Temenos Ag · SIX:TEMN
Temenos — FY2013 Earnings Presentation
33 slides from Temenos's earnings presentation, Feb 18, 2014
Slide 1: Financial results & business update
Financial results & business update Quarter and year ended 31 December 2013 18 February 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: Overview of 2013
Overview of 2013 Strong licence growth, with momentum building through the year – taking market share Strong growth in Europe, our largest market, and across MEA and APAC Core banking strong, supported by multi-product offering Services strategy delivering with lower contribution from services and i
Slide 5: FY 2013 financial highlights
FY 2013 financial highlights Software licensing growth at the top of guidance Significant improvement in non-IFRS services margin Non-IFRS EBIT margin above the top of guidance Cash conversion above guidance Material reduction in DSOs Dividend increased Share buyback programme completed Delivering s
Slide 6: Q4 and FY 2013 sales update
Q4 and FY 2013 sales update Strong Q4 reflecting • fruition of sales investment made at the start of the sales cycle • multi-product offering accelerating demand for core replacements Good sales to new customers • 14 new customer wins in Q4 (Q4 2012: 10) with 33 in total in 2013 (2012: 37) • High pr
Slide 7: Services and partners update
Services and partners update Services Partners A strong 2013 The model is delivering • More projects delivered – 132 in • Growth in partner resource – now 2013 (2012:89) at over 1,700 • “Premium” services contributed • Increase in ILF brought by partners 19% of revenues (2012: 11%) to 20% in 2013 (2
Slide 8: Market conditions
Market conditions Packaged solutions coupled with progressive renovation is proving winning model Good start to the year with pipeline building well • multi-product offering expected to contribute c.30% to 2014 software licensing revenue • Europe improving on a macro level, but remains below peak •
Slide 9: Agenda
Agenda Business update David Arnott, CEO Financial update Max Chuard, CFO and 2014 guidance Summary David Arnott, CEO Q&A 9
Slide 10: Q4 and FY 2013 financial highlights
Q4 and FY 2013 financial highlights Q4 LFL software licencing growth of 15% drives 10% FY 2013 growth, top end of guidance Lower services contribution to group revenues and 7.8% points improvement in LFL FY 2013 non-IFRS services margin Better revenue mix and lower fixed cost base delivers FY 2013 n
Slide 11: Non-IFRS income statement - operating
Non-IFRS income statement - operating In USDm Q4 13 Q4 12 Y-o-Y FY 13 FY 12 Y-o-Y Software licensing 54.8 47.9 14.3% 137.8 125.1 10.1% SaaS 1.6 0.0 NA 4.8 0.0 NA Total software licensing 56.3 47.9 17.6% 142.6 125.1 13.9% Maintenance 55.9 52.8 5.8% 212.5 201.7 5.4% Services 32.4 33.5 -3.3% 112.7 123.
Slide 12: Like-for-like revenue and costs
Like-for-like revenue and costs FY LFL revenue up 2% LFL non-IFRS costs down 4% Maintenance Licence SaaS Services USDm USDm 500 500 400 (10)% 400 (4)% +17% 300 300 +10% 200 200 100 100 +4% 0 0 FY 2012 FY 2013 FY 2012 FY 2013 Revenue mix improving; lower like-for-like cost base 12
Slide 13: 2014 non-IFRS cost base
2014 non-IFRS cost base Fixed Variable At the mid point of guidance, the Increased investments Increased variable costs 2014 cost base is expected to Effect of lower net cap dev increase by 6% 110% This increase is expected to be 100% broadly split between 90% • increased investment in the businesse
Slide 14: Non-IFRS income statement – non-operating
Non-IFRS income statement – non-operating In USDm, except EPS Q4 13 Q4 12 Y-o-Y FY 13 FY 12 Y-o-Y Non-IFRS EBIT 53.5 48.2 11% 112.8 86.5 30% Net finance charge -2.5 -2.1 -19% -8.9 -7.8 -14% FX gain / (loss) -0.3 0.1 NA -2.2 -3.5 39% Tax -7.5 -3.4 -118% -16.6 -12.6 -32% Non-IFRS net profit 43.2 42.7
Slide 15: Cash conversion
Cash conversion USDm 119% 180 150 120 228% 101% 90 60 30 0 FY 2011 FY 2012 FY 2013 EBITDA Operating cashflow Continued strong cash conversion driven by DSOs reduction of 28 days 15
Slide 16: Balance sheet – debt and financing
