Temenos Ag · SIX:TEMN
Temenos — Q2 2016 Earnings Presentation
41 slides from Temenos's earnings presentation, Jul 20, 2016
Slide 1: The software specialist for banking and finance
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Slide 2: Financial results & business update
Financial results & business update Quarter ended 30 June 2016 20 July 2016
Slide 3: Disclaimer
Disclaimer 3 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-loo
Slide 4: Non-IFRS Information
Non-IFRS Information 4 Readers are cautioned that the supplemental non-IFRS information presented in this presentation 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. Al
Slide 5: Agenda
Agenda 1. Business update David Arnott 2. Financial update Max Chuard 3. Summary David Arnott 4. Q&A
Slide 6: Business update
Business update David Arnott
Slide 7: Summary
Summary 7 Outstanding performance across all KPIs Total software licensing up 25% for the quarter, driven by strong license growth of 31% y-o-y Digitisation and cost focus continue to drive bank decision making Leadership position in Wealth demonstrated by signing of Standard Chartered Bank
Slide 8: Q2 2016 sales update
Q2 2016 sales update 8 Strong growth in Q2 2016, in particular across Developed Markets Strong performance in Europe across all tiers and segments, Banque Internationale à Luxembourg (BIL) a key win Asia had another strong quarter, with key wins in Wealth space including Standard Chartered Ban
Slide 9: Competitive positioning in Wealth
Competitive positioning in Wealth 9 Won all key deals in Wealth in the last 3 years Standard Chartered Bank a key win Standard Chartered Bank selected WealthSuite for deployment across more than 30 countries Decision driven by need to standardised IT systems across operations, increase autom
Slide 10: Competitive positioning in Retail
Competitive positioning in Retail 10 Won the two largest Retail deals in the market in H1 2016 Laurentian Bank of Canada a key win in North America BIL a key win in Europe, with Retail constituting a significant part of the project In both cases, decision was driven by need to eliminate lega
Slide 11: Why we win
Why we win 11 Key factors driving selection include Ability to provide out of the box, front-to-back integrated solutions that can offer progressive renovation capability Tier 1 ready - proven scalability and open architecture facilitates seamless integration Clear vision of the future of ba
Slide 12: Q2 2016 operational overview
Q2 2016 operational overview 12 Partner ecosystem expanding Clients value breadth and depth of partner resources Partners played critical role in winning key deals including Laurentian and BIL Partner involvement in nearly all implementations Increased services activity 24 implementation go
Slide 13: U.S. update
U.S. update 13 Go-live of top 20 U.S. bank, with partial replacement of its core - first large U.S. client, key reference for closing future deals Ongoing campaigns on key deals are progressing well Differentiated product value proposition resonating with clients Joint go-to-market with top
Slide 14: TCF showcased new products, technology and innovation
TCF showcased new products, technology and innovation 14 Product Suites Digital engagement – single brain Products, technology Innovation Jam Temenos real time analytics and innovation Component Framework Marketplace and APIs
Slide 15: Overview of the market and pipeline
Overview of the market and pipeline 15 Post Brexit referendum, all planned deals closed with no delay or change in scope Key accounts in pipeline reconfirmed intention and urgency of need to invest in IT renovation - no slow down in client engagement and decision making Banks still face same p
Slide 16: Financial update
Financial update Max Chuard
Slide 17: Q2 2016 non-IFRS financial highlights (c.c.)
