Temenos Ag · SIX:TEMN
Temenos — Investor Day (February 2023)
144 slides from Temenos's investor day presentation, February 2023
Slide 1: Temenos
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Slide 2: temenos
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Slide 3: Today's Agenda
Today’s Agenda 10:00 Strategy and Vision Andreas Andreades Executive Chairman and Acting CEO 10:25 Industry Trends and CEO Navigator Kanika Hope Chief Strategy Officer 10:40 Temenos Product and Clients Prema Varadhan President Product and Chief Operating Officer 11:10 Coffee Break 11:30 Temenos Tech
Slide 4: Q&A
Q&A • Q&A will be held at the end of the event • Webcast participants can submit questions online through the portal • In-person attendees can submit questions via Slido – scan the QR code on your name badges or download the Slido app, event #7800150 Or through the Slido App: event #7800150 6
Slide 5: Strategy and vision
Strategy and vision Andreas Andreades Executive Chairman and Acting CEO 7
Slide 6: Introduction to Temenos
temenos Introduction to Temenos
Slide 7: Delivering tangible business value through our platform
CEO Navigator Delivering tangible business value through our platform Win on Customer Agility to Grow Scale Without Limits Experience Faster innovation with cloud native, Improved cost-to-income ratio Hyper-personalization powered by API-first banking capabilities and with unlimited scale and servic
Slide 8: Everyone's Banking Platform
Everyone’s Banking Platform Largest Smallest Client Client 3K clients 500 150M 200+ accounts partners accounts In150+ countries Our top performing banks achieve CIRS half the industry average and returns 3X the industry average N.B. Data accurate as of Feb 21, 2023 10
Slide 9: Client logos: Retail, Corporate, Wealth
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Slide 10: We've always been pioneers
We’ve always been pioneers Packaged Cloud Cloud Native Upgradable (All products) Ready Open 2003 2020 2022 1993 2011 2021 Cloud Open 24x7 banking Native platform for Multiple (Core Banking) composable Stack support Cloud banking Agnostic XAI $2.8B N.B. Data accurate as of Feb 1, 2023 Unparalleled R&
Slide 11: Market Opportunity
temenos Market Opportunity
Slide 12: Temenos Serviceable Addressable Market (SAM)
Temenos Serviceable Addressable Market (SAM) Serviceable Addressable Market is the banking 3rd party software spend addressable by Temenos products Serviceable addressable market (SAM) $ B By Product By SaaS vs On Premise By Incumbent vs Non-incumbent CAGR CAGR 2022-26 2022-26 34 34 34 11% 12% 27% 3
Slide 13: Public cloud adoption accelerating Temenos SaaS as well as Subscription revenues
Public cloud adoption accelerating Temenos SaaS as well as Subscription revenues Serviceable addressable market (SAM) $ B Implications for Temenos revenue model SaaS: vendor run Public cloud, bank run On-premise CAGR 2022-26 11% 34 34% SaaS 23 34% Subscription ARR 5% Subscription 2022 2023 2024 2025
Slide 14: 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 Partner Temenos Public SaaS Ops temenos On-premise Private Software SaaS Ops temenos temenos temenos Software Software Softwar
Slide 15: SaaS benefits and its implications for Banks and Temenos
SaaS benefits and its implications for Banks and Temenos Banking Innovation Customer Advanced Effective Risk & Operational Performance & Growth Centricity Analytics Compliance Efficiency Drivers What we provide Continuous Advanced Governance Breadth & Service upgrades & computing power security & de
Slide 16: Single code and configuration base enables higher serviceable addressable market
Single code and configuration base enables Temenos to target a higher serviceable addressable market and quickly adapt to SaaS Segment 3K agnostic Clients Retail SME Corp. Wealth Addressable $26B Market 2023 Type 85+ Challenger agnostic Clients Traditional Challenger Addressable Single code and $86B
Slide 17: Core Banking: 2022 win-rates vs top competitors
Core Banking: 2022 win-rates vs top competitors Top traditional vendors Top neo-vendors 73% 76% 65% 64% 52% 50% Traditional Vendor 1 Traditional Vendor 2 Traditional Vendor 3 Next five Neo vendors traditional vendors Temenos has strong win-rates against traditional and neo competitors in Core Bankin
Slide 18: Why we outsell the competition
Why we outsell the competition Packaged, upgradable Pre-built localization Temenos vs ALL vendors Functionality breadth Extensible & depth Temenos vs Temenos vs Traditional vendors Neo-vendors 100% Banking focused Proven scalability Market leadership, including Proven migration credentials in non-in
