Temenos Ag · SIX:TEMN
Temenos — Q3 2014 Earnings Presentation
33 slides from Temenos's earnings presentation, Oct 21, 2014
Slide 1: Financial results & business update
Financial results & business update Quarter ended 30 September 2014 21 October 2014
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 Business update David Arnott, CEO Financial update Max Chuard, CFO and 2014 guidance Summary David Arnott, CEO Q&A 3
Slide 4: Summary
Summary Solid Q3 results LFL software licensing growth – larger deals moving towards closure Strong execution on services strategy - positive non-IFRS services margin in Q3 Strong cash inflows and conversion with DSOs materially down Value returned to shareholders through share buyback Increased non
Slide 5: Q3 2014 sales and pipeline overview
Q3 2014 sales and pipeline overview Good sales to new customers with 7 new customer wins (Q3 2013:5) All regions performing well • Europe continued to grow in the quarter with good growth on an LTM basis • good growth in APAC and the Americas in the quarter • lower MEA growth in Q3 vs strong Q3 2013
Slide 6: Q3 2014 operational overview
Q3 2014 operational overview Leadership in product development Progress with SaaS • Positioned as a 'leader' in the latest • Director of SaaS division now started Forrester Wave on Global Banking • Clear go-to-market strategy Platforms with highest score for Strategy • Revenue expected to be increme
Slide 7: Agenda
Agenda Business update David Arnott, CEO Financial update Max Chuard, CFO and 2014 guidance Summary David Arnott, CEO Q&A 7
Slide 8: Q3 2014 financial highlights
Q3 2014 financial highlights LFL software licencing growth of 2%; LTM growth of 11% Maintenance growth of 7% in the quarter 6.4% pts improvement in LTM non-IFRS services margin – positive margin in Q3 Non-IFRS EBIT down 2%; LTM non-IFRS EBIT margin of 25.2% Non-IFRS EPS flat; up 11% on an LTM basis
Slide 9: Non-IFRS income statement - operating
Non-IFRS income statement - operating In USDm Q3 14 Q3 13 Y-o-Y LTM 14 LTM 13 Y-o-Y Software licensing 31.1 30.9 0.8% 146.1 130.9 11.6% SaaS 2.0 1.6 30.2% 7.4 3.2 131% Total software licensing 33.1 32.4 2.2% 153.5 134.1 14.5% Maintenance 56.9 53.2 7.0% 222.3 209.4 6.1% Services 23.7 23.9 -1.0% 104.3
Slide 10: Like-for-like revenue and costs
Like-for-like revenue and costs Q3 LFL revenue up 4% Q3 LFL non-IFRS costs up 5% Maintenance Licence SaaS Services USDm USDm 120 120 100 (2)% 100 5% 80 +30% 80 60 +2% 60 40 40 20 +7% 20 0 0 Q3 2013 Q3 2014 Q3 2013 Q3 2014 Small currency impact on LFLs 10
Slide 11: Non-IFRS income statement – non-operating
Non-IFRS income statement – non-operating In USDm, except EPS Q3 14 Q3 13 Y-o-Y LTM 14 LTM 13 Y-o-Y Non-IFRS EBIT 25.2 25.8 -2% 121.0 107.4 13% Net finance charge -2.8 -2.4 -16% -10.8 -8.5 -26% FX gain / (loss) 0.1 -0.5 NA -0.6 -1.8 68% Tax -3.3 -3.3 1% -17.0 -12.5 -35% Non-IFRS net profit 19.2 19.5
Slide 12: Cash conversion
Cash conversion USDm 123% 200 125% 150 162% 100 50 0 LTM Q3 2012 LTM Q3 2013 LTM Q3 2014 EBITDA Operating cashflow Significant growth in EBITDA and operating cashflows 12
Slide 13: Balance sheet – debt and financing
Balance sheet – debt and financing In USDm 30 Sept 14 Comment Debt 299.7 Includes USD 350m facility and CHF 200m bonds Cash 137.4 Held in short term deposits Net debt 162.3 1.0x LTM EBITDA Treasury shares* (60.1) Reflects market value as of 30 Sept 2014 Net debt inc. treasury shares 102.2 0.6x LTM E
Slide 14: 2014 guidance
2014 guidance Software licensing growth of 10% to 15% (implying software licensing revenue of USD 151m to USD 158m)* Non-IFRS revenue growth of 5% to 10% (implying revenue of USD 489m to USD 512m)* Non-IFRS EBIT margin of 25.5% (implying non-IFRS EBIT of USD 124m to USD 130m)* 100%+ conversion of EB
Slide 15: Agenda
Agenda Business update David Arnott, CEO Financial update Max Chuard, CFO and 2014 guidance Summary David Arnott, CEO Q&A 15
Slide 16: The fundamental drivers of our business remain intact
The fundamental drivers of our business remain intact • Each vertical and geography has the More intense competition same fundamental underlying drivers supplemented by specific drivers Growing Higher capital • These drivers represent a structural complexity Core banking requirements shift in the wa
Slide 17: Market conditions: Europe, MEA, APAC and Latam
