Temenos Ag · SIX:TEMN
Temenos — Q3 2012 Earnings Presentation
30 slides from Temenos's earnings presentation, Oct 23, 2012
Slide 1: The Banking Software Company
\é The Banking Software Company
Slide 2: Business Update & Financial Results
Business Update & Financial Results Quarter ended 30 September 2012
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: Agenda
Agenda 1 Strategy and Business update | David Arnott | CEO 2 Financial update | Max Chuard | CFO 3 Outlook | David Arnott | CEO 4 Q&A 4
Slide 5: Market overview
Market overview 1 Structural growth in EM helping to offset weakness in Europe 2 Demand for shorter timeframe projects with quicker payback 3 Strong demand for BI, PWM and Channels 4 Fundamentals remain intact Well positioned to capitalise on market growth 5
Slide 6: Banking software market landscape
Banking software market landscape 4% 10% Size of bubbles PWM reflects market size T24 WM TAP Islamic Universal Payments T24 Channels T24 ABN AMRO Temenos Competitive Retail partnership Connect Intensity T24 AML Lending AML Risk STEP BI Corp’ T24 T1&2 Retail Insight T24 Market/segment software growth
Slide 7: Business overview
Business overview 1 Licence trend improved against strong comparative 2 Better execution resulting in better control of the quarter 3 7 go lives in Q3 (31 YTD) incl. first bank live in the Cloud in Kenya 4 9 new customer wins (11 in Q3 2011, 5 in Q2 2012) 5 Improved position within the ‘Leader’ Magi
Slide 8: Partner strategy
Partner strategy Technology Partner Complementary Solution Partner Services Partner Powered by Temenos • Plus 3 Regional and 14 Local 8
Slide 9: Financial overview
Financial overview 1 [ Licence ] (at constant currency) revenue down 20% 22 Maintenance [ resilient (up] 6% at constant currency) 3 Services [ continues to reduce ] dependency on Licences 4 [Good progress on cost savings ] with 80% already locked-in 55 [Adjusted EBIT down 14%] vs down 31% LTM 6 [Ope
Slide 10: Acquisition of edge IPK
Acquisition of edge IPK • Positions Temenos strongly in an exciting and fast-growing market • Closed on 1 October 2012; earnings neutral in 2012 • 45 employees • Leading product allows: • Common user experience across all channels • Model of build once, deploy multiple times • Web designers to work
Slide 11: Agenda
Agenda 1 Strategy and Business update | David Arnott | CEO 2 Financial update | Max Chuard | CFO 3 Outlook | David Arnott | CEO 4 Q&A 11
Slide 12: Income statement highlights
Income statement highlights in USDm Q312 Q3 11 LTM 12 LTM 11 Licences 29.6 37.7 (21)% 118.3 165.9 (29)% Maintenance 50.2 49.6 1% 198.7 195.1 2% Services 30.2 33.6 (10)% 126.0 135.3 (7)% Total Revenue 110.0 120.9 (9)% 443.0 496.3 (11)% Adj. operating costs (89.4) (97.0) (8)% (370.2) (389.9) (5)%
Slide 13: Like-for-like revenue and cost performance
Like-for-like revenue and cost performance Like-for-like revenue Like-for-like costs USD 116m 120 USD 110m 120 (20)% 100 100 Licence Licence (3)% 80 6% 80 USDm 60 60 Maintenance Maintenance 40 40 (4)% 20 20 Services Services 0 0 Q3 2011 Q3 2012 Q3 2011 Q3 2012 * Revenue adjusted for FX ** Costs adju
Slide 14: Update on cost efficiencies
Update on cost efficiencies Cost Area Source of Savings Progress? • Simplified structure Sales & Marketing • Refocus • Office consolidation G&A • Offshoring / nearshoring • Efficiencies from acquisitions R&D • Offshoring / nearshoring • Changing skills mix Services • Simplified structure Significant
Slide 15: 2013 cost base
2013 cost base Actual costs (in USDm) Q3 2012 Bridge to 2013 cost base 380 Variable costs 5 10 360 360 30 Fixed costs 84 340 334 Total adjusted costs 89 320 (14) USDm 300 Annual savings (in USDm) 280 260 240 Realised in Q3 2012 (run-rate) 6 220 “Locked-in” 10 200 To come 2013 Fixed Savings Variable
