Slide 1: Temenos
temenos
Slide 2: Financial Results and Business Update
Financial Results and Business Update Andreas Andreades, CEO Takis Spiliopoulos, CFO 24 October 2023 Quarter ended, 30 September 2023 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: Q3-23 highlights
Q3-23 highlights FY-23 guidance (non-IFRS, Q3-23 financial highlights Q3-23 operational highlights c.c.) - ARR, EBIT and EPS (non-IFRS, c.c.) guidance raised • Continued strong momentum in the • Stable sales environment throughout • ARR growth of 13%-15% (up from 12- third quarter with ARR of USD687
Slide 6: Agenda
Agenda Our cloud native platform Operational highlights Financial update Conclusion Appendix 6 6
Slide 7: Everyone's banking platform
Everyone’s banking platform Packaged, Country model SaaS, cloud, Composable upgradeable software banks SaaS-like banking Modular Single code Breadth & depth of Cloud native Loosely coupled infrastructure base functionality cloud agnostic event driven as code 7
Slide 8: Same cloud native software
Same cloud native software Segment 3K Powering a world of banking agnostic Clients Retail SME Corp. Wealth that creates opportunities for everyone Type 85+ Challenger agnostic Clients Traditional Challenger Increases relevance Single code and and applicability of configuration base Temenos software,
Slide 9: Temenos Wealth: an end-to-end solution for a global, Tier 1 Bank
Temenos Wealth: an end-to-end solution for a global, Tier 1 Bank • A global Tier 1 bank looking for a cloud-native platform for their International Private Banking Background division in line with their AWS first policy & Context • To consolidate their fragmented, legacy platform and augment the exp
Slide 10: Nationale Nederlanden: Becoming a digital banking provider
Nationale Nederlanden: Becoming a digital banking provider • Part of NN Group, Nationale Nederlanden Bank provides financial services to over 1 million private and Background business customers in the Netherlands. & Context • Transitioning to a leading digital mobile retail banking, offering daily b
Slide 11: QIK: Creating the First Innovative Digital Bank in the country
QIK: Creating the First Innovative Digital Bank in the country • Part of Grupo Popular, QIK Banco Digital Dominicano wanted to launch the first full service digital Background bank in the Dominican Republic within 3 years & Context • To onboard thousands of customers in the first year (targeting 3 m
Slide 12: Agenda
Agenda Our cloud native platform Operational highlights Financial update Conclusion Appendix 12 12
Slide 13: Q3-23 sales and operational review
Q3-23 sales and operational review Total software licensing • Continued stable sales environment throughout Q3-23; positive pipeline development and progress made on large deals Geographic split • Subscription transition on track with small proportion of term licences and cash Q3-23 flow impact from
Slide 14: Subscription transition progressing well
Subscription transition progressing well Subscription and term license mix Subscription was 44% of FY-22 subscription and term mix 2% 23% 49% 51% 48% 55% 68% 77% 98% 77% 51% 49% 52% 45% 23% 32% Q4-21 Q1-22 Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 Q3-23 Subscription Term License Subscription expected to be over
Slide 15: SaaS momentum continues with revenue growth of 23% in Q3-23
SaaS momentum continues with revenue growth of 23% in Q3-23 USDm SaaS Revenue 55 50 31% CAGR LTM Q3-21 to LTM Q3-23 45 40 35 30 25 20 15 10 5 0 Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 Q3-23 Q3-23 SaaS ACV of USD12.8m; mix of new logos and additional consumption 15 Note: non
Slide 16: ARR continued its growth trajectory, up 15% in Q3-23
ARR continued its growth trajectory, up 15% in Q3-23 USDm ARR 700 15% CAGR LTM Q3-21 to LTM Q3-23 650 600 550 500 450 400 350 300 250 200 150 100 50 0 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 Q3-23 ARR growth driven by SaaS growth, maintenance growth acceleration and subscription
Slide 17: Agenda
Agenda Our cloud native platform Operational highlights Financial update Conclusion Appendix 17 17
Slide 18: Q3-23 Non-IFRS financial highlights
Q3-23 Non-IFRS financial highlights Revenue and profit (non-IFRS, c.c.) Cash flow • ARR of USD 687.5m, up 15% • Q3-23 operating cash flow of USD 55.1m, up 58% y-o-y; • Subscription revenue of USD 23.7m • Q3-23 operating cash conversion of 107% of IFRS EBITDA • SaaS revenue up 23% in Q3-23 • Q3-23 Fr
Slide 19: ARR and non-IFRS income statement – operating
ARR and non-IFRS income statement – operating ARR (USDm) Q3-23 Q3-22 Y-o-Y Y-o-Y c.c. reported ARR 687.5 595.9 15% 15% Income statement (USDm) Q3-23 Q3-22 Y-o-Y Y-o-Y c.c. LTM Q3-23 LTM Q3-22 Y-o-Y Y-o-Y c.c. reported reported Subscription 23.7 17.2 37% 36% 140.4 61.4 129% 129% Term Licence 19.3 16.
