2017 FOURTH QUARTER AND FULL YEAR RESULTS Ended December 31, 2017
Forward Looking Statements Disclaimer This presentation contains statements, including statements about future plans and expectations, which constitute forward- looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward looking statements are generally stated in terms of the Company’s plans, expectations and intentions. These statements are based on the current beliefs, expectations and assumptions of the Company’s management and the current economic environment. Forward looking statements are inherently subject to significant economic, competitive and other uncertainties and contingencies, many of which are beyond the control of management. The Company cautions that these statements are not guarantees of future performance. There are or will be important known and unknown factors and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward looking statements. These factors, include, but are not limited to, risks associated with the global economic environment on the Company’s customer base (particularly financial services firms) potentially impacting our business and financial condition; competition; changes in technology and market requirements; decline in demand for the Company's products; inability to timely develop and introduce new technologies, products and applications; difficulties or delays in absorbing and integrating acquired operations, products, technologies and personnel; loss of market share; an inability to maintain certain marketing and distribution arrangements; and the effect of newly enacted or modified laws, regulation or standards on the Company and its products; and other factors and uncertainties discussed in our filings with the U.S. Securities and Exchange Commission (the “SEC”) . You are encouraged to carefully review the section entitled “Risk Factors” in our latest Annual Report on Form 20-F and in our other relevant filings with the SEC for additional information regarding these and other factors and uncertainties that could affect our future performance, and undue reliance should not be placed upon these statements . The forward-looking statements contained in this presentation are made as of the date hereof, and the Company undertakes no obligation to update or revise them, except as required by law. 2
Explanation of Non-GAAP measures Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude: amortization of acquired intangible assets, re-organization expenses, share-based compensation, and certain business combination accounting entries, settlement, amortization of discount on long term debt and tax adjustment re non-GAAP adjustments. The purpose of such adjustments is to give an indication of our performance exclusive of non-cash charges and other items that are considered by management to be outside of our core operating results. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Business combination accounting rules requires us to recognize a legal performance obligation related to a revenue arrangement of an acquired entity. The amount assigned to that liability should be based on its fair value at the date of acquisition. The non-GAAP adjustment is intended to reflect the full amount of such revenue. We believe this adjustment is useful to investors as a measure of the ongoing performance of our business. We believe these non-GAAP financial measures provide consistent and comparable measures to help investors understand our current and future operating cash flow performance. These non-GAAP financial measures may differ materially from the non-GAAP financial measures used by other companies. Reconciliation between results on a GAAP and non-GAAP basis is provided in a table immediately following the Consolidated Statements of Income. 3
Q4 and Full Year 2017 Highlights Income Statement Balance Sheet and Cash Flow Analysis Outlook
Q4 and Full Year 2017 Highlights* Record operating Record revenue for Record gross Record gross income for Q4 and Q4 and FY; growth profit for Q4 and margin of 74.2% FY; growth of 20% of 20% and 31% FY; growth of 21% in Q4; compared and 23% YoY YoY respectively and 30% YoY to 73.9% last year respectively respectively FY recurring Analytics Record EPS for Record operating revenue continues to Q4 and FY; cash flow of represents 65% of grow; represent $1.35 and $4.10 $395M in FY; total revenue; 68% of new respectively, compared to compared to 53% bookings in Q4 growth of 14% $228M last year last year YoY * All numbers are Non-GAAP 5
