Temenos Ag · SIX:TEMN
Temenos — Debt Investor Presentation (November 2019)
51 slides from Temenos's debt investor presentation, Nov 12, 2019
Slide 1: Temenos: The Banking Software Company
TEMENOS THE BANKING SOFTWARE COMPANY
Slide 2: The world's number 1
THE WORLD’S NUMBER 1 TEMENOS | BANKING SOFTWARE temenos.com Over 3000 banks in 150 countries run Temenos
Slide 3: Fixed income roadshow presentation
Fixed income roadshow presentation 12-13 November 2019
Slide 4: 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 5: Non-IFRS Information
Non-IFRS Information Readers are cautioned that the supplemental non-IFRS information presented in this presentation is subject to inherent limitations. It is not based on any comprehensive set of accounting rules or principles and should not be considered as a substitute for IFRS measurements. Also
Slide 6: Agenda
Agenda 1. Overview of Temenos 2. The market opportunity 3. Business and financial update 4. Credit highlights 5. Appendix 6
Slide 7: Overview of Temenos
Overview of Temenos ® TEMENOS
Slide 8: Overview of Temenos
Overview of Temenos $10b 22%+ 15 years market average Management capitalization annual Board average software tenure license growth 41 $190m countries with R&D investment Temenos (20% of 2018 offices revenues) 8
Slide 9: Temenos Cloud Native, Cloud Agnostic Products
Temenos Cloud Native, Cloud Agnostic Products Open Banking Bank Ecosystem Digital Front Office 3rd party Temenos Infinity developers Bank APIs Peripheral APIs APIs 3rd party Systems providers Core Banking Temenos T24 Transact Client Runs Software Temenos Runs Software On- premise Client Temenos Clou
Slide 10: Our clients
Our clients 3,000 150+ 1st 41 financial countries with Banking of the top 50 institutions use Temenos clients software in the banks in the Temenos cloud in 2011 world software 2,000 24,000,000 500,000,000 $19t AUM accounts in accounts in end-customers by wealth/asset smallest client largest client r
Slide 11: Temenos leadership team
Temenos leadership team Years of service at Temenos Alexa Andreas Guenoun Andreades 12 Chief Client Officer Executive Chairman 20 André Loustau Jean-Michel Chief Technical Hilsenkopf 25 Officer Chief Operating Officer 25 Panagiotis ‘Takis’ Mark Winterburn Spiliopoulos Chief Product Max Chuard Chief
Slide 12: Long term, diversified client relationships
Long term, diversified client relationships Geographically diversified client portfolio Limited customer concentration exposure FY-18 Revenues FY-18 Revenues 18% 33% 44% 19% 67% 19% Europe Asia Americas Middle-East & Africa Top 20 Clients Others Reputable customers Very high client retention FY-18 R
Slide 13: Our revenue model: a product led company
Our revenue model: a product led company Software licenses Maintenance Packaged and modular offering Cumulative recurring revenue stream Drives 21% recurring maintenance Regular upgrades & innovation Vertically integrated suites Typical 5 years initial commitment New and existing clients Paid annual
Slide 14: Double digit growth across key metrics
Double digit growth across key metrics Total Revenues growth – 16% CAGR Recurring revenue growth – 14% CAGR 1,000 500 800 400 600 m USD 300 m USD 400 737 847 200 635 326 383 469 559 291 200 100 228 243 - - 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Revenues from Tier 1&2 growth – 22% CAGR Non
Slide 15: Cash-flow metrics
Cash-flow metrics Operating Cash growing 18% CAGR Operating Cash : EBITDA conversion over 100% 400 140% 350 120% 300 100% 250 80% m USD 200 365 133% 60% 117% 114% 114% 150 300 258 227 40% 100 50 20% - 0% 2015 2016 2017 2018 2015 2016 2017 2018 Consistent EBITDA conversion into cash of 100%+ 15
Slide 16: Disciplined approach to debt gearing