Slide 20: Like-for-like revenues and costs
Like-for-like revenues and costs • Q3-23 LFL non-IFRS revenues up 10% • Q3-23 LFL non-IFRS costs up 2% • Q3-23 LFL non-IFRS product revenues up 14% • Q3-23 LFL non-IFRS product costs up 7% LFL non-IFRS Services revenue LFL non-IFRS Product revenues LFL non-IFRS Services cost LFL non-IFRS Product cos
Slide 21: Non-IFRS income statement – non-operating
Non-IFRS income statement – non-operating Y-o-Y Y-o-Y In USDm, except EPS Q3-23 Q3-22 reported LTM Q3-23 LTM Q3-22 reported EBIT 59.8 40.8 46% 305.6 306.8 -0% Net finance charge -5.0 -6.1 -18% -23.3 -22.6 23% FX gain / (loss) 0.7 -0.8 -181% 3.2 -0.8 -1044% Tax -11.5 -6.4 79% -57.5 -49.7 16% Net prof
Slide 22: IFRS cash conversion
IFRS cash conversion USD m 119% 113% 117% 107% 450 400 350 300 250 200 150 100 50 0 LTM Q3-20 LTM Q3-21 LTM Q3-22 LTM Q3-23 IFRS EBITDA Operating Cashflow Cash conversion well above 100% target 22
Slide 23: Group liquidity
Group liquidity (6) USDm (21) 55 101 (35) 87 (7) (827) (740) Cash on Operating Cash Tax Capex Net Proceeds / Interest, FX Cash on Borrowings Reported Net Debt Balance Sheet Repayment of & Leases Balance Sheet (30/06/23) Borrowings and (30/09/23) Investments Leverage at 1.8x at end of Q3-23 23 Note:
Slide 24: Revised FY-23 guidance (non-IFRS, c.c.)
Revised FY-23 guidance (non-IFRS, c.c.) ARR, EBIT and EPS guidance raised, other guidance items reconfirmed FY-23 guidance FY-22 base (USD, c.c.) 13%-15% growth ARR 626m (raised from 12%-14% growth ) Total software licensing At least 6% growth 404m At least 8% growth EBIT 278m (raised from at least
Slide 25: Mid-term targets (non-IFRS, c.c.)
Mid-term targets (non-IFRS, c.c.) Mid-term targets (USD) FY-22 base (USD, c.c.) ARR >1.3bn 626m EBIT >570m 278m Free Cash Flow (reported) >700m 193m* * FY-22 Free Cash Flow is reported figure and not restated. See Disclaimer at beginning of this presentation on forward-looking statements 25
Slide 26: Agenda
Agenda Our cloud native platform Operational highlights Financial update Conclusion Appendix 26 26
Slide 27: Concluding remarks
Concluding remarks • USD687m of ARR at end of Q3-23 with ongoing shift to a recurring revenue business model • Sales environment expected to remain stable through balance of year • Subscription expected to be over 70% of subscription/term license mix in FY-23 – future renewals of existing term contr
Slide 28: Agenda
Agenda Our cloud native platform Operational highlights Financial update Conclusion Appendix 28 28
Slide 29: Illustrative Non-IFRS EBIT Bridge FY-22/FY-23
Illustrative Non-IFRS EBIT Bridge FY-22/FY-23 >=8% y-o-y growth 278 EBIT FY-22 CC Saas Profit Services Profit Variable, Investments, EBIT FY-23 (Guidance) Wage inflation • Visibility on SaaS profitability driving FY-23 EBIT growth • Prior year headwinds on services business overcome, contributing to
Slide 30: Illustrative FCF Evolution FY-22/FY-23
Illustrative FCF Evolution FY-22/FY-23 Estimated movements for illustrative purposes only 12-14% growth 193 FY-22 Opex investment Net Services Term License Subsc License SaaS & Maint Tax Capex & Cap Dev FY-23 & inflation Impact Impact Impact Revenue/Deferred 30
Slide 31: 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 32: 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 3
Slide 33: 89 go-lives
Q3-23 operational overview 89 go-lives including 52 implementation go-lives in Q3-23 33
Slide 34: FX and other assumptions underlying FY-23 guidance
FX and other assumptions underlying FY-23 guidance In preparing the FY-23 guidance, the Company has assumed the following FX rates: EUR to USD exchange rate of 1.08 GBP to USD exchange rate of 1.24; and USD to CHF exchange rate of 0.90 The Company has also assumed the following for FY-23 guidance: •