Market conditions: Europe, MEA, APAC and Latam Europe MEA • Continues to perform strongly • Market leader in Islamic banking • 36% software licensing growth from Q3 • Strong growth opportunities within the 2012 to Q3 2014 on an LTM basis regions • Regulation and wealth remain key drivers • Strengthe
Slide 18: Market conditions: the US
Market conditions: the US Pressures on US financial institutions A vendor community struggling to meet FIs’ needs • Changing customer behaviour • Dominated by a few large vendors – little choice • New regulation • Multiple core systems for each vendor • New technology fragments market and R&D spend
Slide 19: Temenos’ US offering remains unique
Temenos’ US offering remains unique Broad US functionality Retail Corporate Private wealth Real-time architecture Single core Compliance Temenos has a unique proposition for US banks 19
Slide 20: Progress made in the past 18 months with Temenos US
Progress made in the past 18 months with Temenos US March 2013 Progress made Now • Installed base of US • US Model Bank successfully • Prospect roadshows branches of delivered to US team European banks • Encouraging early • Moving towards first go-lives stage feedback • On-premise solutions • “Ameri
Slide 21: Summary
Summary • Solid Q3 results • Continued encouraging levels of customer activity across all geographies • Larger deals moving towards closure • YTD performance and pipeline underpins confidence in achieving full year guidance Confidence in delivery of the full year 21
Slide 22: Appendices
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Slide 23: FX assumptions underlying 2014 guidance
FX assumptions underlying 2014 guidance In preparing the 2014 guidance, the Company has taken the actual Q1, Q2 and Q3 2014 results and for Q4 2014 assumed the following: • USD to Euro exchange rate of 0.786 • USD to GBP exchange rate of 0.614; and • USD to CHF exchange rate of 0.948. 23
Slide 24: Net earnings reconciliation
Net earnings reconciliation In USDm, except EPS Q3 14 Q3 13 IFRS net earnings 17.5 15.9 Acquisition related charges - - Amortisation of acquired intangibles 1.9 3.2 Restructuring 0.3 0.8 Taxation -0.6 -0.4 Net earnings for non-IFRS EPS 19.2 19.5 No. of dilutive shares 69.0 69.2 Non-IFRS diluted EPS
Slide 25: Total software licensing revenue breakdown by geography
Total software licensing revenue breakdown by geography Q3 2013 Q3 2014 APAC APAC Europe Europe 29% 26% 23% 28% Americas Americas MEA MEA 15% 12% 34% 33% LTM Q3 2013 LTM Q3 2014 APAC APAC Europe 16% 22% Europe 20% 24% Americas Americas MEA MEA 15% 23% 41% 39% 25
Slide 26: Total software licensing revenue breakdown by customer tier
Total software licensing revenue breakdown by customer tier Q3 2013 Q3 2014 1 and 2 1 and 2 18% 23% 3, 4 and 5 3, 4 and 5 77% 82% LTM Q3 2013 LTM Q3 2014 1 and 2 1 and 2 21% 39% 3, 4 and 5 3, 4 and 5 61% 79% 26
Slide 27: Total software licensing revenue breakdown by new / existing
Total software licensing revenue breakdown by new / existing Q3 2013 Q3 2014 15% New New 42% Existing Existing 58% 85% LTM Q3 2013 LTM Q3 2014 New New 37% Existing 45% Existing 63% 55% 27
Slide 28: DSOs
DSOs 250 240 230 220 210 200 190 180 170 30 Sept 12 31 Dec 12 31 Mar 13 30 Jun 13 30 Sept 13 31 Dec 13 31 Mar 14 30 Jun 14 30 Sept 14 DSOs down 25 days vs 30 September 2013 28
Slide 29: Capitalisation of development costs
Capitalisation of development costs USDm Q1 12 Q2 12 Q3 12 Q4 12 FY 12 Cap’ dev’ costs -9.6 -9.6 -9.6 -13.0 -41.8 Amortisation 6.2 6.7 6.5 6.1 25.5 Net cap’ dev’ -3.4 -2.9 -3.1 -6.9 -16.3 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
Slide 30: Reconciliation from IFRS EBIT to non-IFRS EBIT
Reconciliation from IFRS EBIT to non-IFRS EBIT USDm Q3 2014 IFRS EBIT 23.0 Deferred revenue write-down - Discontinued activities - Acquisition-related charges - Amortisation of acquired intangibles 1.9 Restructuring 0.3 Non-IFRS EBIT 25.2 30
Slide 31: Reconciliation from IFRS to non-IFRS
Reconciliation from IFRS to non-IFRS IFRS revenue measure + Deferred revenue write-down = Non-IFRS revenue measure IFRS profit measure +/- Discontinued activities +/- Acquisition related charges +/- Amortisation of acquired intangibles +/- Restructuring +/- Taxation = Non-IFRS profit measure 31
Slide 32: Definitions
Definitions Non-IFRS adjustments Deferred revenue write-down Adjustments made resulting from acquisitions Discontinued activities Discontinued operations at Temenos that do not qualify as such under IFRS Acquisition related charges Relates mainly to advisory fees and integration costs Amortisation o
Slide 33: Thank you
Thank you www.temenos.com