Temenos Ag · SIX:TEMN
Temenos — Investor Day (February 2022)
130 slides from Temenos's investor day presentation, Feb 15, 2022
Slide 1: Capital Markets Day 2022
TEMENOS Capital Markets Day 2022
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: Strategy and Vision
Strategy and Vision Max Chuard CEO
Slide 5: Business overview
| Business overview Dy »:
Slide 6: Temenos: Everyone's banking platform
Temenos: Everyone’s banking platform 1.2 billion Banks that use Our 3000 banks individuals, Temenos are include 41 of the top families, businesses industry leaders 50 global banks, 70+ rely on Temenos challengers That’s 30% of the Achieving They rely on the world’s banking return on equity World’s #
Slide 7: Relentless Focus on Innovation
Relentless Focus on Innovation Sustained $ 2.5B high level of R&D $ 1.0B Investment cumulative R&D R&D investment investment 1990-2021 2022-25 We invest 20% of revenues in R&D…highest in the industry 2011 2020 2022 Temenos Cloud Cloud Native Temenos Banking Cloud Next… (Virtual machines, Core (Conta
Slide 8: Market opportunity
| Market opportunity
Slide 9: Disruptive technologies key to the future of banking
Disruptive technologies key to the future of banking… 2022 - 2025 AI/Machine Blockchain/ Cloud/SaaS API/Microservices DevOps Big Data Learning Distributed DB Banking 2025 - 2030 Quantum Augmented/ Internet 5G Biometrics Wearables Computing Virtual Reality of Things 9
Slide 10: Unbundling of the banking value chain
…leading to unbundling of the banking value chain, which has fundamentally changed our market Distribution Manufacturing Product Sales & Marketing Servicing Operations Management Banks – Tier 1,2,3+ Credit unions & Specialty Finance Micro finance Bank owned Incumbents community banks Challenger bank
Slide 11: Sizeable and fast-growing addressable market
Sizeable and fast-growing addressable market USD 64bn USD 26bn USD 26bn USD 26bn USD 18bn 18% USD 18bn USD 18bn 70% 9% 82% 84% 91% 30% 16% Total Addressable Market Third party software Third party software Third party software Third party software Third party software Third party software spend spen
Slide 12: Penetrating the non-incumbent market
From our market leading position at traditional banks, we have successfully penetrated the non-incumbent market Traditional banks Non-incumbents (Digital transformation from legacy to modern) (Rapid scaling of greenfield business) Global multi-country client Single country client Flowe 12
Slide 13: Varo: Growth and path to profitability
Varo: Growth and path to profitability on The Temenos Banking Cloud First and only consumer fintech with a national bank charter in the US Background Customer-centric strategy to deliver a real-time, omni-channel customer experience & Context + Why Continued R&D investment to support current
Slide 14: Openbank: Successful greenfield implementation
Openbank: Successful greenfield implementation of a scalable platform for international expansion Largest full-service digital bank in Europe, with 1.6 million customers Background Considered the flagship digital offering of the Santander Group & Context Multi-country project By Open, API dr
Slide 15: Santander Digital Consumer Bank
Our Digital Consumer Bank: building on a strong foundation 0 te Openbank Santander Auto Global consumer financing Largest full-service Auto loan and leasing business business serving offline global digital bank serving OEMs and dealers and e-commerce merchants in the world Openbank?= > 55k Merchant
Slide 16: Client credentials
Client credentials Dan Henry President and CEO
Slide 17: Continued market leadership
Continued market leadership Best-In-Class for Aite Matrix: Leader in Omdia Universe Leader in Forrester Waves for #1 Digital banking and Digital Banking US Digital Banking Solutions of Core Providers Matrix for Digital Banking Platforms 2020-21 Digital Banking Engagement Platforms & Digital Banking
Slide 18: Our composable banking platform
Our composable banking platform
Slide 19: Open composable banking platform for continuous innovation
Open composable banking platform for continuous innovation EXPLORE DEVELOP DEPLOY & TEST COLLABORATE & SELL API Catalogue Base Camp Sandbox Environment Temenos Exchange Temenos Open Platform for Composable Banking TEMENOS COMPOSED BANKING SERVICES TEMENOS ENTERPRISE SERVICES precomposed services bas
Slide 20: Key differentiators of the platform
Key differentiators of the platform Pre-built Banking Broadest set of Localization through Services banking capabilities Country Model Banks in the market Scales with Continually Updated Extensible with Banking business growth solutions Capabilities from Temenos and Exchange 20
