Temenos Ag · SIX:TEMN
Temenos — Q1 2010 Earnings Presentation
36 slides from Temenos's earnings presentation, Apr 28, 2010
Slide 1: Financial Results & Business Update
Financial Results & Business Update Quarter ended 31 March 2010 28 April 2010
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 Introduction Ben Robinson Director, Strategic Planning Strategy and Business update Andreas Andreades CEO Financial update David Arnott CFO Update on Viveo Max Chuard Director, M&A and IR Outlook and Summary Andreas Andreades CEO Q&A Slide 3
Slide 4: Agenda
Agenda Introduction Ben Robinson Director, Strategic Planning Strategy and Business update Andreas Andreades CEO Financial update David Arnott CFO Update on Viveo Max Chuard Director, M&A and IR Outlook and Summary Andreas Andreades CEO Q&A Slide 4
Slide 5: Business update
Business update Highlights: • Return to l-f-l revenue growth → Like-for-like revenues up 3% in the quarter → First quarter in six to show like-for-like growth • Larger deals sizes help to grow licences against tough comparative → 4 new tier 1 customers added in the quarter → 10 new customers (vs. 14
Slide 6: Business update
Business update Highlights: • Pipeline growing strongly → All regions, retail and corporate in particular → Supports double-digit like-for-like licence growth outlook • Good traction with new AML and STP products → Significant deals with Barclays and ANZ • Viveo Integration proceeding well → First V
Slide 7: Update on Q1 2010 Sales
Update on Q1 2010 Sales Seeing bigger banks come to market for core replacement T24 sales More tier 1 deals result in higher deal sizes... • 8 new T24 customers added in the quarter vs. 11 in prior year • 2 new tier 1 T24 customers • 2 large pure-play lending wins • IBS league table results confirm
Slide 8: Update on Q1 2010 Sales
Update on Q1 2010 Sales Insight continues to outperform ARC & Insight In Q1, we signed 9 Insight licences (36 for the LTM)... • Adding functionality for risk and private wealth management • Several sites now live and acting as references • Launched direct marketing campaign, which should see take-up
Slide 9: Update on Q1 2010 Sales
Update on Q1 2010 Sales Gaining traction with new products AML & STP 3 AML sales in the quarter • Includes sale to existing tier 1 customer ...and 3 STP sales • All tier 1 deals (2 new customers) • None uses T24 Slide 9
Slide 10: Update on partners
Update on partners Partners Microsoft → Adoption of MS Platform continues to accelerate following formal partnership → Danske notable new taker in the quarter Cognizant → Number of trained resources increases to 255 in the quarter (all fully utilised on existing projects and client engagements) → Co
Slide 11: Agenda
Agenda Introduction Ben Robinson Director, Strategic Planning Strategy and Business update Andreas Andreades CEO Financial update David Arnott CFO Update on Viveo Max Chuard Director, M&A and IR Outlook and Summary Andreas Andreades CEO Q&A Slide 11
Slide 12: Income statement highlights – Q1 2010
Income statement highlights – Q1 2010 Q1 2010 Q1 2009 y-o-y (USDm) (USDm) Licence revenues 27.2 27.8 (2%) Total revenues 93.9 81.2 16% Adj. EBIT 12.4 10.7 16% Adjusted EPS* 0.17 0.13 31% * in USD; see appendix for reconciliation Slide 12
Slide 13: Financial statement highlights
Financial statement highlights in USDm Q1 10 Q1 09 LTM 10 LTM 09 Licences 27.2 27.8 (2%) 125.4 146.8 (15%) Maintenance 35.1 27.8 26% 124.4 105.3 18% Services 31.6 25.6 24% 133.3 147.7 (10%) Total revenue 93.9 81.2 16% 383.1 399.8 (4%) Total operating costs (92.1) (72.5) 27% (309.8) (333.6) (7%) Adj.
Slide 14: Q1 like-for-like revenues
Q1 like-for-like revenues ► Adjusting for FX, acquisitions and Metavante 120 Total revenue +3% 100 USDm Acquisitions 80 Fx Services +1% Services 60 40 Maintenance Maintenance +6% 20 License License +1% 0 Q1 2009 Q1 2010 • Q1 09 is the last comparative quarter with Metavante Organic licence growth –
Slide 15: Like-for-like cost growth
Like-for-like cost growth 100 92.1 90 85.1 77.9 80 72.5 74.4 70 60 50 40 30 20 10 0 Q4 09 Q109 Q1 2010 Q1 2010 Pre- Q1 2010 like-f or- restructuring like • Like-for-like costs in Q110 down on Q409 because of higher variable costs in Q4 • Like-for-like costs in Q110 up year-on-year as we begin to mak
Slide 16: Income statement
Income statement Q1 2010 Q1 2009 y-o-y LTM 10 LTM 09 y-o-y (USDm) (USDm) (USDm) (USDm) EBIT 1.8 8.7 (79%) 73.4 66.1 11% Net finance charge (2.2) (1.4) (57%) (8.5) (6.4) (33%) FX (loss)/gain 0.7 (2.4) (71%) (0.6) 1.5 n/a Tax (0.1) 0.0 n/a (0.5) 1.8 n/a Net earnings 0.2 5.0 (96%) 63.8 63.1 1% Adjusted
Slide 17: Update on cash
Update on cash Continued strong cash generation • Adj. EBITDA into adj. operating cash conversion of 133% in Q1 • LTM 2010 conversion at 119% EBITDA into operating cash conversion 160 +119% +124% 140 140 120 120 +60% 100 +59% 100 80 80 USDm 60 60 40 +133% 40 +185% +48% +48% 20 20 0 0 Q1 2009 Q1 2010
Slide 18: Balance sheet – debt and financing
