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Q3 09 Financial and Operating highlights
* Operating profit growth of 81% to USD20.3m (Q308: USD11.2m)
* Operating margin expansion of over 1,000bps to reach 23% (Q308:11.1%)
* An increase in like-for-like licences* of 6% in the quarter against a tough comparative quarter
* 2 tier 1 deals, taking to 6 the number of tier 1 deals so far this year
* Operating cash of USD31.6m in the quarter, an increase of 195% on the same quarter last year (Q308: USD10.7m)
Commenting on the results, Temenos CEO Andreas Andreades said, "I am very pleased with this set of results. Against a tough comparative quarter, we grew underlying licences, while operating profit increased strongly in both absolute and percentage terms and, for the second quarter running, we generated operating cash well in excess of EBITDA.
At the end of last year, we set out to change the operating model to make the business more cash generative and to lock in higher profitability. This is clearly paying off as, even with lower revenues, the business is much more profitable and cash generative than in the past.
Looking ahead, we anticipate - and are investing for - growth in 2010. Thanks to better payment terms, an expanding partner network and a market-leading product, Temenos will be able to invest and realise significant growth in the year ahead while continuing to expand margins and converting operating cash around the level of EBITDA."
Revenue Revenue for the third quarter was USD88.6m, down from USD100.4m in the same period last year, representing a decline of 12%. Licence revenue for the quarter was USD26.8m, 24% behind the previous year. For the Last Twelve Months (LTM), total revenue was USD373.9m, down 9% on 2008, with licence revenue at USD131.9m, 22% behind the previous 12 months.
Operating profit Operating profit for the quarter was USD20.3m, compared with USD11.2m in the same period last year, an increase of 81%. The LTM operating profit was USD 75.7m, up from USD71.5m in the prior period, representing a 6% increase. Margin for the quarter was 23%, 1,190 basis points higher than in the prior year, with the LTM margin at 20.2%, 280 basis points lower than the previous 12 months.
Earnings Per Share (EPS) Adjusted EPS, which excludes amortisation of acquisition-related intangibles and restructuring charges, was USD0.34 in the quarter, up from USD0.13 in the same quarter of the previous year. The LTM adjusted EPS was USD1.35, 25% up on the previous 12 months.
Cash Operating cash was USD31.6m in the quarter, representing cash conversion - conversion of Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) into operating cashflow - of 113% for the quarter.
Outlook With one quarter of the financial year remaining, Temenos replaces an operating margin outlook of 19-20% with a range for operating profit of USD75-USD80m.
The outlook for full year operating costs has been lowered by USD10m, reflecting a lower outlook for services revenues and costs of USD10m. The new outlook range for services stands at USD120-130m.
The company continues to expect full year maintenance revenues of around USD118. Further, the full year outlook for operating cashflow and free cashflow also remain unchanged, at USD110m and USD80m, respectively.
A transcript from the a results call with Andreas Andreades, CEO, David Arnott, CFO, and Max Chuard, Director of M&A and IR, is available on the company website.
About Temenos
Founded in 1993 and listed on the Swiss Stock Exchange (SIX: TEMN), Temenos Group AG is a global provider of banking software systems in the Retail, Corporate & Correspondent, Universal, Private, Islamic and Microfinance & Community banking markets. Headquartered in Geneva with 51 offices worldwide, Temenos serves over 700 customers in more than 120 countries. Temenos' software products provide advanced technology and rich functionality, incorporating best practice processes that leverage Temenos' experience in over 600 implementations around the globe. Temenos' advanced and automated implementation approach, provided by its strong Client Services organisation, ensures efficient and low-risk core banking platform migrations. Temenos annually invests around 20% in R&D, significantly more than its peers, into a single fully packaged upgradeable software release, which ensures all Temenos customers benefit from modern technology and support indefinitely. Temenos is top of the IBS Sales League Table 2008, winner of the Best Core Banking Product category in Banking Technology magazine's Readers' Choice Awards 2008, winner of the Financial-i Leaders in Innovation award for the most innovative core banking systems solution 2008 and is listed in the American Banker top 100 FinTech companies.
For more information please visit www.temenos.com
Any statements in this press release about future expectations, plans and prospects for the company and statements containing the words "believes", anticipates", "plans", "expects", "will" and similar expressions, constitute forward-looking statements. Actual results may differ materially from those indicated by these forward-looking statements as a result of various factors. In particular, the forward-looking financial information provided by the company in this press release represents the company's estimates as today's date. We anticipate that subsequent events and developments will cause the company's estimates to change. However, while the company may elect to update this forward-looking financial information at some point in the future, the company specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing the company's estimates of its future financial performance as of any date subsequent to today's date.
CONTACT: Investor / Analyst queries Max Chuard, TEMENOS, Director, M&A & IR, Member of the Executive Board Tel: +41 (0) 22 708 1482 e-mail:mchuard@temenos.com Ben Robinson, TEMENOS, Associate Director, IR & Business Strategy Tel: +44 (0)20 7290 3012 Tel: +44 (0)78 0388 7929 e-mail: brobinson@temenos.com Press queries Sarah Mason, Metia, Team 660 for Temenos Tel: +44 (0)20 3100 3613 e-mail: Sarah@metia.com Melanie Hesketh, Metia, Team 660 for Temenos Tel: +44 (0)203 3100 3584 e-mailA:Melanie.Hesketh@metia.com
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