Slide 21: Single code and configuration base drives higher margin
Single code and configuration base drives higher margin, competitive edge and profitable growth Retail SME Corp. Wealth Segment agnostic Higher margin Total Assets Traditional Non- incumbent Tier 1 Tier 2 Tier 3+ Type agnostic Single code and Size agnostic Competitive advantage configuration base Te
Slide 22: Why we outsell the competition
Why we outsell the competition Traditional vendors Neo vendors Cross-industry, not packaged nor New digital entrants, cloud-native cloud native nor SaaS ready offering, but limited functional scope Why we win Why we win 100% Banking focused Depth and breadth of functionality Market leadership, inclu
Slide 23: Vendor of choice for core and digital banking globally
Vendor of choice for core and digital banking globally IBS Sales League Table 2021: Global new named deals 20201 0.0 x Temenos deals multiple vs competitor Core Banking Digital Banking & Channels 50 120 40 100 80 30 2.3x 2.7x 3.0x 3.7x 5.3x 8.0x 3.9x 4.1x 5.0x 15.1x 17.7x 21.2x 60 20 40 10 20 0 0 Ca
Slide 24: Subscription pricing model
| Subscription pricing model OS kets Day
Slide 25: Move to subscription captures greater value
Move to subscription captures greater value and accelerates our growth Significant acceleration in Annual Recurring Revenue ARR forecast to grow 20-25% CAGR 2021-2025 Clients across all tiers and business models are ARR % of Total Revenue increasingly asking for subscription contracts c.USD1.3bn rat
Slide 26: Value creation will drive acceleration in licensing and EBIT
Value creation will drive acceleration in Total Software licensing and EBIT >19% >15% Total Software Licensing 22-25 CAGR Non IFRS EBIT 22-25 CAGR 10%* 17%* 10% 17% 357 323 414 356 2020 2021 2022E 2025E 2020 2021 2022E 2025E Note: Numbers are non-IFRS. 2020 and 2021 at constant currency * Mid-point
Slide 27: Tangible benefits to clients and Temenos
Tangible benefits to clients and Temenos Benefits to client Benefits to Temenos Enhanced value proposition for customers Greater upsell opportunity significantly expanding flexibility Better customer retention Lower upfront cost, reflecting a shift to OPEX Significantly expanding long-term value fro
Slide 28: Key strategic initiatives
| Key strategic initiatives arkets ay
Slide 29: Key strategic initiatives
Key strategic initiatives North America Partner centric focus approach Increasing Continued SaaS penetration in acceleration Larger banks 29
Slide 30: Continued focus on profitable SaaS growth
Continued SaaS acceleration Continued focus on profitable SaaS growth with margin expansion Sustained SaaS revenue growth Key levers for profitable growth SaaS Revenue (USD M) Composable Banking 30%+ CAGR Higher incremental revenue Self service portal 2021-2025 Lower time to value Click &
Slide 31: Building momentum in North America
North America focus Building momentum in North America Significant increase in North America’s contribution to our Software licensing Accelerating our North America growth Total software licensing: North America vs. Rest of Maintain advantage in non-incumbents World1 Significant growth in pipeline
Slide 32: Commerce Bank: Digital transformation in the US
North America focus Commerce Bank: Successful Digital transformation in the US market from legacy to Temenos Core Banking Super community bank in the United States, 47th largest with $25 billion in assets Background Core modernization project now live, moved its legacy platform for deposits to a
Slide 33: Enhancing capabilities to serve larger banks
Increasing penetration in Larger banks Enhancing capabilities to serve Larger banks Strong track record among Large banks Increasing penetration within larger banks > 35% of Tier 1-2 banks, Targeted incremental transformations including 41 of the top 50 Standardized global expansion (reuse, loca
Slide 34: Open platform powers network effects
Partner centric approach Open platform powers network effects Sales Partner led delivery model Partners Extensibility framework & Open APIs to help partners configure, customize and extend Temenos platform Delivery Partners Temenos SCALE program Collaboration and co- innovation with fintechs, develo
Slide 35: ESG integral to our goal
ESG integral to our goal of achieving our vision and delivering business value Consistent overperformance in leading global benchmarks (Top 1% of industry) Top 1% ESG Mission: Leadership Top 10% Included in Swiss Top performer AA rating Sustainability 25 index in industry (top 20%) Help our client
