Temenos Ag · SIX:TEMN
Temenos — Q3 2013 Earnings Presentation
35 slides from Temenos's earnings presentation, Oct 22, 2013
Slide 1: Financial results & business update
Financial results & business update Quarter ended 30 September 2013 22 October 2013
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 Business update David Arnott, CEO Financial update Max Chuard, CFO Summary David Arnott, CEO Q&A 3
Slide 4: Q3 summary
Q3 summary Good Q3 performance across all KPIs Product performing well with growth in software licencing; 4th consecutive quarter Services strategy delivering ahead of expectations – margins improving strongly Continued group margin expansion driven by better revenue mix Strong cashflows and cash co
Slide 5: Q3 sales update
Q3 sales update Good performance from product business • LFL software licensing revenues up 4% with sales activity accelerating • Fourth consecutive quarter of software licensing growth with LTM growth of 11% • 5 new customer wins in Q3 (Q3 2012: 9) • Expansion of SaaS offering in APAC with local pa
Slide 6: Q3 operations update
Q3 operations update Continued leadership in product development • Temenos Payment Suite (“TPS”) launched • Expansion of T24 on Azure platform • “Leader” in Gartner Magic Quadrant for retail banking Services strategy ahead of expectations • Premium services now account for more than 20% of services
Slide 7: Update on US SaaS business
Update on US SaaS business 63 new customers added in Q3 LFL SaaS revenues up 7% T24 on a SaaS basis sold to two financial institutions in the US market SaaS versions of BI and AML sold and being installed in first group of US banks Integration of TriNovus operations complete US strategy on track 7
Slide 8: TPS: introduction
TPS: introduction Launched in September at Sibos Designed by banks for banks, in conjunction with ABN AMRO Channel and platform agnostic Linear and componentised Sanction screening & AML fully integrated Flexible, real-time, single customer view A ground breaking payments hub 8
Slide 9: TPS: the market opportunity (1)
TPS: the market opportunity (1) Third party spend & total spend on banking software today* Core banking Wealth BI Channels Payments USDbn 35 USD 32.0bn 30 6.0 25 5.6 20 3.0 15 4.5 10 USD 7.0bn 12.9 5 0 Spend with third-parties today Total spend on banking software today *Licences and maintenance Sou
Slide 10: TPS: the market opportunity (2)
TPS: the market opportunity (2) 3% 10% Size of bubbles reflects market size PWM Islamic Universal Channels Competitive intensity Retail Lending Payments AML Risk Business intelligence Corporate T1&2 Retail Market/segment software growth CAGR 2013-15e Payments is a high growth area 10
Slide 11: TPS: competitive landscape
TPS: competitive landscape A different competitive landscape but still plays to our strengths 11
Slide 12: TPS: why we are well-positioned
TPS: why we are well-positioned Market demands How our solution addresses this Rationalisation of IT systems Integrated, comprehensive, end to end More personalised customer service Fast time to market, flexible Higher levels of STP rates Linear, condition driven, payment repair Ability to cope with
Slide 13: Agenda
Agenda Business update David Arnott, CEO Financial update Max Chuard, CFO Summary David Arnott, CEO Q&A 13
Slide 14: Q3 financial overview
Q3 financial overview Strong growth in product revenues • LFL software licensing revenues up 4% with LTM growth of 11% • Maintenance revenues remain resilient with LFL growth of 4% Services delivering on strategy • Margin improvement of 7% pts as revenue mix shifts / premium business delivers • Prem
Slide 15: Non-IFRS income statement - operating
Non-IFRS income statement - operating In USDm Q3 13 Q3 12 Y-o-Y LTM 13 LTM 12 Y-o-Y Software licensing 30.9 29.6 4.3% 130.9 118.3 10.6% SaaS 1.6 - NA 3.2 - NA Total software licensing 32.4 29.6 9.6% 134.1 118.3 13.3% Maintenance 53.2 50.2 6.0% 209.4 198.7 5.4% Services 23.9 30.2 -20.8% 113.8 126.0 -
Slide 16: Q3 like-for-like revenue and costs
Q3 like-for-like revenue and costs LFL revenue LFL non-IFRS costs Maintenance Licence SaaS Services USDm USDm 120 120 (22)% 90 90 (8)% +7% 60 4% 60 30 30 +4% 0 0 Q3 2012 Q3 2013 Q3 2012 Q3 2013 Revenue mix improving and like-for-like costs lower 16
Slide 17: Non-IFRS income statement – non-operating
Non-IFRS income statement – non-operating In USDm, except EPS Q3 13 Q3 12 Y-o-Y LTM 13 LTM 12 Y-o-Y Non-IFRS EBIT 25.8 20.8 24% 107.4 73.6 46% Net finance charge -2.4 -2.1 -14% -8.5 -8.3 -3% FX loss -0.5 -0.2 -154% -1.8 -6.3 71% Non-IFRS tax -3.3 -3.1 -7% -12.5 -18.2 31% Non-IFRS net profit 19.5 15.
