Slide 1: Temenos – The banking software company
€) TEMENOS The banking software company
Slide 2: Financial results & business update
Financial results & business update Quarter and year ended 31 December 2017 13 February 2018
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, CEO 2. Financial update and 2018 guidance Max Chuard, CFO, COO 3. Summary David Arnott, CEO 4. Q&A
Slide 6: Business update
Business update David Arnott, CEO
Slide 7: Review of Q4 2017
Review of Q4 2017 7 Outstanding performance in Q4 2017 Leading vendor for tier 1 banks Total software licensing growth of 29% Total revenues up 22% EBIT up 17% Multiple tier 1 bank deals signed in the quarter Taking market share, pulling ahead of US tier 1 bank competition Banks cannot aff
Slide 8: Consistency in execution
Consistency in execution 8 USDm USDm USDm 350 Total software licensing 800 Total revenue 250 EBIT 300 700 200 600 250 500 150 200 400 150 300 100 100 200 50 50 100 0 0 0 FY 2014 FY 2015 FY 2016 FY 2017 FY 2014 FY 2015 FY 2016 FY 2017 FY 2014 FY 2015 FY 2016 FY 2017 Consistent 20%+ total software lic
Slide 9: Q4 and FY 2017 sales review
Q4 and FY 2017 sales review 9 Strong double-digit growth across all geographies in FY Strong contribution from competitive deals 2017 Digital and regulatory pressure and move to open banking FY 2017 software licensing are driving market growth Competitive Tier 1 and 2 banks contributed 71% of
Slide 10: Tier 1 wins in Q4 2017
Tier 1 wins in Q4 2017 10 US tier 1 bank Openbank, Multi-country Largest bank in Tier 1 US bank Santander’s progressive Latin America selected digital bank, renovation after selected Temenos Temenos Core selected Temenos successful Ireland WealthSuite for Banking for Core Banking for roll ou
Slide 11: FY 2017 operational overview
FY 2017 operational overview 11 Taking a new client live every 3.5 days Key implementations continue to progress well Implementation go-lives 100 80 104 60 95 40 20 0 FY 2016 FY 2017 Strong operational performance
Slide 12: We continue to pull ahead of the competition
We continue to pull ahead of the competition 12 A global power seller New and existing clients: a top global #1 for the for new business last 5 years deals for the 11th player for 5 consecutive year consecutive years Top 2 for last 18 years 251 Total number of go-lives Best-selling vendor for both n
Slide 13: Looking forward to 2018
Looking forward to 2018 13 Digital and regulatory pressures are top of mind for banks Open banking a new driver of opportunity and changing business models IT renovation is therefore key to banks’ strategy, not discretionary spend Installed base a key driver of growth, selling to clients who
Slide 14: Financial update and 2018 guidance
Financial update and 2018 guidance Max Chuard, CFO, COO
Slide 15: Performance vs. revised 2017 guidance (c.c.)
Performance vs. revised 2017 guidance (c.c.) 15 Initial guidance Revised guidance Achieved Non-IFRS +22% Total software licensing 10% to 15% 20% to 22.5% Non-IFRS Revenue growth of 12.5% 7.5% to 11.0% 13% toto14.5% 14.5% +15% Total revenues Non-IFRS EBIT of USD 184m to USD 186m Revenue USD 210 to 21
Slide 16: Non-IFRS income statement – operating
Non-IFRS income statement – operating 16 Y-o-Y Y-o-Y In USDm Q4 17 Q4 16 Y-o-Y c.c. FY 17 FY 16 Y-o-Y c.c. reported reported Software licensing 99.2 78.7 26% 22% 248.5 205.1 21% 20% SaaS and subscription 19.1 13.1 46% 40% 67.5 51.1 32% 31% Total software licensing 118.3 91.8 29% 25% 316.1 256.2 23%