Balance sheet – debt and financing In USDm 31 Dec 13 Comment Debt 213.1 USD 350m facility and CHF 100m bond, due in 2017 Cash (115.6) Held in short term deposits Net debt 97.4 0.7x LTM EBITDA Treasury shares (62.5) Reflects market value as of 31 December 2013 Net debt inc. treasury shares 34.9 0.2x
Slide 17: 2014 guidance
2014 guidance Software licensing growth of 10% to 15% (implying software licensing revenue of USD 152m to USD 158m)* Non-IFRS revenue growth of 5% to 10% (implying revenue of USD 491m to USD 515m)* Non-IFRS EBIT margin of 25.1% (implying non-IFRS EBIT of USD 123m to USD 129m)* 100%+ conversion of EB
Slide 18: Agenda
Agenda Business update David Arnott, CEO Financial update Max Chuard, CFO and 2014 guidance Summary David Arnott, CEO Q&A 18
Slide 19: Temenos Analyst & Investor Day: London, February 2014
Temenos Analyst & Investor Day: London, 19 February 2014 10.00 to 10.45 Strategy and vision David Arnott, CEO 10.45 to 11.15 Delivering innovation Mark Winterburn, Group Product Director 11.15 to 11.30 Coffee 11.30 to 12.00 Making payments pay Amanda Gilmour, Payments Product Director Jost Hopperman
Slide 20: Medium term targets announced in February 2013
Medium term targets announced in February 2013 10%+ Economies Shorter software of scale 100-150bps of projects licensing margin Cash growth Higher expansion New / conversion services existing mix over 100% 5%+ revenue margins on average growth More cash Revenue mix per annum per annum up-front per a
Slide 21: Summary
Summary Sustainably grow licence and maintenance revenues Multi-product offering with a focus on reusable product investment Realising the installed base opportunity Higher margin services supporting product business Partner strategy moving into the next phase Strategic M&A complementing organic gro
Slide 22: Appendices
‘é TEMENOS Appendices
Slide 23: FX assumptions underlying 2014 guidance
FX assumptions underlying 2014 guidance In preparing the 2014 guidance, the Company has assumed the following: • USD to Euro exchange rate of 0.734; • USD to GBP exchange rate of 0.607; and • USD to CHF exchange rate of 0.903. 23
Slide 24: Net earnings reconciliation
Net earnings reconciliation In USDm, except EPS Q4 13 Q4 12 FY 13 FY 12 IFRS net earnings 40.2 31.3 68.2 25.2 Acquisition related charges - - 0.3 5.5 Amortisation of acquired 3.3 3.5 12.3 13.2 intangibles Restructuring 1.1 10.0 6.7 18.7 Taxation (1.4) - (2.4) - Net earnings for non-IFRS EPS 43.2 42.
Slide 25: Total software licensing revenue breakdown by geography
Total software licensing revenue breakdown by geography Q4 2012 Q4 2013 APAC APAC 14% 11% 20% Europe 20% Europe Americas 11% Americas 14% MEA MEA 52% 58% FY 2012 FY 2013 APAC APAC 19% Europe 19% Europe 24% 25% Americas Americas MEA 10% MEA 16% 41% 46% 25
Slide 26: Total software licensing revenue breakdown by customer tier
Total software licensing revenue breakdown by customer tier Q4 2012 Q4 2013 1 and 2 1 and 2 30% 48% 3, 4 and 5 3, 4 and 5 52% 70% FY 2012 FY 2013 1 and 2 1 and 2 31% 37% 3, 4 and 5 3, 4 and 5 63% 69% 26
Slide 27: Total software licensing revenue breakdown by new / existing
Total software licensing revenue breakdown by new / existing Q4 2012 Q4 2013 New New 32% 32% Existing Existing 68% 68% FY 2012 FY 2013 New New 28% 44% Existing Existing 56% 72% 27
Slide 28: DSOs
DSOs 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 Continued significant reduction in DSOs 28
Slide 29: Capitalisation of development costs
Capitalisation of development costs USDm Q1 11 Q2 11 Q3 11 Q4 11 FY 11 Cap’ dev’ costs -6.2 -7.6 -11.2 -13.5 -38.5 Amortisation 4.5 4.4 5.3 5.1 19.2 Net cap’ dev’ -1.7 -3.2 -5.9 -8.4 -19.3 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
Slide 30: Reconciliation from IFRS EBIT to non-IFRS EBIT
Reconciliation from IFRS EBIT to non-IFRS EBIT USDm Q4 2013 FY 2013 IFRS EBIT 49.1 93.5 Deferred revenue write-down - - Discontinued activities - - Acquisition-related charges - 0.3 Amortisation of acquired intangibles 3.3 12.3 Restructuring 1.1 6.7 Non-IFRS EBIT 53.5 112.7 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