Temenos Ag · SIX:TEMN
Temenos — Q4 2015 Earnings Presentation
44 slides from Temenos's earnings presentation, Feb 11, 2016
Slide 1: The software specialist for banking and finance
; ov % The software specialist for banking and finance Ec
Slide 2: Financial results & business update
Financial results & business update Quarter and year ended 31 December 2015 11 February 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 and 2016 guidance Max Chuard 3. Summary David Arnott 4. Q&A
Slide 6: Business update
Business update David Arnott
Slide 7: Summary: 2015 a landmark year; outlook for 2016 is positive
Summary 7 Outstanding performance across all KPIs in Q4, delivered FY 2015 guidance Total software licensing up 63% for the quarter, 31% like-for-like Strong progress on larger deals and in the U.S., major growth drivers for the future Strong pipeline generation in Q4 gives confidence for 20
Slide 8: Q4 and Full Year sales update
Q4 and Full Year sales update 8 Mobility trend forcing banks to modernize their IT infrastructure Outstanding year in Europe driven by high levels of activity, especially in large banks Asia growth driven by leadership position in Wealth, particularly in mature markets Momentum in the U.S.,
Slide 9: Q4 and Full Year operational overview
Q4 and Full Year operational overview 9 Partner ecosystem expanding Increase in joint go-to-market activities, strengthening the value proposition Partner involvement in nearly all implementations New partners on-boarded in Q4 to meet client needs in specific geographies Focus on strategic p
Slide 10: Highly differentiated product
Highly differentiated product 10 Packaged, upgradable Front-to-back, vertically integrated Progressive renovation Scalable Model bank Open architecture
Slide 11: Clear water between Temenos and the competition
Clear water between Temenos and the competition 11 1st position again – 15th time in 16 years 137 Total number of go-lives in 2015
Slide 12: Update on Multifonds
Update on Multifonds 12 Leader in fund administration and fund accounting software Well positioned to capitalise on growth of third-party administrator revenues (c.10% p.a.) and move from internal to external software Exceeded financial targets for 2015 Strong pipeline growth in 2015 giving
Slide 13: Update on the U.S.
Update on the U.S. 13 World’s largest financial services market, dominated by few large vendors with legacy technology; significant opportunity for Temenos to capture market share Differentiated product value proposition – real time, upgradable, modular architecture Akcelerant delivered financ
Slide 14: Looking forward to 2016
Looking forward to 2016 14 78% of 2015 total software licensing revenues from developed markets Our clients are well capitalised with strong balance sheets P&L volatility drives costs base scrutiny as only way to deliver shareholder value Core renovation is not discretionary spend – quantifi
Slide 15: Financial update and 2016 guidance
Financial update and 2016 guidance Max Chuard
Slide 16: Q4 and Full Year 2015 non-IFRS financial highlights
Q4 and Full Year 2015 non-IFRS financial highlights (c.c.) 16 Total software licensing up 63.5% in Q4 2015 and 52.1% for FY 2015 of which software licensing up 46.0% in Q4 2015 SaaS and subscription contributed 15% of total software licensing in Q4 2015 vs. 4% in Q4 2014 Maintenance growth o
Slide 17: Performance vs. 2015 guidance
Performance vs. 2015 guidance 17 2015 non-IFRS guidance* 2015 non-IFRS results* • Total software licensing growth of 42% to 46% 52.1% growth • Software licensing growth of 21%+ 30.6% growth • Revenue growth of 20.5% to 24.5% 25.8% growth • EBIT of USD 153m to USD 158m USD 157m EBIT • 100%+ c
