Slide 1: Temenos
temenos
Slide 2: Financial Results and Business Update
Financial Results and Business Update Jean-Pierre Brulard, CEO Takis Spiliopoulos, CFO 23 July 2024 Quarter ended, 30 June 2024 2
Slide 3: Disclaimer
Disclaimer Our presentation and this document may contain forward-looking statements relating to the future of the business and financial performance of Temenos AG. Any statements we make about our expectations, plans and prospects for the Company, including any guidance on the Company’s financial p
Slide 4: Non-IFRS information
Non-IFRS information In its presentation and in this document, the Company may present and discuss non-IFRS measures. Readers are cautioned that non-IFRS measures are subject to inherent limitations. Non-IFRS measures are not based on any comprehensive set of accounting rules or principles and shoul
Slide 5: Q2-24 Highlights
Q2-24 Highlights Customer confidence: all delayed deals from Q1-24 signed in Q2-24, strong TCF attendance Q2-24 ARR of USD 742m, up 12% y-o-y c.c. Free Cash Flow of USD 73m, up 16% reported Launched Temenos SaaS Foundation, our next-gen SaaS platform for banking However 2 month delay in most sales p
Slide 6: Agenda
Agenda CEO introduction Operational and financial update Appendix 6 6
Slide 7: CEO introduction
CEO introduction Joined Temenos May 1st, 2024, recently relocated to Zurich Previously CRO of VMware, based in the US for last 4 years Led strategic planning, business operations, go-to-market strategy, and management of VMware’s revenue globally Drove VMware’s transformation to SaaS and subscriptio
Slide 8: First days: a listening and learning tour
First 90 days…a listening and learning tour 50+ Clients 100+ Employees 20+ Partners (SIs & Strategic Partners) Temenos Community Forum 1,400+ attendees; clients & partners 8
Slide 9: Initial impressions
Initial impressions Large and growing Strength of customer Very committed market relationships people Breadth of Innovation functionality 9
Slide 10: Customer success go-lives in Q2-24
Customer success 101 go-lives in Q2-24 Up from 62 go-lives in Q1-24 10
Slide 11: BIL goes live on Temenos core, payments and wealth
BIL goes live on Temenos core, payments and wealth Scalability to Agility to Operational on-board regulatory & efficiency high-volume commercial clients challenges 11
Slide 12: Launching our next generation SaaS for banking
Temenos Enterprise Services Retail Business & Wealth Enterprise Corporate Enterprise Service Enterprise service Service Launching our next Temenos SaaS Foundation generation Customer Empowerment SaaS for Productized Platform & Operations banking Automated Processes Hyperscaler Management 12
Slide 13: Senior leadership strengthened through promotions and new hires
Senior leadership strengthened through promotions and new hires Promotions New hires William Moroney Rodrigo Silva Isabelle Guis Monty Bhatia Chief Revenue Officer President Americas Chief Marketing Officer EVP Global Alliances & Partner Ecosystem 13
Slide 14: Priorities for H2 2024
Priorities for H2 2024 Culture & Product & Strategy & Leadership Technology Financial Plan Immediate investment in go-to-market in the US and Western Europe Capital Markets Day London and virtual, November 12, 2024 14
Slide 15: Agenda
