Slide 1: The software specialist for banking and finance
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Slide 2: Financial results & business update
Financial results & business update Quarter ended 31 March 2016 19 April 2016
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 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. Al
Slide 5: Agenda
Agenda 1. Business update David Arnott 2. Financial update Max Chuard 3. Summary David Arnott 4. Q&A
Slide 6: Business update
Business update David Arnott
Slide 7: Summary: Strong start to 2016
Summary 7 Strong start to 2016 across all KPIs Total software licensing up 53% for the quarter Digitisation and cost focus continue to drive bank decision making Continued progress on larger deals, key milestones achieved Committed spend from progressive renovation and Q1 activity driving
Slide 8: Q1 2016 sales update
Q1 2016 sales update 8 Strong growth in Q1 2016 in all regions, continued investment in sales Wide spread activity across Europe continues, driven by banks’ focus on costs and the digitisation trend Asia had a strong quarter, particularly in Wealth Increased activity across Latam and North A
Slide 9: Q1 2016 operational overview
Q1 2016 operational overview 9 Partner ecosystem expanding Continued focus on joint go-to-market activities with strategic partners Partner involvement in nearly all implementations Improving services profitability 140 bps improvement in non-IFRS services margin Y-o-Y Premium services contri
Slide 10: Competitive positioning
Competitive positioning 10 High level of activity confirms superiority of Temenos product offering Tier 1 offering significantly ahead of competition as evidenced by Nordea 3rd party validation through Forrester and IBS Intelligence Further validation from EFG acquisition of BSI, announced i
Slide 11: Market leader again in 2016
Market leader again in 2016 11 Global power sellers Temenos EdgeVerve, Misys, Global challengers Oracle, SAP, TCS 1st position again – Intellect Design Global pursuers 16th time in 17 years Regional pursuers Asseco, Capital Banking, Diasoft, D+H, Nucleus Software, Path Solutions, Profile, Sopra Bank
Slide 12: Temenos' platform for growth in the US
Temenos’ platform for growth in the US 12 • Differentiated product value proposition – real time, upgradable, modular architecture • Critical mass and strong management team in place, additional senior hires made in Q1 2016 • Continue to build sales organisation to position for market opportunity •
Slide 13: Financial update
Financial update Max Chuard
Slide 14: Q1 2016 non-IFRS financial highlights (c.c.)
Q1 2016 non-IFRS financial highlights (c.c.) 14 Total software licensing up 52.5% Y-o-Y of which software licensing up 35.9% Y-o-Y SaaS and subscription contributed 31% of total software licensing in Q1 2016 vs. 22% in Q1 2015 Maintenance growth of 9.8% Y-o-Y Total revenue growth of 25.5%
Slide 15: Non-IFRS income statement – operating
Non-IFRS income statement – operating 15 Y-o-Y Y-o-Y In USDm Q1 16 Q1 15 Y-o-Y c.c. LTM 16 LTM 15 Y-o-Y c.c. reported reported Software licensing 26.9 20.0 34.2% 35.9% 180.2 129.9 38.7% 44.4% SaaS and subscription 12.3 5.8 110.5% 108.4% 47.1 12.1 290.6% 292.1% Total software licensing 39.2 25.9 51.4
Slide 16: Like-for-like revenue and costs
Like-for-like revenue and costs 16 Q1 LFL non-IFRS revenues up 14% Q1 LFL non-IFRS costs up 14% Maintenance Total software licensing Services USDm USDm 140 120 120 100 +14% +24% 100 80 80 +18% 60 60 40 40 +8% 20 20 0 0 Q1 2015 Q1 2016 Q1 2015 Q1 2016 Strong organic growth
Slide 17: Non-IFRS income statement – non-operating
Non-IFRS income statement – non-operating 17 In USDm, except EPS Q1 16 Q1 15 Y-o-Y LTM 16 LTM 15 Y-o-Y EBIT 22.2 16.4 35% 162.8 124.4 31% Net finance charge -4.6 -4.0 -13% -18.0 -12.7 -42% FX gain / (loss) -0.7 0.8 N.A. -2.7 0.6 N.A. Tax -2.2 -1.1 -100% -17.9 -14.5 -24% Net profit 14.7 12.1 21% 124.
