Temenos Ag · SIX:TEMN
Temenos — Q1 2015 Earnings Presentation
35 slides from Temenos's earnings presentation, Apr 21, 2015
Slide 1: Financial results & business update
Financial results & business update Quarter ended 31 March 2015 21 April 2015
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: Non-IFRS Information
Non-IFRS Information Readers are cautioned that the supplemental non-IFRS information presented in this press release is subject to inherent limitations. It is not based on any comprehensive set of accounting rules or principles and should not be considered as a substitute for IFRS measurements. Als
Slide 4: Agenda
Agenda Business update David Arnott, CEO Financial update Max Chuard, CFO Summary David Arnott, CEO Q&A 4
Slide 5: Summary
Summary • Weak software licensing performance in Q1 2015 • Strong start to Q2 and full year total software licensing guidance reconfirmed • Market conditions improving • Two strategic acquisitions completed and integration on track • Continued focus on high margin services delivered profitability in
Slide 6: Q1 sales update
Q1 sales update Weak sales performance: • Restructuring actions taken after Q4, sales force not fully productive in Q1 • Lack of client imperative to sign deals in Q1 and focus on holding value • Unable to lap tough comparative quarter Positives for the quarter: • Strong tier 1/2 contribution • Resi
Slide 7: Q1 2015 operational overview
Q1 2015 operational overview Services business profitable in Q1 • 740bps improvement in non-IFRS services margin Y-o-Y Continued strong customer success • 123 go-lives LTM (28 go-lives in total in Q1 with 4 implementation go lives) Deepening and maturing relationship with partner ecosystem • Partner
Slide 8: Market Update
Market Update First growth in core banking since 2007 Expects global banking software Europe showing clear signs of recovery spending to grow at 7.2% CAGR US opening up to international vendors (through 2018) Top banking initiative for 2015 is to “Align Global banking IT spend will be driven by core
Slide 9: Continued 3rd party validation of market leadership
Continued 3rd party validation of market leadership • Sole vendor at the top of both pyramids • 10th consecutive year as “Global Power Seller” New-named clients All counted deals • 1st position - 3rd consecutive year • Top 1-2 position for past 17 years Leading position in a consolidating marketplac
Slide 10: Acquisition update
Acquisition update Multifonds Akcelerant • Market leader in fund administration • Market leader in collections software to software, serving 9 of top 15 players. Entry US credit unions, 600 clients. Boosts US into fast-growing market value proposition and presence • Training of Temenos sales on Mult
Slide 11: Agenda
Agenda Business update David Arnott, CEO Financial update Max Chuard, CFO Summary David Arnott, CEO Q&A 11
Slide 12: Q1 2015 non-IFRS financial highlights
Q1 2015 non-IFRS financial highlights • Total software licensing down 14.7% Y-o-Y and down 2.6% LTM (constant currency) • SaaS contributed 22% of total software licensing in Q1 2015 vs. 6% in Q1 2014 • Maintenance growth of 9% Y-o-Y and 5.5% LTM (constant currency) • 740bps improvement in services m
Slide 13: Non-IFRS income statement – operating
Non-IFRS income statement – operating Y-o-Y Y-o-Y Y-o-Y Y-o-Y In USDm Q1 15 Q1 14 constant LTM 15 LTM 14 constant reported reported currency currency Software licensing 20.0 29.8 -32.7% -29.9% 129.9 143.1 -9.2% -6.8% SaaS 5.8 1.7 234.3% 235.3% 12.1 6.6 83.5% 83.2% Total software licensing 25.9 31.5
Slide 14: Like-for-like revenue and costs
Like-for-like revenue and costs Q1 LFL revenue down 5% Q1 LFL non-IFRS costs down 1% Maintenance Total software licensing Services USDm USDm 120 120 100 -4% 100 80 80 -24% -1% 60 60 40 40 20 +7% 20 0 0 Q1 2014 Q1 2015 Q1 2014 Q1 2015 Costs under control 14
Slide 15: Non-IFRS income statement – non-operating
Non-IFRS income statement – non-operating In USDm, except EPS Q1-15 Q1-14 Y-o-Y LTM 15 LTM 14 Y-o-Y EBIT 16.4 19.8 -17% 124.4 119.1 4% Net finance charge -4.0 -2.5 -61% -12.7 -9.9 -28% FX gain / (loss) 0.8 -0.5 N.A. 0.6 -2.0 N.A. Tax -1.1 -2.8 61% -14.5 -16.9 14% Net profit 12.1 14.0 -14% 97.9 90.4
Slide 16: IFRS cash conversion
IFRS cash conversion USDm 200 118% 115% 150 110% 100 50 0 LTM Q1 2013 LTM Q1 2014 LTM Q1 2015 EBITDA Operating cashflow Continued strong cash conversion 16
Slide 17: Balance sheet – debt and financing
Balance sheet – debt and financing In USDm 31 Mar 15 Comment Debt 513.0 Facilities of up to USD 487.5m* and CHF 200m bonds Cash 106.4 Held in short term deposits Net debt 406.6 2.3x proforma LTM EBITDA** Treasury shares*** (29.5) Reflects market value as of 31 Mar 2015 Net debt incl. treasury shares
Slide 18: 2015 guidance
2015 guidance Total software licensing growth of 36% to 41% (implying total software licensing revenue of USD 192m to USD 199m) • includes software licensing growth of 13%+ (implying software licensing revenue of at least USD 152m ) Non-IFRS revenue growth of 18% to 23% (implying revenue of USD 526m
