Temenos Ag · SIX:TEMN
Temenos — Q1 2019 Earnings Presentation
42 slides from Temenos's earnings presentation, Apr 16, 2019
Slide 1: Temenos – The Banking Software Company
TEMENOS THE BANKING SOFTWARE COMPANY
Slide 2: Financial results & business update
Financial results & business update Quarter ended 31 March 2019 16 April 2019
Slide 3: 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 4: 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 5: Agenda
Agenda 1. Business update……………………………………………Max Chuard, CEO 2. Financial update……………………………………. Takis Spiliopoulos, CFO 3. Summary…………………………………………...............Max Chuard, CEO 4. Q&A 5
Slide 6: Business update
Business update Max Chuard, CEO
Slide 7: Very strong start to 2019
Very strong start to 2019 Q1 2019 Key deals announced Total software licensing growth of 28% Total revenue up 23% EBIT up 27% EPS up 24% Operating cash up 19%, DSOs down 6 days Banks without a modern digital platform will find it hard to remain competitive in the next five to seven years.
Slide 8: Q1 2019 sales review
Q1 2019 sales review Strong broad based demand across regions, tiers and Strong contribution across tiers products LTM Q1 2019 total software licensing Digital, regulatory and cost pressures and move to open banking are driving market growth 1 and 2 Key deals announced include Al Rajhi Bank fo
Slide 9: Momentum in SaaS and cloud
Momentum in SaaS and cloud Strong incremental growth in demand for SaaS and cloud SaaS Total Contract Value US$m adoption USD 66m LTM TCV of USD 66m in Q1 2019 SaaS revenue grew 71% in Q1 2019 60 Banks are seeking multiple benefits from the cloud: De-risk implementation Decrease time-to-
Slide 10: Integration of Avoka progressing well
Integration of Avoka progressing well Acquired Avoka in December 2018 for USD 245m Avoka is a US headquartered market leader in customer acquisition and on boarding Enables banks to create simple customer experiences to improve conversion rates Integrated as part of Temenos Infinity Key Av
Slide 11: Q1 2019 operational overview
Q1 2019 operational overview Continued growth in third party experts with over 5,000 Temenos consultants Build and renovate – rich functionality, front-to-back packaged software and country model banks allow build and renovate approach with no integration to legacy 20 implementation go-lives i
Slide 12: TCF 2019 – launching new innovation
TCF 2019 – launching new innovation 12
Slide 13: Temenos and Cognizant powering digital transformation through 'Banking as a Service'
Temenos and Cognizant powering digital transformation through ‘Banking as a Service’ Three Finnish banks, Savings Banks Group, Oma Savings Bank Plc and POP Bank Group, selected Temenos T24 Transact and Temenos Payments Hub for digital transformation through a shared platform ‘Banking as a Servic
Slide 14: Looking forward
Looking forward Addressable software spend by banks of USD 57bn globally Digital, regulatory and cost pressures are intensifying Temenos has a leadership position, pulling ahead in a winner-takes-all market Benefiting from six major engines of growth – T24 Transact, Temenos Infinity, Wealth,
Slide 15: Financial update
Financial update Takis Spiliopoulos, CFO
Slide 16: Q1 2019 non-IFRS financial highlights
Q1 2019 non-IFRS financial highlights Total software licensing up 28% Y-o-Y (c.c.) Maintenance growth of 13% Y-o-Y (c.c.) Total revenue growth of 23% Y-o-Y (c.c.) EBIT up 27% Y-o-Y (c.c.), with EBIT margin of 24.1% EPS growth of 24% Y-o-Y Q1 operating cash flows of USD 55m, up 19% DSOs
Slide 17: Non-IFRS income statement – operating
