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 September 2017 18 October 2017
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 Max Chuard, CFO, COO 3. Summary David Arnott, CEO 4. Q&A
Slide 6: Business update
Business update David Arnott, CEO
Slide 7: Q3 highlights
Q3 highlights 7 Very strong performance across all KPIs Lapping two years of Q3 tier 1 contributions USDm 90 Total software licensing Total software licensing up 23% 80 70 Total revenues up 16% 60 50 EBIT up 19% 40 +87% +5% +23% Acceleration in pipeline growth and deal 30 signings across all
Slide 8: Q3 2017 sales review
Q3 2017 sales review 8 Sales momentum across all markets, developed and emerging Significant traction with tier 1 and 2 banks Digital and regulatory pressure on banks continue to drive market growth 1 and 2 Robust tier 1 activity 48% 52% 3, 4 and 5 2015 Nordea 2016 Standard Chartered and B
Slide 9: Q3 2017 services review
Q3 2017 services review 9 Q3 go-lives Key implementations continue to progress well Implementation go-lives 30 25 20 29 15 10 18 5 0 Q3 2016 Q3 2017
Slide 10: Build & Migrate, Back-to-front, Front-to-back
Progressive renovation provides implementation flexibility 10 Build & Migrate Back-to-front Front-to-back by Bank Leumi Israel EQ Bank Canada
Slide 11: Openbank, the digital bank of Santander Group
Openbank, the digital bank of Santander Group 11 Openbank signed deal in Q4 2017 for Temenos Core Banking for retail and SME banking One of the first fully digital banks in the world Complete range of banking and investment products through its digital platform Temenos will help drive domest
Slide 12: Update on US
Update on US 12 Won high profile greenfield digital bank for core banking in the cloud Competed against all US vendors and pure cloud players Selected on strength of Temenos architecture and breadth of offering Commerce implementation progressing well, achieved key delivery milestone in Sept
Slide 13: Update on Temenos Australia
Update on Temenos Australia 13 Acquisition of Rubik completed on 22 May 2017 Rebranded as Temenos Australia Investing in sales and the Australia model bank Continued high level of pipeline activity in Australia for core banking renovation and wealth across tiers Market being driven by digi
Slide 14: Financial update
Financial update Max Chuard, CFO, COO
Slide 15: Q3 2017 non-IFRS financial highlights
Q3 2017 non-IFRS financial highlights 15 Total software licensing up 23% Y-o-Y Total revenue growth of 16% Y-o-Y EBIT up 19% Y-o-Y LTM EBIT margin of 30.3%, up 1.6% pts Y-o-Y EPS growth of 17% Y-o-Y, LTM EPS of USD 2.35 up 22% Y-o-Y Services margin of 10% for Q3 2017 LTM, up 2% points
Slide 16: Non-IFRS income statement – operating
Non-IFRS income statement – operating 16 Y-o-Y Y-o-Y In USDm Q3 17 Q3 16 Y-o-Y c.c. LTM 17 LTM 16 Y-o-Y c.c. reported reported Software licensing 59.9 51.7 16% 14% 228.1 192.7 18% 17% SaaS and subscription 19.7 13.1 50% 46% 61.5 49.5 24% 24% Total software licensing 79.6 64.8 23% 20% 289.6 242.2 20%
Slide 17: Like-for-like revenue and costs
Like-for-like revenue and costs 17 Q3 LFL non-IFRS revenues up 10% Q3 LFL non-IFRS costs up 7% Maintenance Total software licensing Services USDm USDm 200 140 180 120 160 +6% +7% 140 100 120 80 100 +12% 80 60 60 40 40 +9% 20 20 0 0 Q3 2016 Q3 2017 Q3 2016 Q3 2017 Continued investment driving organic
Slide 18: Non-IFRS income statement – non-operating
Non-IFRS income statement – non-operating 18 In USDm, except EPS Q3 17 Q3 16 Y-o-Y LTM 17 LTM 16 Y-o-Y EBIT 60.6 50.8 19% 210.7 177.0 19% Net finance charge -3.6 -4.2 -15% -15.8 -17.7 -11% FX gain / (loss) -0.6 0.4 NA -1.2 -1.7 NA Tax -7.4 -5.7 30% -24.3 -20.0 22% Net profit 49.0 41.2 19% 169.4 137.
