Temenos Ag · SIX:TEMN
Temenos — Debt Investor Presentation (March 2014)
40 slides from Temenos's debt investor presentation, March 2014
Slide 1: Succeeding through the digital revolution
Succeeding through the digital revolution Fixed income presentation March 2014
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: Agenda
Agenda Overview of Temenos The market opportunity Our credentials 2013 financial performance and 2014 guidance Medium term 3
Slide 4: Temenos – a global market leader
Temenos – a global market leader No.1 World class delivery • 132 new customers went live in 2013 • Community of 1,700+ World’s leading banking partner consultants software company • 1,600+ installations in 150+ countries • USD 468M revenues in 2013 • 3,500+ employees in 57 international offices Prod
Slide 5: Global reach
Global reach 3,500 57 38 Europe Belgium Asia Pacific Australia employees offices countries France Bangladesh Germany China Greece Hong-Kong Kazakhstan India Americas Middle East Luxembourg Indonesia Canada & Africa Netherlands Japan Costa Rica Egypt Romania Malaysia Ecuador Kenya Russia Pakistan Mex
Slide 6: Our revenue model: a product led company
Our revenue model: a product led company • Rich product suite • Regularly upgraded • New and existing clients • • Geographic spread Referencability 31% Maintenance Licence 45% Maintenance 24% Services • High level consultancy • Revenue stream grows • Direct client feedback for with Licence sales ben
Slide 7: A track record of success
A track record of success Total revenue – 14% CAGR Non-IFRS EBIT – 27% USDm USDm 500 120 400 100 80 300 60 200 40 100 20 0 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Maintenance revenue – 20% Installations – 13% CAGR USDm
Slide 8: Resilience of cashflows
Resilience of cashflows Operating cashflows (USDm) Operating cash: EBITDA as a % 228% 200 120% 100% 150 80% 100 60% 40% 50 20% 0 0% 2008 2009 2010 2011 2012 2013 2008 2009 2010 2011 2012 2013 Installed based contribution to Licence rev’ Maintenance as a % of revenue 80% 60% 60% 40% 40% 20% 20% 0% 0%
Slide 9: Management and governance
Management and governance Board of Directors David Arnott Max Chuard CEO CFO Andreas Andreades Chris Pavlou George Koukis Ian Cookson Executive Chairman INED, Vice-Chairman Non-Executive INED Mark Winterburn Product Director Central functions Mark Gunning Pre-Sales Director Mike Davis Client Directo
Slide 10: A three-pronged approach to M&A
A three-pronged approach to M&A Increased scale Accelerated growth in key markets and A three-pronged segments approach Complementary products 2007 2008 2009 2010 2011 2012 2013 10
Slide 11: Delivering on our vision
Delivering on our vision Build Scale Lead 1993 to 2002 2003 to 2011 2012 onwards Domain focus Built out regional structure True multi-product focus Truly global Expansion of addressable market Multi-deployment options Single packaged product M&A programme Realising installed base opportunity Commitm
Slide 12: Agenda
Agenda Overview of Temenos The market opportunity Our credentials 2013 financial performance and 2014 guidance Medium term 12
Slide 13: The market opportunity is huge
The market opportunity is huge Core banking Wealth BI Channels Payments USDbn 35 USD 32.0bn 30 6.0 25 5.6 20 3.0 15 4.5 10 USD 7.0bn 12.9 5 0 Spend with third-parties today Total spend on banking software today *Licences and maintenance Source: Gartner, IDC, Celent, Temenos estimates Multi-product o
Slide 14: Application software is significantly underpenetrated in banks
Application software is significantly underpenetrated in banks 100% 80% 60% 40% 20% 0% Industrial Energy Consumer Healthcare Public sector Insurance Telecoms Banking goods Sources: BCG, Gartner, Forrester Banks have the lowest penetration of 3rd party software 14
Slide 15: The industry is undergoing a structural shift
The industry is undergoing a structural shift Multi- Cloud Multi-channels Breaking the value chain 1bn predicted smartphone shipments in 2014 49% annual growth rate of tablet sales to 2018 Regulation Price transparency Diminishing customer loyalty 3% pts 50% 29% The amount BASLE III lowers ROE % of
Slide 16: Key drivers for our five verticals
Key drivers for our five verticals More intense competition Growing Higher capital complexity Core banking requirements PWM Channels BI Payments More demanding Technology customers disruption The key drivers are consistent across all of our verticals 16
Slide 17: Agenda
Agenda Overview of Temenos The market opportunity Our credentials 2013 financial performance and 2014 guidance Medium term 17
Slide 18: We have the solutions to meet the industry's needs
We have the solutions to meet the industry’s needs Efficient Omnichannel IT solutions delivering 60% higher Great, consistent user experience across IT efficiency ratios all channels Analytics Agile Fastest time to value, best success The best product-building capabilities rate on analytics in our i
Slide 19: Multi-product offering remains the winning model
Multi-product offering remains the winning model • Multi-product offering accelerating demand for core replacements • Focus in 2013 was on winning the larger core banking deals • However, in the medium term, multi-product still expected to drive growth • Multi-product offering expected to increase c
Slide 20: Beating the competition
Beating the competition Taking market share <1% >4% Market growth in 2013 Temenos growth in 2013 Extending our lead Product Sales Delivery • Best products • Unrivalled referenceability • Rich methodologies • Best roadmap • A strong partner channel • The right partners We are extending our leadership
Slide 21: 3rd party validation
