Temenos Ag · SIX:TEMN
Temenos — Investor Presentation (October 2009)
43 slides from Temenos's investor presentation, October 2009
Slide 1: Introductory Corporate Presentation
Introductory Corporate Presentation October 2009
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 to Temenos Strategy and Business update Financial update Outlook and Summary Appendices Slide 3
Slide 4: Agenda
Agenda Introduction to Temenos Strategy and Business update Financial update Outlook and Summary Appendices Slide 4
Slide 5: Who we are
Who we are A leading global banking software company A company with a firm foundation and strong financials • Headquartered in Geneva, global presence through 3,000+ employees in 51 offices • Listed on the Swiss stock exchange • USD406 million revenues International Client Base • 700+ clients • 120+
Slide 6: Our global reach
Our global reach Temenos operates from 51 offices in 37 countries (1) Frankfurt Vancouver Amsterdam LONDON (1) Warsaw HEMEL HEMPSTEAD Moscow Seoul Dublin Luxembourg Bucharest Paris Almaty Zurich GENEVA (1) Montreal MADRID Tokyo Orlando Athens New York Bangkok Shanghai Miami Beirut Hong Kong Mexico C
Slide 7: Our addressable market
Our addressable market Temenos current addressable market DISTRIBUTION CHANNELS CRM BUSINESS INTELLIGENCE BANKING INVESTMENT SERVICES INSURANCE RISK & COMPLIANCE Retail/Universal Wholesale Asset management Life Private Treasury & Capital Markets General GENERAL SUPPORT PAYMENTS Slide 7
Slide 8: The competitive landscape
The competitive landscape Major players by segment Vendor Products Retail Private Wholesale Universal TEMENOS T24 TCB I-Flex Flexcube Misys Equation, Midas, Bankmaster Infosys Finacle Fidelity Corebank, Systematics TATA Consulting FNS SAP Corebanking Source: IBS Market Report; Companies announcement
Slide 9: Vendor viability is more important than ever
Vendor viability is more important than ever According to Forrester Research, we are one of only two global power sellers Gives us ability to: • Deliver software across all geographies • Endure the current banking crisis (which will see “some vendors leaving the market”) • Dominate – strong vendors
Slide 10: High R&D
High R&D In 2008, as % of sales, we spent >2x more than our biggest competitors... R&D spend as % of revenues 22% 20.9% 20.8% 20.1% 19.9% 20.3% 20% 19.0% 18% 16% 14% 12% 10% 9.6% 9.4% 8.6% 8.8% 8.9% 8.5% 8% 2003 2004 2005 2006 2007 2008 Temenos* Peer Group** ...to maintain our advantage in terms of
Slide 11: T24 is the market leader
T24 is the market leader Temenos T24 has the largest and most geographically diverse installed base Number of live customers by region for major core banking systems 350 300 250 200 150 100 50 0 Europe Americas Asia Pacific Africa Temenos T24 i-flex Flexcube Infosys Finacle Misys Equation Misys Mida
Slide 12: Compelling value proposition
Compelling value proposition Our software allows banks to cut costs.... 13% 9.5% 23 bps 5.5% INDUSTRY 8 bps INDUSTRY INDUSTRY TCB 1.5% TCB TCB IT Cost as IT Cost as IT Cost as % of % of total % of Income Costs Assets Sources: Techcombank and BCG third annual IT cost benchmarking survey Slide 12
Slide 13: Compelling value proposition
Compelling value proposition ...while improving customer service... A week - the reduction in time it takes for Schroders Private Bank to send out customer statements each quarter ...and enhancing risk management... 30 mins – the time it took Schroders Private Bank to determine it had no exposure to
Slide 14: Agenda
Agenda Introduction to Temenos Strategy and Business update Financial update Outlook and Summary Appendices Slide 14
Slide 15: Business update
Business update Executing on strategy for growth with better profitability and cash generation Resilient licence performance • Against a strong comparative, like-for-like licences* were up 6% • Year to date, like-for-like licences* are up 3% Continued good cost control • Costs fall sequentially for