Slide 18: IFRS cash conversion
IFRS cash conversion 18 USDm 115% 131% 250 200 150 100 50 0 LTM Q1 2015 LTM Q1 2016 EBITDA Operating cashflow Cash conversion remains well above target of 100%
Slide 19: Stable group liquidity
Stable group liquidity 19 Cash on Change in Cash on balance sheet Operating debt and balance sheet Borrowings Net debt Net debt USDm (31/12/15) cash Tax Capex M&A related interest (31/3/16) (31/3/16)* (31/3/16) (31/12/15) 300 3 13 2 200 24 7 86 100 193 114 0 -100 394 280 267 -200 -300 Operating cash
Slide 20: Balance sheet strength
Balance sheet strength 20 31/3/15 31/3/16 Weighted average interest rate 3.8% 3.6% Weighted average maturity 2 years 5 years Total available financing USD 670m USD 875m Leverage ratio 2.2x 1.3x Low cost debt structure with significant flexibility
Slide 21: 2016 guidance
2016 guidance 21 Non-IFRS total software licensing growth at constant currencies of 10% to 15% (implying non-IFRS total software licensing revenue of USD 234m to USD 245m) Non-IFRS revenue growth at constant currencies of 7.5% to 11.0% (implying non-IFRS revenue of USD 594m to USD 614m) Non-IF
Slide 22: Summary
David Arnott eS} TEMENOS
Slide 23: Summary: Strong momentum in 2016
Summary 23 Q1 demonstrates a strong start to 2016 We continue to capitalise on the market recovery and to take market share Large banks are focused on digitisation and costs Spend on IT renovation is not discretionary Tier 1 and 2 banks continue to engage with us on progressive renovation
Slide 24: TCF 2016 – Barcelona: 17 to 19 May
TCF 2016 – Barcelona: 17 to 19 May 24 Theme for 2016 is ‘Open and Integrated: Solutions for a Connected World’ Dedicated analyst and investor stream See our software in action and learn about our product roadmap Insights from Temenos executives and industry thought leaders Interaction and
Slide 25: Appendices
Appendices TEMENOS
Slide 26: FX assumptions underlying 2016 guidance
FX assumptions underlying 2016 guidance 26 In preparing the 2016 guidance, the Company has assumed the following: USD to Euro exchange rate of 0.901 USD to GBP exchange rate of 0.691; and USD to CHF exchange rate of 0.992
Slide 27: FX exposure
FX exposure 27 % of total USD EUR GBP CHF Other Total software licensing 36% 45% 8% 8% 3% Maintenance 65% 20% 6% 6% 3% Services 45% 29% 10% 10% 6% Revenues 49% 31% 8% 8% 4% Non-IFRS costs 20% 20% 20% 10% 30% Non-IFRS EBIT 127% 60% -24% 1% -64% NB. All % are approximations based on 2015 actuals Mitig
Slide 28: Total software licensing revenue breakdown by geography
Total software licensing revenue breakdown by geography 28 Q1 2015 Q1 2016 APAC APAC 17% 13% 13% Europe 22% Europe Americas Americas MEA 20% MEA 24% 46% 45% LTM Q1 2015 LTM Q1 2016 APAC APAC 17% 12% 16% 21% Europe Europe Americas Americas 17% MEA MEA 23% 39% 55%
Slide 29: Total software licensing revenue breakdown by customer tier
Total software licensing revenue breakdown by customer tier 29 Q1 2015 Q1 2016 1 and 2 1 and 2 3, 4 and 5 60% 40% 3, 4 and 5 57% 43% LTM Q1 2015 LTM Q1 2016 1 and 2 1 and 2 31% 3, 4 and 5 3, 4 and 5 69% 46% 54%
Slide 30: Software licensing revenue: competitive deals vs add-ons
