Geneva, Switzerland, 28 July, 2010 – Temenos Group AG (SIX: TEMN), the market leading provider of core banking solutions, today reports second quarter 2010 results demonstrating excellent profit growth on the back of strong licence sales and focused investments.
Q2 Financial and Operating highlights
Q2 Financial and Operating highlights
- Like-for-like revenue growth +11%, total revenue growth +22%
- Like-for-like licence growth +19%, reported licence growth +26%
- Adjusted EBIT +46%, adjusted EPS +44%
- Adjusted EBIT margin growth of 300bps
Commenting on the results, Temenos CEO Andreas Andreades said, “This is an excellent set of results. What we observed at the end of Q1 is now materialising: that is, banks are dealing with the legacy of the financial crisis by investing in technology and we see customers committing to bigger projects. Clearly, not all banks are yet in a position to invest millions of dollars in core replacement projects, but what is encouraging is that every day more banks move from tactical decision-making to long-term strategic planning. When they do this, they almost invariably arrive at the conclusion that technology is only way to make a real, long-lasting impact on cost to income.
Our business has been building momentum for several quarters, culminating in this very strong performance. What is more, Temenos is a different business than pre-crisis. We are bigger and enjoy greater economies of scale than before. In addition, we have put in place an extensive network of partners, who are helping us to win more business but also leading more and more of our implementation efforts. Overall, this has meant that our investments can be much more targeted than before and also enjoy more leverage. So, while licences are growing in double-digits, costs are growing in low single-digits. And the impact of profitability is dramatic, 300 basis points in this quarter alone.”
Revenue
Revenue for the second quarter was USD 100.2m, up from USD 81.9m in the same period last year, representing an increase of 22%. Licence revenue for the quarter was USD 34.3m, 26% higher than in 2009. For the LTM 2010, total revenue was USD 401.3m, up 4% on LTM 2009, with licence revenue at USD 132.3m, 6% lower than the same period last year.
Adjusted EBIT
Adjusted EBIT (EBIT before restructuring charges and amortization of acquired intangibles) was USD 18.1m in the quarter, 46% higher than in Q2 2009. Adjusted EBIT for the last twelve months was USD 98.5m compared to USD 77.1m in the prior period, representing a 28% increase. The adjusted EBIT margin was 18%, an increase of nearly 300 basis points on the prior year, with LTM 2010 adjusted EBIT margin at 25%, 452 basis points higher than in the prior 12 months.
Earnings Per Share (EPS)
Adjusted EPS, which excludes amortization of acquired intangibles and restructuring charges, was USD 0.23 in the quarter, up from USD 0.16 in the same quarter of the previous year, which represents a growth of 44%. The LTM adjusted EPS was 1.32, up 16% on the previous 12 months.
Cash
Operating cash was an outflow of USD 12.6m in the quarter, reflecting chiefly a large adverse movement on payables. On a twelve month basis, operating cashflow was USD 98.3m, 18% higher than in the comparative period and representing a 91% operating cashflow into EBITDA conversion.
Outlook
On a like-for-like basis, the outlook is unchanged. The company expects licence revenue of approximately USD150m, representing 12% like-for-like growth. For total revenues, the company now anticipates a range between USD435m and USD445m, translating into like-for-like growth of 6% (unchanged). The range for adjusted EBIT of USD110-115m is left unchanged.
Conference call
At 17.30 GMT/ 18.30 CET/ 12.30 EST, today, July 28 2010, Andreas Andreades, CEO, David Arnott, CFO, and Max Chuard, Director of M&A and IR, will host a conference call to present results and offer an update on business outlook. Listeners can access the conference call using the following dial in numbers:
+44 (0) 203 037 9105 (UK)
+1 866 966 5335 (USA)
0800 673 7932 (Germany)
0800 800 038 (Switzerland)
A transcript will be made available on the company website 24 hours after the call.
Presentation slides for the call can be accessed using the following link
http://www.temenos.com/Investor-Relations/New-Presentations/
About Temenos
Founded in 1993 and listed on the Swiss Stock Exchange (SIX: TEMN), Temenos Group AG is a global provider of banking software systems in the Retail, Corporate & Correspondent, Universal, Private, Islamic and Microfinance & Community banking markets. Headquartered in Geneva with 57 offices worldwide, Temenos serves over 1000 customers in more than 120 countries. Temenos’ software products provide advanced technology and rich functionality, incorporating best practice processes that leverage Temenos’ experience in over 600 implementations around the globe. Temenos’ advanced and automated implementation approach, provided by its strong Client Services organisation, ensures efficient and low-risk core banking platform migrations. Temenos is top of the IBS Sales League Table 2009; winner every year since its launch of the Best Core Banking Product in
Banking Technology magazine’s Readers’ Choice Awards and ranks 26th in the American Banker top 100 FinTech companies. Temenos customers are proven to be more profitable than their peers: data from The Banker – top 1000 banks shows that Temenos’ customers enjoy a 54% higher return on assets, a 62% higher return on capital and a cost/income ratio that is 7.2 points lower than non-Temenos customers.
