Temenos Ag · SIX:TEMN
Temenos — Debt Investor Presentation (September 2023)
40 slides from Temenos's debt investor presentation, Sep 26, 2023
Slide 1: Fixed Income Investor Update 2023
Fixed Income Investor Update 2023 Takis Spiliopoulos, CFO September 26, 2023 1
Slide 2: Disclaimer
Disclaimer This presentation constitutes advertisement according to the Swiss Financial Services Act (FinSA). The presentation does not constitute a prospectus nor a key information document within the meaning of the FinSA. In the case of a public offer or admission to trading of securities in Switz
Slide 3: Agenda
Agenda 1. Introduction to Temenos 2. ESG at Temenos 3. Financial overview 4. Temenos’ credit story 5. Appendix 3
Slide 4: 1. Introduction to Temenos
1. Introduction to Temenos 4
Slide 5: Everyone's Banking Platform
Everyone’s Banking Platform Largest Smallest Client Client 3k clients 500 150m 200+ accounts partners accounts In 150+ countries Temenos is a global leader in banking software Note: Data accurate as of February 21, 2023 5
Slide 6: Market leading functionality and technology
Market leading functionality and technology Country model Packaged, Cloud and Composable banks upgradeable software SaaS banking (localization) Single code Breadth & depth Cloud native Extensibility base of cloud agnostic framework functionality Leading functionality + modern technology = the winnin
Slide 7: Delivering tangible business value through our platform
Delivering tangible business value through our platform Win on Customer Agility to Grow Scale Without Limits Experience Faster innovation with cloud native, Improve cost-to-income ratio Hyper-personalization powered by API-first banking capabilities and with unlimited scale and services open banking
Slide 8: Global reference client base across business models and tiers
Retail Corporat e Wealth Temenos has a global reference client base across main banking business models and tiers 8
Slide 9: We've always been pioneers
We’ve always been pioneers Packaged Cloud Cloud Upgradable Ready Native Open (All products) 2003 2020 2022 1993 2011 2021 24x7 Cloud Open banking Native platform for Multiple (Core Banking) Cloud composable Stack banking support Agnostic XAI , 2023 $2.8bn Significant R&D investment $1.3bn 1995-2022
Slide 10: Single code and configuration base
Single code and configuration base Segment C.3,000 Addressable agnostic Clients Retail SME Corp. Wealth $26b Market 2023 n Type 85+ Challenger agnostic Clients Traditional Challenger Addressable $86b Market over next Single code and 3 years configuration base n Total Size Largest to Assets agnostic
Slide 11: Temenos' competitive advantage
Temenos’ competitive advantage Temenos vs Packaged, upgradable Pre-built localization ALL vendors Functionality breadth & Extensible depth Temenos vs Temenos vs Traditional vendors Neo-vendors 100% Banking focused Proven scalability Market leadership, including non- Proven migration credentials in i
Slide 12: Temenos' Serviceable Addressable Market
Temenos’ Serviceable Addressable Market By Product By SaaS vs On Premise By Incumbent vs Non-incumbent USDbn USDbn CAGR USDbn CAGR 2022-26 2022-26 CAGR 34 34 34 11% 12% 27% 30% 34% 231) 231) 231) 14% 7% 88% 9% 70% 5% 86% 93% 2022 2026 2022 2026 2022 2026 Transact Infinity Fund admin On Premise SaaS
Slide 13: Revenue and operating models
Revenue and operating models Subscription revenue Subscription revenue SaaS revenue Bank runs software Bank runs software Partner runs software Temenos runs software Temenos Public Partner Temenos Private SaaS Ops On-premise temenos Software SaaS Ops temenos temenos temenos Software Software Softwar