Slide 17: Like-for-like revenue and costs
Like-for-like revenue and costs 17 Q4 17 LFL non-IFRS revenues up 14% Q4 17 LFL non-IFRS costs up 13% FY 17 LFL non-IFRS revenues up 12% FY 17 LFL non-IFRS costs up 10% Maintenance Total software licensing Services USDm USDm 450 700 400 +10% 600 350 +10% 300 500 250 +16% 400 200 300 150 200
Slide 18: Non-IFRS income statement – non-operating
Non-IFRS income statement – non-operating 18 In USDm, except EPS Q4 17 Q4 16 Y-o-Y FY 17 FY 16 Y-o-Y EBIT 87.6 74.8 17% 223.5 186.5 20% Net finance charge -3.0 -3.9 -23% -14.9 -16.9 -12% FX gain / (loss) -0.5 0.8 NA -2.5 -0.3 NA Tax -11.6 -8.3 40% -27.6 -20.3 36% Net profit 72.6 63.4 14% 178.6 149.1
Slide 19: IFRS cash conversion
IFRS cash conversion 19 USDm 114% 133% 114% 300 250 200 150 100 50 0 FY 2015 FY 2016 FY 2017 EBITDA Operating cashflow Cash conversion remains significantly above target of 100%
Slide 20: Group liquidity
Group liquidity 20 Cash on Change in Cash on balance debt, balance USDm sheet Operating Dividends Share Bond interest sheet (31/12/16) cash Tax Capex paid M&A buyback proceeds and FX (31/12/17) Borrowings Net debt 600 12 500 61 400 40 300 50 300 190 200 149 122 100 194 168 0 440 272 -100 -200 -300 L
Slide 21: Overview of IFRS changes
Overview of IFRS changes 21 Effective 1 January 2018, Temenos adopted IFRS15: Revenue from contracts with customers The company will transition using a modified retrospective methodology In 2018, we will provide Quarter and Full Year financial statements under both old and new standards Fu
Slide 22: Guidance
Guidance Max Chuard, CFO, COO
Slide 23: Highest ever product revenue visibility
Highest ever product revenue visibility 23 Strong visibility on c.85% of FY 2018 product revenues Maintenance SaaS and subscription Relicensing Progressive renovation Sales to installed Strong revenue visibility base Visibility driven by recurring revenue, committed spend and the installed base
Slide 24: Pipeline growth
Pipeline growth 24 Software licensing pipeline Jan-15 Jan-16 Jan-17 Jan-18 Acceleration in pipeline growth
Slide 25: 2018 non-IFRS guidance range (c.c.)
2018 non-IFRS guidance range (c.c.) 25 FY 2018 guidance based on old standards i.e. pre adoption of IFRS15 Total software licensing (%) 13.5% – 18.5% Implied USDm 363 – 379 Total revenue (%) 10% – 13% Implied USDm 819 – 840 EBIT (USDm) 255 – 260 Implied margin 31.1% – 31.0% Cash conversion 100%+ con
Slide 26: Large transformational deals and market growth driving license upside
Large transformational deals and market growth driving license upside 26 Total software licensing USDm Initial guidance* 350 Full Year 300 250 200 150 100 50 0 2015 2016 2017 Increasing demand from tier 1 and 2 banks * mid point of total software licensing guidance post any M&A
Slide 27: Medium term targets
Medium term targets 27 Metric Medium term targets (Non-IFRS) Total software licensing At least 15% CAGR Total revenue 10-15% CAGR EBIT 100-150 bps p.a. EPS At least 15% CAGR DSO reduction 5-10 days reduction p.a. Cash conversion 100%+ of EBITDA Tax rate 17-18%
Slide 28: Summary
David Arnott, CEO eS} TEMENOS
Slide 29: Temenos Capital Markets Day: London, February 2018
Temenos Capital Markets Day: London, 14 February 2018 29 Time Event Speaker 09.30 - 10.00 Registration 10.00 - 10.45 Strategy and vision David Arnott, CEO Building Enterprise Architecture Willem Hueting, Senior General Manager 10.45 - 11.30 around Temenos International Markets, KBC Group 11.30 - 11.
