Temenos Ag · SIX:TEMN
Temenos — Investor Day (February 2018)
115 slides from Temenos's investor day presentation, Feb 14, 2018
Slide 1: Temenos – The banking software company
® TEMENOS The banking software company
Slide 2: Capital Markets Day, 14 February 2018
Capital Markets Day 14 February 2018
Slide 3: Agenda
Agenda 10.00 – 10.45 Strategy and vision David Arnott, CEO 10.45 – 11.30 Building Enterprise Architecture around Temenos Willem Hueting, Senior General Manager International Markets, KBC 11.30 – 11.45 Coffee 11.45 – 12.30 Product leadership Mark Winterburn, Group Product Director 12.30 – 13.00 Creat
Slide 4: Strategy and Vision
Strategy and Vision David Arnott, CEO 14 February 2018
Slide 5: Key messages
Key messages 5 2017 was another outstanding year Market growth underpinned by structural drivers We are best placed to capitalize on the opportunity Strategy to deliver sustained growth
Slide 6: A look back at 2017
A look back at 2017 6 $737m $224m Total revenue #1 EBIT Digital Banking 114% $150m+ Cash Conversion R&D Spend Our 25th year was another landmark for Temenos Source: IBS sales league table for digital banking & channel systems 2017
Slide 7: We have delivered ahead of our strategic plan
We have delivered ahead of our strategic plan 7 Extending our lead in core Licence growth in each area materially above market growth banking, fund administration Won all landmark deals in 2017* and private wealth Penetrating the U.S. market New strategic accounts signed; strong pipeline development
Slide 8: The provider of choice – across all tiers and segments
Won all major deals in the market in 2017* 8 Retail & Microfinance Universal & Islamic PWM & Corporate Asset and Central Mgmt. Banking The provider of choice – across all tiers and segments *based on RFPs Temenos was invited to participate in during 2017. This slide contains logos of new named clien
Slide 9: Delivering unparalleled customer success
Taking a new customer live every 3.5 days 9 Delivering unparalleled customer success
Slide 10: Structural drivers
Structural drivers 10 Reliability & Start-ups Trust Responsiveness Neobanks Convenience – anytime anywhere Technology giants Relevance – personalized offerings Retailers, telcos Demanding Customers Rise of New Competitors IFRS, SOX, Debt crisis Dodd Frank BANKS Basel II, III and IV Market volatility
Slide 11: Open banking is inevitable
Open banking is inevitable 11
Slide 12: Do nothing not an option – banks need to build digital ecosystems
Banks must digitize 12 Bank RoE – historical and projected 5.9% 6.3% 15.0% 4.1% 14.0% 2.5% 7.7% 5.2% 5.2% 1980-2007 Financial crisis Digital 2025e Boost from Ecosystem 2025 average disruption do nothing digitization Platform Successful Banking Ecosystem Source: BCG, McKinsey Strategy Do nothing not
Slide 13: Temenos Digital Banking Suites
Temenos Digital Banking Suites 13 Offering the best customer experience with highest level of fulfilment
Slide 14: 10 attributes of digital banking
10 attributes of digital banking 14 Automated where Customer Fast time Cost efficient, low possible, human centric Personalised to market operational risk where needed Digital platform Anytime, Open Cloud Embedded Product anywhere, enabled analytics Factory any device We are the only vendor to offer
Slide 15: The vendor of choice of largest transformation projects
The vendor of choice of largest transformation projects 15 Rich model banks for 30+ countries First go-live already achieved Project in line with plan, progressing well First go-live already achieved Driving domestic and global expansion Retail and corporate transformation Tier 1 credentials create
Slide 16: The most profitable banks run Temenos
The benefits of running Temenos software 16 Banks running Temenos software Banks running Temenos software enjoy a higher return on equity free up more budget for innovation 14.0% Rest of banks Return 14.3% of revenue on equity 12.0% 36% 19% 10.0% Temenos clients 5.7%of revenue 8.0% Maintenance 6.0%
Slide 17: Looking forward
Looking forward
Slide 18: Our market opportunity continues to grow
Our market opportunity continues to grow 18 Spend on banking software: total vs. third party CAGR 50.0 USD 48bn Core banking 6% 45.0 Front Office 8% 40.0 Channels 10% Payments 10% 35.0 Fund Admin 9% 30.0 USD bn Compliance 9% 25.0 20.0 15.0 USD 14bn * USD 10.3bn * 10.0 5.0 0.0 Total Addressable Spend
Slide 19: New Strategic Initiatives
