Q2 Financial and Operating highlights
â¢ Like-for-like revenue growth +11%, total revenue growth +22%
â¢ Like-for-like licence growth +19%, reported licence growth +26%
â¢ Adjusted EBIT +46%, adjusted EPS +44%
â¢ Adjusted EBIT margin growth of 300bps
Commenting on the results, Temenos CEO Andreas Andreades said, âThis is an excellent set of results. What we observed at the end of Q1 is now materialising: that is, banks are dealing with the legacy of the financial crisis by investing in technology and we see customers committing to bigger projects. Clearly, not all banks are yet in a position to invest millions of dollars in core replacement projects, but what is encouraging is that every day more banks move from tactical decision-making to long-term strategic planning. When they do this, they almost invariably arrive at the conclusion that technology is only way to make a real, long-lasting impact on cost to income.
Our business has been building momentum for several quarters, culminating in this very strong performance. What is more, Temenos is a different business than pre-crisis. We are bigger and enjoy greater economies of scale than before. In addition, we have put in place an extensive network of partners, who are helping us to win more business but also leading more and more of our implementation efforts. Overall, this has meant that our investments can be much more targeted than before and also enjoy more leverage. So, while licences are growing in double-digits, costs are growing in low single-digits. And the impact of profitability is dramatic, 300 basis points in this quarter alone.â
Revenue for the second quarter was USD 100.2m, up from USD 81.9m in the same period last year, representing an increase of 22%. Licence revenue for the quarter was USD 34.3m, 26% higher than in 2009. For the LTM 2010, total revenue was USD 401.3m, up 4% on LTM 2009, with licence revenue at USD 132.3m, 6% lower than the same period last year.
Adjusted EBIT (EBIT before restructuring charges and amortization of acquired intangibles) was USD 18.1m in the quarter, 46% higher than in Q2 2009. Adjusted EBIT for the last twelve months was USD 98.5m compared to USD 77.1m in the prior period, representing a 28% increase. The adjusted EBIT margin was 18%, an increase of nearly 300 basis points on the prior year, with LTM 2010 adjusted EBIT margin at 25%, 452 basis points higher than in the prior 12 months.
Earnings Per Share (EPS)
Adjusted EPS, which excludes amortization of acquired intangibles and restructuring charges, was USD 0.23 in the quarter, up from USD 0.16 in the same quarter of the previous year, which represents a growth of 44%. The LTM adjusted EPS was 1.32, up 16% on the previous 12 months.
Operating cash was an outflow of USD 12.6m in the quarter, reflecting chiefly a large adverse movement on payables. On a twelve month basis, operating cashflow was USD 98.3m, 18% higher than in the comparative period and representing a 91% operating cashflow into EBITDA conversion.
On a like-for-like basis, the outlook is unchanged. The company expects licence revenue of approximately USD150m, representing 12% like-for-like growth. For total revenues, the company now anticipates a range between USD435m and USD445m, translating into like-for-like growth of 6% (unchanged). The range for adjusted EBIT of USD110-115m is left unchanged.