Temenos delivers strong Q1 2014 results across all metrics and reaffirms full year guidance
GENEVA, Switzerland, 29 April 2014 – Temenos Group AG (SIX: TEMN), the market leading provider of mission-critical software to financial institutions globally, today reports its first quarter 2014 results.
The definition of non-IFRS adjustments is below with a full reconciliation of IFRS to non-IFRS results can be found in Appendix II
* Like-for-like (LFL) excludes contributions from acquisitions and adjusts for movements in currencies
** Earnings before interest, tax, depreciation and amortisation (EBITDA) into cash generated from operations
Q1 2014 financial highlights
- Strong Q1 results across all key performance indicators
- LFL software licencing growth of 20% taking growth on an LTM basis to 12%
- Continued strong execution on services strategy with LTM non-IFRS services margin approaching breakeven
- Better revenue mix and operational leverage drives non-IFRS EBIT up 47% with margin up 5.1% points
- Non-IFRS EPS up 54%
- Cash conversion** of 119% in the twelve months to March 2014; DSOs down 18 days vs Q1 2013
- Full year guidance reaffirmed
Q1 2014 operational and industry highlights
- Good sales to both the installed base and to new customers
- 9 new customer wins (Q1 2013:7)
- Continued customer success with 20 implementation go-lives (Q1 2013: 7) and 40 in total (Q1 2013: 32)
- Taking market share as multi-product remains winning model
- Recognition of market leadership from both Forrester and IBS Intelligence
- High levels of customer activity in all regions
- Strong Q1 and pipeline underpins confidence in achieving reaffirmed full year guidance
Commenting on the results, Temenos CEO David Arnott said:
“I am once again pleased to report strong quarterly results across all key performance indicators. Software licensing growth was above our guidance range which drove revenue growth and, together with a better revenue mix, significant growth in non-IFRS EBIT and margin expansion. We are seeing high levels of customer activity in all regions with banks feeling more confident and taking longer term views against an improving macro backdrop.
Looking forward, our award winning multi-product offering together with the strength of our pipeline gives me great confidence in our ability to continue to take market share and deliver strong operating and financial results for our shareholders.”
Commenting on the results, Temenos CFO Max Chuard said:
“Q1 once again saw strong operational performance translated into strong financial performance with non-IFRS EBIT up 47% and non-IFRS EBIT margin up 5.1% points. Our continued focus on cash saw strong cash inflows, with DSOs down 18 days against the same time last year.
For the twelve months ended March 2014 we have delivered software licensing growth of 12%, non-IFRS services margin approaching breakeven, non-IFRS group EBIT margin of 25.2% and cash conversion of 119%, all of which gives me great confidence in achieving our 2014 guidance.”
Both IFRS and non-IFRS revenue for the quarter was USD 109.6m, up from USD 103.6m in Q1 last year, representing an increase of 6% on a reported basis and 3% on a like-for-like basis. Licence revenue for the quarter was USD 29.8m, 22% higher than in the same period in 2013 on a reported basis and 20% higher on a like-for-like basis.
Non-IFRS EBIT was USD 19.8m in Q1, 47% higher than in Q1 2013, with a non-IFRS EBIT margin in Q1 of 18.1%, up 5% points on Q1 2013. IFRS EBIT increased from USD 8.2m in Q1 2013 to USD 17.3m in Q1 2014.
Earnings per share (EPS)
Non-IFRS EPS was USD 0.20 in the quarter compared to USD 0.13 in the prior year. LTM 2014 non-IFRS EPS was USD 1.30, up 27% on the previous 12 months. IFRS EPS for the quarter more than tripled from USD 0.05 per share to USD 0.17 per share.
Pre-tax operating cash
Operating cash was an inflow of USD 20.4m in Q1 2014 compared to USD 8.0m in Q1 2013. For LTM to March 2014, operating cash was USD 181.6m representing a 119% conversion of EBITDA into operating cash.
Our reaffirmed guidance for 2014 on a non-IFRS basis is:
- Total non-IFRS revenue growth of 5% to 10% (implying non-IFRS revenue of USD 491m to USD 515m)*
- Software licensing growth of 10% to 15% (implying software licensing revenue of USD 152m to USD 158m)*
- Non-IFRS EBIT margin of 25.1% (implying non-IFRS EBIT of USD 123m to USD 129m)*
- 100%+ conversion of EBITDA into operating cashflow
- Tax rate of 17% to 18%
* Based on the currency assumptions set out below
At 17.30 BST / 18.30 CET / 12.30 EST, today, 29 April 2014, David Arnott, CEO, and Max Chuard, CFO, will host a conference call to present the results and offer an update on the business outlook. Listeners can access the conference call using the following dial in numbers:
+44 (0)1452 569 335 (UK and International)
0808 238 0673 (UK Free Call)
0445 804 038 (Swiss Local Call)
0800 650 052 (Swiss Free Call)
+1 866 655 1591 (USA Free Call)
Conference ID # 23845809
A transcript will be made available on the Company website 48 hours after the call. Presentation slides for the call can be accessed using the following link: http://www.temenos.com/en/about-temenos/investor-relations/results-and-presentations/.
Currency assumptions for 2014 guidance
In preparing the 2014 guidance, the Company has assumed the following currency assumptions, which remain unchanged from those announced at the company’s Q4 and FY 2013 results:
- USD to Euro exchange rate of 0.734;
- USD to GBP exchange rate of 0.607; and
- USD to CHF exchange rate of 0.903.
Non-IFRS financial Information
Readers are cautioned that the supplemental non-IFRS information presented in this press release 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 reconciliation of IFRS to non-IFRS found in Appendix II, the Company sets forth the most comparable IFRS financial measure and reconciliations of this information with non-IFRS information.
The Company’s non-IFRS figures exclude any deferred revenue write-down resulting from acquisitions, discontinued activities that do not qualify as such under IFRS, acquisition related charges such as advisory fees and integration costs, charges as a result of the amortisation of acquired intangibles, costs incurred in connection with a restructuring plan implemented and controlled by management, and adjustments made to reflect the associated tax charge relating to the above items.