Slide 36: Tenacity Velocity Responsibility Authenticity Community
TENACITY VELOCITY RESPONSIBILITY AUTHENTICITY COMMUNITY 36
Slide 37: Accelerating growth trajectory
Accelerating growth trajectory To grow ARR at a To grow Expanding Total Software EBIT margin CAGR of 20-25% Licensing from 2021-25, to c.41% revenue at a by 2025 To reach c.USD1.3bn CAGR of by 2025 (85%+ of total revenues) 15-20% from 2021-25 37 Note: Revenue, cost and profit numbers are non-IFRS
Slide 38: Thank You
Thank You
Slide 39: An Industry in Flux: Banking Trends
An Industry in Flux: Banking Trends 2022 Kanika Hope Chief Strategy Officer 39
Slide 40: Disruptive technologies key to future of banking
Disruptive technologies key to future of banking… 2021 - 2025 AI/Machine Blockchain/ Cloud/SaaS API/Microservices DevOps Big Data Learning Distributed DB 65% think new technologies will have the 86% believe DevOps 81% think unlocking value methodologies and biggest impact on from AI will be the mode
Slide 41: Intensifying the pressures banks have always faced
…intensifying the pressures banks have always faced Payment Reliability & Trust specialists Responsiveness & Convenience “Tech-fin” - Technology giant + Hyper-personalization & Holistic Ecommerce platforms experience Fintech - start-ups, neo-banks, Access or financial inclusion BaaS providers Demand
Slide 42: The unbundling of the banking value chain
The unbundling of the banking value chain Distribution Manufacturing Sales & Product Servicing Operations Marketing Management Digital banking Mobile Wallets & Remittances Open Banking and BaaS Credit score and analytics Real estate and mortgages POS and consumer lending Personal Finance Retail inve
Slide 43: The rise of Banking-as-a-Service
The rise of Banking-as-a-Service BaaS Value Chain Banking capability BaaS API (and/or embedded BPO) BaaS API Brand or BaaS provider Licence holder Consumer of BaaS (specialist cloud (Embedded finance) API platform) The BaaS market is expected to reach $3.6T by 2030 43
Slide 44: Profitable segments of banking value chain at risk
Profitable segments of the banking value chain at risk due to nimble new entrants Estimated business volumes lost to disintermediation by 20251 Accounts in Millions 24 Payments 34-50% 22 20 18 16 14 Investments 34-50% 12 10 8 6 4 2 Consumer lending 17-34% 0 April 2020 Today “I would highlight the ra
Slide 45: Incumbent banks' strategic responses
Incumbent banks’ strategic responses 1 2 3 4 5 6 Divest utility Focus on Collaboration Building Open Banking Consolidation segments niche segments with fintechs greenfield business models Mergers between Withdraw from non- Focus on core Bilateral partnerships, Leverage existing Banking-a
Slide 46: Banking Capability Model for Digital & Open Banking
The Banking Capability Model for the Digital & Open Banking age to support all strategic responses Digitally augmented customer experience 93% 95% 92% 87% 77% Contextual DISTRIBUTION & Omni-Channel user-experience Mass personalization Open banking Collaboration with CHANNELS Harmonized, seamless, Ta
Slide 47: Market Landscape: Banking revenue moving beyond incumbents
Market Landscape: Banking revenue moving beyond incumbents Segment Sub-segment Example Banks – Tier 1,2,3+ Credit unions & community banks Specialty Finance Incumbents Micro finance Bank owned Challenger banks Not bank owned Challenger Banks Pureplay BaaS providers Non-incumbents BaaS brands excludi
Slide 48: Growth-share matrix of key segments and tiers
Growth-share matrix of key segments and tiers 32.0 ? : Selectively invest Stars: Invest Wealth Tech Not-bank owned Challenger banks Market growth 2020-24 (%)1 Corporate T1 & 2 & BaaS providers Digital Lenders Retail T1 & 2 PWM Avg Corporate T4 Retail T3 Corporate T3 Retail T4 Corporate T5 Retail T5
Slide 49: Current Reality at Incumbent Banks
Current Reality at Incumbent Banks High Operational costs Complex, Dependencies on end-of-life Monolithic, systems major cause for High concern Long times to Inflexible, operational market Batch Legacy risk Basel committee introduces Based IT new rules to standardize Landscapes operational risk
Slide 50: Three technology strategies banks are following
Today, banks are following a combination of three technology strategies Source from Build Renovate fintechs greenfield existing business Acquire modern cloud- Launch a greenfield Modernize existing IT native technology stack to challenger bank (new architecture using disruptive augment/enhance in- b
