GENEVA, Switzerland, 19 April 2016 – Temenos Group AG (SIX: TEMN), the market leading provider of mission-critical software to financial institutions globally, today reports its first quarter 2016 results.
The definition of non-IFRS adjustments is below and a full reconciliation of IFRS to non-IFRS results can be found in Appendix II
* Constant currency (c.c.) adjusts prior year for movements in currencies
Q1 2016 Highlights
- Strong start to 2016 across all KPIs
- Digitisation and cost focus continue to drive bank decision making
- Continued progress on larger deals, key milestones achieved
- Committed spend from progressive renovation and Q1 activity driving increased revenue visibility for 2016
- Very strong pipeline, giving confidence in 2016 guidance
- Refinancing in Q1 2016 increases flexibility for future growth opportunities
Q1 2016 Financial Summary
- Non-IFRS total software licensing up 53% (c.c.) and IFRS total software licensing up 64% (c.c.) Y-o-Y
- Non-IFRS maintenance growth of 10% (c.c.) and IFRS maintenance growth of 10% (c.c.) Y-o-Y
- Non-IFRS services margin improvement of 140bps in Y-o-Y
- Non-IFRS EBIT up 29% (c.c.) and IFRS EBIT up 155% (c.c.) Y-o-Y
- Non-IFRS EPS increase of 17% and IFRS EPS increase of 800% Y-o-Y
- Q1 2016 LTM cash conversion of 131%
- DSOs down 32 days Y-o-Y
Commenting on the results, Temenos CEO David Arnott said:
“I am very pleased with the strong start we have had to 2016. We have seen excellent performance across all KPIs be it sales, operational or financial. The level of activity in Q1 demonstrates that financial institutions continue to embark on transformational IT renovation, with the digitisation trend and focus on costs putting ever more pressure on banks to upgrade their IT platforms.
In this environment, our value proposition of packaged, upgradeable software is resonating with our clients. We saw good growth across all regions and our pipeline for 2016 remains very strong. The significant number of implementations in the quarter are also a testament to our ability to deliver customer success. We continue to take market share and are proud once again to be recognised as the leading provider of software to financial institutions by the independent industry analysts in 2016.”
Commenting on the results, Temenos CFO and COO Max Chuard said:
“Our growth in revenue, profitability and cash generation has been excellent in Q1, reflecting the strength of our business model and the momentum we have in the market. We continue to make good progress with larger financial institutions embarking on progressive renovation, which has helped to maintain our high levels of revenue visibility for the coming quarters and the medium term. The refinancing we carried out in Q1 2016 has also increased our balance sheet flexibility for future growth opportunities. Given the strong start to 2016 and our healthy pipeline, we are confident in reconfirming our guidance for 2016.”
IFRS revenue for the quarter was USD 129.1m, up from USD 102.0m in Q1 2015. Non-IFRS revenue was USD 129.4m for Q1 2016 up from USD 104.3m in Q1 2015, representing an absolute increase of 24% and 26% in constant currencies. IFRS total software licensing revenue for the quarter was USD 38.9m, and non-IFRS total software licensing revenue for the quarter was USD 39.2m, up 51% from Q1 2015 on a reported basis and 53% in constant currencies.
IFRS EBIT was USD 12.4m this quarter. Non-IFRS EBIT was USD 22.2m in Q1 2016, 29% higher than in Q1 2015 in constant currencies, with a Q1 2016 non-IFRS EBIT margin of 17.2%, up 1.4% points on Q1 2015.
Earnings per Share (EPS)
IFRS EPS for the quarter was USD 0.09 vs. USD 0.01 in Q1 2015. Non-IFRS EPS was 0.21 in Q1 2016, an increase of 17% vs Q1 2015.
Pre-Tax Operating Cash
IFRS operating cash was an inflow of USD 23.9m in Q1 2016 compared to USD 10.1m in Q1 2015. For LTM to March 2016, operating cash was USD 240.9m representing a conversion of 131% of IFRS EBITDA into operating cash.
The company reaffirms its outlook for the year as follows*:
- Non-IFRS total software licensing growth at constant currencies of 10% to 15% (implying non-IFRS total software licensing revenue of USD 234m to USD 245m)
- Non-IFRS revenue growth at constant currencies of 7.5% to 11.0% (implying non-IFRS revenue of USD 594m to USD 614m)
- Non-IFRS EBIT at constant currencies of USD 180m to 185m (implying non-IFRS EBIT margin of c.30%)
- 100%+ conversion of EBITDA into operating cashflow
- Tax rate of 17% to 18%
*Assumes FX rates as disclosed in Q1 2016 results presentation
At 18.30 CET / 17.30 GMT / 12.30 EST, today, 19 April 2016, David Arnott, CEO, and Max Chuard, CFO and COO, 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:
0800 001 184 (Swiss Free Call)
1 866 904 9433 (USA Free Call)
0800 279 7058 (UK Free Call)
+44 (0) 1452 580 111 (UK and International)
Conference ID # 90929134
A transcript will be made available on the Company website 48 hours after the call. Presentation slides for the call can be accessed by clicking here.
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.
Below are the accounting elements not included in the 2016 non-IFRS guidance:
- FY 2016 estimated amortisation of acquired intangibles of USD 35m
- FY 2016 estimated restructuring costs of USD 4m
Restructuring costs include completion of Multifonds integration and realising R&D efficiencies in acquired products. These estimates do not include impact of any further acquisitions or restructuring programmes commenced after 19 April 2016.
The above figures are estimates only and may deviate from expected amounts.