Slide 14: Public cloud adoption accelerating SaaS as well as Subscription revenues
Public cloud adoption accelerating SaaS as well as Subscription revenues Serviceable Addressable Market (USDbn) Implications for Temenos revenue model SaaS: vendor run Public cloud, bank run On-premise CAGR 2022-26 CAGR 34 11% 34% SaaS 23 34% Subscription ARR 5% Subscription 2022 2023 2024 2025 2026
Slide 15: Key strategic initiatives
Key strategic initiatives Continued SaaS Partner centric acceleration approach Increasing North America penetration focus in larger banks 15
Slide 16: 2. ESG at Temenos
2. ESG at Temenos 16
Slide 17: Temenos continues to top ESG indices
Temenos Top 25 TOP SOF Top Highest Swiss category continues to stocks SXI Switzerland globally Dow Jones 10% rating FTSE4GOOD CDP top ESG Sustainability 25® Index Sustainability Index World & Europe Index Leadership (A/A-) global indices Highest Highest PRIME Low and ratings rating rating status ris
Slide 18: Temenos ESG targets
Temenos ESG targets 59 offices in 39 countries, 87 nationalities ENVIRONMENT SOCIAL GOVERNANCE Climate Change Diversity, Equity Corporate governance Business Ambition for 1.5°C &Inclusion Operating responsibly Employees Science-based targets 36% 30% 50% reduction of GHG Gender diversity in global Ge
Slide 19: 3. Financial overview
3. Financial overview 19
Slide 20: Temenos has demonstrated long-term sustainable growth
Temenos has demonstrated long-term sustainable growth USDm FY-22 EBIT & FCF impacted by first Highly resilient business during Highly resilient business during Highly resilient business during year of subscription transition and the global financial crisis European sovereign debt crisis the COVID-19
Slide 21: Move to Subscription improves predictability of financial performance
Move to Subscription improves predictability of financial performance Significant acceleration in Annual Recurring Revenue Client across all tiers and business (USD) >97% models are now sold Subscription contracts 78% >1.3bn Temenos’ five-year Subscription contracts for on-premise license and 626m m
Slide 22: Accelerating ARR and Free Cash Flow growth
Accelerating ARR and Free Cash Flow growth Annual Recurring Revenue Free Cash Flow USDm USDm 12-14%2) c.12% 17-21 CAGR1) c.13% 17-22 CAGR1) >1.3bn >700m 12-14%2) 626 358 494 553 280 269 297 391 462 227 345 193 2017 2018 2019 2020 2021 2022 2023E 2017 2018 2019 2020 2021 2022 2023E Mid- Mid- term ter
Slide 23: 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 2014 2022 Mid-term 26% 43% 50-55% Tier 1/2 Others Tier 1/2 Others Tier 1/2 Others Note: Total Software Licensing revenue are non-IFRS 23
Slide 24: Building momentum in North America
Building momentum in North America Non-IFRS total software licensing, North America vs. Rest of World 2014 2022 Mid-term 10% 37% 45-50% North America ROW North America ROW North America ROW Note: Total Software Licensing revenue are non-IFRS 24
Slide 25: Mid-term targets (non-IFRS, c.c.)
Mid-term targets (non-IFRS, c.c.) Mid-term targets (USD) FY-22 base (USD, c.c.) ARR >1.3bn 629m EBIT >570m 276m Free Cash Flow >700m 193m1) Abbreviations: ARR (Annual Recurring Revenue), c.c. (Constant Currency) 25 Note: See Disclaimer at the beginning of this presentation on forward-looking stateme
Slide 26: Free Cash Flow evolution 2022 to mid-term
Free Cash Flow evolution 2022 to mid-term Estimated movements for illustrative purposes only USDm >700 193 FY22 IFRS EBITDA Net Trade Deferred Tax Capex & Cap Dev Mid-term Receivables & Revenue Payables Accelerating Free Cash Flow growth driven by profit and deferred revenue growth Note: Figures are
Slide 27: FY-23 guidance (non-IFRS, c.c.)