Slide 18: Non-IFRS income statement – operating
Non-IFRS income statement – operating 18 Y-o-Y Y-o-Y In USDm Q4 15 Q4 14 Y-o-Y c.c. FY 15 FY 14 Y-o-Y c.c. reported reported Software licensing 66.3 48.3 37.3% 46.0% 173.4 139.7 24.2% 30.6% SaaS and subscription 11.4 2.1 433.2% 434.7% 40.6 8.0 410.2% 413.1% Total software licensing 77.8 50.5 54.2% 6
Slide 19: Like-for-like revenue and costs
Like-for-like revenue and costs 19 Q4 LFL non-IFRS revenues up 19% Q4 LFL non-IFRS costs up 29% Maintenance Total software licensing Services Fixed costs Variable costs USDm USDm 200 120 FY 2015 LFL FY 2015 LFL 180 160 100 +72% +667% +15% +6% 140 80 120 100 +31% +20% 60 80 +5% +3% 60 40 40 +9% +7% 2
Slide 20: Non-IFRS income statement – non-operating
Non-IFRS income statement – non-operating 20 In USDm, except EPS Q4 15 Q4 14 Y-o-Y FY 15 FY 14 Y-o-Y EBIT 65.2 60.3 8.2% 157.0 127.8 22.8% Net finance charge -4.7 -2.9 60.5% -17.5 -11.2 56.9% FX gain / (loss) -0.7 -0.4 63.5% -1.2 -0.7 66.3% Tax -7.9 -6.8 17.6% -16.8 -16.2 4.0% Net profit 51.9 50.2 3
Slide 21: Stable group liquidity while making largest acquisition
Stable group liquidity while making largest acquisition 21 Cash on Change in Cash on balance sheet Operating Dividends debt & balance sheet USDm (31/12/14) cash Tax Capex paid Acquisitions interest (31/12/15) Borrowings Net debt 500 11 400 55 29 300 227 200 298 100 193 168 193 460 0 -100 267 -200 -3
Slide 22: Balance sheet – debt and financing
Balance sheet – debt and financing 22 Net debt and leverage ratios* USDm 500 2.4x 450 2.1x 2.3x 400 350 300 1.3x 250 200 150 100 50 0 Q1 2015 Q2 2015 Q3 2015 Q4 2015 * proforma non-IFRS EBITDA Continued rapid deleveraging
Slide 23: 2016 guidance
2016 guidance 23 Non-IFRS total software licensing growth at constant currency of 10% to 15% (implying total software licensing revenue of USD 234m to USD 245m) Non-IFRS revenue growth at constant currency of 7.5% to 11.0% (implying revenue of USD 594m to USD 614m) Non-IFRS EBIT at constant cu
Slide 24: Summary
David Arnott eS} TEMENOS
Slide 25: Temenos Analyst & Investor Day: London, February 2016
Temenos Analyst & Investor Day: London, 12 February 2016 25 10.00 - 10.45 Strategy and vision David Arnott, CEO 10.45 - 11.30 Digitizing the bank Joseph Edwin, Head of Core Banking Programme, Nordea 11.30 - 11.45 Coffee 11.45 - 12.30 Product leadership Mark Winterburn, Group Product Director 12.30 -
Slide 26: Updated medium term targets
Updated medium term targets 26 Non-IFRS total software licensing growth of 15% CAGR Non-IFRS revenue growth of 10% CAGR Non-IFRS EBIT margin improvement of 100 to 150bps on average p.a. Non-IFRS EPS growth of 15% CAGR Cash conversion over 100% p.a. DSOs reducing by 10 to 15 days p.a. T
Slide 27: Summary
Summary 27 2015 was a landmark year for Temenos We are capitalising on the market recovery Banks are beginning to react to reality, and our business model meets their needs Our growth is driven by Tier 1 and 2 progressive renovation and significant sales into the installed base The busines
Slide 28: Appendices
Appendices TEMENOS
Slide 29: FX exposure
FX exposure 29 % 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 30: FX assumptions underlying 2016 guidance
FX assumptions underlying 2016 guidance 30 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 31: 2015 income statement restated for currency