New Strategic Initiatives 19 M&A S&M 1 2 3 Enhance Product Market Services Cloud award development development winning to open up to capture Suites new markets faster growth Education A layered set of initiatives to deliver sustained growth
Slide 20: Enhancing our Suites to empower banks to become platforms
Enhance award winning Suites 20 APIs to allow our customers to capitalize on open banking – a catalogue of APIs plus an API designer MarketPlace to provide an ecosystem of third-party complementary solutions and banking services – an exponential growth opportunity Analytics to bind together the fron
Slide 21: We're opening up new markets worth USD1.6bn
Product development to open up new markets 21 Origination Fraud & compliance New omnichannel, Packaged updates for tier 1 ready solution major new regulations reinforces front to back and suite of solutions to value proposition and address financial crime opens up addressable opens up a USD700m mark
Slide 22: Market development to capture faster growth
Market development to capture faster growth 22 Provider of choice for tier 1 & 2 banks, but significant opportunity to expand footprint (still only 30%) and increase wallet share with existing accounts (4%) Following Rubik acquisition, we have the platform (team and solutions) to build greater marke
Slide 23: Investing in Sales and Marketing
Investing in Sales and Marketing 23 Chief Sales Revenue Academy Officer 20% Sales Value headcount engineering increase Continued investment in Sales and Marketing to capture the market
Slide 24: Education – Temenos Learning Community
Education – Temenos Learning Community (TLC) 24 TLC - ONLINE Temenos Online Familiarisation Learning Community Training Exam Sandbox Pathways Forum Content access Annual Subscription Platform TLC - ENGINE Configurable Able to Train Pre loaded E-simulation, digital include Temenos & tutorial learning
Slide 25: Services – Client Assembly
Services 25 Client 20k Projects Differentiated Assembly Certified governed by delivery Cloud Factory Resources Experts model Scaling services even faster with even better customer success
Slide 26: Cloud
Cloud 26 Test on Cloud Implement on Cloud Run on Cloud Partner Resources Leverage cloud for faster, more cost-effective implementation & deployment
Slide 27: M&A
M&A 27 c. USD 1bn Total available financing Accelerated growth in key Increased scale Complementary products markets and segments We maintain our M&A discipline to overlay on top of organic growth
Slide 28: Key messages
Key messages 28 2017 was another outstanding year Market growth underpinned by structural drivers We are best placed to capitalize on the opportunity Strategy to deliver sustained growth
Slide 29: Temenos – The banking software company
® TEMENOS The banking software company
Slide 30: BE@T: Building Enterprise Architecture around Temenos
BE@T Building Enterprise Architecture around Temenos Temenos Capital Markets Day London, 14 February 2018 30
Slide 31: Agenda
Agenda 1. KBC Business Profile 2. KBC Group Strategy 3. Group-wide digital transformation 4. Temenos in BU IM 31
Slide 32: 1. KBC's Business Profile
TEMENOS 1. KBC's Business Profile
Slide 33: KBC: Overview key financial data at 9M17
KBC : Overview key financial data at 9M17 KBC Group Market cap1 Net result Total assets Total equity CET1 ratio2 29 2 176 297 18 15.9 bn EUR m EUR bn EUR bn EUR % KBC Bank KBC Insurance Net result3: 1 850m EUR Net result 3: 360m EUR Total assets: 261bn EUR Total assets: 39bn EUR Total equity: 16bn E
Slide 34: KBC: well defined core markets
KBC : 6 well defined core markets: • 3.5 million clients • 93b EUR in Loans • 0.6 million • 130b EUR clients • 3.5 million Deposits • 6b EUR in clients Loans • 22b EUR in • 6b EUR Loans Deposits • 29b EUR Deposits Roadshow Brussels • 1.5 million clients • 3b EUR in Loans • 4b EUR Deposits • 0.3 mill
Slide 35: 2. KBC Group Strategy
TEMENOS 2. KBC Group Strategy
Slide 36: Changing client behaviour and expectations
The environment is continuously changing Changing client behaviour and expectations Digitalisation is Financial industry unavoidable and regulation Macroeconomic Technology as environment catalyst Increasing competition 36
Slide 37: More of the same, but differently
Our business model has proven to be very successful …. MORE OF THE SAME, BUT DIFFERENTLY 37
Slide 38: So we are keeping our core strategy unchanged
So we are keeping our core strategy unchanged KBC aspires to be the reference Our Group strategy principles power our transformation Digitalize the front Client centricity and back end Simplicity Co-creation Invest wisely: Empowerment. Min costs/max speed Local teams lead 38