Our business has been building momentum for several quarters, culminating in this very strong performance. What is more, Temenos is a different business than pre-crisis. We are bigger and enjoy greater economies of scale than before. In addition, we have put in place an extensive network of partners, who are helping us to win more business but also leading more and more of our implementation efforts. Overall, this has meant that our investments can be much more targeted than before and also enjoy more leverage. So, while licences are growing in double-digits, costs are growing in low single-digits. And the impact of profitability is dramatic, 300 basis points in this quarter alone.”
Revenue
Revenue for the second quarter was USD 100.2m, up from USD 81.9m in the same period last year, representing an increase of 22%. Licence revenue for the quarter was USD 34.3m, 26% higher than in 2009. For the LTM 2010, total revenue was USD 401.3m, up 4% on LTM 2009, with licence revenue at USD 132.3m, 6% lower than the same period last year.
Adjusted EBIT
Adjusted EBIT (EBIT before restructuring charges and amortization of acquired intangibles) was USD 18.1m in the quarter, 46% higher than in Q2 2009. Adjusted EBIT for the last twelve months was USD 98.5m compared to USD 77.1m in the prior period, representing a 28% increase. The adjusted EBIT margin was 18%, an increase of nearly 300 basis points on the prior year, with LTM 2010 adjusted EBIT margin at 25%, 452 basis points higher than in the prior 12 months.
Earnings Per Share (EPS)
Adjusted EPS, which excludes amortization of acquired intangibles and restructuring charges, was USD 0.23 in the quarter, up from USD 0.16 in the same quarter of the previous year, which represents a growth of 44%. The LTM adjusted EPS was 1.32, up 16% on the previous 12 months.
Cash
Operating cash was an outflow of USD 12.6m in the quarter, reflecting chiefly a large adverse movement on payables. On a twelve month basis, operating cashflow was USD 98.3m, 18% higher than in the comparative period and representing a 91% operating cashflow into EBITDA conversion.
Outlook
On a like-for-like basis, the outlook is unchanged. The company expects licence revenue of approximately USD150m, representing 12% like-for-like growth. For total revenues, the company now anticipates a range between USD435m and USD445m, translating into like-for-like growth of 6% (unchanged). The range for adjusted EBIT of USD110-115m is left unchanged.
Conference call
At 17.30 GMT/ 18.30 CET/ 12.30 EST, today, July 28 2010, Andreas Andreades, CEO, David Arnott, CFO, and Max Chuard, Director of M&A and IR, will host a conference call to present results and offer an update on business outlook. Listeners can access the conference call using the following dial in numbers:
+44 (0) 203 037 9105 (UK)
+1 866 966 5335 (USA)
0800 673 7932 (Germany)
0800 800 038 (Switzerland)
A transcript will be made available on the company website 24 hours after the call.
Presentation slides for the call can be accessed using the following link
http://www.temenos.com/Investor-Relations/New-Presentations/
About Temenos
Founded in 1993 and listed on the Swiss Stock Exchange (SIX: TEMN), Temenos Group AG is a global provider of banking software systems in the Retail, Corporate & Correspondent, Universal, Private, Islamic and Microfinance & Community banking markets. Headquartered in Geneva with 57 offices worldwide, Temenos serves over 1000 customers in more than 120 countries. Temenos’ software products provide advanced technology and rich functionality, incorporating best practice processes that leverage Temenos’ experience in over 600 implementations around the globe. Temenos’ advanced and automated implementation approach, provided by its strong Client Services organisation, ensures efficient and low-risk core banking platform migrations. Temenos is top of the IBS Sales League Table 2009; winner every year since its launch of the Best Core Banking Product in
Banking Technology magazine’s Readers’ Choice Awards and ranks 26th in the American Banker top 100 FinTech companies. Temenos customers are proven to be more profitable than their peers: data from The Banker – top 1000 banks shows that Temenos’ customers enjoy a 54% higher return on assets, a 62% higher return on capital and a cost/income ratio that is 7.2 points lower than non-Temenos customers.