Slide 19: Key strategic initiatives
Key strategic initiatives 21
Slide 20: Key strategic initiatives
Key strategic initiatives Continued SaaS Partner centric acceleration approach Increasing North America penetration focus in larger banks 22
Slide 21: Embedded Lending: scalability with Temenos Banking Cloud
Market leading Platform player in Embedded Lending: Massive & instant scalability with Temenos Banking Cloud Exponential growth in loan volumes Background Establishing a flexible, scalable credit platform for merchant & consumer segments & Context Supporting country specific and global regulatory co
Slide 22: Continued focus on profitable SaaS growth with margin expansion
Continued focus on profitable SaaS growth with margin expansion Sustained SaaS revenue growth SaaS growth levers SaaS Revenue (USD M) Infinity Transact Best in class scalability and security c.30% growth CAGR: +35% 164 96 124 67 Advancements in self service, extensibility, and ESG (carbon footprint
Slide 23: Established North America presence
Established North America presence Incumbents Challengers 1500+ customers, 9 offices, 400+ staff 25
Slide 24: Continuing momentum in North America
Continuing momentum in North America North America Total Software licensing has grown NAM strategy paying off 2x in the last four years Target top tier banks for digital transformation Total software licensing: North America vs. Rest of World1 • Top 20 bank in US for Retail & Corporate, • Global Tie
Slide 25: Advancement in Partner strategy to scale capabilities and revenue
Advancement in Partner strategy to scale capabilities and revenue Partner plays +22 % Win rate in competitive deals brought or influenced by partner 2019-2022 Sales partners • Set up partnerships for country model for localization or segment specific solutions Local development revenue (USD M) • Set
Slide 26: Large bank revenue has grown; remains a priority
Large bank revenue has grown; remains a priority Growth in large bank penetration Increasing penetration within larger banks Progress in Composable platform – 35 independently deployable and upgradeable banking capabilities with another 30 in progress, to support progressive renovation Total softwar
Slide 27: Temenos continues to top ESG global indices and ratings
Temenos Top 25 Swiss TOP SOF category Top Highest 10% rating continues to stocks SXI Switzerland globally Dow Jones FTSE4GOOD CDP Sustainability 25® Sustainability Index top ESG global Index World & Europe Index Leadership (A/A-) indices and Highest Highest PRIME Low ratings rating rating status ris
Slide 28: TEMENOSITY
We We Collaborate Care TEMENOSITY We We Commit Challenge People and Culture - A Strategic Asset built over 30 years 31
Slide 29: Summary
Summary Value delivery to our clients is at the core of Temenos business model Highest quality of client case studies and references propelling growth Innovation and creative disruption at the heart of 30 years of market leadership, cloud native credentials Robust competitive position Broadest monet
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Slide 31: Digital Transformation 2023 – A perfect storm
Digital Transformation 2023 – A perfect storm Kanika Hope Chief Strategy Officer 34
Slide 32: Key Digital Trends 2023
Key Digital Trends 2023 35
Slide 33: Top Banking Trends for 2023
Top Banking Trends for 2023 Digital SaaS and 1 Transformation 2 public cloud Banking-as-a- Uncertainty for 3 service 4 challengers 5 ESG 6 CBDCs 36
Slide 34: New technologies continue to mature and intensify pressures on banks
New technologies continue to mature and intensify pressures on banks Embedded Finance Tech-fins Cloud/SaaS Big Data AI/ML Challengers Hyper-Personalisation Values Inclusion BaaS Providers Demanding Customers Rise of New Competitors Quantum Blockchain AR/VR Computing BANKS Open Banking COVID-19 ESG C
Slide 35: Banks projected to steadily increase IT spend in line with revenues
Banks are projected to steadily increase IT spend in line with revenues as macroeconomic turmoil settles in coming years Macroeconomic situation expected to improve Banking revenues expected to steadily rise post 2023 after brief slowdown in 2022 In USD T CPI % Real GDP growth % 8 6.1% 7.4% 5.6% 6 4
Slide 36: Top Technology investment priorities
Top Technology investment priorities Retail + SME Corporate Wealth Digital engagement Digital onboarding & Digital channels & platforms omni-channel engagement Embedded finance & open banking Client lifecycle management Modern self-directed platform Virtual accounts & Payment & card Innovations ESG