Slide 51: Technology attributes required for today and tomorrow
Technology attributes required for today and tomorrow Attributes Temenos Characteristics Composable banking Extensibility Framework Openness & Interoperability Low code Configuration, workflow and rules Agility and time Modularity to market Embedded Explainable Artificial Intelligence Software- as-a
Slide 52: Thank You
Thank You
Slide 53: The Evolution of Temenos Products and Services
The Evolution of Temenos Products and Services Prema Varadhan, Chief Product and Technology Officer
Slide 54: Changing Ecosystem of Banking Service Providers
Changing Ecosystem of Banking Service Providers INSTITUTION TYPE KEY ELEMENTS ROLE Product builder? Incumbents Cloud Core Banking Builder-Aggregator? Open Banking APIs Distributor? Non-incumbents Banking-as-a-Service Distributor-Aggregator? Click to add text Extensible banking services
Slide 55: The Temenos Banking Cloud Platform
THE TEMENOS BANKING CLOUD PLATFORM FOR COMPOSABLE BANKING PLATFORM USERS Banks Enterprises Solution FinTechs Systems Individual Providers Integrators Developers UNIQUE PLATFORM TemenosBanking.cloud CHARACTERISTICS EXPLORE DEVELOP DEPLOY & TEST COLLABORATE & SELL Composable API Catalogue Base Camp
Slide 56: Temenos Banking Capabilities Landscape
TEMENOS BANKING CAPABILITIES LANDSCAPE GROUPED BY BANKING SERVICE DOMAINS Wealth Retail SME Customer Transaction Retail Next SME Next Best FCM Outlier XAI Retail Scoring SME Scoring Scoring Customer Management Management Best Product Product Detection Management Channels Customer Engagement Products
Slide 57: Example Temenos Composed Banking Service
EXAMPLE TEMENOS COMPOSED BANKING SERVICE BUY NOW PAY LATER Wealth Retail SME Customer Transaction Retail Next SME Next Best FCM Outlier XAI Retail Scoring SME Scoring Scoring Customer Management Management Best Product Product Detection Management Channels Customer Engagement Products Operations Dat
Slide 58: Composed Banking Services for 2022
Composed Banking Services for 2022 Temenos Enterprise Temenos Composed Temenos Independent Services Banking Services Banking Capabilities Temenos Enterprise Buy Now Pay Later Retail Loans Digital Mortgages Demand Deposit Accounts Retail Deposits and Savings Retail Lending Accounts Temenos Enterprise
Slide 59: Why is it better?
Why is it better? The broadest set Localized Extensible with Scales with of open and configurations Banking business growth composable Capabilities from banking capabilities Temenos and in the market Exchange The ability to Compose banking services allows banks, Temenos, and partners to rapidly asse
Slide 60: ABN AMRO: A true partnership with Temenos
ABN AMRO: A true partnership with Temenos driving innovation and agility on cloud • Long term strategic partnership through transformation Background • Phase 1: Transact, Phase 2: Payments, Phase 3: Temenos Continuous Deployment (TCD) on & Context Cloud, Phase 4: Wealth + Why • • Market-leading solu
Slide 61: Flowe: Launching one of the world's most ethical banks
Flowe: Launching one of the world’s most ethical and innovative banks in rapid time • Italian Challenger bank targeting Millennial and Generation Z Background • Built unique mobile app that allows users to transfer funds while making positive impact on & Context society & planet + Why • • Proven exp
Slide 62: Thank you
Thank you
Slide 63: Technology Update
Technology Update Tony Coleman Chief Technology Officer
Slide 64: Temenos Offers…
Temenos Offers… Composable Banking: Compose services from the most comprehensive set of banking capabilities, augmented with capabilities with Exchange partners Choice: A single code base Investments benefit everyone Extensibility: Efficiency: Continuously upgrade safely Simpler to implement
Slide 65: Choice
Choice Who runs it? Deployment Architecture Packaged / The Temenos Banking Public Cloud Decoupled Differentiate / Cloud (SaaS) Commodity Private Cloud Embedded Client Country Model Hybrid Partners Hybrid Safe Extensions Cloud-like / On-prem Continuously Upgradeable Single Code Base. Investment benef
Slide 66: The Temenos Banking Cloud Platform
THE TEMENOS BANKING CLOUD PLATFORM FOR COMPOSABLE BANKING PLATFORM USERS Banks Enterprises Solution FinTechs Systems Individual Providers Integrators Developers UNIQUE PLATFORM TemenosBanking.cloud CHARACTERISTICS EXPLORE DEVELOP DEPLOY & TEST COLLABORATE & SELL Composable API Catalogue Base Camp
Slide 67: Temenos Banking Capabilities Landscape