Q4 and Full Year 2017 Highlights Income Statement Balance Sheet and Cash Flow Analysis Outlook
Strong Growth and Execution REVENUES (Non-GAAP, $M) 1,346 • Record revenue for the quarter and the full year 1,030 • Strong growth reflects across-the-board momentum especially in our strategic pillars of 31% cloud and analytics 396 329 • Recurring revenue accounted for 65% of total 20% revenue in 2017 Q4 16 Q4 17 FY 16 FY 17 EARNINGS PER SHARE (Non-GAAP, $) 4.10 3.61 • Record EPS for the quarter and the full year 14% • Double digit growth in EPS due to improved 1.35 1.18 gross margin and positive leverage in the 14% business model Q4 16 Q4 17 FY 16 FY 17
GAAP and Non-GAAP Income Statement $M (except EPS) Q4 2017 Q4 2016 FY 2017 FY 2017 GAAP revenue 392.2 323.9 1,332.1 1,015.5 Valuation adjustment on acquired deferred product revenue 0.0 0.5 0.3 2.0 Valuation adjustment on acquired deferred service revenue 0.8 2.9 4.7 6.9 Valuation adjustment on acquired deferred cloud revenue 2.8 1.2 8.8 5.9 Non-GAAP revenue 395.8 328.5 1,345.9 1,030.3 GAAP Cost of revenue 123.9 102.8 468.7 337.7 Amortization of acquired intangible assets on cost of product (5.3) (6.0) (23.8) (26.2) Amortization of acquired intangible assets on cost of services (1.0) (3.0) (6.3) (9.6) Amortization of acquired intangible assets on cost of cloud (12.6) (5.5) (46.4) (5.5) Valuation adjustments on acquired deferred cost of service 0.4 0.2 1.5 0.2 Cost of product revenue adjustment (0.2) (0.2) (0.7) (0.5) Cost of services revenue adjustment (2.1) (2.1) (7.7) (7.0) Cost of cloud revenue adjustment (0.8) (0.5) (3.0) (0.7) Non-GAAP cost of revenue 102.3 85.7 382.3 288.4 GAAP gross profit 268.3 221.1 863.5 677.8 Gross profit adjustments 25.2 21.7 100.1 64.0 Non-GAAP gross profit 293.5 242.8 963.6 741.8 GAAP operating expenses 205.1 184.0 713.4 543.6 Research and development (2.4) (2.2) (9.0) (6.6) Sales and marketing (6.1) (7.0) (23.2) (18.1) General and administrative (5.0) (19.2) (12.0) (32.4) Amortization of acquired intangible assets (10.6) (6.8) (41.9) (17.2) Non-GAAP operating expenses 181.1 148.9 627.2 469.3 8
GAAP and Non-GAAP Income Statement (cont.) $M (except EPS) Q4 2017 Q4 2016 FY 2017 FY 2016 GAAP finance & other income (expense), net (3.7) (1.4) (20.4) 10.3 Amortization of discount on long term debt 2.1 0.4 13.5 0.4 Realized gain from substantial liquidation of marketable securities - - - (2.7) Non-GAAP finance & other income (expense), net (1.6) 1.0 (6.9) 8.0 GAAP taxes on income (19.9) 5.8 (13.6) 21.4 Tax adjustment re non-GAAP adjustments 15.4 14.7 57.7 38.5 Tax reform adjustments 30.9 - 30.9 - Non-GAAP taxes on income 26.4 20.5 75.0 59.9 GAAP net income from continuing operations 79.4 30.0 143.3 123.1 Valuation adjustment on acquired deferred revenue 3.5 4.6 13.7 14.8 Valuation adjustment on acquired deferred cost of service of revenue (0.3) (0.2) (1.5) (0.2) Amortization of acquired intangible assets 29.5 21.2 118.4 58.5 Share-based compensation 16.1 14.8 57.0 40.5 Re-organization expenses - 7.8 (3.0) 11.0 Acquisition related expenses 0.5 8.5 1.7 13.7 Amortization of discount on long term debt 2.1 0.4 13.5 0.4 Realized gain from substantial liquidation of marketable securities - - - (2.7) Tax adjustments re non-GAAP adjustments and tax reform (46.3) (14.7) (88.6) (38.5) Non-GAAP net income from continuing operations 84.5 72.4 254.5 220.6 GAAP diluted earnings per share from continuing operations 1.27 0.49 2.31 2.02 Non-GAAP diluted earnings per share from continuing operations 1.35 1.18 4.10 3.61 9
Q4 2017 Revenue Breakdown by Region (Non-GAAP) 79% 14% AMERICAS EMEA $313M, +24% YoY $54M, +2% YoY 7% APAC $28M, +24% YoY 10
Full Year 2017 Revenue Breakdown by Region (Non-GAAP) 78% 14% AMERICAS EMEA $1,048M, +43% YoY $192M, -2% YoY 8% APAC $107M, +5% YoY 11
Q4 2017 Revenue Breakdown by Business Unit (Non-GAAP) 23% FINANCIAL CRIME & COMPLIANCE $93M, +4% YoY 77% CUSTOMER ENGAGEMENT $303M, +26% YoY 12
Full Year 2017 Revenue Breakdown by Business Unit (Non-GAAP) 21% FINANCIAL CRIME & COMPLIANCE $281M, +7% YoY 79% CUSTOMER ENGAGEMENT $1,065M, +39% YoY 13
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