Slide 39: More of the same but differently…
More of the same but differently… • Integrated distribution model • Client-centricity will be further fine-tuned • Investment in our digital presence (e.g., according to a real-time omni- into ‘think client, but design for a digital social media) to enhance client channel approach remains key world’
Slide 40: 3. Group-wide digital transformation
3. Group-wide digital transformation 40
Slide 41: Investing in transformation … but differently
Investing in transformation … but differently ... Cashflow 2017-2020 = 1.5bn EUR Operating Expenses 2017-2020 = 1bn EUR Regulatory driven Organic growth developments or operational 48 55 (IFRS 9, CRS(*), Regulatory efficiencies 43 44 20% Strategic MIFID, etc...) 83 90 Grow 94 78 36% Strategic Transf
Slide 42: What will we deliver?
What will we deliver? Further optimise our integrated distribution model according to a real-time omni-channel approach Prepare our applications to engage with Fintechs and other value chain players Invest in our digital presence (e.g., social media) to enhance client relationships and anticipate th
Slide 43: 4. Temenos in BU IM
TEMENOS 4. Temenos in BU IM 43
Slide 44: Why?
Four KBC entities plan to migrate to T24, together, to achieve specific business goals & transform their businesses (and ICT architecture) Increase commercial agility: - Improve local responsiveness, provide faster TTM, and facilitate easier SmartCopy between entities and adoption of 4 country-led l
Slide 45: BE@T
Dedicated programs led by country managers. Local lead - business lead. Supported, overseen, and coordinated by the center of competence Wim Verbraeken BE@T Center of Daniel Kollar Competence David Moucheron Peter Andronov 45
Slide 46: Local entities & competence center closely cooperate
Local entities & competence center closely cooperate to stay aligned Local country teams • Typically larger teams • Work on target architecture and Temenos implementation • Experts with relevant experience in one country can go to other countries as needed & agreed The BE@T competence center • Small
Slide 47: A clear playing field and regular program reporting
…with a clear playing field and regular program reporting Performance Diamond Principles Progress Reporting Elements 1. Operating rhythm 1. Time & budget 2. Financials 2. Complexity reduction 3. Operating model 3. Level of together 4. Governance 4. Governance 47
Slide 48: Scope: interim and strategic target architectures
Scope Interim Architectures Strategic Target Architecture in 4 (pragmatic) architectural dimensions in 4 (pragmatic) architectural dimensions Cooperation / Services Infrastructure / Technology Processes Solution Architecture HU SK IE BG 48
Slide 49: What do we mean with shared technology and architecture?
What do we mean with shared technology and architecture? Triangle = shared ICT Outside the triangle = architecture scope country specific choices 1. We start from the KBC Group strategy Ambition to SmartCopy 2. We will align our Target ICT in the upper Architecture and Infrastructure layers where po
Slide 50: There is a clear commitment to agreed principles
There is a clear commitment to agreed principles All countries to migrate to the agreed target architecture (the “triangle”) One centrally managed infrastructure (CE-DC) All T24 modules to be upgraded at least every 3 years “Stay together” (enabling sharing) “Stay current” (latest developm
Slide 51: KBC and Temenos launched a strategic partnership
KBC and Temenos launched a strategic partnership, and will commit significant resources and attention to make it a success 51
Slide 52: Making the project a success for all parties involved
Governance of Tier 1 Engagements Alignment to updated Agile Temenos Temenos responses to Temenos participation in Formal reviews Implementation regulatory and technology Architecture Governance of project plans Methodology change processes and solution designs Solution and execution quality Temenos
Slide 53: A strong partnership based on clear roles and principles
We established a strong partnership with Temenos, based on clear roles & principles GExCo IM Design Board (=MC IM) Expert Advisory Board SteerCo / Country Team SteerCo / Country Team Enterprise Architects Design Board Design Board Vendor Management Temenos Solution Program Teams Architect & Experts
Slide 54: Building a sustainable future!