TEMENOS BANKING CAPABILITIES LANDSCAPE GROUPED BY BANKING SERVICE DOMAINS Wealth Retail SME Customer Transaction Retail Next SME Next Best FCM Outlier XAI Retail Scoring SME Scoring Scoring Customer Management Management Best Product Product Detection Management Channels Customer Engagement Products
Slide 68: Composable Banking
Composable Banking ARCHITECTURE API Traffic VNet Compose solutions Decoupled capabilities - each defines by choosing its own runtime and dependencies Temenos Banking Enables Infrastructure-as-Code (IaC) to Capabilities… be created on the fly… 68
Slide 69: Composable Banking
Composable Banking ARCHITECTURE API Traffic VNet Compose solutions … and modified as needed by choosing … from a broad Temenos Banking range of business Capabilities… areas … 69
Slide 70: Composable Banking
Composable Banking ARCHITECTURE API Traffic VNet Compose solutions … add supporting by choosing … from a broad capabilities, from Temenos Banking range of business both Temenos and Capabilities… areas … Exchange Partners 70
Slide 71: Extensibility Framework
Extensibility Framework What: How: Upgrade safely, with ease “Make high-impact “Extend & test changes frequently solutions safely at the and predictably with perimeter” minimal toil” Protect SLAs Enhance developer experience Use industry standard skills 71
Slide 72: Extensibility Framework & Partners
Extensibility Framework & Partners A digital ecosystem for banking centered around Temenos System Empowers the ecosystem to create IP integrators with Temenos 3rd party developers Startups Co – Innovate Co – Create Co – Monetize Complementary Customers SW providers Exchange adapters, apps, loc
Slide 73: Embedded DevOps & Continuous Updates
Embedded DevOps & Continuous Updates WHAT OUR CLIENTS NEED HOW WE DO IT Seamless updates Release Validation Tests Always on the last version Automated Test Framework High Availability / Disaster Temenos Workbench recovery Extensibility framework Evergreen SLAs Temenos distributes Release Validation
Slide 74: Efficiency
Efficiency Improved efficiency of Temenos software, regardless of who, how or where it runs Build Deploy Less Infrastructure Simpler to implement Less middleware Operational simplicity Overarching design Reduced TCO principle Scale as needed Leaner and greener throughout the Temenos SD
Slide 75: Proven Track Record: Cloud Native Technology
Proven Track Record: Cloud Native Technology 2011 2020 2022 2022+ Temenos Cloud Temenos Banking TECHNOLOGY revolution Cloud Native Next … Cloud Virtual Machines Containers & Serverless Continuous Updates Multi-Cloud Workload Allocations Core banking Multi-Product Composable Banking Ser
Slide 76: Thank you
Thank you
Slide 77: Composable Challenger Bank Demo
Composable Challenger Bank DEMO Ramki Ramakrishnan Global Business Solutions Director
Slide 78: Spotlight on Composability
Spotlight on Composability Composability Low-touch SaaS Open Platform Exploring Self Service Portal Composed Services Learning Open Access to all Banking Capabilities Assembling capabilities Continuous Updates 78
Slide 79: Buy Now Pay Later Demo
Buy Now Pay Later DEMO Ramki Ramakrishnan Global Business Solutions Director
Slide 80: Buy Now Pay Later Demo
| Buy Now Pay Later Demo Glace Wy Pr ee Netsplace Payarrow @ TEMENOS * TEMENOS 80
Slide 81: Summary
| Summary oat < Paying at NeoStore_ Macbook Pro. was 1699.99 a@ 2 e230 azuso LL e272090 YL Good Setup account for autopaymont Choice of Add On Q nal cut Pro +€2030 poplecare + +1070 © ths: 20050 Add tocart P Payarrow Account endl MAKE PAYMENT * TEMENOS
Slide 82: Thank you
Thank you
Slide 83: Temenos SaaS
Temenos SaaS Ross Mallace, Business Line Director, Temenos SaaS
Slide 84: SaaS is rapidly growing
SaaS is rapidly growing 70%+ Year on Year growth for SaaS Growing margins 300 $284m Over 700 through automation 250 SaaS clients efficiency gains, 200 economies of scale $165m & larger clients. 150 100 $89m 50 Solutions supporting all incumbent and 0 non-incumbent business models. 2019 2020 2021 All
Slide 85: Accelerating SaaS Consumption
Accelerating SaaS Consumption 700+ SaaS Clients 70+ Challenger Banks 10 Years of Operation 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 85
Slide 86: Providing SaaS for all types of banks
Providing SaaS for all types of banks Non-incumbents Incumbents 86
Slide 87: The Temenos Banking Cloud
The TEMENOS BANKING CLOUD The Open Platform for TEMENOS Composable Banking Open Platform For Composable Banking Try new ideas in a sandbox Test and send into production quickly Extend from the Exchange ecosystem 87
Slide 88: Why are we winning?
