Financial results & business update Quarter ended 30 September - PowerPoint PPT Presentation

Financial results & business update Quarter ended 30 September 2019 16 October 2019

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-looking financial information provided by the company in the conference call represent the company’s estimates as of 16 October 2019. We anticipate that subsequent events and developments will cause the company’s estimates to change. However, while the company may elect to update this forward-looking financial information at some point in the future, the company specifically disclaims any obligation to do so. This forward- looking information should not be relied upon as representing the company’s estimates of its future financial performance as of any date subsequent to 16 October 2019. 3

Non-IFRS Information Readers are cautioned that the supplemental non-IFRS information presented in this presentation is subject to inherent limitations. It is not based on any comprehensive set of accounting rules or principles and should not be considered as a substitute for IFRS measurements. Also, the Company’s supplemental non-IFRS financial information may not be comparable to similarly titled non-IFRS measures used by other companies. In the tables accompanying this presentation the Company sets forth its supplemental non-IFRS figures for revenue, operating costs, EBIT, EBITDA, net earnings and earnings per share, which exclude the effect of adjusting the carrying value of acquired companies’ deferred revenue, the amortization of acquired intangibles, discontinued activities, acquisition related charges, restructuring costs, and the income tax effect of the non-IFRS adjustments. The tables also set forth the most comparable IFRS financial measure and reconciliations of this information with non-IFRS information. When the Company believes it would be helpful for understanding trends in its business, the Company provides percentage increases or decreases in its revenue (in both IFRS as well as non-IFRS) to eliminate the effect of changes in currency values. When trend information is expressed herein "in constant currencies", the results of the "prior" period have first been recalculated using the average exchange rates of the comparable period in the current year, and then compared with the results of the comparable period in the current year. 4

Agenda 1. Business update……………………………………………Max Chuard, CEO 2. Financial update……………………………………. Takis Spiliopoulos, CFO 3. Summary…………………………………………...............Max Chuard, CEO 4. Q&A 5

Business update Max Chuard, CEO

Review of Q3 2019 Acquisition of Kony strengthens Q3 2019 Temenos Infinity, US strategy and Total software licensing growth of 15% in Q3,  SaaS and cloud expertise 20% YTD  Strong momentum in SaaS, with revenues up 93% and ACV up 164% in Q3  Total revenue growth of 12% in Q3, 17% YTD EBIT up 16% in Q3 , 20% YTD   EPS up 18% in Q3, 19% YTD  Guidance updated following Kony acquisition SaaS ACV up 164%; total software licensing up 15% in Q3 and 20% in 2019 YTD 7 *Revenue and EBIT figures are non-IFRS c.c. growth rates, EPS is non-IFRS reported growth rate

Q3 2019 sales review  Digital, regulatory and cost pressures and move to open Geographic split of total software licensing banking continue to drive market growth Q3 2019 total software licensing Good sales momentum in Europe, Asia and Americas, in  particular in the US, continuing the trend from H1 APAC 9%  Key wins in Q3 include Europe 25% Americas  Tier 1 US bank for fund administration MEA 34%  Tier 1 Australian bank for Infinity 32% Multiple sales to existing Tier 1 European clients   Weak sales execution in MEA region impacted signings in Q3, plan in place to regain momentum in the region by early 2020  Continued momentum in sales into the installed base, increasing share of wallet 18 new customer wins in Q3 2019 vs. 17 in Q3 2018  8

Significant momentum in SaaS Strong performance in SaaS in Q3  Key signings include  High profile challenger bank entering Australian market  Alba, UK challenger bank, focusing on SME  Multiple wins across countries in Europe for neo-banks and new entrants  Developing SaaS pipeline with Kony and already seen early customer success in Q4  TCV ACV SaaS revenue USDm USDm USDm 35 16 7 30 14 6 25 12 5 10 20 4 8 15 3 6 10 2 4 5 1 2 0 0 0 Q3 2018 Q3 2019 Q3 2018 Q3 2019 Q3 2018 Q3 2019 9 *non-IFRS c.c. growth rates

Q3 2019 operational overview Q3 2019 update Global partner network  21 implementation go-lives in Q3 2019  Multiple go-lives in Europe with ongoing tier 6,000+ experienced third party 1 and 2 continuous renovation projects and Temenos consultants globally supporting client  Multiple cloud go-lives in Asia and Europe success with neo-banks  Continued growth in third party experts Building strong references with key go-lives 10

Kony integration progressing well Temenos acquired Kony in September 2019 for an enterprise value of USD 559m and an earn-out of USD 21m Kony is the No.1 digital banking SaaS provider in the US Strengthens Temenos Infinity as the richest and most technologically advanced digital banking product Global team of 1,500 people brings unmatched digital and cloud expertise Accelerates Temenos’ growth in the US, bringing substantial scale, digital expertise and increased market presence Integration of product and organisation progressing well 11

