Temenos Ag · SIX:TEMN
Temenos — Investor Day (February 2003)
62 slides from Temenos's investor day presentation, Feb 10, 2003
Slide 1: Welcome & Introduction
Welcome & Introduction Max Chuard VP Corporate Finance & Investors Relations Analyst Update 10th February 2003 London
Slide 2: Analyst Update - Agenda
Analyst Update - Agenda • Corporate • Sales & Marketing • Product & Technology • Case Study • Q & A session • Presentations will be available at www.temenos.com
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: Corporate Update
Corporate Update George Koukis Chairman and C.E.O. Analyst Update 10th February 2003 London
Slide 5: Building TEMENOS
Building TEMENOS In 1990 we had a vision on how to be successful • Industry: Banking; Packaged Software • Product: One Product Strategy • Support: Worldwide, International • Technology: New, Functionally Rich • Main features: Upgradeable, Low Cost • Unique Company: Client-Centric
Slide 6: TEMENOS – Historical Perspective
TEMENOS – Historical Perspective TEMENOS has evolved into a leading provider of banking software systems for the financial industry 1984 1988 1993 2001 5 Citibankers GLOBUS TEMENOS is Key Statistics Key Statistics start GLOBUS becomes founded after • 2 Offices • 27 Offices commercially acquisition o
Slide 7: Worldwide Support
Worldwide Support Luxembourg Amsterdam Frankfurt Khatmandu New York Miami London Warsaw Chicago Bangkok Moscow Dublin Tokyo Paris Geneva Madrid Lisbon Athens Beijing Beirut Hong Kong Manila San Francisco Kuala Lumpur Lagos Singapore Quito Accra Jakarta Dubai Planned offices Chennai Dhaka Offices Joh
Slide 8: Upgradeable
Upgradeable • Cost Effective • Standard operating systems and database environment • Client’s investment is protected • Significant effect on Maintenance Revenues Forms / Menus / Queries Client Enhancements Rules & Parameters New application Old application layer layer Application Oracle, DB2, jBASE
Slide 9: TEMENOS GLOBUS vs. Other Products
TEMENOS GLOBUS™ vs. Other Products Asset and Treasury Securities and International Private Retail Risk Management Management Capital Markets and Corporate TEMENOS T24 TEMENOS TEMENOS T24 OPICS / RIMS Quasar / Rapide Midas/Kindle MISYS TOF Equation / Kindle Summit Microbanker iFLEX Solutions Flexcube
Slide 10: Business Model
Business Model Contracts • Initial License Fees (ILF) per user • Maintenance 18% of ILF • Implementation Services Time & Materials • Product Development (GAPS) Time & Materials Payments • Initial License Fees (ILF) Up-front • Maintenance – 5 years Non Cancellable Signing date/12 monthly • Implementa
Slide 11: Initial Licence Fees
Initial Licence Fees 2001 2002 2003 Budget Q1 12.2 12.6 7.8 Q2 14.8 11.7 12.8 Q3 1.9 12.6 16.7 Q4 17.3 18.9 30.3 Total 46.3 55.9 67.6 Most Important Indicator – Lifeline of a Software Company
Slide 12: Effect of ILF on Maintenance
Effect of ILF on Maintenance 100% CLIENT PARTICIPATION IN THE MAINTENANCE PROGRAM 2002 2003 2004 2005 2006 2007 2008 2009 2010 ILF 2001 46,000 8,280 8,280 8,280 8,280 8,280 8,280 8,280 8,280 8,280 ILF 2002 56,000 - 10,080 10,080 10,080 10,080 10,080 10,080 10,080 10,080 ILF 2003 68,000 - - 12,240 12
Slide 13: Implementation Constraint
Implementation Constraint Contracts 6-18 months Contract 2 Contract 3 Contract 4 Contract 5 Contract n Projects 10-20 consultants required for a project Project 2 Project 3 Project 4 Project 5 Project n Timing of Signings; Duration of Implementation
Slide 14: Highlights of 1993 - 2002
Highlights of 1993 - 2002 • Nov 1993 to June 2001 – Unprecedented Growth • 26 June 2001 - IPO • July 2001 – December 2001 – Recession; Banks Re- structured • We did not react quickly to cutting costs • One bright spot – ILF 6 months Dec 2002 grew by 70% against same period in 2001. Will it continue?
Slide 15: 2003 Business Drivers
2003 Business Drivers Banks And Financial Institutions face a difficult future • Cost Reductions • Replace Old Technology • Become Competitive
Slide 16: 2003 Risks - World Environment
2003 Risks - World Environment • Experts • Politics • Banks • Competitors INVESTORS ARE LOST/ CONFUSED UNCERTAINTY UNEMPLOYMENT
Slide 17: Main Direction for 2003
Main Direction for 2003 • Reasonable ILF Targets • Conservative Budget • Shorter Implementations – New Product – T24 2003 2001 2002 2003 Signings 68 Budget Revenues 130 Q1 12.2 12.6 7.8 Expenses 120 Operating Profit 10 Q2 14.8 11.7 12.8 Q3 1.9 12.6 16.7 Q4 17.3 18.9 30.3 Total 46.3 55.9 67.6
Slide 18: TEMENOS T24 What is it?
