Temenos Ag · SIX:TEMN
Temenos — Q3 2024 Earnings Presentation
40 slides from Temenos's earnings presentation, Oct 23, 2024
Slide 1: Temenos
temenos
Slide 2: Financial Results and Business Update
Financial Results and Business Update Jean-Pierre Brulard, CEO Takis Spiliopoulos, CFO 23 October 2024 Quarter ended, 30 September 2024 2
Slide 3: Disclaimer
Disclaimer Our presentation and this document may contain forward-looking statements relating to the future of the business and financial performance of Temenos AG. Any statements we make about our expectations, plans and prospects for the Company, including any guidance on the Company’s financial p
Slide 4: Non-IFRS information
Non-IFRS information In its presentation and in this document, the Company may present and discuss non-IFRS measures. Readers are cautioned that non-IFRS measures are subject to inherent limitations. Non-IFRS measures are not based on any comprehensive set of accounting rules or principles and shoul
Slide 5: Q3-24 highlights
Q3-24 highlights Continued customer engagement in Q3-24 after sales cycles already normalized in Q2-24 Sales environment was stable across regions globally New product and technology leadership with hiring of Barb Morgan as new CPTO Sales execution issues in MEA led to Q3-24 total software licensing
Slide 6: Agenda
Agenda CEO update Operational and financial update Appendix 6 6
Slide 7: Customer success go-lives in Q3-24
Customer success 61 go-lives in Q3-24 Across all products 224 go-lives in first three quarters Across all products 7
Slide 8: US regional bank, MidWest One Bank, goes live on Temenos digital onboarding
US regional bank, MidWest One Bank, goes live on Temenos digital onboarding Streamline Enhance customer Delivered as customer acquisition and SaaS on AWS onboarding retention process 8
Slide 9: Kuwait's Boubyan Bank selects Temenos for core migration
Kuwait’s Boubyan Bank selects Temenos for core migration Migrating to Enhancing Fully compliant Temenos core business agility with Shari’ah banking for and operational requirements retail, corporate efficiency and processes and private banking 9
Slide 10: Temenos is recognized as the market leader
Temenos is recognized as the market leader Temenos ranked #1 in Core Banking Temenos named a Leader in IBS Intelligence sales league tables Digital Core Banking Platforms across for all three regions; North America, 19th consecutive year EMEA and APC 10
Slide 11: New product and technology leadership
New product and technology leadership • 25 years leading global product development organisations, in particular banking and financial services expertise • Joined from the London Stock Exchange Group, where Barb was Group Head of Product for Data and Analytics • Previously Chief Technology Developme
Slide 12: Focused priorities
Focused priorities Culture & Product & Strategy Leadership Technology • Accountability • Simplification & • Drivers of growth • Talent attraction rationalization • Operational plan • Lean and fit • Innovation • Execution organization Go-to-market • Operational excellence • Sales capacity • Territory
Slide 13: Agenda
Agenda CEO update Operational and financial update Appendix 13 13
Slide 14: Q3-24 Non-IFRS financial highlights
Q3-24 Non-IFRS financial highlights Revenue and profit (non-IFRS, c.c.) Cash flow • ARR of USD 760.9m, up 9% • Q3-24 operating cash flow of USD 51.9m, down 6% y-o-y; • SaaS ACV of USD 9.4m • Q3-24 operating cash conversion of 115% of IFRS EBITDA • SaaS revenue up 5% in Q3-24 • Free cash flow of USD
Slide 15: ARR and non-IFRS income statement – operating
ARR and non-IFRS income statement – operating ARR (USDm) Q3-24 Q3-23 Y-o-Y Y-o-Y c.c. reported ARR 760.9 687.5 11% 9% Income statement (USDm) Q3-24 Q3-23 Y-o-Y Y-o-Y c.c. LTM Q3-24 LTM Q3-23 Y-o-Y Y-o-Y c.c. reported reported Subscription 28.2 23.7 19% 17% 154.8 140.4 10% 9% Term License 12.8 19.3 (
Slide 16: Like-for-like revenues and costs
Like-for-like revenues and costs • Q3-24 LFL non-IFRS revenues up 4% • Q3-24 LFL non-IFRS costs down 1% • Q3-24 LFL non-IFRS product revenues up 5% • Q3-24 LFL non-IFRS product costs up 1% LFL non-IFRS Services revenue LFL non-IFRS Services cost LFL non-IFRS Product costs LFL non-IFRS Product revenu
Slide 17: Non-IFRS income statement – non-operating
Non-IFRS income statement – non-operating Y-o-Y Y-o-Y In USDm, except EPS Q3-24 Q3-23 reported LTM Q3-24 LTM Q3-23 reported EBIT 71.3 59.8 19% 336.0 305.6 10% Net finance charge (5.4) (5.0) 8% (18.8) (23.3) (19%) FX gain / (loss) 4.6 0.7 575% 2.8 3.2 (12%) Tax (16.0) (11.5) 39% (67.1) (57.5) 17% Net
Slide 18: IFRS cash conversion
IFRS cash conversion USD m IFRS EBITDA 113% 117% 107% 115% Operating Cashflow 450 400 350 300 250 200 150 100 50 0 LTM Q3-21 LTM Q3-22 LTM Q3-23 LTM Q3-24 Cash conversion well above 100% target 18
Slide 19: Group liquidity
Group liquidity USDm (10) 52 (20) 194 (187) 107 (6) 85 (906) (798) Cash on Operating Cash Tax Capex Share buyback Net Repayment of Interest, FX Cash on Borrowings Reported Balance Sheet Borrowings and & Leases Balance Sheet Net Debt (30/06/24) Investments (30/09/24) Leverage at 1.8x at end of Q3-24
Slide 20: Q4-24 and revised FY-24 guidance (non-IFRS, c.c.)
