Temenos Ag · SIX:TEMN
Temenos — Investor Presentation (December 2010)
30 slides from Temenos's investor presentation, Dec 6, 2010
Slide 1: The Banking Software Company
\é The Banking Software Company
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: Temenos: Who We Are
Temenos: Who We Are Founded in 1993 Listed since 2001 3,500+ Employees Global, HQ in Geneva 2009 Revenue Split By Geography By Revenue Line Americas APAC 9% Europe License Service 23% 42% 34% 34% Maint. MEA 32% 26% 3
Slide 4: Our Track Record
Our Track Record 450 400 350 300 250 200 150 100 50 0 2003 2004 2005 2006 2007 2008 2009 We have grown to become the 7th largest listed software company in Europe and a global leader in core banking software. 4
Slide 5: Why is there a replacement cycle for core banking?
Why is there a replacement cycle for core banking? “Legacy banking systems lead to deteriorating customer service, lost flexibility, outdated products and stalled innovation.” Source: BCG, “Perspectives on Core Banking Modernisation”, November 2009 5
Slide 6: Why is there a replacement cycle for core banking?
Why is there a replacement cycle for core banking? Modern core banking provides a single view across the bank 6
Slide 7: Banks' IT spending is unsustainable
Banks’ IT spending is unsustainable spending is unsustainable Banks spend twice as much on IT as other industries IT Spending as a % of costs Average IT Spending Source: Boston Consulting Group 7
Slide 8: Market Dynamics
Market Dynamics Core banking is the most exciting software market in the world offering low penetration coupled with strong drivers Addressable* 10-15% CAGR Today 12.6bn 2.1bn • Slower economic growth • Lower leverage • More regulation • Greater competitive pressures *Source: Celent, Gartner, IDC, T
Slide 9: Our Revenue Model
Our revenue model Our Revenue Model LEVERAGE LICENSE REVENUES THROUGH PARTNERSHIP AGREEMENTS GROW BASE OF MAINTENANCE REVENUE MAINTAIN AND LEVERAGE SERVICE EXPERTISE 9
Slide 10: T24 Addressable Market
T24 Addressable Market Temenos Current Addressable Market DISTRIBUTION CHANNELS Insight ARC AML CRM BANKING INVESTMENT SERVICES INSURANCE BUSINESS INTELLIGENCE Retail/Universal Asset mgmt. T24 RISK & COMPLIANCE TCM Wholesale Life Private General GENERAL SUPPORT STeP PAYMENTS 10
Slide 11: Market Leadership
Market Leadership Because we are market leaders by: # Core Banking Customers # Deals # Reported License revenue Source: Capgemini Core Banking Systems Survey 2008 11
Slide 12: Scale and viability are more important than ever
Scale and viability are more important than ever According to Forrester Research, we are one of only two global power sellers “Oracle and Temenos remain the Global Power Sellers. They defended their 2009 territories against the smallest group of Global Challengers ever” According to Gartner**: “Vend
Slide 13: High R&D
High R&D We spend >2x more than our biggest competitors... ...to maintain our technological advantage * Cash R&D, adjusted for the difference between capitalisation and amortisation ** End of fiscal years: SAP, i-flex (ex-services), Misys (ex-Sesame); TCS (BaNCS). For i-flex in 2008 and 2009, no dat
Slide 14: Competitive Landscape
Competitive Landscape Major players Functional breadth Vendor Products Retail Universal Wholesale Private TEMENOS T24 TCB Market share Oracle Flexcube Infosys Finacle TATA Consulting BaNCS Fidelity Corebank, Systematics SAP Deposits, Loans Equation, Midas, Misys Bankmaster, BankFusion Source: IBS Ma
Slide 15: Focus brings value
Focus brings value Temenos concentration on 1 vertical and completely packaged software increases value to customer High Temenos Extent to which product packaged SAP Misys Oracle Infosys TCS Low High Number of industries served Low * Source: Temenos estimates, public information 15