TEMENOS T24 What is it? • TEMENOS T24 is the result of major investment in a product: – Scaleable – Reliable – Non-Stop Banking – T24 is the most technically advanced banking system available today.
Slide 19: Technology Introductions in 2003
Introductions in 2003 Full Process SwiftNet Real-time Management Services Processing Database Workflow Independence J2EE Extended Thin Client CRM Connectors Technology & XML Enhanced STP IAS39 Full Loan Origination Basle II Financial Compliance Reporting Regional Platforms Anti Money TEMENOS Lauderi
Slide 20: TEMENOS T24
TEMENOS T24 Products Utilities Services Developers Browser tPW tIB Web Services Development Enterprise A T r e c t Implementation Manager (tim) t Development Kit (tdk) h c i j2EE h t n e tConnector o c t l tServer tServer tEvent Svc tSA u o r Non - Stop g e Open database (Oracle XML DB, DB2, etc.) y
Slide 21: Summary
Summary • 2002 was a once-off bad year • We have the right Business Model • We understand the Industry • We have the Right Products • We have the Distribution Channels • We believe in the original plan • We need to deliver good results in 2003
Slide 22: Financial Update
Financial Update David Arnott CFO Analyst Update 10th February 2003 London
Slide 23: Pillars for 2003 Success
Pillars for 2003 Success • Continuing to win over 80% of the deals in which we compete • High product investment • Continued efforts to package software and services • A client-centric philosophy • Local support
Slide 24: Cash Flow (US$ m.)
Cash Flow (US$ m.) 1999 2000 2001 2002 Operating cashflow 6.9 10.0 (0.3) (5.4) Capital spending, incl. Acquisitions (3.6) (6.1) (25.7) (15.4) Other, incl. Financing (2.7) 1.2 89.8 (10.2) Total cashflow 0.6 5.1 63.8 (31.0) Despite 6 difficult quarters operating cash outflows have been minimal – the b
Slide 25: R&D Investment
R&D Investment 50000 40000 30000 Corebanking GLOBUS 20000 Cash R&D 10000 0 1999 2000 2001 2002 2003 % of revenues 15% 16% 21% 30% 23% Product investment remains high, cash cost declines following restructuring
Slide 26: Quarterly Operating Cashflows
Quarterly Operating Cashflows Quarter Amount Quarter Amount Q1 2001 1.7 Q1 2002 (4.5) Q2 2001 2.2 Q2 2002 4.1 Q3 2001 (5.9) Q3 2002 (12.8) Q4 2001 1.6 Q4 2002 7.8 TOTAL (0.3) TOTAL (5.4) High working capital needs due to seasonality (around strong signings quarters) and client mix shift to larger de
Slide 27: Average ILF Deal Size (US$m.)
Average ILF Deal Size (US$m.) US$m 3.5 3 2.5 23% CAGR 2 1.5 1 0.5 0 1999 2000 2001 2002 2003 Sales reps. 17 We have 2-3 years leverage of our existing salesforce ILF signings target (US$) 68m Quota per salesman(US$) 4m
Slide 28: 2003 Budget Overview
2003 Budget Overview • Conservative assumption for new business wins: US$7.8m in Q1, US$12.8m in Q2, zero for second half year. • Business on hand at start of year contributes 74% of the annual budget of US$130m total revenues. Balance of budget funded from ILF and services booked from 1H 2003 assum
Slide 29: Restructuring Now Complete
Restructuring Now Complete Key strategic decisions undertaken in 2002 include: Annualised Saving Development: 11.1 MBO of Outsourcing business 3.2 jBase indirect go to market strategy 5.8 Marketing spending 1.8 Infrastructure 2.1 Reduced use of external consultants: 8.9 Other redundancies: 2.1 Restr
Slide 30: Operating Costs As Percentage Of Revenues
Operating Costs As Percentage Of Revenues 2001 2002 2003 actual consensus budget Total Revenues 100% 100% 100% Service Revenues 51% 50% 47% Operating costs R&D 22% 24% 23% Services 38% 46% 37% Sales & Marketing 17% 23% 16% G&A 12% 19% 16% Operating Profit 11% -13% 8% Restructuring -17%
Slide 31: Routemap Back to Business Model
Routemap Back to Business Model Operating costs as a percentage of revenues 2002 to 2003 2003 Target 2002 annualised revenue reinvestment leverage impact of leverage & efficiencies restructuring R&D 21% -5% -2% 6% 23% -7% 16-18% Services 46% -3% -4% -3% 37% -4% 32-34% Sales & Marketing 27% -4% -2% -
Slide 32: 2003 Overview
2003 Overview • Revenues will benefit from our strong ILF signings in 2H 2002 • Earnings depressed by high investment in R&D, which will trend back to business model within 2 years as a result of leverage derived from corebanking revenues • Services will benefit from higher utilisation in 2003 over