Slide 37: Public cloud adoption expected to continue driving demand for Banking SaaS
Public cloud adoption expected to continue in banking driving demand for Banking SaaS Drivers of Cloud and SaaS 94 % 2 X Enhanced cloud security Multi-cloud increase in preference of bankers expect >50% for public cloud of business to move to amongst banks in 2022 Artificial ESG cloud within 3 years
Slide 38: The Banking-as-a-Service value chain
The Banking-as-a-Service value chain Banking capability BaaS API (and/or embedded BPO) Retail customers SME customers BaaS API Corporate Brands or License holder/ customers Fintechs BaaS providers Sponsor Bank (Brands wanting to provide embedded (Specialist cloud API platform to provide modular bank
Slide 39: Embedded finance and BaaS expected to gain significant momentum
Embedded finance and BaaS expected to gain significant momentum in next 5-10 years Market value created by $7t embedded finance activities by 2030 Exponential rise in Maturing Open Embedded Finance Banking CAGR of embedded Eroding Trust Demand from new 24% finance revenues from 2022 to 2029 advantag
Slide 40: Macroeconomics have favoured incumbents over challengers
Macroeconomics in the past year have favoured incumbents over challengers… Pre-2022 2022 onwards Superior Niche Lower customer propositions pricing Customer experience attrition Varo Credit quality Average account base growth per year for profitable challenger banks, Share of wallet since founding 2
Slide 41: Incumbents continue to hold several advantages
… and incumbents continue to hold several advantages whilst closing the gap on digital transformation Continue to hold the Dominate Meet full needs Superior in compliance primary relationship profitable products, of end customer with / KYC / onboarding with clients including lending broad product se
Slide 42: Sustainability needs to be fully embedded in the banking value chain
Sustainability needs to be fully embedded in the banking value chain Client propositions Own operations Providing retail & corporate Funding green innovation & Running own operations customers with better tools addressing climate change sustainably to measure and mitigate in lending portfolios their
Slide 43: Diversity and inclusion initiatives to meet client needs
Diversity and inclusion initiatives to meet unique client needs and expectations Target underprivileged/ Charitable giving Pre-paid carer cards Objective bias-free AI disadvantaged groups 46
Slide 44: CBDC a key focus area for central banks globally
CBDC a key focus area for central banks globally; seen as potential alternative to unregulated cryptocurrencies Implications of CBDC on banks’ business model 33 % 20 % decline in cash usage in of households as per McKinsey Value added services Europe between 2014 and survey1 hold digital assets in 2
Slide 45: CEO Navigator Update
CEO Navigator* Update * Formerly known as Temenos Value Benchmark 48
Slide 46: What is the Temenos CEO Navigator?
What is the Temenos CEO Navigator? Customized reports with executive-level insights 2 A strategic survey-based program to discuss business performance and value creation enabled by the 100% consultative 1 3 Subscription based bank’s investment in IT, approach with Temenos with annual updates structu
Slide 47: The CEO Navigator is an industry leading program
The CEO Navigator is an industry leading program 125 banks >60,000 data 5 regions, points collected 73 countries covered 4 banking verticals – Retail, >1,200 C-level / senior >1,800 hours SME, Corporate, Wealth executives met of consulting workshops 50
Slide 48: The C-level endorse the CEO Navigator (I/II)
The C-level endorse the CEO Navigator (I/II) “Our CEO Chris Catliff, was quite “The report is phenomenal work, it is “The benchmark helped answer impressed with the breadth of a goldmine of information. With this questions about our areas of the Temenos Benchmark report report I can do my work for t
Slide 49: The C-level endorse the CEO Navigator (II/II)
The C-level endorse the CEO Navigator (II/II) “Using the technology we have “The Temenos CEO Navigator is “A great example of the value I got now and with the Temenos CEO comparing you with other banks, it from the Temenos CEO Navigator and Navigator, we are able to pull data has an operational focu
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Slide 51: Temenos Product & Clients