Non-IFRS income statement – operating Y-o-Y Y-o-Y In USDm Q1 19 Q1 18 Y-o-Y c.c. YTD 19 YTD 18 Y-o-Y c.c. reported reported Software licensing 63.2 54.4 16% 22% 63.2 54.4 16% 22% SaaS and subscription 13.0 8.1 61% 71% 13.0 8.1 61% 71% Total software licensing 76.2 62.5 22% 28% 76.2 62.5 22% 28% Main
Slide 18: Like-for-like revenue and costs
Like-for-like revenue and costs Q1 19 LFL non-IFRS revenues up 17% Q1 19 LFL non-IFRS costs up 11% Maintenance Total software licensing Services USDm USDm 250 250 200 200 +20% 150 +11% 150 +21% 100 100 +2% 50 50 +11% +9% +15% +13% +13% 0 0 Q1 2018 Q1 2019 Q1 2018 Q1 2019 Total like-for-like reve
Slide 19: Non-IFRS income statement – non-operating
Non-IFRS income statement – non-operating In USDm, except EPS Q1 19 Q1 18 Y-o-Y YTD 19 YTD 18 Y-o-Y EBIT 49.5 38.5 29% 49.5 38.5 29% Net finance charge -4.3 -3.5 25% -4.3 -3.5 25% FX gain / (loss) -0.7 0.6 NA -0.7 0.6 NA Tax -7.0 -5.1 39% -7.0 -5.1 39% Net profit 37.4 30.5 23% 37.4 30.5 23% EPS (USD
Slide 20: DSOs continue to decline
DSOs continue to decline 160 151 140 127 117 120 111 100 Q1 2016 Q1 2017 Q1 2018 Q1 2019 20
Slide 21: IFRS cash conversion
IFRS cash conversion USDm 117% 113% 115% 350 300 250 200 150 100 50 0 Q1 2017 Q1 2018 Q1 2019 LTM EBITDA Operating cashflow Cash conversion significantly above target of 100% 21
Slide 22: Group liquidity
Group liquidity Cash on Change in Cash on USDm balance debt, interest, balance sheet Operating Repayment FX and lease sheet (31/12/18) cash Tax Capex M&A of bond liability (31/3/19) Borrowings Net debt 450 (7) (17) 350 (2) 55 250 (101) 150 287 (119) 50 97 -50 -150 439 -250 646 549 -350 -450 Operatin
Slide 23: 2019 non-IFRS guidance range (c.c.)
2019 non-IFRS guidance range (c.c.) FY 19 guidance Total software licensing (%) 17.5% - 22.5% Implied USDm USD 431 – 450m Total revenue (%) 16% - 19% Implied USDm USD 966 – 991m EBIT (USDm) USD 310 – 315m Implied margin c.31.9% Implied organic margin increase c. 150 bps Cash conversion 100%+ convers
Slide 24: Summary
| Summary Max Chuard, CEO
Slide 25: Capital Markets Day, 21 May 2019
Capital Markets Day, 21 May 2019 Temenos is hosting its Capital Markets Day on 21 May 2019 in London This will include presentations covering strategy, product and finance as well as a client presentation Opportunity to meet and network with Temenos management Taking place at the Institute o
Slide 26: Conclusion
Conclusion Very strong start to 2019 Digital, regulatory and cost pressures and move to open banking are driving demand SaaS and cloud adoption driving incremental demand Strong sales execution across geographies and segments Ongoing investment in sales and product Very high revenue visi
Slide 27: Appendix
| Appendix YW TEMENOS 27
Slide 28: FX assumptions underlying 2019 guidance
FX assumptions underlying 2019 guidance In preparing the 2019 guidance, the Company has assumed the following FX rates: USD to Euro exchange rate of 0.881 USD to GBP exchange rate of 0.757; and USD to CHF exchange rate of 1.00 28
Slide 29: FX exposure
FX exposure % of total USD EUR GBP CHF Other Total software licensing 60% 25% 2% 1% 12% Maintenance 68% 22% 5% 5% 0% Services 46% 30% 8% 3% 13% Revenues 60% 25% 4% 3% 8% Non-IFRS costs 23% 20% 13% 8% 36% Non-IFRS EBIT 142% 35% -15% -9% -53% NB. All % are approximations based on 2018 actuals Mitigate
Slide 30: Total software licensing revenue breakdown by geography
Total software licensing revenue breakdown by geography Q1 2018 APAC Q1 2019 APAC 13% 18% 17% Europe 10% Europe Americas Americas 22% MEA 29% MEA 45% 47% LTM 2018 APAC LTM 2019 APAC 9% 18% 16% 18% Europe Europe Americas Americas 21% MEA MEA 22% 44% 52% 30