Slide 33: Market Overview and Perspective for 2003
Market Overview and Perspective for 2003 Rachel Rowe Global Manager Research & Knowledge Management Analyst Update 10th February 2003 London
Slide 34: Agenda
Agenda • Review of 2002 • Strategic Shift • Outlook to 2003 • Hot Spot in 2003
Slide 35: Review of 2002
Review of 2002 • Heightened competition from non-banks, a bearish market and decreasing bank profits and revenues have influenced the banks’ IT spend in 2002 – Strategic focus – New FSI entrants – increased market potential • Number of core systems deals were down in 2002 for Wholesale Banking whils
Slide 36: A Strategic Shift
A Strategic Shift • Gaining flexibility, reducing costs, time to market and operational efficiency will all be key • IT projects that will be funded in 2003 will be strategically focused, high impact and low cost – Financial Insights • Savings on legacy systems could lead to major savings in busines
Slide 37: A Strategic Shift
A Strategic Shift • Shift towards external spend, rather than internal development and maintenance • Hardware spend will decline • Software and Services spending will increase • Transition factors towards external vendors include: – Vendor credibility – Product maturity – FSI focus on core business
Slide 38: Outlook to 2003
Outlook to 2003 • Financial institutions were more rigorous in 2002 in their project spending and will continue to enforce rigour in 2003 – Longer sales cycles – Third party consultancy • Investments in 2003 will be focused on preparing for the future – Replacing old technology – Reducing costs – Ga
Slide 39: Outlook to 2003
Outlook to 2003 • Corporate Banking: Will continue to be a challenging year – focus will be on critical IT investment: – Overhauling and unifying treasury & fund management systems – Gaining better risk management control and increasing margins – Strong emphasis on Security and Disaster Recovery – R
Slide 40: Hot Spot in 2003: Core Systems Replacement
Hot Spot in 2003: Core Systems Replacement • The daunting task of replacing core processing systems will be undertaken: “Celent foresees many large financial institutions will invest hundreds of millions of dollars over the next few years to replace outdated mainframe legacy systems. Old systems hav
Slide 41: TEMENOS GLOBUS Sales Overview
Analyst Update 10th February 2003 London TEMENOS GLOBUS™ Sales Overview Philip Stanning Global Sales Director
Slide 42: Winners of the CD Race
< <, Sa TEMENOS Winners of the CD Race... THE BANKING SOFTWARE STANDARD
Slide 43: Which are the Biggest Challenges Faced by Banks Today?
Which are the Biggest Challenges Faced by Banks Today? Faster Time To Market • Key challenges are: • Increasing profitability Flexibility in New Products • Improving customer service Regulatory Compliance • Reducing costs • Enabling new business growth Channels to Market Integration of Business Proc
Slide 44: Agenda
Agenda • Introduce the sales team • Sales cycle duration and milestones • Win hit rates • Client segmentation • Competition
Slide 45: TEMENOS Focuses on Optimisation of its Sales Force in 2002
TEMENOS Focuses on Optimisation of its Sales Force in 2002 Americas • Significant investment in the sales & presales 2% MEA Asia Pac. 14% organisation 30% – Reorganised regions and sales structure Russia, CIS, – Global “best in class” team Baltics Europe 8% 46% – Clear qualification and client pursu
Slide 46: TEMENOS a Global Player – Sales Coverage Across Regions
TEMENOS a Global Player – Sales Coverage Across 8 Regions Americas Americas Northern Continental Eastern Middle Russia Asia North South Europe Europe Europe East CIS & Pacific Africa Baltics Australia Sales:2 Sales:1 Sales:4 Sales:3 Sales:2 Sales:2 Sales:2 Sales:3 Pre- Pre- Pre- Pre- Pre- Pre- Pre-
Slide 47: TEMENOS: Three Sales Channels
TEMENOS: Three Sales Channels – Strategic Alliances Offer Greater Sales Potential Sales and marketing Direct sales Strategic alliances Distributors • Offices around the • IBM/ PWC: strategic • 10 independent world alliance covering sales, distributors • Target large global services, R&D and • Distri
Slide 48: TEMENOS: A Structured Sale Cycle