Temenos Product & Clients Prema Varadhan President Product & Chief Operating Officer 54
Slide 52: Leading functionality + Latest technology = The winning combination
Leading functionality + Latest technology = The winning combination 55
Slide 53: Leading functionality + Latest technology = The winning combination
Leading functionality + Latest technology = The winning combination 29 years of providing model banking software built with 3K clients 1800+ pre-built banking processes across retail, corporate, SME and wealth covering sales and servicing & including exception-handling 35 independently deployable an
Slide 54: Leading functionality + Latest technology = The winning combination
Leading functionality + Latest technology = The winning combination Cloud-native, cloud agnostic* Performance benchmarked at 102,875 tps covering 100M customers and 200M accounts API-first Microservices architecture within each banking capability Non-disruptive upgrades Smart data migration with nea
Slide 55: Temenos enables banks to follow any business model
Temenos enables banks to follow any business model required to compete today Characteristics of Temenos Banking Platform Openness & Interoperability Modularity & Agility and time non-disruptive to market updates Traditional Banking as Banking as Software- Banking Model a Service a Platform as-a-Serv
Slide 56: The Temenos Banking Cloud Platform for Composable Banking
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 API Catalogue Base Camp Sandbox Envir
Slide 57: Temenos Banking Services
Temenos Banking Services temenos Discover Temenos Banking Services Retail Banking Risk & Compliance SME Banking Allows banks to formalize customers dat ‘corporate Banking Wealth Management AMLTransaction Monitoring Risk & Compliance tion montoring Payment Fraud Monitoring Complementing the core serv
Slide 58: Product investment approach: how we build our roadmap
Product investment approach: how we build our roadmap Market research Market analysis Competitive analysis Industry bodies Field Product Roadmap Temenos CEO Navigator Internal Product strategist / Domain experts 61
Slide 59: 2022: Reaping the benefits of our platform investments
2022: Reaping the benefits of our platform investments Wealth US SaaS BaaS Reinforced leadership with key US strategy paying off as we SaaS business now accounts for Temenos Banking Cloud allows flagship deals demonstrating leap-frogged competition: > 40% of software licencing BaaS plays: our produc
Slide 60: Preparing for the digital money future
Preparing for the digital money future We are getting ready for • CBDC • Tokenised commercial bank money • Alternate payment networks • Regulated stablecoins What we have done • Validated integration with leading enterprise CBDC platform and opensource blockchain technology • Demonstrated end-to-end
Slide 61: Looking forward…
Looking forward… BaaS Corporate Lending Corporate Payments Digital Wealth Leverage mBanq in US Corporate Lending Leverage recent wins Leverage recent wins to target incremental Origination and globally to enable globally to target market (direct to Servicing ready for instant payments multiple count
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Slide 63: BaaS Example
BaaS Example 66
Slide 64: Hi JOHN,
8,567 Mi Hi JOHN, Discover & Explore Where to next? Discover Money temenos
Slide 65: temenos
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Slide 66: temenos
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Slide 67: Your Booking is confirmed
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Slide 68: Discovery Account
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Slide 69: temenos
temenos Account Overview 4 Available Amount S_rimary account 10.15 USD. For domestic transfers only Beneficiary JOHN MILLER BAN DA 2476 1899 3890 0030 BIC DIsc2022 O Increase your spending limit choose to accept on overattof upto $40c0 Apply now > ©& Accounts
Slide 70: Client Delivery
temenos Client Delivery {Oh
Slide 71: Nordea: Multi-country Core Banking Transformation
Nordea: Multi-country Core Banking Transformation • Leading financial services group in Nordics and one of biggest banks in Europe, 11M retail and 700k corporate customers • Core transformation is part of Nordea’s Simplification Program to meet current and future customers’ needs across four Nordic
Slide 72: ABN Amro: A true partnership driving innovation and agility on cloud
