GENEVA, Switzerland, 28 July 2014 – Temenos AG (SIX: TEMN), the market leading provider of mission-critical software to financial institutions globally, today reports its second 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
Q2 2014 Financial Highlights
- Strong Q2 results across all key performance indicators
- LFL software licensing growth in Q2 of 10% taking growth in H1 to 16%
- Continued strong execution on services strategy with non-IFRS services margin positive on LTM basis
- Non-IFRS EBIT up 12% in Q2 2014 vs Q2 2013 and up 19% on an LTM basis
- Non-IFRS EBIT margin up 1.8% points in Q2; LTM margin of 25.5%
- Cash conversion** of 115% in the twelve months to June 2014; DSOs down 16 days vs Q2 2013
- USD 120m share buyback initiated
- Full year guidance reaffirmed
Q2 2014 Operational Highlights & Outlook
- Strong sales to new customers
- 10 new customer wins (Q2 2013:7)
- Continued strong execution with 9 implementation go-lives (Q2 2013: 8) taking H1 total to 28 (H1 2013:15)
- Continued encouraging levels of customer activity across all geographies
- Progress made on discussions for larger deals
- Strong H1 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. The strong performance through the first half of the year, together with the strength of our market leading product offering and the highest levels of customer success we deliver, gives me confidence in our ability to continue to take market share.
The encouraging levels of customer activity seen at the start of the year have continued as has the positive trend of larger deals emerging, and we are making good progress in discussions on these deals. This emerging trend is reflected in the mix of our pipeline and we are anticipating good growth as the rest of the year progresses and remain on track to meet our full year guidance.”
Commenting on the results, Temenos CFO Max Chuard said:
“Software licensing saw double-digit growth in the quarter taking growth for the half year to 16%. Our improving revenue mix and operational leverage drove further margin expansion, with the non-IFRS EBIT margin at 25.5% on a twelve month basis. Our continued focus on cash delivered cash conversion of 115% for the twelve months to the end of Q2 2014.
The strength of our operational and financial performance gives me confidence in delivering another year of growth in revenues and profit, margin expansion, strong cash inflows and a further reduction in DSOs.”
Both IFRS and non-IFRS revenue for the quarter was USD 112.3m, up from USD 110.0m in Q2 last year, representing an increase of 2% on a reported basis and 1% on a like-for-like basis. Licence revenue for the quarter was USD 30.5m, 10% higher than in the same period in 2013 on both a reported basis on a like-for-like basis.
Non-IFRS EBIT was USD 22.5m in Q2, 12% higher than in Q2 2013, with a non-IFRS EBIT margin in Q2 of 20.0%, up 1.8% points on Q2 2013. IFRS EBIT increased from USD 14.4 in Q2 2013 to USD 20.1m in Q2 2014.
Earnings per Share (EPS)
Non-IFRS EPS was USD 0.23 in the quarter compared to USD 0.19 in the prior year. LTM 2014 non-IFRS EPS was USD 1.34, up 17% on the previous 12 months. IFRS EPS for the quarter increased from USD 0.12 per share to USD 0.20 per share.
Pre-Tax Operating Cash
Operating cash was an inflow of USD 21.6m in Q2 2014 compared to USD 18.9m in Q2 2013. For LTM to June 2014, operating cash was USD 184.3 representing a 115% 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 18.30 CET / 12.30 EST / 17.30 BST, today, 28 July 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:
0445 804 038 (Swiss Local Call)
0800 650 052 (Swiss Free Call)
+1 866 655 1591 (USA Free Call)
+44 (0)1452 569 335 (UK and International)
0808 238 0673 (UK Free Call)
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.