Why are we winning? Prebuilt Low-touch SaaS to Extensible with Composed enable self-service Banking Capabilities Banking Services composability to from Temenos and banks Exchange Cloud Native Consumption based Powered by the Continuous updates Subscription pricing broadest set of Elastically scalabl
Slide 89: Sharing our clients' success
Sharing our clients’ success • Extremely scalable platform to support successful client growth • Driving further SaaS consumption from our clients’ success • Margin growth through economies of scale Digital Bank Accounts in Customer Growth 24 Millions 800,000 22 20 700,000 18 600,000 16 500,000 14 1
Slide 90: Thank you
Thank you
Slide 91: Temenos' approach to ESG
Temenos’ approach to ESG Kalliopi Chioti Chief ESG Officer
Slide 92: To grow our business in a way that takes care of the world
To grow our business in a way that takes care of the world around us, delivering value to anyone associated with us Wf TEMENOS 92
Slide 93: The 3 dimensions of our ESG strategy
The 3 dimensions of our ESG strategy VALUE COMMUNITY RISK CREATION INVESTMENT MANAGEMENT Impact on Impact on Impact on business model society operations 93
Slide 94: Integrating ESG into operations and product offering
Integrating ESG into our operations and product offering WHAT IT MEANS TO US: ESG PRIORITY STRATEGIC AREAS Achieving Business Excellence Helping our clients transform into smart, inclusive and sustainable organizations Operating Responsibly Investing in our People Investing in our Communitie
Slide 95: Engaging with stakeholders to define focus areas
Engaging with our stakeholders to define our focus areas SOCIAL Diversity, Equity & Inclusion ENVIRONMENT GOVERNANCE Digital Inclusion & Innovation Environmental Management & Poverty Alleviation & Financial Ethical Business Conduct & Awareness Inclusion Governance Climate Change & Carbon
Slide 96: Setting competitive ESG targets
Setting competitive ESG targets SOCIAL Diversity, Equity & Inclusion ENVIRONMENT Employees GOVERNANCE Climate Change & Carbon Neutrality Business Ambition for 1.5°C Reporting progress Our in the Temenos Annual Report TARGETS 96
Slide 97: Mitigating Climate Change
Mitigating Climate Change Aligned our climate Temenos Banking Cloud as a strategy and reporting with climate-related opportunity TCFD recommendations Provide our clients with the Set Science-based targets tools to reduce their or their customers’ carbon footprint, https://ffnews.com/newsarti
Slide 98: Reporting on our ESG Progress
Reporting on our ESG Progress GRI & SASB reporting TCFD reporting UN SDGs mapping (operations & product offering) ESG targets (2030) Science-based targets (by end of 2022) 3rd party external assurance https://www.temenos.com/wp-content/uploads/2021/03/2020-Annual-Report-7u42lsu22.pdf#pag
Slide 99: Benchmarking against global indices and ratings
Benchmarking against global indices and ratings OUR ACHIEVEMENTS Top 25 2nd in the 2x Sustainability Swiss SOF category Top Highest Top Award stocks globally 10% rating performer Winner SXI Switzerland Dow Jones Bloomberg 2022 S&P Global FTSE4GOOD CDP Gender Equality Sustainability 25® Sustainabilit
Slide 100: Delivering business value along our value chain
Delivering business value along our value chain with targeted initiatives Product & Sales & Support Ops & HR Finance Procurement Cloud Marketing Analytics Measure and ESG to be integral Introduce purpose- Implement TCFD Require critical Establish real time showcase green part of our bran
Slide 101: Doing business with our people, clients, partners and communities
Because it is no longer enough to have the best, fastest or cheapest product… It is about operating responsibly Doing business with our people, clients, Innovating partners and with communities purpose that share our values And winning the right way, not just the easy way. 101