Q4-24 and revised FY-24 guidance (non-IFRS, c.c.) Q4-24 guidance Q4-23 base (USD, c.c.) Total software licensing About 5% growth 156m FY-23 base (USD, Revised FY-24 guidance Previous FY-24 guidance c.c.) ARR 11-12% growth About 13% growth 733m Total software licensing Flattish to FY-23 3-6% growth 4
Slide 21: Agenda
Agenda CEO update Operational and financial update Appendix 21 21
Slide 22: FX and other assumptions underlying FY-24 guidance
FX and other assumptions underlying FY-24 guidance In preparing the FY-24 guidance, the Company has assumed the following FX rates: EUR to USD exchange rate of 1.09 GBP to USD exchange rate of 1.30; and USD to CHF exchange rate of 0.88 The Company has also assumed the following for FY-24 guidance: •
Slide 23: FX exposure
FX exposure % of total USD EUR GBP CHF INR RON Other Total software licensing 69% 19% 2% 3% 0% 0% 6% Maintenance 77% 15% 2% 1% 0% 0% 6% Services 55% 27% 6% 5% 0% 0% 7% Revenues 70% 18% 3% 3% 0% 0% 6% Non-IFRS costs 27% 18% 10% 5% 16% 2% 21% Non-IFRS EBIT 165% 19% (15)% (3)% (35)% (3)% (27)% NB. All
Slide 24: Quarterly SaaS ACV
Quarterly SaaS ACV USDm Q1-19 Q2-19 Q3-19 Q4-19 SaaS ACV 2.7 2.9 6.6 8.8 USDm Q1-20 Q2-20 Q3-20 Q4-20 SaaS ACV 5.3 3.5 14.3 11.5 USDm Q1-21 Q2-21 Q3-21 Q4-21 SaaS ACV 12.1 17.4 10.7 17.0 USDm Q1-22 Q2-22 Q3-22 Q4-22 SaaS ACV 19.0 10.6 17.9 10.5 USDm Q1-23 Q2-23 Q3-23 Q4-23 SaaS ACV 18.9 20.2 12.8 8.
Slide 25: Quarterly ARR, FCF
Quarterly ARR, FCF ARR, USD Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 Q3-23 Q4-23 Q1-24 Q2-24 Q3-24 m ARR 468.1 475.4 486.4 493.5 500.1 514.4 530.8 553.4 568.4 581.9 595.9 626.1 645.2 666.8 687.5 730.0 723.1 742.4 760.9 FCF, USD m Q1-20 Q2-20 Q3-20 Q4-20 Q1-
Slide 26: Total software licensing revenue breakdown by geography
Total software licensing revenue breakdown by geography Q3-23 Q3-24 15% 21% APAC APAC Europe Europe MEA 48% MEA 48% Americas 26% Americas 20% 11% 11% LTM Q3-23 LTM Q3-24 16% 19% APAC APAC Europe Europe 41% 43% MEA MEA 21% Americas Americas 22% 20% 18% 26
Slide 27: Total software licensing revenue breakdown by customer tier
Total software licensing revenue breakdown by customer tier Q3-23 Q3-24 37% 42% 1 and 2 1 and 2 58% 3, 4, and 5 3, 4, and 5 63% LTM Q3-23 LTM Q3-24 1 and 2 1 and 2 39% 47% 3, 4, and 5 3, 4, and 5 53% 61% 27
Slide 28: Software licensing revenue breakdown by competitive deals/add-ons
Software licensing revenue breakdown by competitive deals/ add-ons to installed base Q3-23 Q3-24 20% Competitive deals Competitive deals 51% 49% Add-ons to installed base Add-ons to installed base 80% LTM Q23-23 LTM Q3-24 27% Competitive deals 39% Competitive deals Add-ons to installed base Add-ons
Slide 29: DSOs
DSOs 150 141 136 133 134 129 125 124 124 117 115 114 111 112 107 106 100 50 0 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 Q3-23 Q4-23 Q1-24 Q2-24 Q3-24 DSOs at 134 at Q3-24 29
Slide 30: Balance sheet – leverage
Balance sheet –leverage Leverage ratios 3.0x 2.6x 2.6x 2.6x 2.5x 2.3x 2.1x 2.2x 2.1x 2.0x 2.0x 2.0x 2.0x 1.9x 1.8x 1.8x 1.8x 1.8x 1.7x 1.6x 1.5x 1.4x 1.4x 1.0x 0.5x 0.0x Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 Q3-23 Q4-23 Q1-24 Q2-24 Q3-24 30
Slide 31: Capitalization of development costs