Agenda CEO introduction Operational and financial update Appendix 15 15
Slide 16: Q2-24 Non-IFRS financial highlights
Q2-24 Non-IFRS financial highlights Revenue and profit (non-IFRS, c.c.) Cash flow • ARR of USD 742.4m, up 12% • Q2-24 operating cash flow of USD 96.7m, up 7% y-o-y; • SaaS ACV of USD 9.4m • Q2-24 operating cash conversion of 121% of IFRS EBITDA • SaaS revenue up 8% in Q2-24 • Q2-24 free cash flow of
Slide 17: ARR and non-IFRS income statement – operating
ARR and non-IFRS income statement – operating ARR (USDm) Q2-24 Q2-23 Y-o-Y Y-o-Y c.c. reported ARR 742.4 666.8 11% 12% Income statement (USDm) Q2-24 Q2-23 Y-o-Y Y-o-Y c.c. LTM Q2-24 LTM Q2-23 Y-o-Y Y-o-Y c.c. reported reported Subscription 39.2 35.6 10% 10% 150.3 133.9 12% 11% Term Licence 8.5 17.0
Slide 18: Like-for-like revenues and costs
Like-for-like revenues and costs • Q2-24 LFL non-IFRS revenues up 5% • Q2-24 LFL non-IFRS costs up 4% • Q2-24 LFL non-IFRS product revenues up 6% • Q2-24 LFL non-IFRS product costs up 6% LFL non-IFRS Services revenue LFL non-IFRS Services cost LFL non-IFRS Product costs LFL non-IFRS Product revenues
Slide 19: Non-IFRS income statement – non-operating
Non-IFRS income statement – non-operating Y-o-Y Y-o-Y In USDm, except EPS Q2-24 Q2-23 reported LTM Q2-24 LTM Q2-23 reported EBIT 90.4 84.7 7% 324.4 286.7 13% Net finance charge (4.2) (6.3) (33%) (18.4) (24.4) (25%) FX gain / (loss) 0.9 0.5 75% (1.1) 1.7 (166%) Tax (17.4) (16.2) 7% (62.6) (52.4) 20%
Slide 20: IFRS cash conversion
IFRS cash conversion USD m IFRS EBITDA 107% 116% 108% 121% Operating Cashflow 450 400 350 300 250 200 150 100 50 0 LTM Q2-21 LTM Q2-22 LTM Q2-23 LTM Q2-24 Cash conversion well above 100% target 20
Slide 21: Group liquidity
Group liquidity USDm (4) (20) 97 302 (97) 28 (110) 194 (2) (766) (572) Cash on Operating Cash Tax Capex Dividend Share Buyback Net Repayment Interest, FX Cash on Borrowings Reported Balance Sheet payment & of & Leases Balance Sheet Net Debt (31/03/24) Disposal of Borrowings and (30/06/24) treasury s
Slide 22: Revised FY-24 guidance (non-IFRS, c.c.)
Revised FY-24 guidance (non-IFRS, c.c.) • Q2-24 progress showing increasingly unlikely to catch up all sales campaigns by year-end • Issued revised FY-24 guidance due to H1 performance, assumes return to growth while de-risking the second half of the year FY-23 base (USD, Revised FY-24 guidance Orig
Slide 23: Agenda
Agenda CEO introduction Operational and financial update Appendix 23 23
Slide 24: Subscription transition substantially complete
Subscription transition substantially complete Subscription and term license mix Subscription was 44% of FY-22 and 67% of the FY-23 subscription and term license mix 2% 23% 49% 51% 48% 55% 68% 68% 73% 77% 82% 98% 77% 51% 49% 52% 45% 32% 32% 27% 23% 18% Q4-21 Q1-22 Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 Q3-23
Slide 25: Strong ARR growth trajectory, up 12% in Q2-24
Strong ARR growth trajectory, up 12% in Q2-24 USDm ARR 800 13% CAGR LTM Q2-21 to LTM Q2-24 700 600 500 400 300 200 100 0 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 Q3-23 Q4-23 Q1-24 Q2-24 ARR growth driven by subscription, SaaS and maintenance 25 Note: non-IFRS c.c. growth rates. Se
Slide 26: Illustrative Non-IFRS EBIT Bridge FY-23/FY-24
