Temenos Ag · SIX:TEMN
Temenos — Q3 2015 Earnings Presentation
35 slides from Temenos's earnings presentation, Oct 20, 2015
Slide 1: Financial results & business update
Financial results & business update Quarter ended 30 September 2015 20 October 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: Non-IFRS Information
Non-IFRS Information 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. Also
Slide 4: Agenda
Agenda Business update David Arnott, CEO Financial update Max Chuard, CFO Summary David Arnott, CEO Q&A 4
Slide 5: Summary
Summary • Strong growth in Q3 across all KPIs • Total software licensing up 95% for the quarter, 44% like-for-like • Landmark Nordea deal demonstrates product superiority and unique business model • Traction with global partners • Strong pipeline generation in the quarter • Investing in the business
Slide 6: Q3 sales update
Q3 sales update • Strong momentum across all geographies • Winning of Nordea a landmark deal for Temenos, reinforcing our market leadership and demonstrating growing appetite of large banks to replace core systems • Strong growth in signings and pipeline across all geographies, all customer segments
Slide 7: Q3 2015 operational overview
Q3 2015 operational overview Partner ecosystem functioning well • Partners involved in nearly all implementations • Focus on key strategic partners to strengthen collaboration Improving services profitability • 470 bps improvement in non-IFRS services margin year-on-year • Premium services contribut
Slide 8: Overview of the landmark Nordea deal
Overview of the landmark Nordea deal • Temenos selected by Nordea for replacement of domestic retail and corporate core banking platform across the bank • Largest core banking replacement programme in Europe, very high profile in the industry and attracting a lot of attention from other banks wantin
Slide 9: Multifonds and the fund administration opportunity
Multifonds and the fund administration opportunity • Third-party administrator (TPA) revenues growing at 10% p.a. driven by asset manager outsourcing; TPAs moving to external software to increase efficiency • Multifonds is a leader in fund administration software and is well positioned to capitalise
Slide 10: The U.S. opportunity
The U.S. opportunity • World’s largest financial services market, dominated by few large venders with legacy technology; significant opportunity for Temenos to capture market share • Integration of Akcelerant now complete, on track to deliver full year forecast of USD 15m in revenue • Ongoing invest
Slide 11: Agenda
Agenda Business update David Arnott, CEO Financial update Max Chuard, CFO Summary David Arnott, CEO Q&A 11
Slide 12: Q3 2015 non-IFRS financial highlights
Q3 2015 non-IFRS financial highlights • Total software licensing up 95.5% Y-o-Y and 27.3% LTM (constant currency) • of which software licensing up 69.5% Y-o-Y (constant currency) • SaaS and subscription contributed 19% of total software licensing in Q3 2015 vs. 6% in Q3 2014 • Maintenance growth of
Slide 13: Non-IFRS income statement – operating
Non-IFRS income statement – operating Y-o-Y Y-o-Y Y-o-Y Y-o-Y In USDm Q3 15 Q3 14 constant LTM 15 LTM 14 constant reported reported currency currency Software licensing 50.3 31.1 61.6% 69.5% 155.4 146.1 6.3% 11.3% SaaS and subscription 11.7 2.0 469.8% 476.7% 31.3 7.4 322.1% 324.2% Total software lic
Slide 14: Like-for-like revenue and costs
Like-for-like revenue and costs Q3 LFL non-IFRS revenues up 19% Q3 LFL non-IFRS costs up 9% Maintenance Total software licensing Services USDm USDm 160 120 140 +6% 100 120 80 100 +44% +9% 80 60 60 40 40 +6% 20 20 0 0 Q3 2014 Q3 2015 Q3 2014 Q3 2015 Higher variable costs related to strong deal flow i
Slide 15: Non-IFRS income statement – non-operating
Non-IFRS income statement – non-operating In USDm, except EPS Q3-15 Q3-14 Y-o-Y LTM 15 LTM 14 Y-o-Y EBIT 43.6 25.2 73% 152.0 121.0 26% Net finance charge -4.9 -2.8 -72% -15.7 -10.8 -46% FX gain / (loss) -0.7 0.1 N.A. -0.9 -0.6 N.A. Tax -5.2 -3.3 -58% -15.7 -17.0 8% Net profit 32.8 19.2 71% 119.7 92.
