Temenos Ag · SIX:TEMN
Temenos — Q2 2015 Earnings Presentation
36 slides from Temenos's earnings presentation, Jul 21, 2015
Slide 1: Financial results & business update
Financial results & business update Quarter ended 30 June 2015 21 July 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 press release 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. Als
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 execution in Q2 across all Key Performance Indicators • Total software licensing up 56% for the quarter, 15% like-for-like • Very strong European business performance • Two landmark deals won in the U.S. with top tier domestic banks • Meaningful progress on specific large deals, key
Slide 6: Q2 sales update
Q2 sales update • High win-rate and strong execution cross all geographies • Very strong performance in the European business driven by increased competitiveness and improving market dynamics • Asian business also performed well in Q2 and is returning to growth • Competing effectively and winning th
Slide 7: Q2 2015 operational overview
Q2 2015 operational overview Improving services profitability • 770 bps improvement in non-IFRS services margin year-on-year • Premium services contributed 24% of total services revenue in Q2 Focus on customer success • 13 implementation go lives in Q2 2015 vs. 9 in Q2 2014 Partner ecosystem functio
Slide 8: Multifonds update
Multifonds update • Multifonds on track to deliver forecasts • 2015 revenues of USD 46m (USD 56m proforma) • 2015 EBIT of USD 13m (USD 16m proforma) • Acquisition by Temenos has raised Multifonds profile and visibility, driving pipeline growth • Multifonds leveraging the Temenos global footprint to
Slide 9: The fund industry opportunity
The fund industry 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 well positioned to capitalise on the market opportun
Slide 10: U.S. update
U.S. update • Good progress made in building U.S. pipeline • Two key strategic deals signed in Q2 • Top 20 U.S. domestic bank signing for T24 and TPS • Top 35 domestic bank signing for Akcelerant products, one of their largest deals ever • Demonstrates traction being gained with higher tier domestic
Slide 11: Temenos and the U.S. opportunity
Temenos and the U.S. opportunity • World’s largest financial services market • Dominated by few large venders with legacy technology • Akcelerant has relationships with c. 600 credit unions and banks • 18 of top 25 credit unions • 60% penetration of credit unions over USD 1bn in assets • TriNovus cu
Slide 12: TCF showcased product leadership in the last 12 months
TCF showcased product leadership in the last 12 months SmartHybrid Rewards New wealthSuite products Embedded analytics launched Data Framework II Marketplace 12
Slide 13: Agenda
Agenda Business update David Arnott, CEO Financial update Max Chuard, CFO Summary David Arnott, CEO Q&A 13
Slide 14: Q2 2015 non-IFRS financial highlights
Q2 2015 non-IFRS financial highlights • Total software licensing up 55.7% Y-o-Y and 7.6% LTM (constant currency) • Of which software licensing up 26.4% Y-o-Y (constant currency) • SaaS and subscription contributed 24% of total software licensing in Q2 2015 vs. 6% in Q2 2014, with inclusion of revenu
Slide 15: Non-IFRS income statement – operating
Non-IFRS income statement – operating Y-o-Y Y-o-Y Y-o-Y Y-o-Y In USDm Q2 15 Q2 14 constant LTM 15 LTM 14 constant reported reported currency currency Software licensing 36.7 30.5 20.6% 26.4% 136.2 145.9 -6.6% -2.8% SaaS and subscription 11.7 2.0 477.4% 479.9% 21.7 6.9 212.5% 212.8% Total software li
Slide 16: Like-for-like revenue and costs
Like-for-like revenue and costs Q2 LFL non-IFRS revenues up 10% Q2 LFL non-IFRS costs up 5% Maintenance Total software licensing Services USDm USDm 140 120 120 100 +6% 100 80 80 +15% +5% 60 60 40 40 +7% 20 20 0 0 Q2 2014 Q2 2015 Q2 2014 Q2 2015 Positive underlying organic growth 16
Slide 17: Non-IFRS income statement – non-operating
Non-IFRS income statement – non-operating In USDm, except EPS Q2-15 Q2-14 Y-o-Y LTM 15 LTM 14 Y-o-Y EBIT 31.7 22.5 41% 133.6 121.6 10% Net finance charge -3.9 -2.9 -35% -13.7 -10.4 -32% FX gain / (loss) -0.6 0.1 N.A. -0.1 -1.2 95% Tax -2.6 -3.3 22% -13.8 -17.0 19% Net profit 24.6 16.3 50% 106.1 93.0
