Slide 1: Financial results & business update
Financial results & business update Quarter and year ended 31 December 2014 10 February 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: Agenda
Agenda Business update David Arnott, CEO Financial update Max Chuard, CFO and 2015 guidance Summary David Arnott, CEO Q&A 3
Slide 4: Summary
Summary • Disappointing software licensing revenue in Q4 impacted full year growth • Fundamentals of the business remain intact - strong growth expected in 2015 • Good progress made in Q4 on strategic initiatives • Strong execution on services strategy – significant improvement in services margin •
Slide 5: Q4 and FY sales update
Q4 and FY sales update All regions performed as expected other than APAC with no significant deals lost in Q4 Overly focussed on new business in a recovering market • value of competitive deals won in 2014 increased by half – taking significant market share • less focus on the installed base Good pr
Slide 6: Services and partners update
Services and partners update Services Partners A strong 2014 The model continues to develop • Consistent project delivery – 135 • Growth in partner resource – now go-lives in 2014 (2013: 132) at over 2,000 (2013: 1,700) • “Premium” services contributed • Partner support on increasing 27% of revenues
Slide 7: Akcelerant – adding scale and products in North America
Akcelerant – adding scale and products in North America The US is a highly strategic market for Temenos Akcelerant is a market leading provider of collections software to US credit unions Client base of c.600 financial institutions including 18 of the top 25 US credit unions Leverages existi
Slide 8: Well positioned in structural growth markets
Well positioned in structural growth markets Europe North America • IT renovation as only solution to higher ROE • Banks well capitalised and digitalisation increasingly gaining yet underinvested in IT acceptance • 2 acquisitions and key • Technology and progressive renovation go lives great platfor
Slide 9: Agenda
Agenda Business update David Arnott, CEO Financial update Max Chuard, CFO and 2015 guidance Summary David Arnott, CEO Q&A 9
Slide 10: Q4 and FY 2014 financial highlights
Q4 and FY 2014 financial highlights • LFL software licencing growth down 9% in Q4; FY growth of 2% • LFL maintenance growth of 6% in 2014 • 14% pts improvement in Q4 non-IFRS services margin; 9% pts improvement for FY • Non-IFRS EBIT up 13% in Q4 and FY; FY non-IFRS EBIT margin of 27.3% • Q4 operati
Slide 11: Non-IFRS income statement – operating
Non-IFRS income statement – operating In USDm Q4 14 Q4 13 Y-o-Y FY 14 FY 13 Y-o-Y Software licensing 48.3 54.8 -11.8% 139.7 137.8 1.4% SaaS 2.1 1.6 33.7% 8.0 4.8 65.1% Total software licensing 50.4 56.4 -10.5% 147.6 142.6 3.5% Maintenance 56.9 55.9 1.9% 223.4 212.5 5.1% Services 25.7 32.4 -20.6% 97.
Slide 12: Like-for-like revenue and costs
Like-for-like revenue and costs Q4 LFL revenue down 5% Q4 LFL non-IFRS costs down 17% Maintenance Licence SaaS Services Fixed Variable USDm USDm 140 140 (18)% 120 120 +34% 100 100 87 80 (9)% 80 73 60 60 40 40 20 +6% 20 0 0 Q4 2013 Q4 2014 Q4 2013 Q4 2014 FX impacted maintenance revenues; lower varia
Slide 13: FX exposure
FX exposure % of total USD EUR GBP CHF Other Total software licensing 65% 20% 5% 5% 5% Maintenance 65% 20% 5% 5% 5% Services 50% 30% 5% 10% 5% Revenues 60% 25% 5% 5% 5% Non-IFRS costs 20% 20% 20% 10% 30% Non-IFRS EBIT 170% 40% -40% -10% -60% NB. All % are approximations Mitigated FX exposure - match
Slide 14: Non-IFRS income statement – non-operating
Non-IFRS income statement – non-operating In USDm, except EPS Q4 14 Q4 13 Y-o-Y FY 14 FY 13 Y-o-Y Non-IFRS EBIT 60.3 53.5 13% 127.8 112.8 13% Net finance charge -2.9 -2.5 -16% -11.2 -8.9 -25% FX gain / (loss) -0.4 -0.3 -44% -0.7 -2.2 68% Tax -6.8 -7.5 10% -16.2 -16.6 2% Non-IFRS net profit 50.2 43.2
Slide 15: Cash conversion
Cash conversion USDm 200 113% 119% 150 101% 100 50 0 FY 2012 FY 2013 FY 2014 EBITDA Operating cashflow Consistent cash conversion with operating cashflows doubling in two years 15
Slide 16: Balance sheet – debt and financing
Balance sheet – debt and financing In USDm 31 Dec 14 Comment Debt 292.1 USD 350m facility and CHF 200m bonds Cash 192.6 Held in short term deposits Net debt 99.5 0.6x LTM EBITDA Treasury shares* (35.9) Reflects market value as of 31 Dec 2014 Net debt inc. treasury shares 63.6 0.4x LTM EBITDA LTM EBI