Building a sustainable future! Speed Omnichannel 24/7 Access presence Digital Digital product Anticipation product offering of needs offering Personalized approach 54
Slide 55: Temenos – The banking software company
® TEMENOS The banking software company
Slide 56: Product Leadership
Product Leadership Mark Winterburn, Group Product Director Kanika Hope, Strategic Business Development Director Prema Varadhan, Chief Architect, Product 14 February 2018
Slide 57: Introduction
Introduction
Slide 58: The highest R&D in the industry
The highest R&D in the industry 58 Cumulative R&D $1.58b investment 1990-2016** 25 20 Temenos average spend of sales on R&D Temenos % of revenues 15 Normalized cash R&D – adjusted for difference between capitalization and amortization and any one-off restructuring charges 10 Our peers 5 Peer group a
Slide 59: Temenos approach to product development
Temenos approach to product development 59 Unified Temenos Platform Continuous planning UTP is the Temenos approach to providing a platform for Continuous Delivery of the Temenos Suites, where customer feedback is at the heart of Collaborative Progressive product our development. renovation developm
Slide 60: Unparalleled value proposition
Unparalleled value proposition 60 Automated where Customer Fast time Cost efficient, low possible, human centric Personalised to market operational risk where needed Digital platform Anytime, Open Cloud Embedded Product anywhere, enabled analytics Factory any device We are the only vendor to offer t
Slide 61: Shifting banks from maintenance to innovation
The benefits of running Temenos software 61 Banks running Temenos software free up more budget for innovation Rest of banks 14.3% of revenue Temenos has the highest Temenos clients score in product strategy 5.7%of revenue Maintenance and excels in fostering product innovation 53.7% 21.1% Innovation
Slide 62: Open Banking: Arising from the Disintermediation of the Banking Value Chain
Open Banking: Arising from the Disintermediation of the Banking Value Chain 62 Divergence of Manufacturing and Distribution
Slide 63: Client survey: How do you view open banking?
Supported by our client survey Jan 2018 63 How do you view open banking?
Slide 64: Client survey: top IT investment priorities
Supported by our client survey Jan 2018 64 What are your top IT investment priorities?
Slide 65: Temenos Perspectives on Open Banking
Temenos Perspectives on Open Banking
Slide 66: The Banking Value Chain is Transforming
The Banking Value Chain is Transforming 66 Sales & Marketing Servicing Product Operations Management
Slide 67: Open Banking – APIs as the de-facto standard for collaboration
Open Banking – APIs as the de-facto standard for collaboration 67 From: To: Individuals Customers Customers Own 3rd party 3rd party API channels developers providers Open APIs Open Banking Financial services providers have been publishing open APIs for many years
Slide 68: Open Banking - Bringing value to the end-customer
Open Banking - Bringing value to the end-customer 68 Relevance Transparency Choice Convenience Access “Open banking will fundamentally shift banking in the way internet banking did more than a decade ago. We will see new ways of distributing banking products. This will create more choice and value f
Slide 69: The Revised Payments Directive (PSD2) – A catalyst for Open Banking
The Revised Payments Directive (PSD2) – A catalyst for Open Banking 69 RTS Regulatory requirement for Consumer Open API* & protection RTS liability & Access to complaints Account Data 2-factor (XS2A) Authentication mandatory in all channels Transparency One leg in and out of charges, FX, dates, and
Slide 70: Rise of new business models engendered by Open Banking
Rise of new business models engendered by Open Banking 70 Manufacturer Platform (B2B) Customers Customers Third party Distribution Distribution API API API API API API Manufacturing Manufacturing Distribution Traditional full-service bank Distributor (B2C) Customers Customers Distribution Distributi