Slide 16: Product Extensions into adjacent markets
Product Extensions into adjacent markets Add-on revenues continue to grow as a percentage of licence revenues 2007 2008 2009 2010 % of licence <5% 5% 10% 15% revenues ARC Biometrics ARC Mobile T-Risk Insight AML STeP Compelling value proposition exists for combining add-on products to T24 licences –
Slide 17: Broadest Choice
Broadest Choice (—— a ee (/; cel "@ Cognizant Deloitte > mini FeMENOS 17 The Banking Software Company
Slide 18: Partners add scale to service capability
Partners add scale to service capability Numbers of external Temenos Consultants 1000 Capgemini Deloitte 750 Microsoft 500 Cognizant 250 Program Start Local Partners 2007 2008 2009 2010 18
Slide 19: Strong Acquisition Track Record
Strong Acquisition Track Record 19
Slide 20: Acquisitions bring us market leadership
Acquisitions bring us market leadership Market share in FST Private Banking Revenues Temenos: 4% Temenos: USD 55m Viveo: 34% Odyssey: USD 75m Combined: 38% Combined: USD 130m Reference Customers Reference Customers Banque de France RBC BNP Paribas ING Credit Agricole Societe Generale Expand product
Slide 21: Process led implementations
Process led implementations Ensure packaged software remains packaged Few customisations... To implement Fortis Bank Singapore (a hub location supporting 5 countries) required only 70 man days of local development ...faster implementations The average project length has been reduced by 40% since 200
Slide 22: Risk
Risk Integrated solution gives single customer view over the whole bank Improved Risk Management Able to see entire counterparty risk in less than 30 mins NPLs of 0.61% vs. 71% asset growth CAGR Source: Schroders case study, FCB annual reports 22
Slide 23: Customer Service
Customer Service Integrated solution gives single customer view over the whole bank Improved customer service and innovation 45,000 8.0% 7.5% 40,000 7.0% 35,000 6.0% 6.7% 6.6% 6.3% 30,000 5.0% in VND bn 5.3% 25,000 4.0% 20,000 3.0% 15,000 2.0% 10,000 5,000 1.0% - 0.0% FY 04 FY 05 FY 06 FY 07 FY 08 D
Slide 24: Scale
Scale ...resulting in much lower relative costs Bank of Shanghai Banking Industry IT Cost to Income 2% 9% IT Cost to Op. Cost 5% 14% IT Cost to Total Assets 5bps 23bps IT Cost to FTE EUR 2,650 EUR 20,000 Source: BCG, Bank of Shanghai 24
Slide 25: Temenos proven value proposition
Temenos proven value proposition 25
Slide 26: Financial statement highlights from Q3 2010
Financial statement highlights from Q3 2010 in USDm Q3 10 Q3 09 LTM 10 LTM 09 Licences 37.7 26.8 41% 143.2 131.9 9% Maintenance 37.1 29.2 27% 138.7 113.9 22% Services 29.2 32.5 (10)% 134.9 128.1 5% Total Revenue 104.0 88.6 17% 416.8 373.9 11% Total operating costs (80.4) (68.2) 18% (339.7) (298.
Slide 27: Adjusted EPS reconciliation
Adjusted EPS reconciliation Q3 2010 Q3 2009 (USDm) (USDm) Net Earnings 21.9 17.4 Amortisation of acquired intangible assets 3.2 1.9 Bond interest 1.5 1.4 Restructuring 2.3 3.0 Earnings for adjusted EPS 28.9 23.7 Number of dilutive shares 72.4 69.4 Adjusted EPS 0.40 0.34 27
Slide 28: Geographical breakdown of licence revenue
Geographical breakdown of licence revenuerevenue 28
Slide 29: Breakdown of license revenues by customer tier
Breakdown of license revenues by customer tier Proportion of Tier 1-2 customers has returned to pre-crisis levels – last seen in 2007 29
Slide 30: Updated Guidance
Updated Guidance Guidance Ranges Previous New outlook Outlook incl. USDm outlook Odyssey Total Revenue 435-445 435-445 451-461* Licence 150m (12% l-f-l) 155m (15% l-f-l) 161m (15% l-f-l) Revenue Adj EBIT 110-115 110-115 110-115 EBITDA 100% 100% 100% Conversion Tax Rates 0% 0% 0% * Q4 F/X rates are E