Slide 16: Business update
Business update Executing on strategy for growth with better profitability and cash generation New operating model firmly established and sustainable • Partners carrying out greater proportion of implementations • Convergence of T24 and TCB and more efficient use of development factories • 70/30 imp
Slide 17: Update on sales
Update on sales T24 sales • 9 new customers in Q309 compared to 9 in PY • Higher licences based on signing bigger deals than in PY • Strong growth in retail licences • 2 new entry-level tier 1 deals (taking number of tier 1 deals to 6 in YTD) providing significant downstream potential ARC and Insigh
Slide 18: Services Update
Services Update Another 4 clients went live in Q309 • 4 clients went live in Q309 (vs. 6 in Q308)... • ...taking number of go-lives to 39 in YTD vs. 24 in YTD 08 ... as services initiatives help us to scale more efficiently • TAM, TIM, Management Consulting, Model Bank have all helped the services b
Slide 19: Update on other initiatives
Update on other initiatives Partners • Relationship with Cognizant progresses well → Training underway → Jointly going to market on a number of deals • Actively speaking to other technology and services partners • Expect to sign second Worldwide services partnership during Q4 • Already, we are deliv
Slide 20: Agenda
Agenda Introduction to Temenos Strategy and Business update Financial update Outlook and Summary Appendices Slide 20
Slide 21: Income statement highlights – Q3 2009
Income statement highlights – Q3 2009 Q3 2009 Q3 2008 y-o-y (USDm) (USDm) Licence revenues 26.8 35.3 (24%) Total revenues 88.6 100.4 (12%) EBIT 20.3 11.2 81% Adjusted EPS* 0.34 0.13 162% * in USD; see appendix for reconciliation Slide 21
Slide 22: Like-for-like revenues
Like-for-like revenues ► Adjusting for FX, acquisitions and Metavante 120 USDm Metavante 100 FX Acquisitions 80 Services Services (20%) 60 +10% (12%) 40 Maintenance Maintenance 20 +6% License License 0 Q3 2008 Q3 2009 Slide 22
Slide 23: Financial statement highlights
Financial statement highlights in USDm Q3 09 Q3 08 LTM 09 LTM 08 Licences 26.8 35.3 (24%) 131.9 168.5 (22%) Maintenance 29.2 25.4 +15% 113.9 94.6 +20% Services 32.5 39.7 (18%) 128.1 147.0 (13%) Total revenue 88.6 100.4 (12%) 373.9 410.0 (9%) Total operating costs (68.2) (89.2) (24%) (298.2) (338.5)
Slide 24: Income statement
Income statement Q3 2009 Q3 2008 y-o-y LTM 09 LTM 08 y-o-y (USDm) (USDm) (USDm) (USDm) EBIT 20.3 11.2 81% 75.7 71.5 6% Net finance charge (2.1) (2.3) (8.7%) (7.6) (4.6) 65% FX (loss)/gain (0.6) (3.6) (83%) 4.6 (2.2) n/a Tax (0.1) (0.2) (50%) 1.7 0.3 570% Net earnings 17.5 5.0 250% 74.4 64.9 15% Adju
Slide 25: Update on cash
Update on cash Ongoing strong cash generation in the quarter • EBITDA into operating cash conversion of 113% in Q3 • LTM conversion at 99% • LTM operating cash of USD104m is very close to full year outlook level EBITDA into operating cash conversion 120 +99% +68% 100 USDm 80 60 EBITDA (USD m.) +113%
Slide 26: Balance sheet – Debt and financing
Balance sheet – Debt and financing Q3 2009 Comments (USDm) EXISTING DEBT 133.6 1.5% coupon, matures 2013 (converts at Convertible bond CHF18.6) Credit facilities 61.5 Consortium of 7 banks, repayment up to end of 2012 Other 1.4 Obligations under finance leases TOTAL DEBT 196.5 AVAILABLE FUNDING Cash
Slide 27: Agenda
Agenda Introduction to Temenos Strategy and Business update Financial update Outlook and Summary Appendices Slide 27
Slide 28: Summary
Summary Executing on strategy for growth with better profitability and cash generation Licence sales resilient → In YTD, +3%; further market share gains Strong margin progression → LTM EBIT margin 20.2%; EBITDA 28.2% Excellent cash generation → EBITDA into operating cash +113% New operating model fi
Slide 29: 2009 Outlook