Slide 18: IFRS cash conversion
IFRS cash conversion USDm 115% 113% 200 150 100 50 0 LTM Q2 2014 LTM Q2 2015 EBITDA Operating cashflow Cash conversion consistently above target of 100% 18
Slide 19: Balance sheet – debt and financing
Balance sheet – debt and financing In USDm 30 Jun 15 Comment Debt 509.5 Facilities of up to USD 350m and CHF 375m bonds Cash 59.7 Held in short term deposits Net debt 449.8 2.4x proforma LTM non-IFRS EBITDA* Treasury shares** (27.9) Reflects market value as of 30 June 2015 Net debt incl. treasury sh
Slide 20: 2015 guidance
2015 guidance Total non-IFRS software licensing growth of 36% to 41% (implying total software licensing revenue of USD 192m to USD 199m) • includes non-IFRS software licensing growth of 13%+ (implying software licensing revenue of at least USD 152m ) Non-IFRS revenue growth of 18% to 23% (implying r
Slide 21: Agenda
Agenda Business update David Arnott, CEO Financial update Max Chuard, CFO Summary David Arnott, CEO Q&A 21
Slide 22: Summary
Summary • Strong execution in Q2 across all Key Performance Indicators • Total software licensing up 56% for the quarter, 15% like-for-like • Very strong European business performance • Two landmark deals won in the U.S. with top tier domestic banks • Meaningful progress on specific large deals, key
Slide 23: Appendices
Appendices
Slide 24: 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 24
Slide 25: Total software licensing revenue breakdown by geography
Total software licensing revenue breakdown by geography Q2 2014 Q2 2015 APAC APAC 17% 15% 14% 25% Europe Europe Americas Americas MEA 20% MEA 34% 24% 51% LTM Q2 2014 LTM Q2 2015 APAC APAC 17% 16% 18% Europe 21% Europe Americas Americas MEA MEA 20% 22% 39% 46% 25
Slide 26: Total software licensing revenue breakdown by customer tier
Total software licensing revenue breakdown by customer tier Q2 2014 Q2 2015 1 and 2 1 and 2 17% 33% 3, 4 and 5 3, 4 and 5 83% 67% LTM Q2 2014 LTM Q2 2015 1 and 2 1 and 2 22% 3, 4 and 5 35% 3, 4 and 5 65% 78% 26
Slide 27: Software licensing revenue: competitive deals vs add-ons to installed base
Software licensing revenue breakdown by competitive deals / add- ons to installed base (excluding SaaS and subscription) Q2 2014 Q2 2015 Competitive Competitive deals deals 48% Add-ons to Add-ons to installed base 40% installed base 60% 52% LTM Q2 2014 LTM Q2 2015 Competitive Competitive deals deals
Slide 28: DSOs continue to decline
DSOs continue to decline 230 211 211 210 198 198 195 186 190 181 183 176 170 150 Proforma of 168 days 130 30 Jun 13 30 Sept 13 31 Dec 13 31 Mar 14 30 Jun 14 30 Sept 14 31 Dec 14 31-Mar-15 30-Jun-15 • DSO in Q2-15 ended at 176 days, of which eight are due to acquisitions 28
Slide 29: 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 30: 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 31: 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 32: Reconciliation from IFRS to non-IFRS
Reconciliation from IFRS to non-IFRS 3 Months Ending 30 June Change 2015 2015 2014 2014 USDm IFRS Adj. Non-IFRS IFRS Adj. Non-IFRS IFRS Non-IFRS Total Software Licensing 43.7 4.7 48.4 32.5 32.5 34% 49% Maintenance 57.7 0.5 58.2 55.7 55.7 4% 5% Services 25.7 0.1 25.8 24.1 24.1 7% 7% Total Revenue 127
Slide 33: Net earnings reconciliation
Net earnings reconciliation In USDm, except EPS Q2-15 Q2-14 IFRS net earnings 6.8 14.2 Deferred revenue write-down 5.3 0.0 Amortisation of acquired intangibles 8.3 2.0 Restructuring 4.0 0.5 Acquisition related charges 1.5 - Taxation -1.3 -0.3 Net earnings for non-IFRS EPS 24.6 16.3 No. of dilutive s
Slide 34: Reconciliation from IFRS to non-IFRS for EBIT and EBITDA
Reconciliation from IFRS to non-IFRS for EBIT and EBITDA USDm – Q2 2015 IFRS EBIT IFRS EBITDA 12.5 32.3 Deferred revenue write-down 5.3 5.3 Amortisation of acquired intangibles 8.3 - Restructuring 4.0 4.0 Acquisition-related charges 1.5 1.5 Non-IFRS EBIT 31.7 Non-IFRS EBITDA 43.1 34
Slide 35: 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 36: Thank you
Thank you www.temenos.com