ABN Amro: A true partnership with Temenos driving innovation and agility on cloud • Long term strategic partnership through transformation in international corporate banking and wealth Background & Context • Phase 1: Transact; Phase 2: Payments; Phase 3: Temenos Continuous Deployment (TCD) on Cloud;
Slide 73: Large Global Bank: End-to-end consolidation on the cloud
Large Global Bank: End-to-end consolidation on the cloud • Existing fragmented platform, complex & costly to run • Not Cloud native Background & Context • Inefficient in supporting growth & expansion of their International non-US division • Not Digital enabled • Leader in Wealth – strong track recor
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Slide 75: Temenos Technology
Temenos Technology Tony Coleman Chief Technology Officer 78
Slide 76: Everyone's Banking Platform
Everyone’s Banking Platform Packaged, Country model SaaS, cloud, Composable upgradeable software banks SaaS-like banking Modular Single code Breadth & depth of Cloud native Loosely coupled infrastructure base functionality cloud agnostic event driven as code 79
Slide 77: Platform Investment Areas
Platform Investment Areas Security Regulation & Scale Efficiency Eco-System Compliance Investing for Everyone 80
Slide 78: Benchmarking against industry definition of Cloud Native
Temenos is benchmarking against industry definition of Cloud Native… Following and going beyond the 12 factor app for SaaS 1 One codebase, one application Not different launch scripts 2 API first Enforces loose coupling and explicit dependencies 3 Dependency management Explicitly separate run time d
Slide 79: Achieving Cloud Native & Composability
Achieving Cloud Native & Composability Journey 2010-2014 Journey from 2019 Design By Explicit Stand-alone Encapsulation Incorporation Temenos Banking Contract Integration capabilities AA Loans Loans (Transact) example Payment Services Repayment Past Due Customer Restrictions Market Data GL Accountin
Slide 80: 2022: Temenos High-water Benchmark
2022: Temenos High-water Benchmark Faster 102,875 tps Greener 100M Customers, 200M Accounts 83
Slide 81: WeLabBank: Hong Kong's First Multi Cloud Challenger Bank
WeLabBank: Building Hong Kong’s First Multi Cloud Challenger Bank • HKMA initiative to re-imagine the banking experience for 7.5 million people in Hong Background Kong by providing seamless digital banking services & Context • Used Sandbox environment to develop and prove readiness, followed by HKMA
Slide 82: Diners Club International: Expanding into a new market
Diners Club International : Expanding into a new market with cloud-based core banking • First ever provider of credit cards in Ecuador; regulatory change now allows Diners Club Background Ecuador to operate as a bank. & Context • Diners Club Ecuador looked to implement a scalable core banking platfo
Slide 83: A digital ecosystem for banking leveraging the Temenos Platform
A digital ecosystem for banking leveraging the Temenos Platform Retail Wealth Customer Customer Ecosystem Ecosystem SME Corporate Customer Customer Ecosystem Ecosystem 86
Slide 84: Exchange partners – a growing network
Exchange partners – a growing network Number of Exchange partners 2021-2023E Integrated solutions New solutions onboarded ~2X Target clients for integrated solutions 116 36 80 25 55 12 80 55 43 2021 2022 2023E 87
Slide 85: Use Cases for 2027
Use Cases for 2027 Building on our Cloud Native foundation Using Technology Investments to enable business model advances Keeping our clients at the forefront of the industry 88
Slide 86: Hyperplexed Architecture?
Hyperplexed Architecture? What does this mean for Temenos? • AI and Data Ops => The move to AI Ops and NoOps requires even further improvements to monitoring. • Probable contract changes to use volumetric meta-data • Zero Trust Architecture: Define what it *means* in practice, as noted during the HS
Slide 87: ESG by design: Temenos Software – leaner, greener
ESG by design: Temenos Software – leaner, greener, for all deployment options Powered by the hyperscalers, can drive innovation & Impact of process and architecture sustainability, reducing energy optimisations externally audited emissions by 95% vs on-premise1 • Platform Carbon Efficiency (latest r
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Slide 89: North America Strategy
North America Strategy Philip Barnett President, Americas 92
Slide 90: Established North America presence
Established North America presence Established Challengers 1500+ customers, 9 offices, 400+ staff 93
Slide 91: Continuing momentum in North America