Illustrative Non-IFRS EBIT Bridge FY-23/FY-24 7-9% y-o-y growth 311 EBIT FY23 CCY Maintenance Saas Profit Services Profit Variable, Investments, EBIT FY24 (Guidance) Wage inflation • Visibility on maintenance and SaaS driving FY-24 EBIT growth • Prior year headwinds on services business overcome, co
Slide 27: FCF evolution 2023 to 2024
FCF evolution 2023 to 2024 Estimated movements for illustrative purposes only At least 16% growth 243 FY-23 Opex investment Net Services Term License Subsc License SaaS & Maint Tax Capex & Cap Dev FY-24 & inflation Impact Impact Impact Revenue/Deferred 27
Slide 28: Impact of subscription transition on P&L, cashflow and ARR
Impact of subscription transition on P&L, cashflow and ARR Term model – P&L Subscription model – P&L 5 5 5 1 1 1 1 1 1 1 1 1 1 1 Year 1 Year 2 Year 3 Year 4 Year 5 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Maintenance Term License Maintenance Subscription License Term model – Cash Subscription model
Slide 29: Impact of SaaS contracts on P&L, cashflow and ARR
Impact of SaaS contracts on P&L, cashflow and ARR SaaS model – P&L 2 2 2 2 2 2 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 SaaS revenue Cashflow SaaS model – Cash 2 2 2 2 2 2 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Cashflow SaaS model – ARR 2 2 2 2 2 2 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 ARR 2
Slide 30: FX and other assumptions underlying FY-24 guidance
FX and other assumptions underlying FY-24 guidance In preparing the FY-24 guidance, the Company has assumed the following FX rates: EUR to USD exchange rate of 1.08 GBP to USD exchange rate of 1.26; and USD to CHF exchange rate of 0.89 The Company has also assumed the following for FY-24 guidance: •
Slide 31: FX exposure
FX exposure % of total USD EUR GBP CHF INR RON Other Total software licensing 69% 19% 2% 3% 0% 0% 6% Maintenance 77% 15% 2% 1% 0% 0% 6% Services 55% 27% 6% 5% 0% 0% 7% Revenues 70% 18% 3% 3% 0% 0% 6% Non-IFRS costs 27% 18% 10% 5% 16% 2% 21% Non-IFRS EBIT 165% 19% (15)% (3)% (35)% (3)% (27)% NB. All
Slide 32: Quarterly SaaS ACV
Quarterly SaaS ACV USDm Q1-19 Q2-19 Q3-19 Q4-19 SaaS ACV 2.7 2.9 6.6 8.8 USDm Q1-20 Q2-20 Q3-20 Q4-20 SaaS ACV 5.3 3.5 14.3 11.5 USDm Q1-21 Q2-21 Q3-21 Q4-21 SaaS ACV 12.1 17.4 10.7 17.0 USDm Q1-22 Q2-22 Q3-22 Q4-22 SaaS ACV 19.0 10.6 17.9 10.5 USDm Q1-23 Q2-23 Q3-23 Q4-23 SaaS ACV 18.9 20.2 12.8 8.
Slide 33: Quarterly ARR, FCF
Quarterly ARR, FCF ARR, USD m Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 Q3-23 Q4-23 Q1-24 Q2-24 ARR 468.1 475.4 486.4 493.5 500.1 514.4 530.8 553.4 568.4 581.9 595.9 626.1 645.2 666.8 687.5 730.0 723.1 742.4 FCF, USD m Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-
Slide 34: Total software licensing revenue breakdown by geography
Total software licensing revenue breakdown by geography Q2-23 Q2-24 14% 24% APAC APAC Europe 39% Europe 41% MEA MEA Americas 27% Americas 19% 20% 16% LTM Q2-23 LTM Q2-24 17% 18% APAC APAC Europe Europe 41% 42% MEA MEA 19% Americas Americas 23% 22% 18% 34
Slide 35: Total software licensing revenue breakdown by customer tier
Total software licensing revenue breakdown by customer tier Q2-23 Q2-24 32% 39% 1 and 2 1 and 2 61% 3, 4, and 5 3, 4, and 5 68% LTM Q2-23 LTM Q2-24 1 and 2 1 and 2 40% 46% 3, 4, and 5 3, 4, and 5 54% 60% 35
Slide 36: Software licensing revenue: competitive deals vs add-ons to installed base
