades CEO Q&A Slide 22
Slide 23: Summary
Summary Another strong quarter underlines improving market dynamics IT pivotal part of banks’ business plans to address: • Stricter and more fragmented regulation • Shoring up deposit base • Rapid growth (especially in emerging markets) • Improving customer experience (and rebuilding of trust) • M&A
Slide 24: Outlook
Outlook Temenos grows ahead of the market due to… → Superior products and breadth of product set → Market leadership → Solid execution → Industry focus → Superior partners → Broadest reference base Slide 24
Slide 25: Updated Guidance
Updated Guidance Guidance Ranges Previous New outlook Outlook incl. USDm outlook Odyssey Total Revenue 435-445 435-445 451-461* Licence 150m (12% l-f-l) 155m (15% l-f-l) 161m (15% l-f-l) Revenue Adj EBIT 110-115 110-115 110-115 EBITDA 100% 100% 100% Conversion Tax Rates 0% 0% 0% * Q4 F/X rates are E
Slide 26: Closing comments
Closing comments LTM revenues and adj. EBIT since Q3 2005 (USDm) Adjusted EBIT CAGR of 40% LTM Revenue Adjusted EBIT Slide 26
Slide 27: Agenda
Agenda Introduction Investor Relations Investor Relations Strategy and Business update Andreas Andreades CEO Financial update David Arnott CFO Acquisition Update Max Chuard Director, M&A and IR Outlook and Summary Andreas Andreades CEO Q&A Slide 27
Slide 28: Appendices
Appendices ‘7 =m: FM] Ce) FA ed EMENOS The Banking Software Company
Slide 29: Adjusted EPS reconciliation
Adjusted EPS reconciliation Q3 2010 Q3 2009 (USDm) (USDm) Net Earnings 21.9 17.4 Amortisation of acquired intangible assets 3.2 1.9 Bond interest 1.5 1.4 Restructuring 2.3 3.0 Earnings for adjusted EPS 28.9 23.7 Number of dilutive shares 72.4 69.4 Adjusted EPS 0.40 0.34 Slide 29
Slide 30: DSOs trend
DSOs trend Days DSOs – last 10 quarters Slide 30
Slide 31: Geographical breakdown of licence revenue
Geographical breakdown of licence revenue Slide 31
Slide 32: Breakdown of license revenues by customer tier
Breakdown of license revenues by customer tier Proportion of Tier 1-2 customers has returned to pre-crisis levels – last seen in 2007 Slide 32
Slide 33: Progress on partner programme
Progress on partner programme How will services be split between Temenos and the different partners? Business Strategy Support & Development Business Operation & Needs Analysis System Specification BPR System Selection Gap Analysis Hardware / Infrastructure Sizing & Selection Project Planning Projec
Slide 34: Key terms of debt facility
Key terms of debt facility The key terms of the facility are: →Maturity Q2 2014 giving 3 full years access to capital →USD 100m term loan, USD 250m RCF →Strong banking syndicate comprising RBS, Credit Suisse, Barclays and HSBC as MLAs as well as Banque Cantonale de Vaud →Full investment grade term
Slide 35: Thank You Questions
Thank You & Questions ‘7 =m: FM] Ce) FA ed EMENOS The Banking Software Company