Disciplined approach to debt gearing Net debt and leverage ratios* $1,144 Leverage ratios* Net debt* Net debt / EBITDA multiple Net debt (USDm) $527 3.1x $267 $272 <2.5x $178 1.6x <1.5x 1.3x $100 1.0x 0.7x $97 0.6x 0.8x Q4 2013 Q4 2014 Q4 2015 Q4 2016 Q4 2017 Q4 2018 Q3 2019 Q4 2019E Q4 2020E * prof
Slide 17: Kony, Inc acquisition - Transaction summary
Kony, Inc acquisition -Transaction summary Temenos acquired Kony in September 2019 for an enterprise value of USD 559m and an earn-out of USD 21m Kony is the No.1 digital banking SaaS provider in the US Strengthens/positions TemenosInfinity as the richest and most technologically Transaction h
Slide 18: The market opportunity
The market opportunity ® TEMENOS
Slide 19: A large and growing market
A large and growing market Addressable Bank IT spend 60 USD 57bn 50 USD 46bn 40 USD bn 30 20 USD 12bn 10 USD 9bn 0 2015 2019 Total addressable market 5% CAGR Third party spend 8% CAGR Source: Gartner, IDC, Celent, Ovum, Oliver Wyman, Temenos estimates Note 2015 addressable market increased due to op
Slide 20: The market will continue to grow
The market will continue to grow 16.00 USD 15.1bn 14.00 USD 12bn 12.00 10.00 USD bn 8.00 6.00 4.00 2.00 - Third-party spend 2019 Third-party spend 2022 Source: Gartner, IDC, Celent, Ovum, Oliver Wyman, Temenos estimates N.B. Digital Front Office comprises previous segments stated as Digital Channels
Slide 21: The urgency to change has never been greater
The urgency to change has never been greater Increasing Tough Market Regulations – Conditions Open Banking Demands for Personalized Diverse Experiences Competitors Accelerating Technology Change Banks without a modern digital platform will find it hard to remain competitive in the next five to seven
Slide 22: Banks are hindered by their legacy systems
Banks are hindered by their legacy systems Higher Higher Poor operating operational customer costs risk experience Reduced speed to Poor market analytics 22
Slide 23: The vendor of choice for core banking transformation globally
The vendor of choice for core banking transformation globally 250 Top 10 global* core banking systems by new-named deals 200 - aggregate 2013-2018 150 1.9x 2.9x 3.2x 5.4x 7.2x 8.8x 9.9x 13.9x 18.2x 100 50 T24 T24 Core Amplitude Amplitude Loans Loans Banking Banking Banking Transact Flexcube Banking
Slide 24: Accelerating our leadership position
Accelerating our leadership position Core banking systems sales by new-named deals 50 2012 2018 45 40 35 30 2.2x 25 1.8x 20 2.4x 3.3x 15 10 5 0 Note: Oracle 2018 deals is estimate based on average of deals from 2012-2015. 24 Oracle did not participate in IBS since 2015
Slide 25: The world's best selling banking software vendor
The world’s best selling banking software vendor #1 #1 #1 #1 Best-selling Best-selling Best-selling Best-selling Core Banking Digital Banking Payments Compliance for 14 years & Channels system & Risk Mgmt. New-name clients: New and existing clients: Top global power seller for the Top global player
Slide 26: We benefit from six drivers of growth
We benefit from six drivers of growth Medium-term third party spend (bn) CAGR $5.0 7% ALL DEPLOYMENT OPTIONS $5.3 8% $0.6 8% $2.7 10% On- $1.6 8% premise 26
Slide 27: Set to take market share across all drivers of growth
Set to take market share across all drivers of growth Temenos Infinity Payments Temenos T24 Transact WealthSuite Fund administration SaaS Temenos market share Temenos combined market share 5% 16% >2x >3x 2018 Long term 2018 Long term Note: independent scales, market share based on licenses only 27
Slide 28: Expanding our tier 1 and 2 client base
Expanding our tier 1 and 2 client base EMEA #205 banks 45% penetration up from 43% The Americas APAC #103 banks #174 banks 19% penetration 23% penetration up from 18% up from 22% # - number of Tier 1 and 2 banks % - Temenos account penetration of T1 and T2 banks 28 Source: FT Banker Database; Temeno