Slide 18: Cash conversion
Cash conversion USDm 180 125% 150 120 164% 105% 90 60 30 0 LTM Q3 2011 LTM Q3 2012 LTM Q3 2013 EBITDA Operating cashflow Continued strong cash conversion; DSOs to reduce by c. 20 to 25 by end of year 18
Slide 19: Balance sheet – debt and financing
Balance sheet – debt and financing In USDm 30 Sept 13 Comment Total debt 255.4 USD 350m facility and CHF 100m bond, due in 2017 Cash (57.2) Held in short term deposits Net debt 198.2 1.6x LTM EBITDA Treasury shares (56.3) Reflects market value as of 30 September 2013 Net debt inc. treasury shares 14
Slide 20: 2013 guidance
2013 guidance Software licensing growth of 5% to 10% (implying software licensing revenue of USD 131m to USD 137m)* Non-IFRS revenue growth of 4.5% to 7.5% (implying revenue of USD 469m to USD 482m)* Non-IFRS EBIT margin of 21.7% to 23.2% (implying non-IFRS EBIT of USD 102m to USD 112m)* 100%+ conve
Slide 21: Agenda
Agenda Business update David Arnott, CEO Financial update Max Chuard, CFO Summary David Arnott, CEO Q&A 21
Slide 22: Market conditions
Market conditions Comprehensive solution set to meet customer demands remains our biggest differentiator Focus on improving account management realising installed base opportunity Continuing to taking share with LTM software licencing growth of 11% Geographical drivers of growth • LatAm and Asia per
Slide 23: Looking forward
Looking forward Good Q3 performance across all KPIs with pipeline providing confidence for Q4 Fourth consecutive quarter of licence growth Services strategy delivering ahead of expectations – margins improving strongly Continued group margin expansion driven by better revenue mix Strong cashflows an
Slide 24: Appendices
‘e TEMENOS Appendices
Slide 25: FX assumptions underlying 2013 guidance
FX assumptions underlying 2013 guidance In preparing the 2013 guidance, the Company has taken the actual Q1, Q2 and Q3 2013 results and for Q4 2013 assumed the following (unchanged from assumptions as at Q1 and Q2 2013): • USD to Euro exchange rate of 0.780; • USD to GBP exchange rate of 0.658; and
Slide 26: Net earnings reconciliation
Net earnings reconciliation In USDm, except EPS Q3 13 Q3 12 IFRS net earnings 15.9 7.0 Acquisition related charges - 0.5 Amortisation of acquired intangibles 3.2 3.1 Restructuring 0.8 4.9 Taxation (0.4) - Net earnings for non-IFRS EPS 19.5 15.4 No. of dilutive shares 69.2 68.9 Non-IFRS diluted EPS (
Slide 27: Total software licensing revenue breakdown by geography
Total software licensing revenue breakdown by geography Q3 2012 Q3 2013 APAC APAC Europe Europe 26% 30% 27% 32% Americas Americas MEA MEA 10% 8% 35% 32% LTM Q3 2012 LTM Q3 2013 APAC APAC Europe 21% Europe 25% 25% 30% Americas Americas MEA MEA 11% 12% 33% 43% 27
Slide 28: Total software licensing revenue breakdown by customer tier
Total software licensing revenue breakdown by customer tier Q3 2012 Q3 2013 1 and 2 1 and 2 20% 23% 3, 4 and 5 3, 4 and 5 80% 77% LTM Q3 2012 LTM Q3 2013 1 and 2 1 and 2 20% 39% 3, 4 and 5 3, 4 and 5 61% 80% 28
Slide 29: Total software licensing revenue breakdown by new / existing
Total software licensing revenue breakdown by new / existing Q3 2012 Q3 2013 New 15% New 46% Existing Existing 54% 85% LTM Q3 2012 LTM Q3 2013 New New 39% 37% Existing Existing 61% 63% 29
Slide 30: DSOs
DSOs 240 230 220 210 200 190 180 30 Jun 12 30 Sept 12 31 Dec 12 31 Mar 13 30 Jun 13 30 Sept 13 Expected 31 Dec 13 Continued significant reduction in DSOs 30
Slide 31: Capitalisation of development costs
Capitalisation of development costs USDm Q1 11 Q2 11 Q3 11 Q4 11 FY 11 Cap’ dev’ costs -6.2 -7.6 -11.2 -13.5 -38.5 Amortisation 4.5 4.4 5.3 5.1 19.2 Net cap’ dev’ -1.7 -3.2 -5.9 -8.4 -19.3 USDm Q1 12 Q2 12 Q3 12 Q4 12 FY 12 Cap’ dev’ costs -9.6 -9.6 -9.6 -13.0 -41.8 Amortisation 6.2 6.7 6.5 6.1 25.5
Slide 32: Reconciliation from IFRS EBIT to non-IFRS EBIT
Reconciliation from IFRS EBIT to non-IFRS EBIT USDm Q3 2013 IFRS EBIT 21.7 Deferred revenue write-down - Discontinued activities - Acquisition-related charges - Amortisation of acquired intangibles 3.2 Restructuring 0.8 Non-IFRS EBIT 25.8 32
Slide 33: 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 +/- Discontinued activities +/- Acquisition related charges +/- Amortisation of acquired intangibles +/- Restructuring +/- Taxation = Non-IFRS profit measure 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 and integration costs Amortisation o
Slide 35: Thank you
Thank you www.temenos.com