Slide 71: Banks and new entrants alike adopt the new business models
Banks and new entrants alike adopt the new business models 71 Manufacturer Platform (B2B) (UK ONLY) Third party Distribution Traditional bank Distributor (B2C) Niche players Own Own Third party Product Creation
Slide 72: Platforms – the new battleground
Platforms – the new battleground 72 Manufacturer Platform (B2B) (UK ONLY) Third party Distribution Traditional bank Niche players ? Distributor (B2C) Own Own Third party Product Creation
Slide 73: The platform world – blurring of industry boundaries
The platform world – blurring of industry boundaries 73 Digital ecosystems across various industries – Within a decade, 12 large ecosystems will emerge in place of many traditional industries, totalling sales of $55 trillion. Will the digital eco-systems of tomorrow spell the end of banks as we know
Slide 74: Competitive advantage of banks against new entrants
Competitive advantage of banks against new entrants 74 Trust The 3 C’s Would you trust a third party as much as a bank with your data? Compliance 30% Would trust a third party as 70% much as a bank Would not trust a third party as much as a bank Customers Capital Source: Accenture PSD2 UKI Banking C
Slide 75: Platform Plays for Banks – A virtuous circle
Platform Plays for Banks – A virtuous circle yielding tangible benefits 75 Return on equity – average bank* 3-6% 11-14% 8% Network effect Post digital Upside from disruption & successful eco- digital system strategy automation * McKinsey Report - “Remaking the bank for an eco-system world’, Oct 2017
Slide 76: Technical Implications of Open Banking and PSD2
Technical Implications of Open Banking and PSD2 76 Open APIs Security Scalability Real-time data and analytics
Slide 77: Temenos has an API-based architecture that enables Open Banking
Temenos has an API-based architecture that enables Open Banking 77 API-based Platform for Temenos API based Banking Solution Architecture Customer Customer TPPs Front-end Temenos Channels API Gateway API layer Temenos APIs (Interaction Framework and API designer) Temenos Front Office Aggregated data
Slide 78: The Temenos Stack with Architecture Frameworks is fully API enabled
The Temenos Stack with Architecture Frameworks is fully API enabled 78 Mobile Internet Call Centre Branch Agent API ATM Channels User Interaction Framework External Experience API’s API’s Design Framework Marketing Risk and Compliance Front Office Services Integration Framework Analytics Sales Integ
Slide 79: Temenos Marketplace – Extending Temenos Stack
Temenos Marketplace – Extending Temenos Stack to support Open Banking Customer Payments and Mobile Money User Experience TPPs Digital Channels API Gateway Digital Engagement (Democratised) Wealth Management API Layer Front Office Front Aggregation Security & Fraud API Layer Transaction Processing Co
Slide 80: Temenos Architecture supports all Business Models
Temenos Architecture supports all Business Models 80 Open API Core Manufacturer Platform (B2B) Platform Customers Customers Third party Distribution Distribution API API API API API API Distribution Manufacturing Manufacturing A full-service bank Distributor (B2C) Customers Customers Distribution Di
Slide 81: 1. Full Service Bank - Temenos Integrated Front-to-Back stack
1. Full Service Bank - Temenos Integrated Front-to-Back stack 81 Mobile Internet Call Centre Branch Agent RM Chat-Bot ATM API Channels Omni-Channel API Designer Open Banking MarketPlace Customer Sales & Single View Service Risk and Compliance Front Office Digital Decision Marketing Engine Portfolio
Slide 82: 2. B2C Aggregator - Temenos Front Office Aggregation
2. B2C Aggregator - Temenos Front Office Aggregation 82 Mobile Internet Call Centre Branch Agent RM Chat-Bot ATM API Channels Omni-Channel API Designer and Interaction Framework Open Banking MarketPlace Customer Order Management & & Single View Service Request Risk and Compliance Real Time Marketing
Slide 83: 3. Manufacturer - Temenos Core Banking