Slide 16: IFRS cash conversion
IFRS cash conversion USDm 123% 108% 200 150 100 50 0 LTM Q3 2014 LTM Q3 2015 EBITDA Operating cashflow Consistent cash conversion above target of 100% 16
Slide 17: Balance sheet – debt and financing
Balance sheet – debt and financing In USDm 30 Sept 15 Comment Debt 501.2 Facilities of up to USD 350m and CHF 375m bonds Cash 83.6 Held in short term deposits Net debt 417.6 2.1x proforma LTM non-IFRS EBITDA* Treasury shares** (29.6) Reflects market value as of 30 September 2015 Net debt incl. treas
Slide 18: 2015 guidance
2015 guidance Total non-IFRS software licensing growth of 42% to 46% (implying total software licensing revenue of USD 202m to USD 206m) • includes non-IFRS software licensing growth of 21%+ (implying software licensing revenue of at least USD 162m ) Non-IFRS revenue growth of 20.5% to 24.5% (implyi
Slide 19: Creating shareholder value
Creating shareholder value Total shareholder return 1 year 3 years 10 years Temenos 30% 200% 497% Swiss Market Index 9% 41% 70% Stoxx Europe 600 18% 47% 85% NASDAQ 17% 70% 163% Significant shareholder value creation Total shareholder return defined as percentage share price performance plus cumulati
Slide 20: Agenda
Agenda Business update David Arnott, CEO Financial update Max Chuard, CFO Summary David Arnott, CEO Q&A 20
Slide 21: Summary
Summary • Strong growth in Q3 across all KPIs • Clear evidence of market recovery • Retaining customers through digital experience top of mind for banks • Modern core a prerequisite • Temenos has the right business model to meet their needs • Investing in the business to capitalise on improving mark
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 0.928 • USD to GBP exchange rate of 0.676; and • USD to CHF exchange rate of 0.971 23
Slide 24: Total software licensing revenue breakdown by geography
Total software licensing revenue breakdown by geography Q3 2014 Q3 2015 APAC APAC 14% 10% 23% Europe Europe 28% Americas Americas MEA 17% MEA 15% 59% 34% LTM Q3 2014 LTM Q3 2015 APAC APAC 14% 16% 22% Europe 14% Europe Americas Americas MEA 20% MEA 23% 52% 39% 24
Slide 25: Total software licensing revenue breakdown by customer tier
Total software licensing revenue breakdown by customer tier Q3 2014 Q3 2015 1 and 2 1 and 2 18% 3, 4 and 5 31% 3, 4 and 5 82% 69% LTM Q3 2014 LTM Q3 2015 1 and 2 1 and 2 21% 3, 4 and 5 3, 4 and 5 79% 51% 49% 25
Slide 26: Software licensing revenue: competitive deals vs add-ons
Software licensing revenue breakdown by competitive deals / add- ons to installed base (excluding SaaS and subscription) Q3 2014 Q3 2015 Competitive Competitive deals deals 24% Add-ons to Add-ons to 76% installed base 45% 55% installed base LTM Q3 2014 LTM Q3 2015 Competitive Competitive deals deals
Slide 27: DSOs continue to decline
DSOs continue to decline 230 211 210 198 198 195 186 181 190 183 176 169 170 150 Proforma of 161 days 130 30 Sept 13 31 Dec 13 31 Mar 14 30 Jun 14 30 Sept 14 31 Dec 14 31-Mar-15 30-Jun-15 30-Sep-15 • DSO in Q3-15 ended at 169 days, of which 8 are due to acquisitions 27
Slide 28: Capitalisation of development costs
Capitalisation of development costs 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 Net cap’ dev’ -3.6 -3.6 -2.3 -4.7 -14.2 USDm Q1 14 Q2 14 Q3 14 Q4 14 FY 14 Cap’ dev’ costs -9.7 -9.8 -9.7 -13.9 -43.1 Amortisation 8.3 8.3 8.3 8.5 33.4
Slide 29: 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 +/- Deferred revenue writedown +/- Discontinued activities +/- Acquisition related charges +/- Amortisation of acquired intangibles +/- Restructuring +/- Taxation =
Slide 30: 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 2015 non-IFRS guidance: • FY 2015 estimated deferred revenue write-down of approximately USD 20m • FY 2015 estimated amortisation of acquired intangibles of USD 30m • FY 2015 estimated acquisi
Slide 31: Reconciliation from IFRS to non-IFRS
Reconciliation from IFRS to non-IFRS 3 Months Ending 30 September Change 2015 2015 2014 2014 USDm IFRS Adj. Non-IFRS IFRS Adj. Non-IFRS IFRS Non-IFRS Total Software Licensing 58.5 3.4 61.9 33.1 33.1 77% 87% Maintenance 59.0 0.3 59.3 56.9 56.9 4% 4% Services 27.5 0.1 27.6 23.7 23.7 16% 17% Total Reve
Slide 32: Net earnings reconciliation
Net earnings reconciliation In USDm, except EPS Q3-15 Q3-14 IFRS net earnings 20.5 17.5 Deferred revenue write-down 3.9 0.0 Amortisation of acquired intangibles 8.4 1.9 Restructuring 1.3 0.3 Acquisition related charges - - Taxation -1.3 -0.5 Net earnings for non-IFRS EPS 32.8 19.2 No. of dilutive sh
Slide 33: Reconciliation from IFRS to non-IFRS for EBIT and EBITDA
Reconciliation from IFRS to non-IFRS for EBIT and EBITDA USDm – Q3 2015 IFRS EBIT IFRS EBITDA 30.0 49.8 Deferred revenue write-down 3.9 3.9 Amortisation of acquired intangibles 8.4 - Restructuring 1.3 1.3 Acquisition-related charges - - Non-IFRS EBIT 43.6 Non-IFRS EBITDA 55.0 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