Slide 35: FX exposure
FX exposure % of total USD EUR GBP CHF INR RON Other Total software licensing 68% 22% 2% 4% 0% 0% 4% Maintenance 79% 13% 2% 1% 0% 0% 5% Services 52% 29% 5% 6% 0% 0% 8% Revenues 71% 18% 2% 3% 0% 0% 6% Non-IFRS costs 19% 22% 12% 5% 18% 2% 23% Non-IFRS EBIT 202% 8% (23)% (4)% (44)% (4)% (35)% NB. All %
Slide 36: 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 SaaS ACV 18.9 20.2 12.8 Figures
Slide 37: 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 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 FCF, 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-
Slide 38: Total software licensing revenue breakdown by geography
Total software licensing revenue breakdown by geography Q3-22 Q3-23 15% 21% APAC APAC Europe Europe 45% MEA MEA 48% 12% 26% Americas Americas 22% 11% LTM Q3-22 LTM Q3-23 16% APAC 21% APAC Europe 38% Europe 43% MEA MEA 21% Americas Americas 21% 20% 20% 38
Slide 39: Total software licensing revenue breakdown by customer tier
Total software licensing revenue breakdown by customer tier Q3-22 Q3-23 35% 42% 1 and 2 1 and 2 3, 4, and 5 58% 3, 4, and 5 65% LTM Q3-22 LTM Q3-23 37% 1 and 2 1 and 2 3, 4, and 5 47% 3, 4, and 5 53% 63% 39
Slide 40: Software licensing revenue breakdown by competitive deals/add-ons
Software licensing revenue breakdown by competitive deals/ add-ons to installed base Q3-22 Q3-23 40% Competitive deals Competitive deals Add-ons to installed base 51% 49% Add-ons to installed base 60% LTM Q3-22 LTM Q3-23 35% Competitive deals Competitive deals 39% Add-ons to installed base Add-ons t
Slide 41: DSOs
DSOs 129 130 125 124 124 120 117 115 114 112 111 110 107 106 100 90 80 70 60 50 40 30 20 10 0 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 Q3-23 DSOs at 124 at Q3-23 41
Slide 42: 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 1.5x 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 42
Slide 43: Capitalization of development costs
Capitalization of development costs USDm Q1-21 Q2-21 Q3-21 Q4-21 FY-21 Cap’ dev’ costs (19.2) (20.9) (20.9) (25.2) (86.2) Amortisation 13.8 15.6 15.1 17.0 61.4 Net cap’ dev’ (5.4) (5.4) (5.8) (8.2) (24.8) USDm Q1-22 Q2-22 Q3-22 Q4-22 FY-22 Cap’ dev’ costs (21.9) (22.3) (21.3) (20.8) (86.3) Amortisat
Slide 44: FCF evolution FY-22 to mid-term
FCF evolution FY-22 to mid-term Estimated movements for illustrative purposes only >700 193 FY-22 IFRS EBITDA Net Trade Deferred Revenue Tax Capex & Cap Dev Mid-term Receivables & Payables Figures are on a reported basis 44
Slide 45: 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 46: 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-23 non-IFRS guidance: FY-23 estimated share-based payments charge of c.5% of revenue FY-23 estimated amortisation of acquired intangibles of USD50m FY-23 estimated restructuring / M&A relat
Slide 47: Earnings Reconciliation – IFRS to non-IFRS
Earnings Reconciliation – IFRS to non-IFRS 3 Months Ending 30 September 3 Months Ending 30 September In USDm, except EPS 2023 2023 2022 2022 IFRS Non-IFRS adj. Non-IFRS IFRS Non-IFRS adj. Non-IFRS Subscription 23.7 23.7 17.2 17.2 Term Licence 19.3 19.3 16.6 16.6 SaaS 52.7 52.7 42.5 42.5 Total Softwa
Slide 48: Net earnings reconciliation IFRS to non-IFRS
Net earnings reconciliation IFRS to non-IFRS In USDm, except EPS Q3-23 Q3-22 IFRS net earnings 21.9 2.1 Share-based payments 11.8 14.5 Amortisation of acquired intangibles 11.0 11.1 Restructuring / M&A related costs 4.1 5.1 Taxation (4.8) (5.3) Net earnings for non-IFRS EPS 43.9 27.5 No. of dilutive
Slide 49: 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 50: 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 51: Thank you
Thank You Thank you 51