Continuing momentum in North America North America Total Software licensing has grown NAM strategy paying off 2x in the last four years Target top tier banks for digital transformation Total software licensing: North America vs. Rest of World1 • Top 20 bank in US for Retail & Corporate, • Global Tie
Slide 92: Why our NAM strategy is paying off
Why our NAM strategy is paying off • Modern core platform with proven scalability and SaaS delivery in US Target top tier banks for digital • Single code and configuration base that drives competitive edge transformation • Incumbent vendors no longer have an advantage and are still trying to moderni
Slide 93: Narrowing the gap on the incumbent competition
Narrowing the gap on the incumbent competition Opportunity Key strengths Key weakness for Temenos • Long standing brand and presence • Multiple existing cores not Overcome incumbency and in the market designed for cloud position modern technology • Extensive client base • Struggling to build out and
Slide 94: Broad and large addressable market, proven traction across all segments
Broad and large addressable market, proven traction across all segments Tier 1 banks Tier 4 & 5 banks Tier 2 banks (Assets $ Tier 3 banks Unlicensed non- (Assets > (Assets Credit Unions 50 to 250 B) (Assets $ 10-50 B) incumbents $ 250 B) < $ 10 B) No. of institutions1 13 38 109 ~ 4500 ~ 4800 NA Esti
Slide 95: Summary – Readiness to take advantage of the market opportunity
Summary – Readiness to take advantage of the market opportunity Perceived incumbency advantage has narrowed significantly as technology investments have paid off and are resonating with customer needs Robust localisation model spans people, product and process with a dedicated on-shore compliance te
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Slide 97: People Agenda
People Agenda Jayde Tipper Chief People Officer 100
Slide 98: The banking industry continues to face talent shortages
The banking industry continues to face talent shortages Extent of global IT talent shortage Survey of CIOs on the duration of IT talent shortage 0-6 months 85M 8 $ T 6-12 months 12+ months tech workers Of lost revenue annually as Will remain this way for foreseeable future shortage by 2030 a result
Slide 99: How we see our people strategy showing success
How we see our people strategy showing success Vs Global norm, % of questions 10 most important questions to our employees Rated high 82% Confidence in the future of this company Behaviour of senior leadership consistent with company's values 5% 12% Sr. leadership demonstrates employees are importan
Slide 100: Pillars of our People Strategy
Pillars of our People Strategy Business priorities Talent and capabilities required Acquire Develop Retain A new Employee Experience Continuous learning & Competitive Open, flexible and Clear company purpose & career opportunities total rewards inclusive culture vision 103
Slide 101: A dynamic approach to skills acquisition
Acquire A dynamic approach to skills acquisition based on ever changing business needs in a SaaS world Product Sales & BSG SaaS Delivery • Corporate Banking • Corporate Banking • Site Reliability Engineering • End-to-end Integration • Business requirements • Wealth Management • Security • Solution a
Slide 102: Addressing talent acquisition challenges
Acquire Addressing talent acquisition challenges by prioritizing internal talent and enhancing external recruitment Enhance recruitment process to increase focus on Temenosity • Assess for cultural fit through psychometric/personality testing • Diverse interview panels across tenure, function and se
Slide 103: Reskilling and upskilling to overcome the talent shortage
Develop Reskilling and upskilling is an important strategy for overcoming the talent shortage Reduce skill gap through upskilling and reskilling Cost benefits of reskilling instead of firing & hiring Upskilling: Learning new competencies to stay in Benefits of Costs of ` current role, due to change
Slide 104: Programs to further enhance our employee experience
Retain Programs to further enhance our employee experience based on feedback Rolled out in 2022 In progress Mentoring program (to include reverse mentoring) SaaS certification and upskilling campaign Launch of Temenos learning hub Top talent development program Continuous Learning Career mobility: m
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Slide 106: ESG: Our Path to Sustainable Growth
ESG: Our Path to Sustainable Growth Kalliopi Chioti Chief Marketing and Environmental, Social and Governance Officer Capital Markets Day 2023 109
