GENEVA, Switzerland, 23 April 2013 – Temenos AG (SIX: TEMN), the market leading provider of mission-critical software to financial institutions globally, today reports its first quarter 2013 results.
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
- Solid Q1 results across all key performance indicators
- Like-for-like licence growth of 5% (4% reported), the second consecutive quarter of growth
- Non-IFRS costs down 4% (IFRS costs down 10%) with non-IFRS EBIT margin up 7% pts
- Non-IFRS EBIT more than doubled with IFRS EBIT moving from a loss of USD 5.3m to a profit of USD 8.2m
- Cash conversion** of 111% in the twelve months ending March 2013
- Acquisition of TriNovus to accelerate US growth and enter US SaaS market
- American Depository Receipt commenced trading today under the symbol TMSNY
- Refinancing and bond issue completed to lock-in flexible, low cost, long term funding
- On track to deliver reaffirmed 2013 guidance
Commenting on the results, Temenos CEO David Arnott said:
The actions we took in the second half of 2012, in particular refocusing the organisation around a new strategic plan and reducing costs, are paying off. Licence revenues are growing again thanks to our multi-product approach, which is not only resulting in higher sales in Private Wealth Management, Channels and Business Analytics, but is also making our core banking proposition more attractive and helping to underpin further market share gains.
He also added:
The combination of a rising top line with a materially and sustainably lower cost base is enabling us to deliver very significant growth in profitability, with profits doubling in the quarter on a non-IFRS basis. What is more, with the acquisition of TriNovus we have established a platform to accelerate growth in the US, the world’s largest market for financial services software spend. Taking all of these things together, I am confident that we have the strategy and team to deliver on our financial commitments for the full year and beyond.”
Both IFRS and non-IFRS revenue for the quarter was USD 103.6m, up from USD 100.3m in Q1 last year, representing an increase of 3%. Licence revenue for the quarter was USD 24.5m, 4% higher than in the same period in 2012.
Non-IFRS EBIT was USD 13.5m in Q1, 115% higher than in Q1 2012, with a non-IFRS EBIT margin in Q1 of 13%, up 7% points on 2012. IFRS EBIT moved from a loss of USD 5.3m in Q1 2012 to a profit of USD 8.2m in Q1 2013.
Earnings per Share (EPS)
Non-IFRS EPS was USD 0.13 in the quarter, compared to USD 0.00 in the prior year. For the twelve months to March 2013, non-IFRS EPS was USD 1.01, up 22% on the previous 12 months. IFRS EPS for the quarter moved from a loss of USD 0.17 per share to a profit of USD 0.05 per share.
Pre-Tax Operating Cash
Operating cash was an inflow of USD 8.0m in Q1 2013 compared to an outflow of USD 14.4m in Q1 2012. For the twelve months to March 2013, operating cash was USD 120.1m representing a 111% conversion of EBITDA into operating cash.
Our guidance for 2013 (post the acquisition of TriNovus) on a non-IFRS basis is:
- Total non-IFRS revenue growth of 4.5% to 7.5% (implying non-IFRS revenue of USD 469m to USD 482m)*
- Licence growth of 5% to 10% (implying Licence revenue of USD 131m to USD 137m)*
- Non-IFRS cost base of USD 368m reaffirmed with non-IFRS EBIT margin of 21.7% to 23.2% (implying non-IFRS EBIT of USD 102m to USD 112m)*
- 100%+ conversion of EBITDA into operating cashflow
- Tax rate of 17% to 18%
* Based on the currency assumptions set out below
Currency Assumptions for 2013 Guidance
In preparing the 2013 guidance, the Company has taken the actual Q1 2013 results and for the remainder of 2013 assumed the following (with comparisons as at the announcement of the Q4 and FY 2012 results):
- USD to Euro exchange rate of 0.780 (from 0.778);
- USD to GBP exchange rate of 0.658 (from 0.631); and
- USD to CHF exchange rate of 0.950 (from 0.938).
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.