Temenos reports Q1 2010 results
28 April 2010
Returns to like-for-like revenue growth and raises full year outlook
Geneva, Switzerland, 28 April, 2010 – Temenos Group AG (SIX: TEMN), the market leading provider of integrated core banking solutions, reports first quarter 2010 results showing a return to like-for-like revenue growth after 5 quarters of decline and higher average deal size.
Q1 Financial and Operating highlights
- Like-for-like revenue growth +3%, total revenue growth +16%
- Like-for-like licence growth +1% (vs. strong comparison base)
- 31% adjusted EPS growth
- Cash into EBITDA conversion of 185%
- 4 new Tier 1 customers signed in the quarter
- Viveo integration proceeds well (first VBank customer switching to T24)
- 6 licences sold for AML and STP products, including significant deals with Barclays and ANZ
Commenting on the results, Temenos CEO Andreas Andreades said, “I think our profitability and solid cash generation represent an excellent start to the year – the first year of recovery after the financial crisis. We are seeing larger banks come to market, which boosted our average deal size in the quarter, helped to increase our pipeline for the remainder of the year and contributed to a strong start to the second quarter. After recording 5 quarters of decline, we returned to like-for-like revenue growth in the quarter despite the very tough licence comparison in Q109, which benefitted from the largest single deal we signed in 2009 as well as deals which slipped from Q408.
The Viveo integration proceeds well. In the quarter we sold 6 licences of the new AML and STP products and we saw the first adopter of T24 from the Viveo base. This validates both our integration and cross-selling efforts.
A stronger pipeline, boosted by larger corporate and retail deals, gives us the confidence to increase our revenue growth outlook and guidance.”
Revenue
Revenue for the first quarter was USD93.9m, up from USD81.2m in the same period last year, representing an increase of 16%. Licence revenue for the quarter was USD27.2m, 2% down compared to 2009. For LTM 2010, total revenue was USD383.1m, down 4% on LTM 2009, with licence revenue at USD125.4m, 15% less compared to the same period last year.
Operating profit
Operating profit for the quarter was USD1.8m, compared with USD8.7m in the same period last year, a decrease of 79%. Much of the decrease in operating profit is due to restructuring charges and higher acquisition-related amortisation charges. At the end of last year, to allow for a fair comparison of underlying performance, the company introduced a new metric: adjusted EBIT (EBIT before restructuring charges and amortisation of acquired intangibles). Adjusted EBIT was USD12.4m in the quarter, 16% higher than in Q109. Adjusted EBIT for the last twelve months was USD 93.1m compared to USD75.4m in the prior period, representing a 23% increase. The adjusted EBIT margin was 13.2%, flat on the prior year, with LTM 2010 margin at 24.3%, 540 basis points higher than the previous 12 months.
Earnings Per Share (EPS)
Adjusted EPS, which excludes amortisation of acquisition-related intangibles and restructuring charges, was USD0.17 in the quarter, up from USD0.13 in the same quarter of the previous year. The LTM 2010 adjusted EPS was USD1.26, 11% up on the previous 12 months.
Cash
Operating cash was USD 25m in the quarter, representing cash conversion (conversion of Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) into operating cashflow) of 185% for the quarter.
Outlook
Having gained a further quarter of visibility into 2010 and after absorbing two negative revenue (but P/L neutral) effects - a USD 7.3m adverse foreign exchange movement and the disposal of USD 4.3m of revenues via the sale of non-core businesses - we are now able to increase the outlook for the full year 2010 as follows:
- Total revenue to range between USD 440 and 450m (vs previous range USD 436-462m not adjusted for the effects cited above)
- Of which, licence revenue of approximately USD 150m (representing 12% organic growth, vs 6% previously)
- Adjusted EBIT margin of approximately 25.3% (vs. 25% previously)
- EBITDA cash conversion of 100%
- Tax rate of 0%
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/
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
For more information please visit www.temenos.com
Any statements in this press release about future expectations, plans and prospects for the company and statements containing the words “believes”, anticipates”, “plans”, “expects”, “will” and similar expressions, 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 this press release represents the company’s estimates as today’s date. 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. These forward-looking statements should not be relied upon as representing the company’s estimates of its future financial performance as of any date subsequent to today’s date.
For more information, please contact:
Investor/Analyst queries:
Max Chuard
TEMENOS
Director, M&A & IR
Member of the Executive Board
Tel: +41 (0) 22 708 1482
Email:
mchuard@temenos.com
Ben Robinson
TEMENOS
Director, Strategic Planning
Tel: +44 (0) 20 7290 3012
Mobile: +44 (0)7803 887929
Email:
brobinson@temenos.com
Sarah Bowman
TEMENOS
Associate Director, IR
Tel: +1 646 472 8069
Mobile: +1 646 752 5463
Email:
sbowman@temenos.com
Press queries:
Wendy Baker
Hudson Sandler
Tel: +44 (0) 20 7796 4133
Email:
wbaker@hudsonsandler.com