Temenos Ag · SIX:TEMN
Temenos — FY2010 Earnings Presentation
39 slides from Temenos's earnings presentation, Feb 16, 2011
Slide 1: Financial Results & Business Update
Financial Results & Business Update Quarter and year ended 31 December 2010 16 February 2011
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 Introduction Sarah Bowman Investor Relations Strategy and Business update Andreas Andreades CEO Financial update David Arnott CFO Acquisition Update Max Chuard Director, M&A and IR Outlook and Summary Andreas Andreades CEO Q&A Slide 3
Slide 4: Agenda
Agenda Introduction Sarah Bowman Investor Relations Strategy and Business update Andreas Andreades CEO Financial update David Arnott CFO Acquisition Update Max Chuard Director, M&A and IR Outlook and Summary Andreas Andreades CEO Q&A Slide 4
Slide 5: Highlights from FY and Q4 2010
Highlights from FY and Q4 2010 Excellent Q4 and full year results USDm Q4 2010 FY 2010 FY Objective Licence Revenue 60.9m 160.1 (+19% 161m (+15% P LfL) LfL) Total Revenues 149.8m 448.0m 451-461m Lower services Adjusted EBIT 53.8m 113.7m 110-115m P Adjusted EBIT 26% 25% P growth EBITDA 212% 111% 100%
Slide 6: 2010 Strategic review
2010 Strategic review Strategic Objective Achievement Grow the partner network Added Capgemini & further local partners Partners now bring 6% of licence revenue Product extensions to enhance growth 15% of total licence revenues Stand-alone services Support expansion of partner program Execute on M&A
Slide 7: Overview of FY sales
Overview of FY sales Core sales robust → 46 new core banking customers in 2010 vs 43 in 2009 → Tier 1 customers continue to be strong in the mix → Pipeline continues to grow sequentially and fully supports our outlook Revenue synergies from acquisitions are materialising → 4 V-Bank replacements, sho
Slide 8: Update on product extension sales
Update on product extension sales Product extensions account for 15% of total licence revenues in 2010 2007 2008 2009 2010 % of licence <5% 5% 10% 15% revenues ARC Biometrics ARC Mobile T-Risk Insight We achieved a sequential quarterly increase in AML average deal size, now 36% above the average of
Slide 9: Number of partner resources committed
Number of partner resources committed → Partner assumption of service activities is a key to our growth strategy → We have improved visibility over committed partner resources → We are right-sizing our service organization in-line with our l l 2000 strategy l Number of resources committed l l l 1500
Slide 10: Update on partners
Update on partners Cognizant • Full utilization for 350+ resources Deloitte • Expanding geographical scope of partnership Capgemini • Have set up competency centers in China and India. 300+ trained resources. Rolling out testing workshops Microsoft • 30 leads over the year • Banks up to 6m accounts
Slide 11: Agenda
Agenda Introduction Sarah Bowman Investor Relations Strategy and Business update Andreas Andreades CEO Financial update David Arnott CFO Acquisition Update Max Chuard Director, M&A and IR Outlook and Summary Andreas Andreades CEO Q&A Slide 11
Slide 12: Income statement highlights
Income statement highlights Q4 2010 Q4 2009 y-o-y FY 2010 FY 2009 y-o-y (USDm) (USDm) (USDm) (USDm) Licence revenues 60.9 44.0 38% 160.1 126.0 27% Total revenues 149.8 118.6 26% 448.0 370.3 21% Adj. EBIT 53.8 42.7 26% 113.7 91.3 25% Adjusted EPS* 0.68 0.58 17% 1.47 1.23 20% * in USD; see appendi
Slide 13: Financial statement highlights
Financial statement highlights in USDm Q4 10 Q4 09 FY 10 FY 09 Licences 60.9 44.0 38% 160.1 126.0 27% Maintenance 47.7 31.6 51% 154.8 117.1 32% Services 41.2 43.0 (4)% 133.1 127.2 5% Total Revenue 149.8 118.6 26% 448.0 370.3 21% Total operating costs (112.4) (78.0) 44% (374.3) (290.1) 29% Adj. E
Slide 14: FY like-for-like revenues
FY like-for-like revenues Like-for-like total revenue +7%... USDm +19% +10% (8)% Slide 14
Slide 15: FY like-for-like costs
FY like-for-like costs ...vs. like-for-like costs -2% USDm *Excludes FX, restructuring and amortization of acquired intangibles ** Excludes restructuring, Viveo & Odyssey stand alone costs and amortization of acquired intangibles Slide 15
Slide 16: Margin development
Margin development Strong improvement in product margin driving overall margin growth Adj. Margin FY 2009 FY 2010 Bps r Product 28.3% 34.9% 660 Service 17.5% 2.9% (1460) EBIT 24.6% 25.4% 80 Slide 16
Slide 17: Income statement
Income statement Q4 2010 Q4 2009 y-o-y FY 2010 FY 2009 y-o-y (USDm) (USDm) (USDm) (USDm) Adjusted EBIT 53.8 42.7 26% 113.7 91.3 25% Net finance charge* (6.1) (2.0) (202)% (13.0) (7.7) (69)% FX (loss)/gain 0.5 0.1 400bps 1.1 (3.7) n/a Tax (0.0) (0.1) n/a (0.4) (0.3) n/a Adjusted Net Profit 48.2 40.