2015 income statement restated for currency 31 2015 non-IFRS income statement Restated at 2016 currency 2015 actual guidance Software licensing 173.4 172.0 SaaS and subscriptions 40.6 40.9 Total software licensing 214.0 212.9 Maintenance 235.4 232.3 Services 109.6 107.7 Total revenues 559.0 552.9 Co
Slide 32: 2016 non-IFRS cost base
2016 non-IFRS cost base 32 Fixed Costs Variable Proforma 2015 M&A USDm 450 422 402 10 400 396 52 341 62 62 350 33 300 250 200 360 330 334 150 308 100 50 0 2014A 2015A 2015 at CC 2016 guidance 2016 non-IFRS costs up 7% on a LFL basis
Slide 33: Total software licensing revenue breakdown by geography
Total software licensing revenue breakdown by geography 33 Q4 2014 Q4 2015 APAC APAC 16% 8% 14% Europe 19% Europe 14% Americas Americas 22% MEA MEA 48% 59% FY 2014 FY 2015 APAC APAC 12% 15% 18% 21% Europe Europe Americas Americas 17% MEA MEA 27% 34% 56%
Slide 34: Total software licensing revenue breakdown by customer tier
Total software licensing revenue breakdown by customer tier 34 Q4 2014 Q4 2015 1 and 2 1 and 2 44% 3, 4 and 5 61% 39% 3, 4 and 5 56% FY 2014 FY 2015 1 and 2 1 and 2 26% 3, 4 and 5 53% 47% 3, 4 and 5 74%
Slide 35: Software licensing revenue: competitive deals / add-ons to installed base
35 Software licensing revenue breakdown by competitive deals / add-ons to installed base Q4 2014 Q4 2015 Competitive Competitive deals deals 33% Add-ons to 33% Add-ons to installed base 67% installed base 67% FY 2014 FY 2015 Competitive Competitive deals deals Add-ons to Add-ons to 38% installed bas
Slide 36: DSOs continue to decline
DSOs continue to decline 36 230 211 210 198 198 195 186 181 190 183 176 169 170 154 150 Proforma of 151 days 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 DSO in Q4-15 ended at 154 days, of which 3 are due to acquisitions
Slide 37: Capitalisation of development costs
Capitalisation of development costs 37 USDm Q1 13 Q2 13 Q3 13 Q4 13 FY 13 Cap’ dev’ costs -9.7 -9.6 -9.8 -12.7 -41.9 Amortisation 6.0 6.1 7.6 8.0 27.7 Net cap’ dev’ -3.6 -3.6 -2.3 -4.7 -14.2 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
Slide 38: Reconciliation from IFRS to non-IFRS
Reconciliation from IFRS to non-IFRS 38 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 39: Accounting elements not included in non-IFRS guidance
Accounting elements not included in non-IFRS guidance 39 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 40: Reconciliation from IFRS to non-IFRS
Reconciliation from IFRS to non-IFRS 40 3 Months Ending 31 December Change 2015 2015 2014 2014 In USDm, except EPS IFRS Adj. Non-IFRS IFRS Adj. Non-IFRS IFRS Non-IFRS Total Software Licensing 73.3 4.5 77.8 50.5 50.5 45% 54% Maintenance 61.8 0.4 62.2 56.9 56.9 8% 9% Services 33.3 0.1 33.4 25.7 25.7 3
Slide 41: Net earnings reconciliation
Net earnings reconciliation 41 In USDm, except EPS Q4 15 Q4 14 FY 15 FY 14 IFRS net earnings 38.3 48.1 66.3 91.6 Deferred revenue write-down 5.0 - 16.5 - Amortisation of acquired intangibles 8.9 1.9 29.3 7.7 Restructuring 1.1 0.6 9.5 1.9 Acquisition related costs - - 5.0 - Taxation -1.5 -0.3 -5.1 -1
Slide 42: Reconciliation from IFRS to non-IFRS for EBIT and EBITDA
Reconciliation from IFRS to non-IFRS for EBIT and EBITDA 42 USDm Q4 2015 EBIT Q4 2015 EBITDA FY 2015 EBIT FY 2015 EBITDA IFRS 50.2 70.1 96.8 171.2 Deferred revenue write-down 5.0 5.0 16.5 16.5 Amortisation of acquired 8.9 - 29.3 - intangibles Restructuring 1.1 1.1 9.5 9.5 Acquisition-related charges
Slide 43: Definitions
Definitions 43 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 44: Thank you
Thank you TEMENOS The software specialist for banking and finance www.temenos.com ‘in| iy | Fi Oo ic)