Slide 1: Temenos – The banking software company
@) TEMENOS The banking software company
Slide 2: Financial results & business update
Financial results & business update Quarter ended 30 September 2018 17 October 2018
Slide 3: Disclaimer
Disclaimer 3 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-loo
Slide 4: Non-IFRS Information
Non-IFRS Information 4 All non-IFRS information in the presentation is under IAS 18, comparable to prior periods. 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
Slide 5: Agenda
Agenda 1. Business update David Arnott, CEO 2. Financial update Max Chuard, CFO, COO 3. Summary David Arnott, CEO 4. Q&A
Slide 6: Business update
Business update David Arnott, CEO
Slide 7: Review of Q3 2018
Review of Q3 2018 7 Outstanding Q3 across all KPIs Lapping strong comparatives USDm 100 Total software licensing Total software licensing growth of 20% 90 80 Total revenue up 16% 70 +20% 60 EBIT up 20% 50 +20% 40 +6% Recognised as a Leader in the Forrester 30 +96% 20 Wave: Global Digital Ban
Slide 8: Q3 2018 sales review
Q3 2018 sales review 8 Strong contribution across geographies Very strong quarter driven by broad based demand across geographies and tiers Q3 2018 software licensing 17 new customer wins including challenger banks in the US, APAC Asia and Europe 14% Europe 23% Americas Very strong quarter in
Slide 9: US update
US update 9 Very strong quarter in the US driven by signings across multiple suites including fund management Varo Money, the first truly national mobile-only bank, selected Temenos Core Banking to be implemented in the cloud Commerce Bank and State Street implementations progressing well Pi
Slide 10: Q3 2018 services overview
Q3 2018 services overview 10 21 implementation go-lives in Q3 2018 Key implementations continue to progress well Total of 70 implementation go lives in 2018YTD Increase in cloud implementations including incumbents such as Itau and Coventry Building Society, as well as neo-banks including Varo
Slide 11: Looking forward
Looking forward 11 Addressable software spend by banks of USD 48bn globally growing at c.5% p.a. Digital, regulatory and competitive pressures intensifying Temenos has a leadership position, pulling ahead in a winner-takes-all market Significant increase in appetite for cloud adoption and Sa
Slide 12: Financial update
Financial update Max Chuard, CFO, COO
Slide 13: Q3 2018 non-IFRS (IAS 18) financial highlights
Q3 2018 non-IFRS (IAS 18) financial highlights 13 Total software licensing up 20% Y-o-Y (c.c.) Maintenance growth of 12% Y-o-Y (c.c.) Total revenue growth of 16% Y-o-Y (c.c.) EBIT up 20% Y-o-Y (c.c.) , with LTM EBIT margin of 30.8% EPS growth of 18% Y-o-Y, LTM EPS of USD 2.84 Q3 operatin
Slide 14: Non-IFRS (IAS 18) income statement – operating
Non-IFRS (IAS 18) income statement – operating 14 Y-o-Y Y-o-Y IAS 18, in USDm Q3 18 Q3 17 Y-o-Y c.c. LTM 18 LTM 17 Y-o-Y c.c. reported reported Software licensing 74.5 59.9 24% 25% 291.5 228.1 28% 26% SaaS and subscription 20.1 19.7 2% 5% 74.8 61.5 22% 18% Total software licensing 94.6 79.6 19% 20%
Slide 15: Like-for-like revenue and costs
Like-for-like revenue and costs 15 Q3 LFL non-IFRS revenue Q3 LFL non-IFRS costs Maintenance Total software licensing Services USDm USDm 250 160 140 200 120 +14% +13% 150 100 80 +20% 100 60 40 50 +12% 20 0 0 Q3 2017 Q3 2018 Q3 2017 Q3 2018 Total organic revenue growth of 16%
Slide 16: Non-IFRS (IAS 18) income statement – non-operating
Non-IFRS (IAS 18) income statement – non-operating 16 In USDm, except EPS Q3 18 Q3 17 Y-o-Y LTM 18 LTM 17 Y-o-Y EBIT 71.3 60.6 18% 253.0 210.7 20% Net finance charge -4.2 -3.6 17% -14.4 -15.8 -8% FX gain / (loss) -0.6 -0.6 NA -1.0 -1.2 NA Tax -9.0 -7.4 21% -32.2 -24.3 33% Net profit 57.6 49.0 18% 20
Slide 17: IFRS cash conversion
IFRS cash conversion 17 USDm 116% 350 125% 111% 300 250 200 150 100 50 0 LTM Q3 2016 LTM Q3 2017 LTM Q3 2018 EBITDA Operating cashflow Cash conversion significantly above target of 100%
Slide 18: Group liquidity
Group liquidity 18 Cash on Change in Cash on balance debt, balance USDm sheet Operating Share interest and sheet Borrowings Net debt (30/6/18) cash Tax Capex buyback FX (30/9/18) (30/9/18) (30/9/18) 250 (5) 150 (16) 53 16 (44) 50 88 92 -50 -150 169 531 439 -250 -350 -450 Operating cash flow up 31% i
Slide 19: Revised 2018 non-IFRS guidance range (IAS 18, c.c.)