Slide 18: Update on cash
Update on cash Guidance of 100% EBITDA conversion* for FY 2010 exceeded Adjusted EBITDA conversion EBITDA conversion 106% 111% 107% 107% USDm * EBITDA conversion = operating cashflow/EBITDA as a percentage. EBITDA is adjusted for the restructuring charge and adjusted cash flow is adjusted for the ca
Slide 19: Balance sheet – debt and financing
Balance sheet – debt and financing Comments FY 2010 (USDm) Credit facilities 181.4 USD 350m facility, due in 2014 Other 1.2 TOTAL DEBT 182.6 CASH 169.5 Held in ST deposits & treasury shares NET DEBT 13.1 Net Debt to EBITDA 0.1x Better than expectation of 0.2x Very low leverage despite two recent, ma
Slide 20: Convertible bond
Convertible bond CHF 132.25m Convertible bond called → Bond converted 100% into shares → Approx. 7.3m shares issued as per year end 2010 → Shares will be fully registered by end of February 2011 Key benefits → Lowers net indebtedness → Removes potential refinancing risk and FX risk → Simplifies capi
Slide 21: Restructuring of services
Restructuring of services Transition to new business model • Partners are taking a greater load of service business • Extended use of model bank • Smaller, yet higher skilled internal team • Services declined from 34% of total revenues to under 30% in 1 year • This has allowed us to reduce our headc
Slide 22: Agenda
Agenda Introduction Sarah Bowman Investor Relations Strategy and Business update Andreas Andreades CEO Financial update David Arnott CFO Acquisition Update Max Chuard Director, M&A and IR Outlook and Summary Andreas Andreades CEO Q&A Slide 22
Slide 23: Viveo update
Viveo update In our first year of integration… Faster than expected uptake of T24 → 4 migrations from V-Bank in our first year post acquisition → Expect a continuation of this trend Viveo revenues are now fully integrated into T24 → AML & STeP fully integrated into T24 sales → Pipeline of deals stro
Slide 24: Odyssey update
Odyssey update Integration progressing in advance of expectations Launched our Private Wealth Management division → Brings focus; dedicated, sales, pre-sales and delivery team → Critical mass; largest, dedicated PWM software provider globally → Confirm position as PWM market leader → PWM currently f
Slide 25: Acquisition update
Acquisition update We continue to screen potential candidates... → Our acquisition expertise and integration track record are sound → We have the internal capacity to manage further acquisitions → Environment continues to present interesting opportunities → Temenos balance sheet is very strong ...an
Slide 26: Agenda
Agenda Introduction Sarah Bowman Investor Relations Strategy and Business update Andreas Andreades CEO Financial update David Arnott CFO Acquisition Update Max Chuard Director, M&A and IR Outlook and Summary Andreas Andreades CEO Q&A Slide 26
Slide 27: Summary and value proposition going into 2011
Summary and value proposition going into 2011 We have achieved our goals in 2010… Strategic and financial objectives achieved …and are in a position to extend further our market lead in 2011 → We enter the year with a strong pipeline and good momentum → Our product set is broad, differentiated and
Slide 28: Our market
Our market 2010 was the first year of the recovery… → Stable deal volume and few megadeals in the overall market → Equates to relatively slow growth – we estimate around 5% … but we predict stronger growth in 2011… Based on analyst commentary… “ “ uptick in demand for core banking revitalization is
Slide 29: Outlook
Outlook Key Performance Indicator Outlook Implied range L-f-L Licence Revenue* 15-20% USD 197-205m Total Revenue** 22-26% USD 546-564m Adj. EBIT margin 26-27% EBIT margin 20-21% EBITDA Conversion into CF from Ops 100% Tax Rates 8-10% Cash tax to be 5% * Base adjusted for Odyssey contribution and con
Slide 30: Closing comments
Closing comments LTM revenues and adj. EBIT since Q4 2005 (USDm) Adjusted EBIT CAGR of 35% LTM Revenue Adjusted EBIT Slide 30
Slide 31: Agenda
Agenda Introduction Investor Relations Investor Relations Strategy and Business update Andreas Andreades CEO Financial update David Arnott CFO Acquisition Update Max Chuard Director, M&A and IR Outlook and Summary Andreas Andreades CEO Q&A Slide 31
Slide 32: Appendices
Appendices ‘7 =m: FM] Ce) FA ed EMENOS The Banking Software Company
Slide 33: Adjusted EPS reconciliation
Adjusted EPS reconciliation Q4 2010 Q4 2009 FY 2010 FY 2009 (USDm) (USDm) (USDm) (USDm) Net Earnings 31.7 38.6 61.4 68.6 Amortisation of acquired 4.7 1.9 14.9 8.1 intangible assets Bond Interest 1.6 1.5 6.0 5.6 Restructuring 11.8 0.0 25.1 3.0 Earnings for adj. EPS 49.8 42.0 107.4 85.3 Number of dilu
Slide 34: DSOs trend
DSOs trend 180 168 170 164 160 150 Days 140 130 125 120 110 100 FY 2008 FY 2009 FY 2010 Slide 34
Slide 35: Geographical breakdown of licence revenue
Geographical breakdown of licence revenue Slide 35
Slide 36: Breakdown of number of deals by customer tier
Breakdown of number of deals by customer tier Proportion of Tier 1-2 customers has returned to pre-crisis levels – last seen in 2007 Slide 36
Slide 37: Calculating like-for-like revenue
Calculating like-for-like revenue Base for 2011 L-f-L licence calculation USDm 2010 2010 Pro LfL growth Implied forma* outlook outlook Licence Revenue 160.1 171.2 15-20% 197-205 * Includes 9.5 months of Odyssey revenues, i.e. for the period not owned 2010 Average FX rates for base of constant curren
Slide 38: Diluted share count
Diluted share count Diluted share count – 5 year evolution* 2007 2008 2009 2010 2011 Average Diluted shares (m) 69.4 69.1 69.5 73.2 75.0 2% We expect the share option plan to lead to 2-3% dilution per annum**, consistent with the last 5 years * 2011 is expected average number of diluted shares for t
Slide 39: Thank You
Thank You ‘j =m: FM] Ce) FA ed EMENOS The Banking Software Company