3. Manufacturer - Temenos Core Banking 83 Bank’s own & Mobile Internet Call Centre Branch Agent RM Chat-Bot ATM API Third Party Channels Omni-Channel API Designer and Interaction Framework Open Banking MarketPlace Risk and Compliance Marketing Product Builder Analytics Operations Core Banking Back O
Slide 84: 4. B2B Platform
4. B2B Platform 84 Distribution Fin-techs Telcos/ Neo-banks without a Banks Retailers license “Banking-as-a-Service” Platform (or a B2B Digital Marketplace) Manufacturing Neo-banks, Banks Bank fin-techs with 3rd party (own products) banking banks oducts) products
Slide 85: 4. B2B – Temenos API-driven Open Banking Platform
4. B2B – Temenos API-driven Open Banking Platform 85 API Designer and and API Designer Interaction Framework Interaction Framework Open Banking MarketPlace Customer Product Builder Platform Integration Framework & Single View Customer Design Capability Digital Decision Engine Arrangements Analytics
Slide 86: Artificial Intelligence at Temenos
Artificial Intelligence at Temenos
Slide 87: Artificial Intelligence in Banking
Artificial Intelligence in Banking 87 Robo Advisors Financial Crime Mitigation Assets under management by robo advisors are AI used for fraud prevention dates back to 1987 estimated to increase 68% annually to about by Security Pacific National Bank $2.2tn in 5 years (A.T. Kearney) in the US Chatbot
Slide 88: Temenos AI capability across the stack – current and roadmap
Temenos AI capability across the stack – current and roadmap 88 Front office Temenos Analytics AI Banking Models Outlier Classification RoboAdvisor Customer Profiling - Microsegmentation Lifetime Value Real-time contextual advice Transaction Classification Next Best Product Automated
Slide 89: Temenos adapts AI algorithms for specific banking use cases
Temenos adapts AI algorithms for specific banking use cases 89 AI algorithms Temenos AI Banking Models Machine Learning Proactive Supervised – Linear regression model Funds Flow Supervised – Logistical regression model Customer attrition; Customer outlier analysis Unsupervised – Clustering and assoc
Slide 90: Temenos – The banking software company
® TEMENOS The banking software company
Slide 91: Creating shareholder value
Creating shareholder value Max Chuard, CFO, COO 14 February 2018
Slide 92: Agenda
Agenda 1. Creating shareholder value 2. Drivers of growth 3. Medium term targets
Slide 93: Creating shareholder value
Creating shareholder value TEMENOS
Slide 94: Temenos drivers of value
Temenos drivers of value 94 Exceptional revenue growth Recurring revenue drives margin expansion d Shareholder value Significant cash flow generation Disciplined capital allocation Share price CAGR of 42% since 2003
Slide 95: Consistent double digit license revenue growth
Consistent double digit license revenue growth 95 Non-IFRS total software license revenue 316 256 214 148 USDm 2014 2015 2016 2017 Medium term target of at least 15% CAGR
Slide 96: Substantial recurring revenue growth
Substantial recurring revenue growth 96 Non-IFRS SaaS and subscription and maintenance revenue 345 302 276 231 USDm 2014 2015 2016 2017 Recurring revenue growth driving predictability
Slide 97: Business model drives consistent margin expansion
Business model drives consistent margin expansion 97 Non-IFRS EBIT margin 30.3% 29.4% 28.1% 27.3% 2014 2015 2016 2017 Medium term target of 100-150bps EBIT margin expansion p.a.
Slide 98: Outstanding consistent double-digit earnings growth
Outstanding consistent double-digit earnings growth 98 Non-IFRS EBIT Non-IFRS EPS 224 2.45 187 2.07 157 1.73 128 1.44 2014 2015 2016 2017 2014 2015 2016 2017 Medium term target of at least 15% EPS CAGR
Slide 99: Exceptional consistent cash flow generation
Exceptional consistent cash flow generation 99 Operating Cash Flow DSOs 181 300 159 256 127 227 119 190 2014 2015 2016 2017 2014 2015 2016 2017 Medium term target of 100%+ EBITDA converted Medium term target DSO reduction of 5-10 days p.a. into operating cash p.a.