FY-23 guidance (non-IFRS, c.c.) FY-23 guidance FY-22 base (USD, c.c.) ARR 12% - 14% growth 629m (raised from at least 12%)1) Total Software Licensing At least 6% growth 405m EBIT At least 7% growth 276m EPS At least 6% growth 2.822) Free Cash Flow 12% - 14% growth; in-line with ARR 193m2) (raised fr
Slide 28: Q2-23 highlights
Q2-23 highlights Q2-23 financial highlights Q2-23 operational FY-23 guidance – ARR and (non-IFRS, c.c.) highlights FCF guidance raised • Strong second quarter with 14% • Sales environment remained stable • ARR growth of 12%-14% ARR growth • Subscription transition progressing • Total software licens
Slide 29: 4. Temenos' credit story
4. Temenos’ credit story 29
Slide 30: Funding and maturity profile / Straight Bonds
Funding and maturity profile as at June 30, 2023 USDm1) RCF available • Temenos has regularly tapped into the Swiss bond amount market since 2013 Straight Bonds RCF drawn • Current bonds outstanding: o CHF 175m 1.875%, due Nov/2023 433 o CHF 150m 1.750%, due Apr/2024 o CHF 220m 1.500%, due Nov/2025
Slide 31: Group liquidity in FY-22
Group liquidity in FY-22 USDm (19) (105) 317 (74) (124) 139 (44) 90 (841) (751) Cash on Operating Tax Capex Dividend Net Proceeds / Interest, Cash on Borrowings Reported Balance Cash Repayment of FX & Balance Net Debt Sheet Borrowings Leases Sheet 31.12.2022 31.12.2021 & Investments 31.12.2022 Lever
Slide 32: Group liquidity in H1-23
Group liquidity in H1-23 USDm (16) (43) 161 (88) 90 13 (14) 101 (873) (772) Cash on Operating Tax Capex Dividend Net Proceeds / Interest, Cash on Borrowings Reported Balance Cash Repayment of FX & Balance Net Debt Sheet Borrowings Leases Sheet 30.06.2023 31.12.2022 & Investments 30.06.2023 Leverage
Slide 33: Leverage ratio
Leverage ratio Kony acquired in Q3-19, Acceleration in ARR, driven by Subscription transition (initiated leverage back within target in Q1-22) and SaaS growth, will accelerate FCF growth and range of 1.5-2.0x after 2 years ensure continued deleveraging 3.5x 3.1x 3.0x 2.6x 2.6x 2.6x 2.6x 2.5x 2.3x 2.
Slide 34: Credit highlights
Credit highlights 1 Market leading platform and strategy allow for expanding market share 2 High barriers to entry driven by continuous innovation, technology leadership and operational excellence 3 Geographically and structurally diversified customer base, low concentration risk 4 Increasing share
Slide 35: 5. Appendix
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Slide 36: Temenos leadership team
Temenos leadership team Years of tenure 24 4 23 7 7 Prema Varadhan Colin Jarrett Andreas Takis Spiliopoulos President Product Chief Security & Jayde Tipper Andreades CFO & COO Risk Officer Chief People Officer CEO 12 18 21 7 7 Jean-Paul Mergeai President Philip Barnett Deirdre Dempsey Kalliopi Chiot
Slide 37: Global Sales Awards – Temenos is #1 in eight categories
Global Sales Awards – Temenos is #1 in eight categories IBS reconfirms Temenos as the #1 best-selling banking software vendor 37
Slide 38: Impact of subscription transition on P&L, cashflow and ARR
Impact of subscription transition on P&L, cashflow and ARR Term 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 model – Cash Subscription model
Slide 39: Impact of SaaS contracts on P&L, cashflow and ARR
Impact of SaaS contracts on P&L, cashflow and ARR SaaS model – P&L 2 2 2 2 2 2 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 SaaS revenue Cashflow SaaS model – Cash 2 2 2 2 2 2 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Cashflow SaaS model – ARR 2 2 2 2 2 2 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 ARR 3
Slide 40: Thank you
Thank you temenos
Temenos — Debt Investor Presentation (September 2023) on 6ix