Q2 2016 non-IFRS financial highlights (c.c.) 17 Total software licensing up 25% Y-o-Y of which software licensing up 31% Y-o-Y SaaS and subscription contributed 21% of total software licensing in the quarter vs 24% in the prior quarter Maintenance growth of 7% Y-o-Y Total revenue growth of
Slide 18: Non-IFRS income statement – operating
Non-IFRS income statement – operating 18 Y-o-Y Y-o-Y In USDm Q2 16 Q2 15 Y-o-Y c.c. LTM 16 LTM 15 Y-o-Y c.c. reported reported Software licensing 47.8 36.8 29.9% 30.9% 191.2 136.2 40.4% 44.0% SaaS and subscription 12.6 11.7 8.1% 6.7% 48.0 21.7 121.2% 119.8% Total software licensing 60.4 48.4 24.7% 2
Slide 19: Like-for-like revenue and costs
Like-for-like revenue and costs 19 Q2 LFL non-IFRS revenues up 17% Q2 LFL non-IFRS costs up 17% Maintenance Total software licensing Services USDm USDm 160 120 140 100 +26% 120 80 +17% 100 +25% 80 60 60 40 40 +7% 20 20 0 0 Q2 2015 Q2 2016 Q2 2015 Q2 2016 Excellent organic license growth
Slide 20: Non-IFRS income statement – non-operating
Non-IFRS income statement – non-operating 20 In USDm, except EPS Q2 16 Q2 15 Y-o-Y LTM 16 LTM 15 Y-o-Y EBIT 38.7 31.7 22% 169.8 133.6 27% Net finance charge -4.2 -3.9 -7% -18.3 -13.7 -34% FX gain / (loss) -0.6 -0.6 N.A. -2.8 -0.1 N.A. Tax -4.2 -2.6 -59% -19.5 -13.8 -42% Net profit 29.7 24.6 21% 129.
Slide 21: IFRS cash conversion
IFRS cash conversion 21 USDm 300 113% 130% 250 200 150 100 50 0 LTM Q2 2015 LTM Q2 2016 EBITDA Operating cashflow Cash conversion significantly above target of 100%
Slide 22: Stable group liquidity
Stable group liquidity 22 Cash on Cash on balance Change in balance USDm sheet Operating M&A debt and Hedging and sheet Borrowings Net debt Net debt (31/3/16) cash Capex related interest Dividend FX (30/6/16) (30/6/16) (30/6/16) (31/3/16) 200 14 150 1 6 38 32 2 100 50 114 97 0 -50 -100 386 288 280 -
Slide 23: 2016 guidance
2016 guidance 23 Non-IFRS total software licensing growth at constant currencies of 10% to 15% (implying non-IFRS total software licensing revenue of USD 233m to USD 244m) Non-IFRS revenue growth at constant currencies of 7.5% to 11.0% (implying non-IFRS revenue of USD 593m to USD 612m) Non-IF
Slide 24: Summary
David Arnott eS} TEMENOS
Slide 25: Conclusion
Conclusion 25 Temenos achieved record sales growth and gained market share in the quarter Strong sales execution across the board, all client tiers and segments Banks are focused on digitisation and costs, IT spend is not discretionary Multiple key wins including Standard Chartered Bank, Lau
Slide 26: Appendices
Appendices TEMENOS
Slide 27: FX assumptions underlying 2016 guidance
FX assumptions underlying 2016 guidance 27 In preparing the 2016 guidance, the Company has assumed the following: USD to Euro exchange rate of 0.901 USD to GBP exchange rate of 0.769; and USD to CHF exchange rate of 0.958
Slide 28: FX exposure
FX exposure 28 % of total USD EUR GBP CHF Other Total software licensing 36% 45% 8% 8% 3% Maintenance 65% 20% 6% 6% 3% Services 45% 29% 10% 10% 6% Revenues 49% 31% 8% 8% 4% Non-IFRS costs 20% 20% 20% 10% 30% Non-IFRS EBIT 127% 60% -24% 1% -64% NB. All % are approximations based on 2015 actuals Mitig
Slide 29: Total software licensing revenue breakdown by geography
Total software licensing revenue breakdown by geography 29 Q2 2015 Q2 2016 APAC APAC 14% 7% 15% Europe 18% Europe Americas 20% Americas 20% MEA MEA 51% 55% LTM Q2 2015 LTM Q2 2016 APAC APAC 16% 10% 18% Europe 17% Europe Americas 17% Americas 20% MEA MEA 46% 56%
