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Manjinder Jaul
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Temenos releases full year 2010 results – showing record results including 19% like-for-like licence growth – and gives strong outlook for 2011

Temenos Group AG (SIX: TEMN), the market leading provider of core banking solutions, today reports fourth quarter and full year 2010 results showing strong performance across key financial metrics.

Full Year Financial and Operating highlights
• Like-for-like licence growth +19%, reported licence growth +27%
• Cashflow from operations reached USD 126m – 111% of EBITDA
• Adjusted EBIT of USD114m, giving 25% growth and a margin of 25%
• 46 new customer wins including 8 Tier 1 customers
• Integration of Viveo and acquisition of Odyssey proves M&A expertise
• Product extensions account for 15% of total licence revenues
• Evolution of partner program as partners take more services business

Commenting on the results, Temenos CEO Andreas Andreades said, “I am delighted to announce this record set of results. In 2010, we achieved like for like licence growth of 19%, reflecting both a continued recovery in the demand for core banking systems and also continued market share gains.

Despite integrating two acquisitions and the transition to a partner strategy, we generated strong margin expansion and profit growth. Cash generation was also extremely strong, exceeding again our public target, as we continue to mature our delivery model.

The prospects for 2011 are very exciting. We believe spending on modern, externally developed core systems will continue to grow as banks worldwide become more convinced that the appropriate technological platform is a prerequisite for sustainable growth and vendors are able to demonstrate more conclusively that this is indeed the case.

Furthermore, Temenos benefits from a number of company-specific drivers that we believe will see us continue to grow faster than the overall market. Our partner programme, which fundamentally changes our delivery model, acts as an additional sales channel and extends our technological deployment options, also helps us to underpin our leadership through the establishment of an ever-growing ecosystem of trained consultants and collaborators. In addition, our product extensions allow us to continue to extend the breadth and value of new deals and also to increase wallet share with existing customers, while our M&A strategy helps us to build the scale to continue
accelerating product and sales investment.”


Total Revenue for the fourth quarter was USD 149.8.m, up from USD 118.6m in the same period last year, representing an increase of 26%. Licence revenue for the quarter was USD 60.9m, 38% higher than in 2009. For the full year total revenue was USD 448.0m up 21% on 2009, with licence revenue at USD 160.1m, an increase of 27%.

Adjusted EBIT
Adjusted EBIT (EBIT before restructuring charges and amortization of acquired intangibles) was USD 53.8m in the quarter, 26% higher than in Q4 2009. Adjusted EBIT for the full year 2010 was USD 113.7m compared to USD 91.3m in the prior period, representing a 25% increase. The fourth quarter adjusted EBIT margin was 36%, flat on the prior year, with full year 2010 adjusted EBIT margin at 25%, 74 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 0.68 in the fourth quarter, up from USD 0.58 in the same quarter of the previous year, which represents a growth of 17%. Full year 2010 EPS was USD 1.47, representing 20% growth vs 2009.

Operating cash was an inflow of USD 102.6m in the quarter, representing a 212% operating cashflow into EBITDA conversion. On a twelve month basis, operating cashflow was USD 125.8m, representing a 111% operating cashflow into EBITDA conversion.

We expect to achieve a L-f-L growth in licence revenue of 15-20% in constant currencies. (implying USD 197- 205m). We look for growth in total revenues of 22-26% in constant currencies. (implying USD 546-564m) We expect to reach an adjusted operating margin of 26-27% and an operating margin of 20-21%. Our conversion of cashflow into EBITDA should reach 100%. We believe that our tax rate for 2011 will be between 8-10%.