Geneva, Switzerland, April 23, 2009 – Temenos Group AG (SWX: TEMN), the global provider of integrated core banking solutions, today reports first quarter results showing strong growth in operating profit based on resilient licence sales and tight cost management.
Q1 09 Financial and Operating highlights
- Operating profit growth of 34% to USD8.7m (Q108: USD6.5m)
- Operating margin expansion of 330bps to reach 10.7% (Q108: 7.4%)
- An increase in T24 licences of 5% stated – and 9% at constant FX – against an extremely tough comparative. Within this, T24 sales to new customers were up 48%.
- 3 tier 1 deals, including one large multi-site roll-out in Europe
- 3 large wins for the Misys replacement programme
- Record number of client go-lives in the quarter
- More than 100% growth in new ARC customers and first sales of Temenos Insight, our new Business Intelligence solution.
- Formal recognition in the IBS sales league table that T24 was again the leading-selling core banking solution in 2008.
Commenting on the results, Temenos CEO Andreas Andreades said, “I am delighted with this set of results. After the setback in Q4 of last year, we knew it was important to act quickly to restore investor confidence in the business.
We executed our cost restructuring as committed and the effect of this can be seen very clearly in the cost base, which has fallen by USD14m, or 16%, compared to the previous quarter.
However, the most pleasing aspect of these results is the resilience of the licence sales. Sales of T24, our flagship core banking product, actually grew year-on-year – by 9% at constant currency and by 48% to new accounts - in spite of the difficult environment and the fact that we were lapping a very tough comparative.
Because licence sales have remained so resilient, the cost cutting has manifested itself in significant leverage at the operating profit line, which we hope will continue over the rest of the year and which gives us confidence that we can deliver our full year margin targets. With 2009 expected to be highly cash generative both at operating and free cash flow level it leaves the company in an excellent position to manage capital and debt level as well as develop its business model through accretive acquisitions.
The unilateral termination by Metavante of its agreement with Temenos (please see below for more details) is clearly disappointing, but we remain very confident about our US prospects and those for TCB.
We believe we are able to absorb the effect of the Metavante agreement termination given the better than anticipated performance from T24 in Q1, and so leave our current full year outlook unchanged.”
Revenue for the first quarter was USD81.2m, down from USD88.4m in the same period last year, representing a decline of 8%. Licence revenue for the quarter was USD27.8m, 11% behind the previous year. For the Last Twelve Months (LTM), total revenue was USD399.7m, up 12% on 2008, with licence revenue at USD146.7m, 6% behind the previous 12 months.
Operating profit for the quarter was USD8.7m, compared with USD6.5m in the same period last year, an increase of 34%. The LTM operating profit was USD 66.2m, up from USD63.8m in the prior period, representing a 4% increase. Margin for the quarter was 10.7%, 330 basis points higher than in the prior year, with the LTM margin at
16.6%, 120 basis points lower than the previous 12 months.
Earnings Per Share (EPS)
Adjusted EPS, which excludes amortisation of acquisition-related intangibles and restructuring charges, was USD0.13 in the quarter, up 2% from the prior year (USD0.13). The LTM adjusted EPS was USD1.14, 6% up on the previous 12 months.
Operating cash was USD7.5m in the quarter, representing cash conversion - conversion of Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) into operating cashflow – of 59% for the quarter.
Temenos and Metavante are in dispute with regard to the unilateral termination by Metavante of the agreement. The parties are engaged in a dialogue to evaluate the available options to attempt to resolve that dispute and Temenos anticipates undertaking formal mediation proceedings. Should mediation not result in a resolution of the dispute, Temenos anticipates that it will proceed to arbitration and seek recovery of all amounts due under the agreement. Further project activities related to the agreement have been suspended pending outcome of dispute. We are no longer booking any revenues in relation to this agreement.
Temenos Group continues to expect full year EBIT margins of 19-20% (giving an EBITDA margin range of 27-28%) on a cost base of USD310m.
In terms of cash generation, Temenos expects operating cash for the year to be equal or exceed USD80m and free cash flow to be equal to or exceed USD50m.
At 17.30 GMT/ 18.30 CET, today, April 23, 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
Download the full Q1 2009 results press release (PDF)
Access the Q1 2009 results investor presentation (PDF)
- ENDS -
Founded in 1993 and listed on the Swiss Stock Exchange (SWX: 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 52 offices worldwide, Temenos serves over 700 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 annually invests around 20% in R&D, significantly more than its peers, into a single fully packaged upgradeable software release, which ensures all Temenos customers benefit from modern technology and support indefinitely. Temenos is top of the IBS Sales League Table 2008, winner of the Best Core Banking Product category in Banking Technology magazine’s Readers’ Choice Awards 2008, winner of the Financial-i Leaders in Innovation award for the most innovative core banking systems solution 2008 and is listed in the American Banker top 100 FinTech companies. For more information please visit www.temenos.com
For more information, contact:
Corporate Finance & IR
Member of the Executive Board
Tel: +41 (0) 22 708 1157
Associate Director, IR & Business Strategy
T: +41 (0) 22 708 1535
M: +44 7803 887929
Tel: +44 (0) 20 7710 8910