Revised 2018 non-IFRS guidance range (IAS 18, c.c.) 19 FY 2018 guidance Revised guidance Original guidance Total software 15% - 20% 13.5% – 18.5% licensing (%) Implied USDm 366 – 382 363 – 379 Total revenue (%) 12% - 14% 10% – 13% Implied USDm 832 – 847 820 – 840 EBIT (USDm) 262 – 264 255 – 260 Impl
Slide 20: Summary
Summary David Arnott, CEO
Slide 21: Conclusion
Conclusion 21 Outstanding performance across all KPIs Digital, regulatory and competitive pressures on banks continue to intensify, with open banking and payments a key focus Momentum across all geographies, client tiers and segments; IT renovation remains strategic, not discretionary Signif
Slide 22: Appendices
Appendices $ TEMENOS
Slide 23: FX assumptions underlying 2018 guidance
FX assumptions underlying 2018 guidance 23 In preparing the 2018 guidance, the Company has assumed the following FX rates: USD to Euro exchange rate of 0.868 USD to GBP exchange rate of 0.755; and USD to CHF exchange rate of 0.990
Slide 24: FX exposure
FX exposure 24 % of total USD EUR GBP CHF Other Total software licensing 44% 40% 1% 3% 12% Maintenance 68% 22% 5% 5% 0% Services 42% 38% 5% 1% 14% Revenues 53% 33% 3% 3% 8% Non-IFRS costs 23% 20% 14% 8% 35% Non-IFRS EBIT 120% 62% -21% -7% -54% NB. All % are approximations based on 2017 actuals Mitig
Slide 25: Total software licensing revenue breakdown by geography
Total software licensing revenue breakdown by geography 25 Q3 2017 Q3 2018 APAC APAC 13% 14% Europe 23% Europe 30% Americas Americas MEA MEA 26% 31% 33% 31% LTM Q3 2017 LTM Q3 2018 APAC APAC 11% 12% 18% Europe 17% Europe Americas Americas 20% MEA 22% MEA 51% 49%
Slide 26: Total software licensing revenue breakdown by customer tier
Total software licensing revenue breakdown by customer tier 26 Q3 2017 Q3 2018 1 and 2 1 and 2 3, 4 and 5 55% 3, 4 and 5 55% 45% 45% LTM Q3 2017 LTM Q3 2018 1 and 2 1 and 2 3, 4 and 5 3, 4 and 5 52% 46% 54% 48%
Slide 27: Software licensing revenue: competitive deals / add-ons to installed base
27 Software licensing revenue breakdown by competitive deals / add-ons to installed base Q3 2017 Q3 2018 Competitive Competitive 23% deals deals 30% Add-ons to Add-ons to installed base installed base 77% 70% LTM Q3 2017 LTM Q3 2018 Competitive Competitive deals deals 31% Add-ons to Add-ons to insta
Slide 28: DSOs continue to decline
DSOs continue to decline 28 200 186 180 169 160 140 129 124 120 114 100 Q3 2014 Q3 2015 Q3 2016 Q3 2017 Q3 2018
Slide 29: Balance sheet – debt and leverage
Balance sheet – debt and leverage 29 Net debt and leverage ratios* USDm 500 450 1.4x 1.4x 400 350 1.3x 1.2x 300 1.3x 1.2x 1.1x 1.0x 0.9x 250 0.8x 200 0.7x 150 100 50 0 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 * proforma non-IFRS EBITDA
Slide 30: Capitalization of development costs
Capitalization of development costs 30 USDm Q1 16 Q2 16 Q3 16 Q4 16 FY 16 Cap’ dev’ costs -10.8 -11.3 -10.8 -12.7 -45.6 Amortisation 8.8 8.8 8.8 8.8 35.2 Net cap’ dev’ -2.0 -2.5 -2.0 -3.8 -10.3 USDm Q1 17 Q2 17 Q3 17 Q4 17 FY 17 Cap’ dev’ costs -11.2 -11.8 -13.4 -14.1 -50.5 Amortisation 8.8 9.8 10.9
Slide 31: Reconciliation from IFRS to non-IFRS
