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
Q3 2015 Financial Summary
- Non-IFRS total software licensing growth in Q3 2015 with total software licensing revenues up 95% Y-o-Y (constant currency), 44% LFL
- Non-IFRS maintenance growth of 10% Y-o-Y and 8% LTM (constant currency)
- Non-IFRS services margin improvement of 470bps Y-o-Y
- Non-IFRS EBIT up 72% Y-o-Y (constant currency), LTM non-IFRS EBIT margin to 29.3% up 410bps Y-o-Y
- Continued strong cash conversion above target of 100%
- DSOs down 17 days Y-o-Y (25 days proforma)
Q3 2015 Operational Highlights and Outlook
- Strong momentum across all geographies
- Landmark Nordea deal demonstrates product superiority and unique business model
- Traction with global partners
- Strong growth in signings and pipeline across all geographies, all customer segments; new and installed base
- Investing in the business to capitalise on improving market conditions and drive future growth
- Strong start to Q4, confident in meeting full year guidance
- Improved revenue visibility for 2016 and the medium term
Commenting on the results, Temenos CEO David Arnott said:
“This was an outstanding quarter for Temenos. We saw great momentum across the whole business, in all geographies and market segments with both new and existing customers. On top of this, the Nordea deal is a landmark for the company. It demonstrates the superiority of our business model, including our packaged software solutions and local presence, as well as the traction we are building with our global partners and a growing appetite for large banks to replace their core systems.
Our key initiatives in the US, partnering for Tier 1 accounts and disruptive and very compelling product roadmap, coupled with a clear recovery in our end markets leaves us very well positioned for the coming quarters and years.”
Commenting on the results, Temenos CFO Max Chuard said:
“We had very strong top line growth in Q3, with total non-IFRS software license revenues up 95%, of which software licensing was up 69%. The strength of our business model with leading, upgradeable packaged software solutions is enabling us to capitalise on improving market conditions. With the license growth and pipeline generation in Q3, our revenue visibility in 2016 and the medium term has substantially increased. Our cash flow generation remains consistently above our target of 100% of EBITDA.”
IFRS revenue for the quarter was USD 145.0m, up from USD 113.7m in Q3 2014. Non-IFRS revenue was USD 148.9m, up from USD 113.7m in Q3 2014, representing an absolute increase of 31% and a 38% increase in constant currency. IFRS total software license revenue for the quarter was USD 58.5m, and non-IFRS total software license revenue for the quarter was USD 61.9m, 87% higher than in the same period in 2014 on a reported basis and 95% higher adjusted for constant currencies.
IFRS EBIT was USD 30.0m this quarter, up from USD 23.0m in Q3 2014. Non-IFRS EBIT was USD 43.6m in Q3 2015, 72% higher than in Q3 2014 (constant currency), with a non-IFRS EBIT margin of 29.3%, up 6% points on Q3 2014 (constant currency).
Earnings per Share (EPS)
IFRS EPS was USD 0.30 vs. USD 0.25 in Q3 2014. Non-IFRS EPS was USD 0.49 vs. USD 0.28 in Q3 2014. LTM non-IFRS EPS was USD 1.78, up 33% on the previous 12 months.
Pre-Tax Operating Cash
IFRS operating cash was an inflow of USD 36.6m in Q3 2015 compared to USD 29.9m in Q3 2014. For LTM to September 2015, operating cash was USD 184m representing a 108% conversion of IFRS EBITDA into operating cash.
- The company reaffirms its outlook for the year as follows*:
- Total non-IFRS software licensing growth of 42% to 46% (implying total non-IFRS software licensing revenue of USD 202m to USD 206m) which includes software licensing growth of 21%+ (implying software licensing revenue of at least USD 162m)
- Total non-IFRS revenue growth of 20.5% to 24.5% (implying non-IFRS revenue of USD 536m to USD 553m)
- Non-IFRS EBIT of USD 153m to USD 158m (implying non-IFRS EBIT margin of 28.5%)
- 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, 20 October 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 # 60469788
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: https://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 20 October 2015.
The above figures are estimates only and may deviate from expected amounts.