Kony is the market leader in digital banking • Global leader in digital banking and low-code development platforms Market leader in digital • Recognized as a leading player by analysts including Forrester & IDC banking • Very strong mobile development and application capabilities • Global client base of over 100 banks across the US, Europe, Middle East and Asia US and global client • 50 US clients across banks and credit unions base • Excellent traction with the largest US banks – a key target market for Temenos – the majority of US clients have asset sizes above USD 10bn • Headquartered in the US with c.230 employees US, digital & cloud • Global team of c.1,500 employees immersed in digital & cloud expertise • Operating a similar R&D model as Temenos, with a large centre of c.1,100 employees with deep digital expertise in Hyderabad, India Highly compelling •Fast growing recurring revenue business model – over 60% recurring, mostly SaaS business model with •Low attrition rate (mid-single digit) strong momentum 12

Financial update Takis Spiliopoulos, CFO

Q3 2019 non-IFRS financial highlights  Total software licensing up 15% Y-o-Y (c.c.), 20% 2019 YTD (c.c.)  Maintenance growth of 12% Y-o-Y (c.c.), 12% 2019 YTD (c.c.)  Total revenue growth of 12% Y-o-Y (c.c.), 17% 2019 YTD (c.c.)  EBIT up 16% Y-o-Y (c.c.), 20% 2019 YTD (c.c.), Q3 EBIT margin of 34.5%  EPS growth of 18% Y-o-Y, 19% 2019 YTD  Q3 operating cash flow of USD 50m, LTM cash flow of USD 382m  DSOs at 123 days, 9 of which due to M&A (pro-forma 114)  Leverage at 3.1x net debt to EBITDA, expected to be below 2.5x by year end  Services margin of 12.2% in the quarter, up 1.2% points 14

Non-IFRS income statement – operating Y-o-Y Y-o-Y In USDm Q3 19 Q3 18 Y-o-Y c.c. YTD 19 YTD 18 Y-o-Y c.c. reported reported 83.5 80.5 4% 7.0% 239.3 218.2 10% 13% Software licensing 14.6 7.8 87% 93% 42.3 23.5 80% 88% SaaS and subscription 98.1 88.4 11% 15% 281.5 241.7 16% 20% Total software licensing 88.6 78.9 12% 12% 260.2 232.4 12% 12% Maintenance 42.3 40.6 4% 6% 129.3 112.7 15% 18% Services 229.1 207.9 10% 12% 671.0 586.8 14% 17% Total revenue 150.0 139.7 7% 10% 469.3 419.5 12% 16% Operating costs 79.1 68.2 16% 16% 201.7 167.3 21% 20% EBIT 34.5% 32.8% 1.7% pts 1.3% pts 30.1% 28.5% 1.6% pts 0.7% pts Margin 98.0 82.0 19% 20% 256.4 208.3 23% 23% EBITDA 42.8% 39.5% 3.3% pts 38.2% 35.5% 2.7% pts Margin 12.2% 10.9% 1.2% pts 10.8% 8.0% 2.8% pts Services margin 15

Like-for-like revenue and costs  Q3 19 LFL non-IFRS revenues up 7%  Q3 19 LFL non-IFRS costs up 1% Maintenance Total software licensing Services USDm USDm 250 250 200 200 -6% 150 1% 150 +8% 100 100 +2% 50 +11% 50 +9% +11% +15% 0 +13% 0 Q3 2018 Q3 2019 Q3 2018 Q3 2019 Total like-for-like revenue growth of 7% 16

Non-IFRS income statement – non-operating In USDm, except EPS Q3 19 Q3 18 Y-o-Y YTD 19 YTD 18 Y-o-Y 79.1 68.2 16% 201.7 167.3 21% EBIT Net finance charge -5.7 -4.2 36% -15.0 -11.4 31% 1.2 -0.6 NA 0.7 -0.5 NA FX gain / (loss) Tax -8.9 -8.5 5% -26.0 -21.0 24% 65.6 54.9 20% 161.5 134.4 20% Net profit EPS (USD) 0.90 0.76 18% 2.22 1.86 19% 17

DSOs continue to decline DSOs 140 129 123 124 (9 days of which due to M&A) 120 9 114 114 100 Q3 2016 Q3 2017 Q3 2018 Q3 2019 18

IFRS cash conversion USDm 107% 116% 111% 400 350 300 250 200 150 100 50 0 LTM Q3 2017 LTM Q3 2018 LTM Q3 2019 EBITDA Operating cashflow Cash conversion significantly above target of 100% 19