3rd party validation • Sole vendor at the top of both pyramids • 9th consecutive year as “Global Power Seller” New-named clients All counted deals • 1st position – 15th year in top 2 places • Twice number of deals of nearest competitor Taking market share in a consolidating marketplace Source: Forre
Slide 22: A proud history of innovation…
A proud history of innovation… GUI SOA XML Open Multi 24/7 Process Models Architectural Cloud DB entity Workflow Frameworks 1993 2012 Retail banking, Corporate banking, Treasury, Lending, Payments back office, Securities Trade finance Front office – CRM Internet banking Insight Business Intelligence
Slide 23: …extending into the future
…extending into the future Advanced Loan Origination Trade finance (forfeiting & factoring) Loan collections & leasing Relationship-based pricing Smart order entry and pre-trade compliance Supply chain finance Cloud & Mobile BI Basel III Marketplace Compelling and unrivalled roadmap 23
Slide 24: The most profitable banks run Temenos
The most profitable banks run Temenos Performance of Temenos customers compared to banks using both other third-party systems and legacy applications Return on assets Return on capital Cost / income 14% 64% 12% 62% 25% 30% 37% 46% -7.4% -8.5% 10% 60% 58% 8% 56% 6% 54% 4% 52% 2% 50% 0% 48% Legacy 3rd
Slide 25: Agenda
Agenda Overview of Temenos The market opportunity Our credentials 2013 financial performance and 2014 guidance Medium term 25
Slide 26: Overview of 2013
Overview of 2013 Strong licence growth, with momentum building through the year – taking market share Strong growth in Europe, our largest market, and across MEA and APAC Core banking strong, supported by multi-product offering Services strategy delivering with lower contribution from services and i
Slide 27: Q4 and FY 2013 financial highlights
Q4 and FY 2013 financial highlights Q4 LFL software licencing growth of 15% drives 10% FY 2013 growth, top end of guidance Lower services contribution to group revenues and 7.8% points improvement in LFL FY 2013 non-IFRS services margin Better revenue mix and lower fixed cost base delivers FY 2013 n
Slide 28: Non-IFRS income statement - operating
Non-IFRS income statement - operating In USDm Q4 13 Q4 12 Y-o-Y FY 13 FY 12 Y-o-Y Software licensing 54.8 47.9 14.3% 137.8 125.1 10.1% SaaS 1.6 0.0 NA 4.8 0.0 NA Total software licensing 56.3 47.9 17.6% 142.6 125.1 13.9% Maintenance 55.9 52.8 5.8% 212.5 201.7 5.4% Services 32.4 33.5 -3.3% 112.7 123.
Slide 29: Cash conversion
Cash conversion USDm 119% 180 150 120 228% 101% 90 60 30 0 FY 2011 FY 2012 FY 2013 EBITDA Operating cashflow Continued strong cash conversion driven by DSOs reduction of 28 days 29
Slide 30: 2014 guidance
2014 guidance Software licensing growth of 10% to 15% (implying software licensing revenue of USD 152m to USD 158m)* Non-IFRS revenue growth of 5% to 10% (implying revenue of USD 491m to USD 515m)* Non-IFRS EBIT margin of 25.1% (implying non-IFRS EBIT of USD 123m to USD 129m)* 100%+ conversion of EB
Slide 31: Growth in 2014 and beyond
Growth in 2014 and beyond By geography By product • Europe continuing to grow • Core banking continuing to grow • MEA and APAC biggest contributors to • Contribution from multi-product offer to growth increase from 25% in 2013 to 30% in 2014 • Strong growth from Americas but from a • Strong growth f
Slide 32: Agenda
Agenda Overview of Temenos The market opportunity Our credentials 2013 financial performance and 2014 guidance Medium term 32
Slide 33: Medium term targets announced in February 2013
Medium term targets announced in February 2013 Non-IFRS revenue growth of 5%+ pa with • Licence growth of 10%+ pa • Services contributing 20% to 25% of group revenue and be profitable Non-IFRS EBIT margin improvement of 100 to 150bps on average pa Cash conversion over 100% pa DSOs reducing by 10 to
Slide 34: Delivering on our medium term targets
Delivering on our medium term targets Software licensing Services Margin Cash & DSOs Faster recovery Higher growth of Faster improvement Faster recovery in Europe “premium” services in revenue mix of old balances Return of larger Faster shift of Faster improvement More sales to existing core banking
Slide 35: A view on costs
A view on costs Cost breakdown • Cost of services falling as % of revenue: focus on “premium” services and leveraging fixed Cost of Services R&D G&A S&M costs 100% • R&D falling as % of revenue (although increasing in actual amounts): exploiting 80% scale synergies and productivity improvements and
Slide 36: Year-on-year margin expansion
Year-on-year margin expansion 100-150bps of margin expansion on average per annum in the medium term Margin improvement to be driven by • better revenue mix • improving services margin • economies of scale Due to the headwind in 2014 and 2015 of increased amortisation of capitalised development cost
Slide 37: High quality earnings
High quality earnings 100%+ conversion of EBITDA into operating cashflow DSOs driven by quality of earnings 250 • EBITDA growing faster that EBIT • cash growing faster than profit 200 150 10 to 15 days reduction in Days Sales Outstanding (DSOs) per annum driven by • reducing implementation time 100
Slide 38: Dividend
Dividend Temenos is highly cash generative with a strong balance sheet which enables • servicing of our debt obligations; and • investment in the business, including industry leading R&D spend; and • funding for targeted acquisitions; and • returning value to stakeholders As a consequence, in 2013 t
Slide 39: Key takeaways
Key takeaways We have delivered on our commitments Our market opportunity is massive… and has increased with the launch of TPS The industry is undergoing a structural shift - the fundamental growth drivers remain We have the solutions to meet the industry’s needs and a compelling roadmap The competi
Slide 40: Thank you
Thank you www.temenos.com