Slide 102: www.temenos.com/corporate-social-responsibility/
www.temenos.com/corporate-social-responsibility/ 102
Slide 103: Thank You
Thank You www.temenos.com/corporate-social-responsibility/
Slide 104: Financial growth plan
Financial growth plan Takis Spiliopoulos CFO
Slide 105: Accelerating growth trajectory
Accelerating growth trajectory To grow ARR at a To grow Expanding Total Software EBIT margin CAGR of 20-25% Licensing from 2021-25, to c.41% revenue at a by 2025 To reach c.USD1.3bn CAGR of by 2025 (85%+ of total revenues) 15-20% from 2021-25 105 Note: Revenue, cost and profit numbers are non-IFRS
Slide 106: Accelerating ARR and Total Software Licensing
Accelerating ARR and Total Software Licensing… Total ARR Total Software Licensing c.25% 22-25 CAGR >19% 22-25 CAGR 19%* 17%* c.19% 17-19 CAGR 12% 17% c.16% 17-19 CAGR 553 445 414 462 494 383 356 391 316 345 2017 2018 2019 2020 2021 2022E 2025E 2017 2018 2019 2020 2021 2022E 2025E Note: Numbers are n
Slide 107: Driving acceleration in EBIT and Free Cash Flow
…driving acceleration in EBIT and Free Cash Flow Non IFRS EBIT FCF >15% 22-25 CAGR >25% 23-26 CAGR 10%* 10% c.19% 17-19 CAGR c.9% 17-19 CAGR 357 358 318 323 297 265 280 269 224 227 2017 2018 2019 2020 2021 2022E 2025E 2017 2018 2019 2020 2021 2022E 2023E 2026E Note: Numbers are non-IFRS. 2020 and 20
Slide 108: Move to subscription captures greater value
Move to subscription captures greater value and accelerates our growth Client across all tiers and business models are Significant acceleration in Annual Recurring Revenue increasingly asking for subscription contracts ARR % of Total Revenue c. 1.3b rather than traditional upfront license 85%+ 80% 7
Slide 109: Tangible benefits to clients and Temenos
Tangible benefits to clients and Temenos Benefits to client Benefits to Temenos Enhanced value proposition for customers Significantly expanding long-term value significantly expanding flexibility creation potential through incremental growth, higher margins and cash flows Lower upfront cost, reflec
Slide 110: Subscription will become a material contributor to ARR
Subscription will become a material contributor to ARR Term and Perpetual model Move to Subscription model 27% 27% c.45% c.50% c.30% 73% 73% c.50% c.25% 2021 2022E 2023 2024 2025 2021 2022E 2023 2024 2025 Maintenance SaaS Maintenance Subscription SaaS Subscription and SaaS to become main contributor
Slide 111: Subscription model illustration
Subscription model illustration Term / Perpetual 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 / Perpetual model – Cash Subscription model –
Slide 112: Drivers of growth
ef °o w]e ° ’ ivers of growth PR (. Q# TEMENOS 112
Slide 113: Application software is significantly underpenetrated
Application software is significantly underpenetrated Third Party Software penetration by industry in 2021 2021 2025 70% 40% 65% 39% 40% 61% 38% 60% 53% 35% 50% 32% 41% 30% 28% 40% 31% 35% 30% 25% 20% 20% Government Manufacturing Retail Healthcare Banking Payments Corporate Wealth Retail Banking Tem
Slide 114: Sizeable and fast-growing addressable market
Sizeable and fast-growing addressable market USD 64bn CAGR 10% CAGR 10% CAGR 10% USD 26bn USD 26bn USD 26bn USD 18bn 18% USD 18bn USD 18bn 9% 82% 91% Total Addressable Market Third party software Third party software Third party software Third party software Third party software Third party software
Slide 115: Building momentum with tier 1 and 2 clients
Building momentum with tier 1 and 2 clients Non-IFRS total software licensing revenues by client tier 26% 36% 40-50% 115
Slide 116: Building momentum in North America
