Slide 1: Financial results & business update
Financial results & business update Quarter ended 30 June 2014 28 July 2014
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 2014 guidance Summary David Arnott, CEO Q&A 3
Slide 4: Summary
Summary Strong Q2 results across all key performance indicators Double-digit Q2 software licencing growth; H1 growth above guidance Continued strong execution on services strategy – non-IFRS margin positive on LTM basis Better revenue mix and operational leverage drives non-IFRS EBIT and margin expa
Slide 5: Q2 2014 sales and pipeline overview
Q2 2014 sales and pipeline overview Strong Q2 licensing growth of 10% taking growth in H1 to 16% Strong sales to new customers • 10 new customer wins (Q2 2013:7) • strong growth from North America and good growth in MEA Encouraging levels of customer activity across all geographies seen at the start
Slide 6: Q2 2014 operational overview
Q2 2014 operational overview Product leadership Customer success Many new products showcased at TCF 9 implementation go-lives (Q2 2013: 8) including new versions of key products taking H1 total to 28 (H1 2013: 15) Temenos Connect Mobile Banking 30 go-lives in total (Q2 2013: 28) (a smart-hybrid solu
Slide 7: LTM non-IFRS services margin
Evolution of services margin 4% 2% LTM non-IFRS services margin 0% -2% -4% -6% -8% -10% -12% -14% Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Consistent improvement in services margin – now positive on LTM basis 7
Slide 8: Update on the US
Update on the US Significant progress made on US strategy Strong growth in pipeline • significantly higher than in 2013 and in Q1 2014 • advanced discussions with many US FIs about core banking replacement Remain on track for go-lives in 2014 of T24 on a SaaS basis Non T24 business performing strong
Slide 9: Agenda
Agenda Business update David Arnott, CEO Financial update Max Chuard, CFO and 2014 guidance Summary David Arnott, CEO Q&A 9
Slide 10: Q2 2014 financial highlights
Q2 2014 financial highlights LFL software licencing growth of 10% with growth in H1 of 16% 9.3% pts improvement in non-IFRS services margin; positive on LTM basis Non-IFRS EBIT margin up 1.8% points; LTM non-IFRS EBIT margin of 25.5% Non-IFRS EBIT up 12% Non-IFRS EPS up 21% Q2 operating cash inflow
Slide 11: Non-IFRS income statement - operating
Non-IFRS income statement - operating In USDm Q2 14 Q2 13 Y-o-Y LTM 14 LTM 13 Y-o-Y Software licensing 30.5 27.7 10.2% 145.9 129.6 12.5% SaaS 2.0 1.6 23.1% 6.9 1.6 322.8% Total software licensing 32.5 29.3 10.9% 152.8 131.3 16.4% Maintenance 55.7 52.4 6.2% 218.6 206.5 5.9% Services 24.1 28.3 -14.9%
Slide 12: Like-for-like revenue and costs
Like-for-like revenue and costs Q2 LFL revenue up 1% Q2 LFL non-IFRS costs down 2% Maintenance Licence SaaS Services USDm USDm 120 120 100 (16)% 100 (2)% 80 +23% 80 60 +10% 60 40 40 20 +5% 20 0 0 Q2 2013 Q2 2014 Q2 2013 Q2 2014 Revenue mix continues to improve 12
Slide 13: Non-IFRS income statement – non-operating
Non-IFRS income statement – non-operating In USDm, except EPS Q2 14 Q2 13 Y-o-Y LTM 14 LTM 13 Y-o-Y Non-IFRS EBIT 22.5 20.1 12% 121.6 102.5 19% Net finance charge -2.9 -2.4 -20% -10.4 -8.2 -26% FX gain / (loss) 0.1 -0.7 NA -1.2 -1.5 18% Tax -3.3 -3.2 -3% -17.0 -12.3 -38% Non-IFRS net profit 16.3 13.