Capitalization of development costs USDm Q1-22 Q2-22 Q3-22 Q4-22 FY-22 Cap’ dev’ costs (21.9) (22.3) (21.3) (20.8) (86.3) Amortisation 15.8 16.4 15.7 15.6 63.4 Net cap’ dev’ (6.1) (6.0) (5.6) (5.2) (22.9) USDm Q1-23 Q2-23 Q3-23 Q4-23 FY-23 Cap’ dev’ costs (19.7) (18.2) (19.4) (19.3) (76.6) Amortisat
Slide 32: Reconciliation from IFRS to non-IFRS
IFRS revenue measure + Deferred revenue write-down = Non-IFRS revenue measure Reconciliation IFRS profit measure from IFRS to +/- +/- Share-based payments and related social charges Deferred revenue write down non-IFRS +/- Discontinued activities +/- Amortisation of acquired intangibles +/- M&A rela
Slide 33: Accounting elements not included in non-IFRS guidance
Accounting elements not included in non-IFRS guidance Below are the accounting elements not included in the FY-24 non-IFRS guidance: FY-24 estimated share-based payments charge of c.5% of revenue FY-24 estimated amortisation of acquired intangibles of USD 50m FY-24 estimated restructuring / M&A rela
Slide 34: Earnings Reconciliation – IFRS to non-IFRS
Earnings Reconciliation – IFRS to non-IFRS 3 Months Ending 30 September 3 Months Ending 30 September In USDm, except EPS 2024 2024 2023 2023 IFRS Non-IFRS adj. Non-IFRS IFRS Non-IFRS adj. Non-IFRS Subscription 28.2 28.2 23.7 23.7 Term License 12.8 12.8 19.3 19.3 SaaS 55.4 55.4 52.7 52.7 Total Softwa
Slide 35: Net earnings reconciliation IFRS to non-IFRS
Net earnings reconciliation IFRS to non-IFRS In USDm, except EPS Q3-24 Q3-23 IFRS net earnings 30.8 21.9 Share-based payments 10.7 11.8 Amortisation of acquired intangibles 10.5 11.0 Restructuring / M&A related costs 3.9 4.1 Fair value adjustment on financial instruments 4.2 - Taxation (5.7) (4.8) N
Slide 36: Non-IFRS definitions
Non-IFRS definitions Other Revenue visibility Visibility on revenue includes a combination of revenue that is contractually committed and revenue that is in our pipeline and that is likely to be booked, but Non-IFRS adjustments is not contractually committed and therefore may not occur. Share-based
Slide 37: Financial metrics definitions and reporting
Financial metrics definitions and reporting SaaS Annual Contract Annual value of incremental business taken in-year. Includes New Customers, up-sell/cross-sell. Only includes the recurring element of the contract and exclude variable elements. Value (ACV) Disclosure: quarterly reporting, annual repo
Slide 38: Impact of subscription transition on P&L, cashflow and ARR
Impact of subscription transition on P&L, cashflow and ARR Term model – P&L Subscription model – P&L 5 5 5 1 1 1 1 1 1 1 1 1 1 1 Year 1 Year 2 Year 3 Year 4 Year 5 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Maintenance Term License Maintenance Subscription License Term model – Cash Subscription model
Slide 39: Impact of SaaS contracts on P&L, cashflow and ARR
Impact of SaaS contracts on P&L, cashflow and ARR SaaS model – P&L 2 2 2 2 2 2 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 SaaS revenue Cashflow SaaS model – Cash 2 2 2 2 2 2 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Cashflow SaaS model – ARR 2 2 2 2 2 2 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 ARR 3
Slide 40: Thank you
Thank You Thank you 40