30 Software licensing revenue breakdown by competitive deals / add-ons to installed base Q1 2015 Q1 2016 Competitive Competitive deals deals 30% Add-ons to Add-ons to 61% 39% installed base installed base 70% LTM Q1 2015 LTM Q1 2016 Competitive Competitive deals deals 36% Add-ons to Add-ons to insta
Slide 31: DSOs continue to decline
DSOs continue to decline 31 230 211 210 198 198 195 186 183 181 190 176 169 170 154 151 150 130 30 Sept 13 31 Dec 13 31 Mar 14 30 Jun 14 30 Sep 14 31 Dec 14 31 Mar 15 30 Jun 15 30 Sep 15 31 Dec 15 31 Mar 16
Slide 32: Balance sheet – debt and leverage
Balance sheet – debt and leverage 32 Net debt and leverage ratios* USDm 500 2.4x 450 2.3x 2.1x 400 350 300 1.3x 1.3x 250 200 150 100 50 0 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 * proforma non-IFRS EBITDA Sustainable low leverage
Slide 33: Capitalisation of development costs
Capitalisation of development costs 33 USDm Q1 14 Q2 14 Q3 14 Q4 14 FY 14 Cap’ dev’ costs -9.7 -9.8 -9.7 -13.9 -43.1 Amortisation 8.3 8.3 8.3 8.5 33.4 Net cap’ dev’ -1.3 -1.5 -1.4 -5.5 -9.8 USDm Q1 15 Q2 15 Q3 15 Q4 15 FY 15 Cap’ dev’ costs -10.3 -11.2 -10.8 -13.0 -45.3 Amortisation 8.8 8.8 8.7 8.7
Slide 34: Reconciliation from IFRS to non-IFRS
Reconciliation from IFRS to non-IFRS 34 IFRS revenue measure + Deferred revenue write-down = Non-IFRS revenue measure IFRS profit measure +/- Deferred revenue writedown +/- Discontinued activities +/- Acquisition related charges +/- Amortisation of acquired intangibles +/- Restructuring +/- Taxation
Slide 35: Accounting elements not included in non-IFRS guidance
Accounting elements not included in non-IFRS guidance 35 Below are the accounting elements not included in the 2016 non-IFRS guidance: FY 2016 estimated amortisation of acquired intangibles of USD 35m FY 2016 estimated restructuring costs of USD 4m Restructuring costs include completion of Multi
Slide 36: Reconciliation from IFRS to non-IFRS
Reconciliation from IFRS to non-IFRS 36 3 Months Ending 31 March Change 2016 2016 2015 2015 In USDm, except EPS IFRS Adj. Non-IFRS IFRS Adj. Non-IFRS IFRS Non-IFRS Total Software Licensing 38.9 0.3 39.2 23.9 2.0 25.9 63% 51% Maintenance 60.5 60.5 55.5 0.2 55.6 9% 9% Services 29.6 29.6 22.7 0.1 22.7
Slide 37: Net earnings reconciliation
Net earnings reconciliation 37 In USDm, except EPS Q1 16 Q4 15 Q1 15 IFRS net earnings 6.1 38.3 0.7 Deferred revenue write-down 0.3 5.0 2.3 Amortisation of acquired intangibles 7.9 8.9 3.7 Restructuring 1.6 1.1 6.5 Acquisition related costs - - - Taxation -1.2 -1.5 -1.0 Net earnings for non-IFRS EPS
Slide 38: Reconciliation from IFRS to non-IFRS for EBIT and EBITDA
Reconciliation from IFRS to non-IFRS for EBIT and EBITDA 38 USDm Q1 2016 EBIT Q1 2016 EBITDA IFRS 12.4 31.7 Deferred revenue write-down 0.3 0.3 Amortisation of acquired intangibles 7.9 - Restructuring 1.6 1.6 Acquisition-related charges - - Non-IFRS 22.2 33.6
Slide 39: Definitions
Definitions 39 Non-IFRS adjustments Other Deferred revenue write-down Constant currencies Adjustments made resulting from acquisitions Prior year results adjusted for currency movement Discontinued activities Like-for-like (LFL) Discontinued operations at Temenos that do not qualify as such under Ad
Slide 40: Thank you
Thank you TEMENOS The software specialist for banking and finance www.temenos.com ‘in| iy | Fi Oo ic)