Slide 17: Akcelerant transaction summary
Akcelerant transaction summary Consideration of USD 50m in cash plus a USD 5m earnout over 3 years Expected revenues of c.USD 15m in 2015 • 75% recurring, subscription model • breakeven in 2015 Akcelerant has seen historic strong growth and is expected to reach group margins by the end of 2017 Reven
Slide 18: 2015 guidance
2015 guidance Total software licensing growth of 15% to 20% (implying total software licensing revenue of USD 164m to USD 172m) • includes software licensing growth of 10%+ (implying software licensing revenue of at least USD 149m ) Non-IFRS revenue growth of 8% to 13% (implying revenue of USD 482m
Slide 19: Agenda
Agenda Business update David Arnott, CEO Financial update Max Chuard, CFO and 2015 guidance Summary David Arnott, CEO Q&A 19
Slide 20: Temenos Analyst & Investor Day: London, 11 February 2015
Temenos Analyst & Investor Day: London, 11 February 2015 10.00 to 10.45 Strategy and vision David Arnott, CEO 10.45 to 11.15 A new era in banking Juan Pedro Moreno, Accenture Global Senior Managing Director - Banking Industry 11.15 to 11.30 Coffee 11.30 to 12.00 Experience driven banking Dharmesh Mi
Slide 21: Summary
Summary • Significant progress in Channels, Wealth and with larger deals • Signing of Julius Baer validates belief in product, executability and strategy • Services performing in line with strategy • Strong cash performance with DSOs materially down • Increasing levels of new business as the market
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 0.891 • USD to GBP exchange rate of 0.666; and • USD to CHF exchange rate of 0.890. 23
Slide 24: 2014 income statement restated for currency
2014 income statement restated for currency 2014 Temenos actual Restated at 2015 (excl. Akcelerant) currency guidance Software licensing 139.7 135.0 SaaS and subscriptions 8.0 7.9 Total software licensing 147.6 143.0 Maintenance 223.4 211.1 Services 97.7 91.8 Non-IFRS total revenues 468.7 445.9 Non-
Slide 25: 2015 non-IFRS cost base
2015 non-IFRS cost base Fixed Costs Variable Akcelerant USDm 400 341 352 350 15 320 34 43 300 32 250 200 150 307 288 294 100 50 0 2014A 2014 at CC 2015 guidance 2015 non-IFRS costs up 4% on a LFL basis 25
Slide 26: Net earnings reconciliation
Net earnings reconciliation In USDm, except EPS Q4 14 Q4 13 IFRS net earnings 48.1 40.2 Acquisition related charges - - Amortisation of acquired intangibles 1.8 3.2 Restructuring 0.6 1.1 Taxation -0.3 -1.4 Net earnings for non-IFRS EPS 50.2 43.2 No. of dilutive shares 67.5 68.9 Non-IFRS diluted EPS
Slide 27: Total software licensing revenue breakdown by geography
Total software licensing revenue breakdown by geography Q4 2013 Q4 2014 APAC APAC 11% 14% 16% 20% Europe Europe 11% Americas Americas MEA 22% MEA 48% 58% FY 2013 FY 2014 APAC APAC 19% Europe 18% 21% Europe 25% Americas Americas 10% MEA MEA 27% 34% 46% 27
Slide 28: Total software licensing revenue breakdown by customer tier
Total software licensing revenue breakdown by customer tier Q4 2013 Q4 2014 1 and 2 1 and 2 30% 3, 4 and 5 44% 3, 4 and 5 56% 70% FY 2013 FY 2014 1 and 2 1 and 2 26% 31% 3, 4 and 5 3, 4 and 5 69% 74% 28
Slide 29: Software licensing revenue by competitive deals / add-ons
Total software licensing revenue breakdown by competitive deals / add-ons to installed base Q4 2013 Q4 2014 Competitive Competitive deals deals Add-ons to 32% Add-ons to 42% installed base installed base 58% 68% FY 2013 FY 2014 Competitive Competitive deals deals 26% Add-ons to 36% Add-ons to instal
Slide 30: DSOs
DSOs 250 230 210 190 170 150 130 30 Sept 12 31 Dec 12 31 Mar 13 30 Jun 13 30 Sept 13 31 Dec 13 31 Mar 14 30 Jun 14 30 Sept 14 31 Dec 14 DSOs down 18 days in 2014 30
Slide 31: Capitalisation of development costs
Capitalisation of development costs 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 Net cap’ dev’ -3.4 -2.9 -3.1 -6.9 -16.3 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
Slide 32: Reconciliation from IFRS EBIT to non-IFRS EBIT
Reconciliation from IFRS EBIT to non-IFRS EBIT USDm Q4 2014 IFRS EBIT 57.9 Deferred revenue write-down - Discontinued activities - Acquisition-related charges - Amortisation of acquired intangibles 1.9 Restructuring 0.6 Non-IFRS EBIT 60.3 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, integration costs and earn outs Amo
Slide 35: Thank you
Thank you www.temenos.com