Slide 14: Cash conversion
Cash conversion USDm 115% 180 132% 150 120 136% 90 60 30 0 LTM Q2 2012 LTM Q2 2013 LTM Q2 2014 EBITDA Operating cashflow Consistent improvement in EBITDA and operating cashflows; strong conversion 14
Slide 15: Balance sheet – debt and financing
Balance sheet – debt and financing In USDm 30 June 14 Comment Debt 316.6 USD 350m facility and CHF 200m bonds Cash (195.3) Held in short term deposits Net debt 121.2 0.8x LTM EBITDA Treasury shares (60.1) Reflects market value as of 30 June 2014 Net debt inc. treasury shares 61.1 0.4x LTM EBITDA LTM
Slide 16: 2014 guidance
2014 guidance Software licensing growth of 10% to 15% (implying software licensing revenue of USD 152m to USD 158m)* Non-IFRS revenue growth of 5% to 10% (implying revenue of USD 491m to USD 515m)* Non-IFRS EBIT margin of 25.1% (implying non-IFRS EBIT of USD 123m to USD 129m)* 100%+ conversion of EB
Slide 17: Agenda
Agenda Business update David Arnott, CEO Financial update Max Chuard, CFO and 2014 guidance Summary David Arnott, CEO Q&A 17
Slide 18: Summary
Summary • Strong Q2 results across all key performance indicators • Continued encouraging levels of customer activity across all geographies • Progress made on discussions for larger deals • Strong H1 and pipeline underpins confidence in achieving reaffirmed full year guidance A strong quarter – on
Slide 19: Appendices
‘e TEMENOS Appendices <
Slide 20: FX assumptions underlying 2014 guidance
FX assumptions underlying 2014 guidance In preparing the 2014 guidance, the Company has assumed the following, which remains unchanged since the announcement of the company’s Q4 and FY 2013 results: • USD to Euro exchange rate of 0.734; • USD to GBP exchange rate of 0.607; and • USD to CHF exchange
Slide 21: Net earnings reconciliation
Net earnings reconciliation In USDm, except EPS Q2 14 Q2 13 IFRS net earnings 14.2 8.5 Acquisition related charges - - Amortisation of acquired intangibles 2.0 3.2 Restructuring 0.4 2.4 Taxation -0.3 -0.4 Net earnings for non-IFRS EPS 16.3 13.7 No. of dilutive shares 69.8 70.5 Non-IFRS diluted EPS (
Slide 22: Total software licensing revenue breakdown by geography
Total software licensing revenue breakdown by geography Q2 2013 Q2 2014 APAC APAC 16% Europe 17% Europe 25% 34% Americas Americas 12% MEA MEA 34% 24% 38% LTM Q2 2013 LTM Q2 2014 APAC APAC Europe 18% 21% Europe 19% 25% Americas Americas MEA MEA 13% 22% 43% 39% 22
Slide 23: Total software licensing revenue breakdown by customer tier
Total software licensing revenue breakdown by customer tier Q2 2013 Q2 2014 1 and 2 1 and 2 14% 17% 3, 4 and 5 3, 4 and 5 86% 83% LTM Q2 2013 LTM Q2 2014 1 and 2 1 and 2 22% 35% 3, 4 and 5 3, 4 and 5 65% 78% 23
Slide 24: Total software licensing revenue breakdown by new / existing
Total software licensing revenue breakdown by new / existing Q2 2013 Q2 2014 New New 31% 35% Existing Existing 69% 65% LTM Q2 2013 LTM Q2 2014 New New 37% Existing Existing 59% 41% 63% 24
Slide 25: DSOs
DSOs 250 240 230 220 210 200 190 180 170 30 Sept 12 31 Dec 12 31 Mar 13 30 Jun 13 30 Sept 13 31 Dec 13 31 Mar 14 30 Jun 14 DSOs down 16 days vs Q2 2013 25
Slide 26: 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 27: Reconciliation from IFRS EBIT to non-IFRS EBIT
Reconciliation from IFRS EBIT to non-IFRS EBIT USDm Q2 2014 IFRS EBIT 20.1 Deferred revenue write-down - Discontinued activities - Acquisition-related charges - Amortisation of acquired intangibles 2.0 Restructuring 0.4 Non-IFRS EBIT 22.5 27
Slide 28: 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 28
Slide 29: 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 30: Thank you
Thank you www.temenos.com