Slide 29: Increasing wallet share in Tier 1 and 2 banks
Increasing wallet share in Tier 1 and 2 banks Temenos’ average share of wallet in Average annual spend from tier 1 and 2 banks tier 1 and 2 banks undergoing transformation >2x 4% 4.5% 2015 2016 2017 2018 2017 2018 Long term * Based on Temenos estimates of average addressable transformational softwar
Slide 30: Business and financial update
Business and financial update Q3-2019
Slide 31: Review of Q3 2019
Review of Q3 2019 Q3 2019 Acquisition of Kony strengthens Total software licensing growth of 15% in Q3, Temenos Infinity, US strategy and 20% YTD SaaS and cloud expertise Strong momentum in SaaS, with revenues up 93% and ACV up 164% in Q3 Total revenue growth of 12% in Q3, 17% YTD EBIT up 16
Slide 32: Q3 2019 sales review
Q3 2019 sales review Geographic split of total software licensing Digital, regulatory and cost pressures and move to open banking continue to drive market growth Q3 2019 total software licensing Good sales momentum in Europe, Asia and Americas, in particular in the US, continuing the trend from
Slide 33: Non-IFRS income statement – operating
Non-IFRS income statement – operating Y-o-Y Y-o-Y In USDm Q3 19 Q3 18 Y-o-Y c.c. YTD 19 YTD 18 Y-o-Y c.c. reported reported Software licensing 83.5 80.5 4% 7.0% 239.3 218.2 10% 13% SaaS and subscription 14.6 7.8 87% 93% 42.3 23.5 80% 88% Total software licensing 98.1 88.4 11% 15% 281.5 241.7 16% 20%
Slide 34: IFRS cash conversion
IFRS cash conversion USDm 107% 400 111% 116% 350 300 250 200 150 100 50 0 LTM Q3 2017 LTM Q3 2018 LTM Q3 2019 EBITDA Operating cashflow Cash conversion significantly above target of 100% 34
Slide 35: 2019 non-IFRS guidance range (c.c.)
2019 non-IFRS guidance range (c.c.) FY 19 guidance Total software licensing (%) 19.5% - 22.5% Implied USDm USD 431 - 442 Total revenue (%) 18.0% - 20.0% Implied USDm USD 970 - 986 EBIT (USDm) USD 310 – 315m Implied margin c.31.9% Implied organic margin increase c. 150 bps Cash conversion 100%+ conve
Slide 36: Sustainable annual growth targets
Sustainable annual growth targets Metric Sustainable long term annual targets (Non-IFRS) Total software licensing At least 15% CAGR Total revenue 10-15% CAGR EPS At least 15% CAGR DSOs Less than 90 days EBIT Margin 36%+ Tax rate c. 20% Cash conversion 100%+ of EBITDA p.a. 3-5 year targets EBIT Margi
Slide 37: Credit highlights
| Credit highlights ® TEMENOS
Slide 38: Credit highlights
Credit highlights Leading market position in core banking software solutions Global reach (3,000+ customers, 150+ countries) Building blocks in place to benefit from the growth prospects given the changing Positioning industry landscape Growing market share (especially within T1/2 banks) T
Slide 39: Thank You
Thank You temenos.com
Slide 40: Appendix
| Appendix
Slide 41: Reconciliation from IFRS to non-IFRS
Reconciliation from IFRS to non-IFRS IFRS revenue measure + Deferred revenue write-down = Non-IFRS revenue measure IFRS profit measure +/- Deferred revenue write down +/- Discontinued activities +/- Amortisation of acquired intangibles +/- Acquisition related charges +/- Restructuring +/- Taxation =
Slide 42: Accounting elements not included in non-IFRS guidance
Accounting elements not included in non-IFRS guidance Below are the accounting elements not included in the 2019 non-IFRS guidance: FY 2019 estimated deferred revenue write down of USD 9-10m FY 2019 estimated amortisation of acquired intangibles of USD 58-60m FY 2019 estimated restructuring co
Slide 43: Reconciliation – IFRS to non-IFRS
Reconciliation – IFRS to non-IFRS 3 Months Ending 30 September 3 Months Ending 30 September 2019 2019 2018 2018 In USDm, except EPSd IFRS Non-IFRS adj. Non-IFRS IFRS Non-IFRS adj. Non-IFRS Software Licensing 83.5 83.5 80.5 80.5 SaaS and subscription 13.5 1.1 14.6 7.8 7.8 Total Software Licensing 97.
