The definition of non-IFRS adjustments is below with a full reconciliation of IFRS to non-IFRS results can be found in Appendix II
* Constant currency (CC) adjusts prior year for movements in currencies
Q2 2015 Financial Summary
- Strong software licensing growth in Q2 2015 with total software licensing revenues up 56% Y-o-Y (non-IFRS, constant currency), 15% LFL
- Maintenance growth of 11% Y-o-Y and 8% LTM (non-IFRS, constant currency)
- Non-IFRS services margin improvement of 770bps Y-o-Y
- Non-IFRS EBIT up 37% Y-o-Y (constant currency), LTM non-IFRS EBIT margin to 27.6% up 210bps Y-o-Y
- Continued strong cash conversion above target of 100%
- DSOs down 19 days Y-o-Y (27 days proforma)
Q2 2015 Operational Highlights & Outlook
- High win-rate and strong execution across all geographies
- Particularly strong performance in the European business
- Two landmark deals won in the U.S. with top tier domestic banks
- Meaningful progress on specific larger deals, key milestones achieved in the quarter
- Market conditions improving
- Increased H2 revenue visibility following strong deal flow in Q2
Commenting on the results, Temenos CEO David Arnott said:
“This is an excellent performance. Our licence revenues grew strongly on the back of improving market conditions and very strong execution. We had a high win-rate across the board, and our European business in particular performed well. In addition, we continue to develop the US market opportunity, signing highly strategic deals with two of the top 35 US banks. In terms of larger deals, we are in an increasing number of discussions and have achieved several major milestones in the quarter.”
Profits and margins showed strong growth in the quarter owing to an improving sales mix and the improving profitability of our services business, which we continue to shift towards higher end consulting and training.
Looking at the balance of year, in view of the improving market conditions, specifically in Europe, and our increased revenue visibility, we remain confident that we will deliver our outlook.”
Commenting on the results, Temenos CFO Max Chuard said:
“Our Q2 non-IFRS results saw strong growth in total software license revenues of 56%, of which software licensing grew 26%. Our SaaS revenues increased materially to 24% of total software licensing, through a full quarter of contribution from our recent acquisitions. Our cash generation remains strong at well over our target of 100%, and DSOs are once again down materially both an absolute and proforma basis.”
IFRS revenue for the quarter was USD 127.1m and non-IFRS revenue was USD 132.4m, up from USD 112.3m in Q2 last year, representing an absolute increase of 18% and a 25% increase in constant currency. Total non-IFRS software license revenue for the quarter was USD 48.4m, 49% higher than in the same period in 2014 on a reported basis and 56% higher adjusted for constant currencies.
Non-IFRS EBIT was USD 31.7m in Q2, 37% higher than in Q2 2014 (constant currency), with a non-IFRS EBIT margin in Q2 of 23.9%, up 2% points on Q2 2014 (constant currency). IFRS EBIT was USD 12.5m this quarter, down from USD 20.1m in Q2 2014.
Earnings per Share (EPS)
Non-IFRS EPS was USD 0.36 vs. USD 0.23 in Q2 2014. LTM non-IFRS EPS was USD 1.56, up 16% on the previous 12 months. IFRS EPS was USD 0.10 vs. USD 0.20 in Q2 2014.
Pre-Tax Operating Cash
Operating cash was an inflow of USD 19.2m in Q2 2015 compared to USD 21.6m in Q2 2014. For LTM to June 2015, operating cash was USD 178m representing a 113% conversion of EBITDA into operating cash.
The company reaffirms its outlook for the year as follows*:
- Total non-IFRS revenue growth of 18% to 23% (implying non-IFRS revenue of USD 526m to USD 548m)
- Total non-IFRS software licensing growth of 36% to 41% (implying total non-IFRS software licensing revenue of USD 192m to USD 199m) which includes software licensing growth of 13%+ (implying software licensing revenue of at least USD 152m)
- Non-IFRS EBIT margin of 28.5% (implying non-IFRS EBIT of USD 150m to USD 156m)
- 100%+ conversion of EBITDA into operating cashflow
- Tax rate of 17% to 18%
*Assumes FX rates as disclosed in Q2 2015 results presentation – (https://www.temenos.com/en/about-temenos/investor-relations)
At 18.30 CET / 17.30 BST / 12.30 EST, today, 21 July 2015, 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:
0315 800 059 (Swiss Local Call)
0800 920 016 (Swiss Free Call)
1 866 966 1396 (USA Free Call)
+44 (0) 2071 928000 (UK and International)
0800 376 7922 (UK Free Call)
Conference ID # 85559480
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/.
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 2015 non-IFRS guidance:
- FY 2015 estimated deferred revenue write-down of approximately USD 20m
- FY 2015 estimated amortisation of acquired intangibles of USD 30m
- FY 2015 estimated acquisition related charges of USD 5m
- FY 2015 estimated restructuring costs of USD 8m
These estimates do not include impact of any further acquisitions or restructuring programmes commenced after 21 April 2015.
The above figures are estimates only and may deviate from expected amounts.