Slide 30: Total software licensing revenue breakdown by customer tier
Total software licensing revenue breakdown by customer tier 30 Q2 2015 Q2 2016 1 and 2 1 and 2 33% 3, 4 and 5 3, 4 and 5 67% 48% 52% LTM Q2 2015 LTM Q2 2016 1 and 2 1 and 2 35% 3, 4 and 5 3, 4 and 5 65% 50% 50%
Slide 31: Software licensing revenue breakdown by competitive deals / add-ons to installed base
31 Software licensing revenue breakdown by competitive deals / add-ons to installed base Q2 2015 Q2 2016 Competitive Competitive deals deals Add-ons to Add-ons to 60% 40% installed base 54% 46% installed base LTM Q2 2015 LTM Q2 2016 Competitive Competitive deals deals 34% Add-ons to Add-ons to insta
Slide 32: DSOs continue to decline
DSOs continue to decline 32 220 211 198 198 200 195 186 181 183 180 176 169 160 154 151 140 130 120 100 30 Sept 13 31 Dec 13 31 Mar 14 30 Jun 14 30 Sep 14 31 Dec 14 31 Mar 15 30 Jun 15 30 Sep 15 31 Dec 15 31 Mar 16 30 Jun 16
Slide 33: Balance sheet – debt and leverage
Balance sheet – debt and leverage 33 Net debt and leverage ratios* USDm 500 2.4x 450 2.1x 2.3x 400 350 300 1.3x 1.3x 1.3x 250 200 150 100 50 0 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 * proforma non-IFRS EBITDA Strong deleveraging profile
Slide 34: Capitalisation of development costs
Capitalisation of development costs 34 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 Net cap’ dev’ -1.3 -1.5 -1.4 -5.5 -9.8 USDm Q1 15 Q2 15 Q3 15 Q4 15 FY 15 Cap’ dev’ costs -10.3 -11.2 -10.8 -13.0 -45.3 Amortisation 8.8 8.8 8.7 8.7
Slide 35: Reconciliation from IFRS to non-IFRS
Reconciliation from IFRS to non-IFRS 35 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 36: Accounting elements not included in non-IFRS guidance
Accounting elements not included in non-IFRS guidance 36 Below are the accounting elements not included in the 2016 non-IFRS guidance: FY 2016 estimated amortisation of acquired intangibles of USD 35m FY 2016 estimated restructuring costs of USD 4m Restructuring costs include completion of Multi
Slide 37: Reconciliation from IFRS to non-IFRS
Reconciliation from IFRS to non-IFRS 37 3 Months Ending 30 June Change 2016 2016 2015 2015 In USDm, except EPS IFRS Adj. Non-IFRS IFRS Adj. Non-IFRS IFRS Non-IFRS Total Software Licensing 60.1 0.3 60.4 43.7 4.7 48.4 38% 25% Maintenance 61.2 61.2 57.7 0.5 58.2 6% 5% Services 32.2 32.2 25.7 0.1 25.8 2
Slide 38: Net earnings reconciliation
Net earnings reconciliation 38 In USDm, except EPS Q2 16 Q2 15 IFRS net earnings 20.9 6.8 Deferred revenue write-down 0.3 5.3 Amortisation of acquired intangibles 8.1 8.3 Restructuring 1.5 5.5 Acquisition related costs - - Taxation -1.0 -1.3 Net earnings for non-IFRS EPS 29.7 24.6 No. of dilutive sh
Slide 39: Reconciliation from IFRS to non-IFRS for EBIT and EBITDA
Reconciliation from IFRS to non-IFRS for EBIT and EBITDA 39 USDm Q2 2016 EBIT Q2 2016 EBITDA IFRS 28.9 48.4 Deferred revenue write-down 0.3 0.3 Amortisation of acquired intangibles 8.1 - Restructuring 1.5 1.5 Acquisition-related charges - - Non-IFRS 38.7 50.1
Slide 40: Definitions
Definitions 40 Non-IFRS adjustments Other Deferred revenue write-down Constant currencies Adjustments made resulting from acquisitions Prior year results adjusted for currency movement Discontinued activities Like-for-like (LFL) Discontinued operations at Temenos that do not qualify as such under Ad
Slide 41: Thank you
Thank you TEMENOS The software specialist for banking and finance www.temenos.com ‘in| iy | Fi Oo ic)