Slide 107: Integrating ESG into our operations and product offering
Integrating ESG into our operations and product offering OUR GOAL WHAT IT MEANS TO US: Helping our clients transform into smart, To grow our business inclusive and sustainable organizations in a way that takes care of the world Managing our operations ethically around us, delivering and responsibly
Slide 108: Temenos ESG: Leading in the IT sector
Temenos ESG: Leading in the IT sector 59 offices in 39 countries, 82 nationalities ENVIRONMENT SOCIAL GOVERNANCE Climate Change Diversity, Equity & Inclusion Corporate governance Business Ambition for 1.5°C Employees Operating responsibly Science-based targets 36% 50% reduction Gender diversity of G
Slide 109: How we are helping our clients transform into sustainable organizations
How we are helping our clients transform into sustainable organizations Energy and Well positioned as a Pioneering Regulation Emissions targets global ESG Leader within our industry Compliance with As partners or suppliers, Top ESG global indices & We have the technical increasing need for ESG suppo
Slide 110: Key ESG Trends within Banking
Key ESG Trends within Banking Sustainability to be fully embedded in banking business models Sustainable Finance: Indirect operations: Funding green innovation & Direct operations: addressing ESG requirements Providing retail & corporate Running own operations in investment and lending customers wit
Slide 111: Temenos Banking Cloud: Digital transformation & sustainability
Temenos Banking Cloud: Digital transformation & sustainability a true climate-related business opportunity 350k 93% - 97% accounts in Canada annual savings in MTCO2e emissions, compared to on- premise alternatives Powered by the hyperscalers, drives innovation & sustainability 700k 95% - 98% account
Slide 112: Temenos Banking Cloud: New carbon footprint tool
Temenos Banking Cloud: New carbon footprint tool • Our tool is NOT just a CO2 calculator based on estimations • Clients get CO2 emissions insights from their actual use of Temenos Banking Cloud, powered by Microsoft Azure 115
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Slide 114: Financial Growth Plan
Financial Growth Plan Takis Spiliopoulos CFO 117
Slide 115: Accelerating Growth Trajectory
Accelerating Growth Trajectory ARR to reach Non-IFRS EBIT to reach FCF to reach >USD1.3bn >USD570m >USD700m in the mid-term in the mid-term in the mid-term 118
Slide 116: Accelerating ARR and Free Cash Flow Growth
Accelerating ARR and Free Cash Flow Growth Annual Recurring Revenue Free Cash Flow c.12% 17-21 CAGR *>12% c.13% 17-22 CAGR >1.3bn >700m *>12% 626 358 494 553 280 269 297 391 462 227 345 193 2017 2018 2019 2020 2021 2022 2023E Mid- 2017 2018 2019 2020 2021 2022 2023E Mid- term term Note: Growth rates
Slide 117: Improved predictability on EBIT Growth Trajectory
Improved predictability on EBIT Growth Trajectory EBIT c.12% 17-21 CAGR *>7% >570m 323 357 318 265 272 224 2017 2018 2019 2020 2021 2022 2023E Mid- term Note: Numbers are non-IFRS. Growth rate is in constant currency * 2023 guidance 120
Slide 118: 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 models are >97% now sold subscription contracts 78% >1.3bn Temenos’ five year subscription contracts for on-premise license and maintenance
Slide 119: ARR Mix Shift from Maintenance to SaaS and Subscription
ARR Mix Shift from Maintenance to SaaS and Subscription ~20% 62% 73% ~25% Maintenance ARR Subscription ARR SaaS ARR c.30% 73% 73% 10% c.50% ~55% c.25% 27% 28% 2021 2022 Mid-term Subscription and SaaS to become main contributors in the mid-term and beyond 122
Slide 120: Acceleration of ARR driving EBIT Growth
Acceleration of ARR driving EBIT Growth ARR and Product revenues ARR vs EBIT % growth rates 15% ARR % of product revenues >90% 807 626 (25%) EBIT y-o-y growth % ARR y-o-y growth % 2022 Mid-term ARR Product Revenues 2021-22 2022-23 Mid-term Note: Numbers are non-IFRS Note: Growth is in constant curre
Slide 121: Free Cash Flow to grow faster than ARR
Free Cash Flow to grow faster than ARR ARR Free Cash Flow *>12% >1.3bn >700 *>12% 626 193 2022 2023E Mid-term 2022 2023E Mid-term * 2023 guidance. Growth rate is in constant currency * 2023 guidance. Free Cash Flow growth in excess of ARR and accelerating from 2023 based on SaaS deferred revenues 12
Slide 122: Drivers of Growth
Drivers of Growth 125
Slide 123: 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. 126
Slide 124: 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. 127
Slide 125: Focused Guidance Metrics