Slide 31: Total software licensing revenue breakdown by customer tier
Total software licensing revenue breakdown by customer tier Q1 2018 Q1 2019 1 and 2 1 and 2 38% 3, 4 and 5 42% 3, 4 and 5 58% 62% LTM 2018 LTM 2019 1 and 2 1 and 2 3, 4 and 5 3, 4 and 5 43% 47% 53% 57% 31
Slide 32: Software licensing revenue breakdown by competitive deals / add-ons to installed base
Software licensing revenue breakdown by competitive deals / add-ons to installed base Q1 2018 Q1 2019 Competitive Competitive deals deals 27% 46% Add-ons to Add-ons to installed base installed base 54% 73% LTM 2018 Competitive LTM 2019 Competitive deals deals 33% Add-ons to Add-ons to 55% 45% instal
Slide 33: Balance sheet – debt and leverage
Balance sheet – debt and leverage Net debt and leverage ratios* USDm 600 1.6x 1.6x 500 1.4x 1.4x 400 1.2x 300 1.1x 1.0x 0.9x 0.7x 200 100 0 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 * proforma non-IFRS EBITDA adjusted for lease expense now reported under depreciation an
Slide 34: Capitalization of development costs
Capitalization of development costs USDm Q1 17 Q2 17 Q3 17 Q4 17 FY 17 Cap’ dev’ costs -11.2 -11.8 -13.4 -14.1 -50.5 Amortisation 8.8 9.8 10.9 10.5 40.0 Net cap’ dev’ -2.4 -2.0 -2.5 -3.6 -10.5 USDm Q1 18 Q2 18 Q3 18 Q4 18 FY 18 Cap’ dev’ costs -12.6 -13.2 -13.0 -13.9 -52.6 Amortisation 10.8 11.1 11.
Slide 35: 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 write down +/- Discontinued activities +/- Amortisation of acquired intangibles +/- Acquisition related charges +/- Restructuring +/- Taxation =
Slide 36: 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 2019 non-IFRS guidance: FY 2019 estimated deferred revenue write down of USD 4m FY 2019 estimated amortisation of acquired intangibles of USD 48m FY 2019 estimated restructuring costs of
Slide 37: Reconciliation – IFRS to non-IFRS
Reconciliation – IFRS to non-IFRS 3 Months Ending 31 March 3 Months Ending 31 March 2019 2019 2018 2018 In USDm, except EPS IFRS Non-IFRS adj. Non-IFRS IFRS Non-IFRS adj. Non-IFRS Software Licensing 63.2 63.2 54.4 54.4 SaaS and subscription 11.9 1.1 13.0 8.0 0.1 8.1 Total Software Licensing 75.1 1.1
Slide 38: Net earnings reconciliation
Net earnings reconciliation In USDm, except EPS Q1 19 Q1 18 IFRS net earnings 24.6 16.8 Deferred revenue write down 1.1 0.1 Amortisation of acquired intangibles 12.4 9.8 Restructuring 1.0 1.3 Acquisition related costs 0.3 4.6 Taxation -2.0 -2.1 Net earnings for non-IFRS EPS 37.4 30.5 No. of dilutive
Slide 39: Reconciliation from IFRS to non-IFRS for EBIT and EBITDA
Reconciliation from IFRS to non-IFRS for EBIT and EBITDA USDm Q1 19 EBIT Q1 19 EBITDA IFRS 34.7 64.9 Deferred revenue write-down 1.1 1.1 Amortisation of acquired intangibles 12.4 - Restructuring 1.0 1.0 Acquisition-related charges 0.3 0.3 Non-IFRS 49.5 67.3 39
Slide 40: Transition to IFRS 16 "Leases"
Transition to IFRS 16 “Leases” IFRS 16 “Leases” primarily changes lease accounting for lessee and moves to single accounting model eliminating the distinction between finance leases and operating lease. Leases qualified under IFRS16 are captured on the balance sheet from 1st January 2019. Temeno
Slide 41: Definitions
Definitions Non-IFRS adjustments Other Deferred revenue write-down Revenue visibility Adjustments made resulting from acquisitions Visibility on revenue includes a combination of revenue that is contractually committed and Discontinued activities revenue that is in our pipeline and that is likely to
Slide 42: Thank You
Thank You temenos.com