Balance sheet – debt and financing Q1 2010 Comments (USDm) 1.5% coupon, matures 2013 (converts at Convertible bond 131.7 CHF18.6) 131.3 Consortium of 7 banks, repayment up to Credit facilities end of 2012 Other 1.2 Obligations under finance leases TOTAL DEBT 264.2 CASH 155.1 Held in short-term depos
Slide 19: Agenda
Agenda Introduction Ben Robinson Director, Strategic Planning Strategy and Business update Andreas Andreades CEO Financial update David Arnott CFO Update on Viveo Max Chuard Director, M&A and IR Outlook and Summary Andreas Andreades CEO Q&A Slide 19
Slide 20: Viveo update
Viveo update Viveo Integration Progressing well: • First migration of Viveo client to T24 with a real combined effort → Led by Viveo Sales organisation → Pre-sales done by a joint Viveo/TEMENOS team • All Customer Event took place on March 31st → 168 customers from 98 banks were present in Paris → P
Slide 21: Viveo update
Viveo update Commodity business disposal: • On the 15th March, we sold the commodity business of Viveo to Brady Plc for USD 3.5m in cash • Rationale was to dispose of non-core assets and focus management efforts • The transaction is marginally accretive to earnings in 2010 Slide 21
Slide 22: Agenda
Agenda Introduction Ben Robinson Director, Strategic Planning Strategy and Business update Andreas Andreades CEO Financial update David Arnott CFO Update on Viveo Max Chuard Director, M&A and IR Outlook and Summary Andreas Andreades CEO Q&A Slide 22
Slide 23: Summary
Summary Bigger banks are starting to make strategic IT investment IT pivotal part of business plans to address: • Stricter and more fragmented regulation • Shoring up deposit base (in absence of government liquidity) • Profitable growth (especially in emerging markets) • Improving customer experienc
Slide 24: Summary
Summary We are seeing good momentum across all regions, bigger deals • Organic revenue trajectory improving • Increase in number of multi-site corporate and retail banks in pipeline • All regions showing higher pipelines, especially APAC, Europe and N. America ex-US • Better visibility plus larger p
Slide 25: 2010 Outlook
2010 Outlook Revised outlook • Revenue range of USD440-450m (giving like-for-like growth of 6% at the midpoint) • Licence revenue of approximately USD150m (representing like-for-like growth of 12% vs. 6% previously, see appendix) • Adjusted EBIT* range of USD110-115m (giving margin at midpoint of 25
Slide 26: 2010 Outlook
2010 Outlook Reconciliation to revised outlook USDm Previous FX Disposals Upgrade*** Revised outlook** outlook Revenue 437-463 (7.3)**** (4.3) 6.6 440-450 Adjusted 109-116 0 0.2 110-115 EBIT* *Adds back restructuring and amortisation of acquired intangibles. Amortisation of acquired intangibles expe
Slide 27: Closing comments
Closing comments • Operating profit growth trend firmly restored • Resumption of revenue growth in quarter • The business is poised to take advantage of better conditions LTM revenues and adj. operating profit since Q3 2005 (USDm) 450 100 400 90 350 80 70 300 60 250 50 200 40 150 30 100 20 50 10 0 0
Slide 28: Agenda
Agenda Introduction Ben Robinson Director, Strategic Planning Strategy and Business update Andreas Andreades CEO Financial update David Arnott CFO Update on Viveo Max Chuard Director, M&A and IR Outlook and Summary Andreas Andreades CEO Q&A Slide 28
Slide 29: Appendices
Appendices a =mMOnae 9 -MENOS The Banking Software Company
Slide 30: Adjusted EPS reconciliation
Adjusted EPS reconciliation Q1 2010 Q1 2009 (USDm) (USDm) Earnings 0.3 5.1 Amortisation of acquired intangible assets 3.6 2.3 Bond interest 1.5 1.3 Restructuring 7.1 0.0 Total adjusted earnings 12.5 8.6 Number of diluted shares 72.7 66.2 Adjusted EPS 0.17 0.13 Slide 30
Slide 31: Geographical breakdown of licence revenue
Geographical breakdown of licence revenue LTM 2010 LTM 2009 Americas 7% MEA MEA Americas 34% APAC 31% 13% 25% APAC 17% Europe Europe 34% 40% Excludes any contribution from Metavante Slide 31
Slide 32: DSOs trend
DSOs trend DSOs – last 9 quarters 176 171 171 Days 168 168 167 165 164 156 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Slide 32
Slide 33: Reconciliation to 12% licence growth
Reconciliation to 12% licence growth USDm 2009 2010 % change Reported/ outlook 125.9 150.0 19% licences MV contribution (2.4) Viveo contribution* (14.3) FX** (2.2) Like-for-like licences 121.3 135.7 12% *This is stated net of USD1.7m of non-core revenue disposed in the year **This restates the 2009
Slide 34: Reconciliation of FX effect on outlook
Reconciliation of FX effect on outlook Currency Budget Spot change Effect on weighting rates rates 2010 revenues (USDm) EUR/USD 25% 1.414 1.33 (6%) 6.5 GBP/USD 5% 1.602 1.540 (4%) 0.9 CHF/USD 1% 0.92 0.93 1% (0.1) 7.3 Slide 34
Slide 35: Leading the IBS League Table
Leading the IBS League Table First place in the 2009 IBS Sales League Table Corebanking Positions Position Product Company Deals 1 T24 TEMENOS 40 2 Flexcube Oracle FSS 33 3 TCS Bancs TCS Financial 17 Solutions • Top two positions in the IBS Sales League Table for 11 out of the last 12 years Slide 35
Slide 36: Thank You
Thank You ‘7 sm: FM fe) FA ed Bl F EMENOS The Banking Software Company