Slide 16: Cash conversion
Cash conversion LTM operating cashflow as a % of EBITDA 120 164% 100 104% 80 USDm 60 40 20 0 LTM Sept 2012 LTM Sept 2011 EBITDA (USDm) Operating cashflow (USDm) Strong Q3 cashflows – 100% cash conversion in 2012 reiterated 16
Slide 17: Balance sheet – debt and financing
Balance sheet – debt and financing in USDm 30 Sept 12 Comments Credit facilities 248.5 USD 350m facility, due in 2014 Others 0.4 Total debt 248.9 Cash (72.6) Held in ST deposits Net debt 176.3 Treasury Shares (44.7) Held at market value as of 30 Sept 12 Net debt & financing 131.6 Continue to expect
Slide 18: Agenda
Agenda 1 Strategy and Business update | David Arnott | CEO 2 Financial update | Max Chuard | CFO 3 Outlook | David Arnott | CEO 4 Q&A 18
Slide 19: Confidence for Q4
Confidence for Q4 A strong pipeline… …backed by improving execution • Thorough and deep review of Q4 • Execution improved throughout pipeline conducted Q3 • “Quality” of the pipeline improves • Greater focus and accountability reliability and visibility • Rising win rates • Half of pipeline is exist
Slide 20: Reiterating FY outlook
Reiterating FY outlook Key Performance Indicator Outlook Implied range Total Revenue -5% to +1% USD438-466m Adjusted EBIT Margin* 19% to 22% USD83-103m Operating Cash to EBITDA 100% Based on spot rates at the end of September 2012 *Adjusted EBIT adjusts for exceptional items and amortisation of acqu
Slide 21: Agenda
Agenda 1 Strategy and Business update | David Arnott | CEO 2 Financial update | Max Chuard | CFO 3 Outlook | David Arnott | CEO 4 Q&A 21
Slide 22: Appendices
Ve EMENOS 22 The Banking Software Company
Slide 23: Licence growth
Licence growth Like-for-like, year-on-year Licence growth 50% 38% 40% 30% 19% 19% 20% 10% 6% 1% 0% 0% -10% -5% -20% -14% -20% -30% -40% -33% -38% -50% Q3 2011 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 is an easier comparative 23
Slide 24: Non-operating items
Non-operating items in USDm Q312 Q3 11 LTM 12 LTM 11 Adj. EBIT 20.6 23.8 (14)% 72.9 106.3 (31)% Net finance charge (2.1) (2.4) (11)% (8.3) (12.2) (32)% FX loss (0.2) (1.3) (84)% (6.3) (2.2) NM Tax (3.1) (2.3) 37% (18.2) (3.2) NM Adj. net profit 15.2 17.9 (15)% 40.1 88.7 (55)% Adj. EPS 0.22 0.26
Slide 25: Adjusted EPS Reconciliation
Adjusted EPS Reconciliation USDm, except EPS (USD) Q3 12 Q3 11 Net Earnings 6.7 12.5 Amortization of acquired intangible 3.1 4.5 assets Adjusting costs * 5.4 1.0 Earnings for adjusted EPS 15.2 18.0 Number of Dilutive Shares 69.5 69.9 Adjusted EPS 0.22 0.26 * Restructuring and one-off non-recurring c
Slide 26: FX assumptions
FX assumptions FX rates underlying outlook USD/EUR 0.778 USD/GBP 0.619 USD/CHF 0.940 26
Slide 27: DSOs Trend
DSOs Trend DSOs in Q3 200 183 165 147 144 150 100 50 0 Q3 2009 Q3 2010 Q3 2011 Q3 2012 * Includes deferred revenues Reduction in DSOs continues 27
Slide 28: Breakdown of Licence revenue by geography
Breakdown of Licence revenue by geography Q3 2012 Q3 2011 AMERICAS MEA AMERICAS 10% 6% 6% MEA 26% APAC APAC 35% 32% EUROPE EUROPE 53% 32% LTM 2012 LTM 2011 AMERICAS AMERICAS 12% 11% MEA MEA 25% 23% APAC APAC 27% 30% EUROPE EUROPE 33% 39% 28
Slide 29: Breakdown of Licence revenue by customer tier
Breakdown of Licence revenue by customer tier Q3 2012 Q3 2011 1-2 1-2 20% 37% 3-5 3-5 63% 80% LTM 2012 LTM 2011 1-2 1-2 20% 28% 3-5 3-5 72% 80% 29
Slide 30: Breakdown of Licence revenue by existing / new customer
Breakdown of Licence revenue by existing / new customer Q3 2012 Q3 2011 New New 38% 46% Existing 54% Existing 62% LTM 2012 LTM 2011 New Existing 41% 37% Existing New 59% 63% 30