Building momentum in North America Non-IFRS total software licensing, North America vs. Rest of World 10% 33% 40-45% 116
Slide 117: Future Reporting - Subscription
Future Reporting - Subscription Total Software Licensing (old) Total Software Licensing (new) + License revenue + Term & Perpetual License revenue + SaaS + Subscription + SaaS = Total Software Licensing revenue = Total Software Licensing revenue ARR (old) ARR (new) + Term & Perpetual Maintenance + T
Slide 118: Focused Guidance Metrics
Focused Guidance Metrics KPI Reporting Annual Guidance 2025 Targets (absolute / CAGR) SaaS ACV Total Bookings ARR Total Software Licensing Total Revenue EBIT Operating Cash Conversion Free Cash Flow Recurring Revenue DSO Tax Rate 118
Slide 119: Medium Term Targets
Medium Term Targets Mid-term Guidance 2020 (CCY) 2021 (CCY) Medium Term Targets Previous guidance 20-25% CAGR 2021-25 ARR 494 553 >=15% CAGR 2020-25 c.USD1.3bn of ARR by 2025 Total Software 356 414 15-20% CAGR 2021-25 15-20% CAGR 2020-25 Licensing Total revenue 900 962 10-15% CAGR 2021-25 10-15% CAG
Slide 120: EBIT Margin % expansion
EBIT Margin % expansion 130-150bps p.a c.41% SaaS c.150bps SaaS 100bps 37% BAU BAU 36% (150-200 bps) FY20 CCY FY21 FY21 CCY FY22 FY22 FY23-25 FY25 Expansion Expansion Investment Expansion After years of margin expansion (FY14-21 averaging >100bps p.a.), FY22 represents a year of investment (e.g. w
Slide 121: SaaS Gross Margin % evolution
SaaS Gross Margin % evolution 6%+ >=80% 4%+ 3%+ 7% c.67% 60% 57% 47% Hyper-scalers: unit costs to reduce as volumes increase Automation to drive significant efficiencies in operation centres Operations optimised into centralised offshore function with local hubs to provide “follow the sun” ser
Slide 122: Drivers of non-IFRS EBIT margin evolution
Drivers of non-IFRS EBIT margin evolution c.41% 37% On-Premise and services gross margin to remain constant SaaS Gross Margin to expand to at least 80% Continued leverage of R&D and G&A infrastructure Sustained investments in Sales & Marketing 122
Slide 123: Disciplined capital allocation (2015-2021)
Disciplined capital allocation (2015-2021) Balance sheet (31-Dec-21) Share buyback - Outflow Weighted average 30% interest rate 2.1% Acquisition - Outflow 55% Weighted average debt maturity 2.2 years Dividend - Outflow 15% Leverage ratio 1.8x Targeted acquisitions for USD1.2bn+ and returned c.USD1bn
Slide 124: Using M&A to accelerate organic growth
Using M&A to accelerate organic growth Date Price (m) Capabilities Sep 19 $560 US scale, digital banking and low code development, cloud operations excellence Jul 19 £12 Explainable AI expertise across all products Feb 19 N.D. Data lake capabilities Dec 18 $245 Digital front office, cloud operations
Slide 125: A three-pronged approach to M&A
A three-pronged approach to M&A to accelerate organic growth Accelerated R&D Adjacent markets roadmap in key Increased and markets and scale complementary segments products 125
Slide 126: Driving shareholder value through accelerating growth
Driving shareholder value through accelerating growth A sizeable and fast growing market Temenos is a leader across all client that is changing rapidly types, incumbent and non-incumbent Single code base drives higher margin, Move to subscription will further competitive edge and profitable accelera
Slide 127: Appendix
| Appendix ENOS — tkets Day
Slide 128: Key cost lines as a percentage of revenue
Key cost lines as a percentage of revenue 37% Margin c.41% Margin 14% ~12% 7% ~5% 21% <17% 21% 25%+ FY21 FY25 S&M R&D G&A Services Note: Non-IFRS. 128
Slide 129: Non-IFRS EBIT reconciliation
Non-IFRS EBIT reconciliation 35.2% Last 10 year average IFRS2 cost as a % of revenues was c.4-5% Total IFRS2 charges for companies in peer group is 4.5% 129
Slide 130: Thank You
Thank You