Focused Guidance Metrics KPI Reporting Annual Guidance Mid-term Targets (absolute) SaaS ACV Total Bookings ARR Total Software Licensing* Total Revenue* EBIT* EPS* Operating Cash Conversion Free Cash Flow Recurring Revenue* DSO Tax Rate* * KPI’s are in non-
Slide 126: 2023 Guidance
2023 Guidance Guidance 2022 (CCY) 2023 Targets ARR 628 At least 12% growth Total Software Licensing 407 At least 6% growth EBIT 274 At least 7% growth EPS (Reported) 2.82* At least 6% growth Free Cash Flow (Reported) 193* In line with ARR (at least 12%) Targets are non-IFRS. Tax rates estimate: FY23
Slide 127: Mid-term Guidance
Mid-term Guidance Guidance 2022 (CCY) Mid-term Targets ARR 628 >1.3Bn EBIT 274 >570m Free Cash Flow (Reported) 193* >700m Targets are non-IFRS. * 2022 baseline on a reported basis 130
Slide 128: ARR more than doubling in Mid-term
ARR more than doubling in Mid-term >1.3bn 626 FY22 ARR SaaS ARR Subscription ARR Maintenance ARR Mid-term • SaaS ARR to represent c.55% of Total ARR • Subscriptions will drive both subscription license ARR growth and maintenance ARR Note: Non-IFRS 131
Slide 129: EBIT Expansion Drivers
EBIT Expansion Drivers >570 272 FY22 EBIT SaaS margin expansion Operating leverage Investment Mid-term • SaaS Gross Margin to expand to at least 80% • Continued leverage of G&A infrastructure, improvement in Services profitability • Sustained investment (e.g. S&M capacity, product, wage inflation, v
Slide 130: SaaS Gross Margin % Evolution
SaaS Gross Margin % Evolution 47% 57% 7% c.64% >=80% FY19 FY22 Non-Core Product FY22 Exit Run Rate Mid-term • Hyper-scalers: unit costs to reduce as volumes increase • Automation to drive significant efficiencies in operation centres • Operations optimised into centralised offshore function with loc
Slide 131: Key Cost Lines as a Percentage of Revenue
Key Cost Lines as a Percentage of Revenue 29% Margin 25% 25%+ S&M Services 16% R&D <10% G&A 23% c.21-22% 8% ~6% 2022 Mid-term 134 Note: Non-IFRS.
Slide 132: FCF Evolution 2022 to 2023
FCF Evolution 2022 to 2023 Estimated movements for illustrative purposes only >=12% growth 193 FY22 Opex investment Net Services Term License Subsc License SaaS & Maint Tax Capex & Cap Dev FY23 & inflation Impact Impact Impact Revenue/Deferred 135
Slide 133: FCF Evolution 2022 to Mid-term
FCF Evolution 2022 to Mid-term Estimated movements for illustrative purposes only >700 193 FY22 IFRS EBITDA Net Trade Deferred Revenue Tax Capex & Cap Dev Mid-term Receivables & Payables 136
Slide 134: Scenario Analysis 1: Mid-term ARR
Scenario Analysis 1: Mid-term ARR Impact on mid-term ARR as a result of a change in mid-term Subscription vs SaaS Total Software Licensing revenue mix Mid-term ARR -20% Subscription -10% Subscription Guidance +10% Subscription +20% Subscription +20% SaaS + 130-150m +10% SaaS + 60-70m Guidance Baseli
Slide 135: Scenario Analysis 2: Mid-term EBIT
Scenario Analysis 2: Mid-term EBIT Impact on mid-term EBIT as a result of a change in mid-term Subscription vs SaaS Total Software Licensing revenue mix Mid-term EBIT -20% Subscription -10% Subscription Guidance +10% Subscription +20% Subscription +20% SaaS +18 to 24 months +10% SaaS +9 to 12 months
Slide 136: Scenario Analysis 3: Mid-term Free Cash Flow
Scenario Analysis 3: Mid-term Free Cash Flow Impact on mid-term FCF as a result of a change in mid-term Subscription vs SaaS Total Software Licensing revenue mix Mid-term FCF -20% Subscription -10% Subscription Guidance +10% Subscription +20% Subscription +20% SaaS + 125-140m +10% SaaS + 55-65m Guid
Slide 137: Capital Allocation
Capital Allocation 140
Slide 138: Disciplined Capital Allocation (2015-2022)
Disciplined Capital Allocation (2015-2022) Balance sheet Share buyback - (31-Dec-22) Outflow 29% Weighted average interest Acquisition - rate 2.9% Outflow 53% Weighted average debt Dividend - maturity 1.4 years Outflow 18% Leverage ratio 2.0x Targeted acquisitions for USD1.2bn+ and returned c.USD1bn
Slide 139: 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 140: A three-pronged approach to M&A to accelerate organic growth
A three-pronged approach to M&A to accelerate organic growth Accelerated R&D Increased Adjacent markets and roadmap in key scale complementary markets and segments products 143
Slide 141: Conclusion
Conclusion 144
Slide 142: Accelerating Growth Trajectory
Accelerating Growth Trajectory ARR to reach Non-IFRS EBIT to reach FCF to reach >USD1.3bn >USD570m >USD700m in the mid-term in the mid-term in the mid-term 145
Slide 143: Appendix
Appendix 146
Slide 144: temenos
temenos - AA A , a aaa