Slide 44: Net earnings reconciliation
Net earnings reconciliation In USDm, except EPS Q3 19 Q3 18 IFRS net earnings 49.3 46.8 Deferred revenue write down 1.1 0.0 Amortisation of acquired intangibles 12.3 9.1 Restructuring 0.9 0.1 Acquisition related costs 3.3 Acquisition related financing costs 0.7 Taxation -2.0 -1.2 Net earnings for no
Slide 45: Reconciliation from IFRS to non-IFRS for EBIT and EBITDA
Reconciliation from IFRS to non-IFRS for EBIT and EBITDA USDm Q3 19 EBIT Q3 19 EBITDA IFRS 61.5 92.7 Deferred revenue write-down 1.1 1.1 Amortisation of acquired intangibles 12.3 - Restructuring 0.9 0.9 Acquisition-related costs 3.3 3.3 Non-IFRS 79.1 98.0 45
Slide 46: Transition to IFRS 16 Leases
Transition to IFRS 16 “Leases” IFRS 16 “Leases” primarily changes lease accounting for lessee and moves to single accounting model eliminating the distinction between finance leases and operating lease. Leases qualified under IFRS16 are captured on the balance sheet from 1st January 2019. Temeno
Slide 47: Reconciliation – IFRS 16 Income Statement
Reconciliation – IFRS 16 Income Statement 3 Months Ending 30 September 2019 2019 IFRS Impact of IFRS 16 IFRS 16 adjusted In USDm Total Revenue 228.0 - 228.0 Operating Expense (166.5) (0.1) (166.6) EBIT 61.5 (0.1) 61.4 D&A (31.2) 3.9 (27.3) EBITDA 92.7 (4.0) 88.7 Financing Costs (5.3) 0.4 (4.8) Taxat
Slide 48: Reconciliation – IFRS 16 Balance Sheet
Reconciliation – IFRS 16 Balance Sheet 3 Months as at 30 September 2019 2019 In USDm IFRS Impact of IFRS 16 IFRS 16 adjusted Property, plant and equipment 70.4 (48.2) 22.2 Other assets (current / non-current) 2,118.1 (2.1) 2,116.0 Totals assets 2,188.5 (50.3) 2,138.2 Borrowings ( current / non-curre
Slide 49: Reconciliation – IFRS 16 net debt calculation
Reconciliation – IFRS 16 net debt calculation 3 Months Ending 30 September 2019 IFRS In USDm Non-IFRS EBITDA 98.0 IFRS16 adjustment (4.3) IFRS 16 adjusted EBITDA 93.7 LTM EBITDA 357.3 Net Debt reported 1,140.9 SWAP add-back 12.2 IFRS16 adjustment (54.2) IFRS 16 adjusted Net Debt 1,098.9 Leverage 3.0
Slide 50: Definitions
Definitions Non-IFRS adjustments Other Deferred revenue write-down Revenue visibility Adjustments made resulting from acquisitions Visibility on revenue includes a combination of revenue that is contractually committed Discontinued activities and revenue that is in our pipeline and that is Discontin
Slide 51: Temenos: The Banking Software Company
TEMENOS THE BANKING SOFTWARE COMPANY