Slide 30: Conclusion
Conclusion 30 Outstanding performance in 2017 on back of landmark 2016 Digital and regulatory pressure on banks continues to drive market expansion Strong sales execution across geographies and segments Significant growth among tier 1 and 2 banks Ongoing investment in sales and product S
Slide 31: Appendices
Appendices TEMENOS
Slide 32: FX assumptions underlying 2018 guidance
FX assumptions underlying 2018 guidance 32 In preparing the 2018 guidance, the Company has assumed the following FX rates: USD to Euro exchange rate of 0.846 USD to GBP exchange rate of 0.719; and USD to CHF exchange rate of 0.946
Slide 33: FX exposure
FX exposure 33 % of total USD EUR GBP CHF Other Total software licensing 44% 40% 1% 3% 12% Maintenance 68% 22% 5% 5% 0% Services 42% 38% 5% 1% 14% Revenues 53% 33% 3% 3% 8% Non-IFRS costs 23% 20% 14% 8% 35% Non-IFRS EBIT 120% 62% -21% -7% -54% NB. All % are approximations based on 2017 actuals Mitig
Slide 34: Total software licensing revenue breakdown by geography
Total software licensing revenue breakdown by geography 34 Q4 2016 Q4 2017 APAC 5% APAC 11% 11% 13% Europe Europe 14% 21% Americas Americas MEA MEA 64% 61% FY 2016 FY 2017 APAC APAC 10% 9% 19% Europe 19% Europe 17% Americas Americas 22% MEA MEA 54% 50%
Slide 35: Total software licensing revenue breakdown by customer tier
Total software licensing revenue breakdown by customer tier 35 Q4 2016 Q4 2017 1 and 2 1 and 2 29% 48% 52% 3, 4 and 5 3, 4 and 5 71% FY 2016 FY 2017 1 and 2 1 and 2 41% 48% 3, 4 and 5 3, 4 and 5 52% 59%
Slide 36: Software licensing revenue breakdown by competitive deals / add-ons
36 Software licensing revenue breakdown by competitive deals / add-ons to installed base Q4 2016 Q4 2017 Competitive Competitive deals deals 28% Add-ons to Add-ons to installed base 44% installed base 56% 72% FY 2016 FY 2017 Competitive Competitive deals deals Add-ons to Add-ons to 37% installed bas
Slide 37: DSOs have declined significantly
DSOs have declined significantly 37 200 181 180 159 160 140 127 119 120 100 Q4 2014 Q4 2015 Q4 2016 Q4 2017
Slide 38: Balance sheet – debt and leverage
Balance sheet – debt and leverage 38 Net debt and leverage ratios* USDm 500 2.4x 450 2.3x 2.1x 400 350 1.3x 1.3x 1.2x 1.1x 300 1.3x 1.2x 1.0x 250 200 0.8x 0.7x 150 100 50 0 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 * proforma non-IFRS EBITDA
Slide 39: Capitalization of development costs
Capitalization of development costs 39 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 35.0 Net cap’ dev’ -1.5 -2.4 -2.1 -4.3 -10.3 USDm Q1 16 Q2 16 Q3 16 Q4 16 FY 16 Cap’ dev’ costs -10.8 -11.3 -10.8 -12.7 -45.6 Amortisation 8.8 8.8 8.8
Slide 40: Estimated impact of IFRS15 on 2018 non-IFRS income statement
Estimated impact of IFRS15 on 2018 non-IFRS income statement 40 Mid-point of FY Estimated IFRS15 Post IFRS15 In USDm 2018 guidance adjustment adjustment Software licensing 42 SaaS and subscription (47) Total software licensing 367 (5) 362 Maintenance 5 Services - Total revenue 824 - 824 Operating co
Slide 41: Reconciliation from IFRS to non-IFRS
Reconciliation from IFRS to non-IFRS 41 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 42: Accounting elements not included in non-IFRS guidance
Accounting elements not included in non-IFRS guidance 42 Below are the accounting elements not included in the 2018 non-IFRS guidance: FY 2018 estimated deferred revenue write down of USD 1m FY 2018 estimated amortisation of acquired intangibles of USD 38m FY 2018 estimated restructuring costs
Slide 43: Reconciliation from IFRS to non-IFRS
Reconciliation from IFRS to non-IFRS 43 3 Months Ending 31 December Change 2017 2017 2016 2016 In USDm, except EPS IFRS Adj. Non-IFRS IFRS Adj. Non-IFRS IFRS Non-IFRS Total Software Licensing 118.0 0.4 118.3 91.5 0.3 91.8 29% 29% Maintenance 73.1 73.1 65.1 65.1 12% 12% Services 41.2 41.2 34.1 34.1 2
Slide 44: Net earnings reconciliation
Net earnings reconciliation 44 In USDm, except EPS Q4 17 Q4 16 FY 17 FY 16 IFRS net earnings 61.5 55.9 138.4 115.8 Deferred revenue write-down 0.4 0.3 1.3 1.1 Amortisation of acquired intangibles 9.9 7.8 35.0 31.7 Restructuring 2.3 0.3 6.9 4.5 Acquisition related costs - - 2.0 - Taxation -1.5 -0.8 -
Slide 45: Reconciliation from IFRS to non-IFRS for EBIT and EBITDA
Reconciliation from IFRS to non-IFRS for EBIT and EBITDA 45 USDm Q4 2017 EBIT Q4 2017 EBITDA FY 2017 EBIT FY 2017 EBITDA IFRS 75.1 98.6 178.3 263.3 Deferred revenue write-down 0.4 0.4 1.3 1.3 Amortisation of acquired 9.9 - 35.0 - intangibles Restructuring 2.3 2.3 6.9 6.9 Acquisition-related charges
Slide 46: Definitions
Definitions 46 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 47: www.temenos.com
) TEMENOS The banking software company www.temenos.com ‘in| iy | Fi Oo ic)