Slide 19: Agenda
Agenda Business update David Arnott, CEO Financial update Max Chuard, CFO Summary David Arnott, CEO Q&A 19
Slide 20: Summary
Summary • Weak software licensing performance in Q1 2015 • Strong start to Q2 and full year total software licensing guidance reconfirmed • Market conditions improving • Two strategic acquisitions completed and integration on track • Continued focus on high margin services delivered profitability in
Slide 21: TCF 2015 – Istanbul: 19 to 21 May 2015
TCF 2015 – Istanbul: 19 to 21 May 2015 • Theme for 2015 is ‘Introducing Experience-Driven Banking’ • Dedicated analyst and investor stream • See our software in action and learn about our product roadmap • Insights from Temenos executives and industry thought leaders • Interaction and learning from
Slide 22: Appendices
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Slide 23: FX assumptions underlying 2015 guidance
FX assumptions underlying 2015 guidance In preparing the 2015 guidance, the Company has assumed the following: • USD to Euro exchange rate of 0.928 • USD to GBP exchange rate of 0.676; and • USD to CHF exchange rate of 0.971 23
Slide 24: Total software licensing revenue breakdown by geography
Total software licensing revenue breakdown by geography Q1 2014 Q1 2015 APAC APAC 14% 13% 17% 19% Europe Europe Americas Americas MEA 24% MEA 26% 41% 46% LTM Q1 2014 LTM Q1 2015 APAC APAC 17% Europe 17% 21% Europe 23% Americas Americas MEA MEA 18% 23% 39% 42% 24
Slide 25: Total software licensing revenue breakdown by customer tier
Total software licensing revenue breakdown by customer tier Q1 2014 Q1 2015 1 and 2 1 and 2 14% 3, 4 and 5 47% 3, 4 and 5 53% 86% LTM Q1 2014 LTM Q1 2015 1 and 2 1 and 2 22% 3, 4 and 5 33% 3, 4 and 5 67% 78% 25
Slide 26: Software licensing breakdown by competitive deals / add-ons to installed base
Total software licensing revenue breakdown by competitive deals / add-ons to installed base Q1 2014 Q1 2015 Competitive Competitive deals deals 30% Add-ons to Add-ons to 55% installed base installed base 45% 70% LTM Q1 2014 LTM Q1 2015 Competitive Competitive deals deals 30% Add-ons to 33% Add-ons t
Slide 27: DSOs continue to decline
DSOs continue to decline 230 216 211 211 210 198 198 195 190 186 183 181 170 Proforma 150 of 173 days 130 31 Mar 13 30 Jun 13 30 Sept 13 31 Dec 13 31 Mar 14 30 Jun 14 30 Sept 14 31 Dec 14 31-Mar-15 • DSO in Q1-15 ended at 183 days, of which ten are due to acquisitions 27
Slide 28: Capitalisation of development costs
Capitalisation of development costs USDm Q1 13 Q2 13 Q3 13 Q4 13 FY 13 Cap’ dev’ costs -9.7 -9.6 -9.8 -12.7 -41.9 Amortisation 6.0 6.1 7.6 8.0 27.7 Net cap’ dev’ -3.6 -3.6 -2.3 -4.7 -14.2 USDm Q1 14 Q2 14 Q3 14 Q4 14 FY 14 Cap’ dev’ costs -9.7 -9.8 -9.7 -13.9 -43.1 Amortisation 8.3 8.3 8.3 8.5 33.4
Slide 29: Reconciliation from IFRS to non-IFRS
Reconciliation from IFRS to non-IFRS IFRS revenue measure + Deferred revenue write-down = Non-IFRS revenue measure IFRS profit measure +/- Deferred revenue writedown +/- Discontinued activities +/- Acquisition related charges +/- Amortisation of acquired intangibles +/- Restructuring +/- Taxation =
Slide 30: Accounting elements not included in non-IFRS guidance
Accounting elements not included in non-IFRS guidance Below are the accounting elements not included in the 2015 non-IFRS guidance: • FY 2015 estimated deferred revenue write-down of approximately USD 23m • FY 2015 estimated amortisation of acquired intangibles of USD 30m • FY 2015 estimated acquisi
Slide 31: Reconciliation from IFRS to non-IFRS
Reconciliation from IFRS to non-IFRS 3 Months Ending 31 March Change 2015 2015 2014 2014 USDm IFRS Adj. Non-IFRS IFRS Adj. Non-IFRS IFRS Non-IFRS Total Software Licensing 23.9 2.0 25.9 31.5 31.5 (24%) (18%) Maintenance 55.5 0.2 55.6 53.8 53.8 3% 3% Services 22.7 0.1 22.7 24.2 24.2 (6%) (6%) Total Re
Slide 32: Net earnings reconciliation
Net earnings reconciliation In USDm, except EPS Q1-15 Q1-14 IFRS net earnings 0.7 11.8 Deferred revenue write-down 2.3 0.0 Amortisation of acquired intangibles 3.7 1.9 Restructuring 3.0 0.6 Acquisition related charges 3.5 - Taxation -1.0 -0.3 Net earnings for non-IFRS EPS 12.1 14.0 No. of dilutive s
Slide 33: Reconciliation from IFRS to non-IFRS for EBIT and EBITDA
Reconciliation from IFRS to non-IFRS for EBIT and EBITDA USDm Q1 2015 Q1 2015 IFRS EBIT 4.0 IFRS EBITDA 19.1 Deferred revenue write-down 2.3 2.3 Acquisition-related charges 3.5 3.5 Amortisation of acquired intangibles 3.7 - Restructuring 3.0 3.0 Non-IFRS EBIT 16.4 Non-IFRS EBITDA 27.8 33
Slide 34: Definitions
Definitions Non-IFRS adjustments Deferred revenue write-down Adjustments made resulting from acquisitions Discontinued activities Discontinued operations at Temenos that do not qualify as such under IFRS Acquisition related charges Relates mainly to advisory fees, integration costs and earn outs Amo
Slide 35: Thank you
Thank you www.temenos.com