Software licensing revenue breakdown by competitive deals/ add-ons to installed base Q2-23 Q2-24 22% 22% Competitive deals Competitive deals Add-ons to installed base Add-ons to installed base 78% 78% LTM Q2-23 LTM Q2-24 33% Competitive deals 37% Competitive deals Add-ons to installed base Add-ons t
Slide 37: DSOs
DSOs 150 141 136 133 129 125 124 124 117 115 114 111 112 107 106 100 50 0 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 Q3-23 Q4-23 Q1-24 Q2-24 DSOs at 133 at Q2-24 37
Slide 38: Balance sheet – leverage
Balance sheet –leverage Leverage ratios 3.0x 2.6x 2.6x 2.6x 2.5x 2.3x 2.1x 2.2x 2.1x 2.0x 2.0x 2.0x 2.0x 1.9x 1.8x 1.8x 1.8x 1.7x 1.6x 1.5x 1.4x 1.4x 1.0x 0.5x 0.0x Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 Q3-23 Q4-23 Q1-24 Q2-24 38
Slide 39: Capitalization of development costs
Capitalization of development costs USDm Q1-22 Q2-22 Q3-22 Q4-22 FY-22 Cap’ dev’ costs (21.9) (22.3) (21.3) (20.8) (86.3) Amortisation 15.8 16.4 15.7 15.6 63.4 Net cap’ dev’ (6.1) (6.0) (5.6) (5.2) (22.9) USDm Q1-23 Q2-23 Q3-23 Q4-23 FY-23 Cap’ dev’ costs (19.7) (18.2) (19.4) (19.3) (76.6) Amortisat
Slide 40: Reconciliation from IFRS to non-IFRS
IFRS revenue measure + Deferred revenue write-down = Non-IFRS revenue measure Reconciliation IFRS profit measure from IFRS to +/- +/- Share-based payments and related social charges Deferred revenue write down non-IFRS +/- Discontinued activities +/- Amortisation of acquired intangibles +/- M&A rela
Slide 41: Accounting elements not included in non-IFRS guidance
Accounting elements not included in non-IFRS guidance Below are the accounting elements not included in the FY-24 non-IFRS guidance: FY-24 estimated share-based payments charge of c.5% of revenue FY-24 estimated amortisation of acquired intangibles of USD 50m FY-24 estimated restructuring / M&A rela
Slide 42: Earnings Reconciliation – IFRS to non-IFRS
Earnings Reconciliation – IFRS to non-IFRS 3 Months Ending 30 June 3 Months Ending 30 June In USDm, except EPS 2024 2024 2023 2023 IFRS Non-IFRS adj. Non-IFRS IFRS Non-IFRS adj. Non-IFRS Subscription 39.2 39.2 35.6 35.6 Term Licence 8.5 8.5 17.0 17.0 SaaS 54.2 54.2 50.2 50.2 Total Software Licensing
Slide 43: Net earnings reconciliation IFRS to non-IFRS
Net earnings reconciliation IFRS to non-IFRS In USDm, except EPS Q2-24 Q2-23 IFRS net earnings 37.1 38.3 Share-based payments 12.5 14.3 Amortisation of acquired intangibles 10.6 11.1 Restructuring / M&A related costs 14.8 4.3 Fair value change on financial instruments 1.6 - Taxation (6.8) (5.2) Net
Slide 44: Non-IFRS definitions
Non-IFRS definitions Other Revenue visibility Visibility on revenue includes a combination of revenue that is contractually committed and revenue that is in our pipeline and that is likely to be booked, but Non-IFRS adjustments is not contractually committed and therefore may not occur. Share-based
Slide 45: Financial metrics definitions and reporting
Financial metrics definitions and reporting SaaS Annual Contract Annual value of incremental business taken in-year. Includes New Customers, up-sell/cross-sell. Only includes the recurring element of the contract and exclude variable elements. Value (ACV) Disclosure: quarterly reporting, annual repo
Slide 46: Thank you
Thank You Thank you 46