Reconciliation from IFRS to non-IFRS 31 IFRS (IFRS 15) revenue measure +/- IFRS 15 impact + Deferred revenue write-down = Non-IFRS (IAS 18) revenue measure IFRS (IFRS 15) profit measure +/- IFRS 15 impact +/- Deferred revenue write down +/- Discontinued activities +/- Amortisation of acquired intang
Slide 32: Accounting elements not included in non-IFRS (IAS 18) guidance
Accounting elements not included in non-IFRS (IAS 18) guidance 32 Below are the accounting elements not included in the 2018 non-IFRS (IAS 18) guidance: FY 2018 estimated deferred revenue write down of USD 1m FY 2018 estimated amortisation of acquired intangibles of USD 38m FY 2018 estimated r
Slide 33: Reconciliation – IFRS (IFRS 15) to IFRS (IAS 18)
Reconciliation – IFRS (IFRS 15) to IFRS (IAS 18) 33 3 Months Ending 30 September 2018 2018 IFRS IFRS IFRS 15 adj. In USDm, except EPS (IFRS 15) (IAS 18) Software Licensing 80.5 (6.0) 74.5 SaaS and subscription 7.8 12.2 20.1 Total Software Licensing 88.4 6.2 94.6 Maintenance 78.9 (2.0) 76.8 Services
Slide 34: Reconciliation – IFRS (IAS 18) to non-IFRS (IAS 18)
Reconciliation – IFRS (IAS 18) to non-IFRS (IAS 18) 34 3 Months Ending 30 September Change 2018 2018 2017 2017 IFRS Non-IFRS Non-IFRS IFRS Non-IFRS Non-IFRS IFRS Non-IFRS In USDm, except EPS (IAS 18) adj. (IAS 18) (IAS 18) adj. (IAS 18) Software Licensing 74.5 74.5 59.9 59.9 24% 24% SaaS and subscri
Slide 35: Reconciliation – IFRS (IFRS 15) to non-IFRS (IFRS 15)
Reconciliation – IFRS (IFRS 15) to non-IFRS (IFRS 15) 35 3 Months Ending 30 September 2018 2018 IFRS Non-IFRS Non-IFRS adj. In USDm, except EPS (IFRS 15) (IFRS 15)* Software Licensing 80.5 80.5 SaaS and subscription 7.8 7.8 Total Software Licensing 88.4 88.4 Maintenance 78.9 78.9 Services 40.6 40.6
Slide 36: Reconciliation – Balance sheet IFRS 15 reported to IAS 18
Reconciliation – Balance sheet IFRS 15 reported to IAS 18 36 30 September 2018 IFRS 15 reported IFRS 15 adj. IAS 18 In USDm, except EPS Cash and cash equivalents 91.9 - 91.9 Trade receivables 255.9 8.0 263.9 Other receivables 36.9 (4.9) 32.0 Property, plant and equipment 17.0 - 17.0 Intangible asset
Slide 37: Net earnings reconciliation
Net earnings reconciliation 37 In USDm, except EPS Q3 18 Q3 17 IFRS (IFRS 15) net earnings 46.8 39.6 IFRS 15 adjustment 3.1 - Deferred revenue write down - 0.3 Amortisation of acquired intangibles 9.1 9.6 Restructuring 0.1 0.9 Acquisition related costs - - Taxation -1.6 -1.3 Net earnings for non-IFR
Slide 38: Reconciliation from IFRS (IFRS 15) to non-IFRS (IAS 18) for EBIT and EBITDA
Reconciliation from IFRS (IFRS 15) to non-IFRS (IAS 18) for EBIT and EBITDA 38 USDm Q3 2018 EBIT Q3 2018 EBITDA IFRS (IFRS 15) 59.0 81.9 IFRS 15 adjustment 3.1 3.1 Deferred revenue write-down - - Amortisation of acquired intangibles 9.1 - Restructuring 0.1 0.1 Acquisition-related charges - - Non-IFR
Slide 39: Definitions
Definitions 39 Non-IFRS adjustments Other Impact of IFRS 15 Constant currencies Adjustments made resulting from elimination of impact of IFRS 15 accounting Prior year results adjusted for currency movement Deferred revenue write-down Like-for-like (LFL) Adjustments made resulting from acquisitions A
Slide 40: www.temenos.com
@) TEMENOS The banking software company www.temenos.com ‘in| iy | Fi oe] ic)