2009 Outlook ► With one quarter to go, we are able to give an absolute profit outlook ► ....resulting in a higher margin ► Outlook for maintenance and operating cash remain unchanged ► But we lower our costs and services revenue by USD10m • 2009 full year cost base of USD300m (Variable costs in Q4 a
Slide 30: Closing comments
Closing comments • Operating profit growth trend firmly restored • Revenue growth soon to be restored • We are investing again for growth LTMrevenues LTM revenues and and operating operating profit profit sincesince Q2 2005 Q2 2005 450 90 400 80 350 70 300 60 250 50 200 40 150 30 100 20 50 10 - 0 Ju
Slide 31: Agenda
Agenda Introduction to Temenos Strategy and Business update Financial update Outlook and Summary Appendices Slide 31
Slide 32: Appendices
Appendices a =mMOnae 9 -MENOS The Banking Software Company
Slide 33: Adjusted EPS reconciliation
Adjusted EPS reconciliation Q3 2009 (USDm) Earnings 17.5 Amortisation of acquired intangible assets 1.9 Total cash Bond interest 1.4 Restructuring* 3.0 Total adjusted earnings 23.8 Number of diluted shares 69.6 Adjusted EPS 0.34 *Costs of exiting the joint agreement with Metavante – severance, legal
Slide 34: DSOs trend
DSOs trend DSOs – last 9 quarters 184 176 172 171 171 168 168 Days 167 165 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Sustained improvement driven by Shorter implementation times down from average of 18 months in 06 to 9-12 months Improving payment terms: In Q3 09, aggre
Slide 35: Overview of new T24 customer sales
Overview of new T24 customer sales New clients (number) LTM 2009 LTM 2008 New clients (licence value) LTM 2009 LTM 2008 Slide 35
Slide 36: Cost reduction – Yielding results
Cost reduction – Yielding results Operating costs have declined sequentially for the 100.0 last 4 quarters 89.2 90.0 86.1 80.0 72.5 71.5 68.2 70.0 USDm 60.0 50.0 40.0 30.0 20.0 10.0 - Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q3 2009 cost base consistent with full year outlook of USD300m Slide 36
Slide 37: Recognition
Recognition Temenos’ products are multi award winning - awards include: T24 was named No.1 best-selling core banking system in 2008 in the IBS Journal’s Annual Sales League Table. Martin Whybrow, editor, commented: “Temenos has maintained a strong position during a challenging year for our industry.
Slide 38: T24 Overview – Functional Architecture
T24 Overview – Functional Architecture Indirect Channels Direct Channels Tech. Admin System Admin Branch Call Centre Internet Mobile IVR 3rd systems BPEL Bank Middleware (optional) T24 Browser Open Financial Service (Web Services, API, Messaging) Security Management System Brokerage, Wealth Manageme
Slide 39: T24 Overview – Functional Architecture
T24 Overview – Functional Architecture Indirect Channels Direct Channels Tech. Admin System Admin Branch Call Centre Internet Mobile IVR 3rd systems BPEL Bank Middleware (optional) T24 Browser Open Financial Service (Web Services, API, Messaging) Security Management System Trade Finance Advices Bran
Slide 40: One annual release
One annual release Upgrade is annual and simple • Client gets annual enhancements • No services input for client or Temenos • Temenos maintains all clients on latest versions High maintenance and high margin on maintenance Slide 40
Slide 41: Our products are open and scalable
Our products are open and scalable XML Built using industry standards, such as SOA/SOAP Have the framework to be run on any platform, any database More servers can be added to cope with increasing volume Slide 41
Slide 42: Glossary
Glossary DSO Days Sales Outstanding LTM Last Twelve Months SOA Service Oriented Architecture PY Prior year TAM Temenos Application Management TIM Temenos Implementation Methodology y-o-y Year-on-year (variation) Slide 42
Slide 43: Thank You
Thank You ‘7 sm: FM fe) FA ed Bl F EMENOS The Banking Software Company