Slide 19: IFRS cash conversion
IFRS cash conversion 19 USDm 300 108% 125% 111% 250 200 150 100 50 0 LTM Q3 2015 LTM Q3 2016 LTM Q3 2017 EBITDA Operating cashflow Cash conversion significantly above target of 100%
Slide 20: Group liquidity
Group liquidity 20 Cash on Cash on balance sheet Change in Debt balance sheet Borrowings Net debt USDm (30/6/17) Operating cash Tax Capex interest and FX repayment (30/9/17) (30/9/17) (30/9/17) 400 3 17 300 5 40 200 107 553 253 100 161 0 -100 439 278 -200 -300 Operating cash flow of USD40m, leverage
Slide 21: Revised 2017 non-IFRS guidance
Revised 2017 non-IFRS guidance 21 Non-IFRS total software licensing growth at constant currencies of 20% to 22.5% (implying non- IFRS total software licensing revenue of USD 309m to USD 315m), up from 15% to 20% Non-IFRS revenue growth at constant currencies of 13% to 14.5% (implying non-IFRS re
Slide 22: Share buyback to be launched
Share buyback to be launched 22 Board approval has been given for a share buyback of up to a total of CHF 150m This will be funded through our strong cash flow generation and we expect to maintain our leverage at 1-1.5x EBITDA by year end Temenos intends to use the repurchased shares to cover
Slide 23: Summary
David Arnott, CEO eS} TEMENOS
Slide 24: Conclusion
Conclusion 24 Very strong performance across all KPIs in Q3 Digital and regulatory pressure on banks continues to drive market growth Momentum across all geographies, client tiers and segments Signing of Santander’s digital bank, Openbank, early in Q4 demonstrating leadership position with t
Slide 25: Appendices
Appendices TEMENOS
Slide 26: FX assumptions underlying 2017 guidance
FX assumptions underlying 2017 guidance 26 In preparing the 2017 guidance, the Company has assumed the following FX rates: USD to Euro exchange rate of 0.867 USD to GBP exchange rate of 0.739; and USD to CHF exchange rate of 0.969
Slide 27: FX exposure
FX exposure 27 % of total USD EUR GBP CHF Other Total software licensing 55% 35% 2% 4% 4% Maintenance 65% 22% 6% 6% 0% Services 41% 34% 5% 5% 15% Revenues 56% 30% 4% 5% 5% Non-IFRS costs 26% 18% 18% 8% 30% Non-IFRS EBIT 128% 58% -24% -2% -60% NB. All % are approximations based on 2016 actuals Mitiga
Slide 28: Total software licensing revenue breakdown by geography
Total software licensing revenue breakdown by geography 28 Q3 2016 Q3 2017 APAC APAC 11% 13% Europe Europe 31% 30% 18% Americas Americas MEA MEA 26% 31% 40% LTM Q3 2016 LTM Q3 2017 9% APAC APAC 11% Europe 18% Europe 23% 17% Americas Americas 20% MEA MEA 51% 51%
Slide 29: Total software licensing revenue breakdown by customer tier
Total software licensing revenue breakdown by customer tier 29 Q3 2016 Q3 2017 1 and 2 1 and 2 47% 3, 4 and 5 55% 45% 3, 4 and 5 53% LTM Q3 2016 LTM Q3 2017 1 and 2 1 and 2 50% 3, 4 and 5 48% 52% 3, 4 and 5 50%
Slide 30: Software licensing revenue breakdown by competitive deals / add-ons
30 Software licensing revenue breakdown by competitive deals / add-ons to installed base Q3 2016 Q3 2017 Competitive Competitive deals deals 23% Add-ons to Add-ons to 56% 44% installed base 77% installed base LTM Q3 2016 LTM Q3 2017 Competitive Competitive deals deals Add-ons to 31% Add-ons to 62% 3
Slide 31: DSOs have declined significantly
DSOs have declined significantly 31 200 186 180 169 160 140 129 124 120 100 Q3 2014 Q3 2015 Q3 2016 Q3 2017
Slide 32: Balance sheet – debt and leverage
Balance sheet – debt and leverage 32 Net debt and leverage ratios* USDm 500 2.4x 450 2.3x 2.1x 400 350 1.3x 1.2x 300 1.3x 1.3x 1.2x 1.1x 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 * proforma non-IFRS EBITDA
Slide 33: Capitalization of development costs
Capitalization of development costs 33 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 34: Reconciliation from IFRS to non-IFRS
Reconciliation from IFRS to non-IFRS 34 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 35: Accounting elements not included in non-IFRS guidance
Accounting elements not included in non-IFRS guidance 35 Below are the accounting elements not included in the 2017 non-IFRS guidance: FY 2017 estimated deferred revenue write down of USD 3m FY 2017 estimated amortisation of acquired intangibles of USD 35m FY 2017 estimated acquisition related
Slide 36: Reconciliation from IFRS to non-IFRS
Reconciliation from IFRS to non-IFRS 36 3 Months Ending 30 September Change 2017 2017 2016 2016 In USDm, except EPS IFRS Adj. Non-IFRS IFRS Adj. Non-IFRS IFRS Non-IFRS Total Software Licensing 79.3 0.3 79.6 64.6 0.3 64.8 23% 23% Maintenance 69.9 69.9 63.4 63.4 10% 10% Services 37.1 37.1 32.6 32.6 14
Slide 37: Net earnings reconciliation
Net earnings reconciliation 37 In USDm, except EPS Q3 17 Q3 16 IFRS net earnings 39.6 32.8 Deferred revenue write-down 0.3 0.3 Amortisation of acquired intangibles 9.6 8.0 Restructuring 0.9 1.1 Acquisition related costs - - Taxation -1.3 -1.0 Net earnings for non-IFRS EPS 49.0 41.2 No. of dilutive s
Slide 38: Reconciliation from IFRS to non-IFRS for EBIT and EBITDA
Reconciliation from IFRS to non-IFRS for EBIT and EBITDA 38 USDm Q3 2017 EBIT Q3 2017 EBITDA IFRS 49.8 72.5 Deferred revenue write-down 0.3 0.3 Amortisation of acquired intangibles 9.6 - Restructuring 0.9 0.9 Acquisition-related charges - - Non-IFRS 60.6 73.7
Slide 39: Definitions
Definitions 39 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 40: www.temenos.com
TEMENOS The software specialist for banking and finance www.temenos.com ‘in| iy | Fi Oo ic)