TEMENOS: A Structured Sale Cycle • Clear milestones to measure progress • Qualifications of sales leads • Process tailored to client’s needs • TEMENOS objective: reduce time line and cost of pursuit 1 2 3 4 5 6 7 8 9 10 11 12 RFI Received RFI Response GAP Contract Sent analysis Signing RFP Sent Cont
Slide 49: Sales Cycles are Evolving – Case Study
…Sales Cycles are Evolving – Case Study • Gartner estimates that sales cycles increased by 2 to 3 months in 2002 • Sales process more complex and thorough • Budget approval process also longer Third Party Consultant 1 2 3 4 5 6 7 8 9 10 11 12 RFI Received RFI Response GAP Contract Sent analysis Sign
Slide 50: TEMENOS Shows High Hit Ratio After Pre-Selection
TEMENOS Shows High Hit Ratio After Pre- Selection… Selection within sales funnel for each milestone 2001/ 2002 USD 125 m 100% 15% 37% Costs for tender (schematic) 6% 5% 1% 0.5% 0.5% 35% 83% Unofficial Total Short list Contract Qualified RFP advice of Official inquiries Interest Final presen- being S
Slide 51: TEMENOS Gaining Acceptance in the Tier 1 Market
TEMENOS Gaining Acceptance in the Tier 1 Market % Signings by Tier, 2002 ILF • 2002 key year for Tier 1 signings 100% with Samsung and ING 90% 84% 79% • Appeal to Tier 1 Banks because of: 80% – Functionality 70% – Flexibility 60% – Hardware and Database independence 50% – Proven & stable architectur
Slide 52: Client Segmentation Reflects IT Spending Volumes
Client Segmentation Reflects IT Spending Volumes… • Smaller number of retail deals % Signings by LoB, 2002 ILF but on average larger contracts 16% • Retail banking continued to fair 27% well in 2002 compared to wholesale 13% • Universal deals tend to reflect lower tiered organisations • Trend is for
Slide 53: Case Studies = Key Deals Signed in 2002
Case Studies = Key Deals Signed in 2002 • ING • IBK – First wholesale deal of – Large TEMENOS Core comparable size in history, Banking deal – GLOBUS/ Flexcube – Further Korean win underwent detailed • Saudi Hollandi Bank evaluation prior to selection – Prestigious Saudi bank – Private banking and Re
Slide 54: TEMENOS GLOBUS No. 1 Position in the Market
TEMENOS GLOBUS™ No. 1 Position in the Market Number of banking software signings and market share Development of new banking software signings Market shares (cumulated 1995-2001) [%] CAGR 220 Signings [Total 1,216] 1997-2001 190 160 130 Total -0.5% Y2K GLOBUS 15.5% 100 and EUR Opics 10.8% 50 effect
Slide 55: TEMENOS Competition = Few True All-In-One Players
TEMENOS Competition = Few True “All-In-One” Players Areas of coverage Wealth Mana- Asset Treasury Securities gement/ Mana- Manage- & Capital Corporate Private Retail Vendor Product gement ment Markets Banking Banking Banking CRM TEMENOS GLOBUS Multi product I-Flex Flexcube vendors Misys Opics, Kindl
Slide 56: TEMENOS T24
TEMENOS T24 André Loustau CTO Analyst Update 10th February 2003 London
Slide 57: TEMENOS GLOBUS to T24
TEMENOS GLOBUS™ Î T24 • For the past 2 years we have invested over 24 million dollars in a major technical renewal of our flagship product: TEMENOS GLOBUS™ • All these developments are completed and are now in the final stages of packaging. • This investment culminates in June when we will deliver t
Slide 58: TEMENOS GLOBUS to T24
TEMENOS GLOBUS™ Î T24 integration browser end of day January 2000 scalability resilience GLOBUS Client Server performance desktop TEMENOS GLOBUS™ Single server workflow architecture Proprietary UniVerse Database solution
Slide 59: TEMENOS GLOBUS to T24
TEMENOS GLOBUS™ Î T24 Browser tPW tIB Web Services Java Dev Enterprise tImplementation Manager (tim) tDevelopment Kit (tdk) j2EE GLOBUS GLOBUS tConnectionServer tEventService GLOBUS tServer tServer tServiceAgents Non - Stop UniVerse Open Database (Oracle XML DB, DB2 etc)
Slide 60: Product Direction
Product Direction Søren F. Mortensen VP Product Strategy Analyst Update 10th February 2003 London
Slide 61: Technology Introductions in 2003
Introductions in 2003 Full Process SwiftNet Real-time Management Services Processing Database Workflow Independence J2EE Extended Thin Client CRM Technology Connectors & XML Enhanced STP IAS39 Full Loan Origination Basle II Financial Compliance Reporting Regional Platforms Anti Money TEMENOS Lauderi
Slide 62: TEMENOS Thank You
TEMENOS thanks Vou THE BANKING SOFTWARE STANDARD