Slide 100: Disciplined capital allocation
Disciplined capital allocation 100 Capital allocation 2014 – 2017 42% 43% Acquisitions Share buyback 15% Dividends
Slide 101: Low-cost debt structure with significant flexibility
Balance sheet strength 101 2013 2017 Total available financing USD 350m USD 925m Weighted average interest rate 5.0% 3.0% Weighted average maturity 4 years 4.5 years Leverage ratio 0.6x 1.0x Low-cost debt structure with significant flexibility
Slide 102: Outstanding shareholder value creation
Shareholder value creation 102 Since IPO on Total shareholder return 25/6/01 at 1 year 3 years 10 years (USD, 31/12/17) CHF 23 per share Temenos 85% 267% 444% 936% Swiss Market Index 23% 17% 42% 262% Stoxx Euro 600 27% 25% (1)% 188% Nasdaq 30% 51% 126% 300% Peer group average 30% 65% 157% 380% Outst
Slide 103: Drivers of growth
Drivers of TEMENOS
Slide 104: A very large and expanding market
A very large and expanding market 104 Building Addressable market (USD billions) product for $900m origination 16.0 market 14.0 Expanded offering in $700m 12.0 compliance market 10.0 Added $1.8bn payments 8.0 market 6.0 4.0 2.0 0.0 2007 2013 2017 Medium term Core banking Front Office Channels Paymen
Slide 105: Winner takes all – a virtuous circle
Winner takes all – a virtuous circle 105 2014 $44m EMEA $27m #205 banks 2015 43% penetration The Americas APAC #103 banks #174 banks 2016 18% penetration 22% penetration 2017 US tier 1 bank # - number of Tier 1 and 2 banks % - Temenos account penetration Massive opportunity to expand into new tier 1
Slide 106: Growing our share of wallet in tier 1 and 2 banks
Increasing share of wallet in tier 1 and 2 banks 106 Temenos’ average share of Average annual spend from tier 1 and 2 wallet in tier 1 and 2 banks banks undergoing progressive renovation Total IT spend Temenos has only captured 4% of spend on average 4% * Based on Temenos estimates of average addres
Slide 107: Vendor of choice for tier 1 and 2 banks
Consistently increasing tier 1 and 2 client mix 107 Non-IFRS total software licensing revenues by client tier Tier 1 & 2 Tier 3, 4 & 5 2014 2017 Medium term Vendor of choice for tier 1 and 2 banks
Slide 108: Maximising the installed base
Maximising the installed base 108 Installed base will continue to represent 60%+ of non-IFRS total software licensing going forward Breakdown of the installed base Cross Selling Tier 1+2 progressive renovation Relicensing c.15-20% CAGR 2014 2017 Medium term Relicensing, progressive renovation and cr
Slide 109: SaaS revenues are growing rapidly
SaaS revenues are growing rapidly 109 Non-IFRS Software licensing vs. SaaS revenues SaaS Software licensing 15%+ c.35% CAGR 2014 2017 Medium term Rapid growth in SaaS revenues
Slide 110: Building traction with large North American banks
We are delivering on our North American strategy 110 Non-IFRS total software licensing, North America vs. Rest of World North America Rest of World 25%+ c.35% CAGR 2014 2017 Medium term Building traction with large North American banks
Slide 111: A three-pronged approach to M&A
A three-pronged approach to M&A 111 Increased scale Accelerated growth in key markets and A three-pronged segments approach Adjacent markets and complementary products
Slide 112: Medium term targets
Medium term targets TEMENOS
Slide 113: Medium term targets
Medium term targets 113 Metric Medium term targets (Non-IFRS) Total software licensing At least 15% CAGR Total revenue 10-15% CAGR EBIT 100-150 bps p.a. EPS At least 15% CAGR DSO reduction 5-10 days reduction p.a. Cash conversion 100%+ of EBITDA Tax rate 17-18%
Slide 114: Conclusion
Conclusion 114 Winner takes it Increasing Share price addressable CAGR of 42% all - vendor of choice for tier 1 market and since 2003 taking market and 2 banks. Shareholder share value We continue to We benefit create significant from multiple shareholder structural value growth drivers
Slide 115: www.temenos.com
TEMENOS The banking software company www.temenos.com ‘in| iy Fi oe] ic)