Temenos Group AG (SIX: TEMN), the market leading provider of mission-critical software to financial institutions globally, today reports its second quarter 2014 results.
Q2 2014 financial highlights
Q2 2014 operational highlights and outlook
Commenting on the results, Temenos CEO David Arnott said: “I am once again pleased to report strong quarterly results across all key performance indicators. The strong performance through the first half of the year, together with the strength of our market leading product offering and the highest levels of customer success we deliver, gives me confidence in our ability to continue to take market share.
The encouraging levels of customer activity seen at the start of the year have continued as has the positive trend of larger deals emerging, and we are making good progress in discussions on these deals. This emerging trend is reflected in the mix of our pipeline and we are anticipating good growth as the rest of the year progresses and remain on track to meet our full year guidance.”
Commenting on the results, Temenos CFO Max Chuard said: “Software licensing saw double-digit growth in the quarter taking growth for the half year to 16%. Our improving revenue mix and operational leverage drove further margin expansion, with the non-IFRS EBIT margin at 25.5% on a twelve month basis. Our continued focus on cash delivered cash conversion of 115% for the twelve months to the end of Q2 2014.
The strength of our operational and financial performance gives me confidence in delivering another year of growth in revenues and profit, margin expansion, strong cash inflows and a further reduction in DSOs.”
Both IFRS and non-IFRS revenue for the quarter was USD 112.3m, up from USD 110.0m in Q2 last year, representing an increase of 2% on a reported basis and 1% on a like-for-like basis. Licence revenue for the quarter was USD 30.5m, 10% higher than in the same period in 2013 on both a reported basis on a like-for-like basis.
Non-IFRS EBIT was USD 22.5m in Q2, 12% higher than in Q2 2013, with a non-IFRS EBIT margin in Q2 of 20.0%, up 1.8% points on Q2 2013. IFRS EBIT increased from USD 14.4 in Q2 2013 to USD 20.1m in Q2 2014.
Earnings per share (EPS)
Non-IFRS EPS was USD 0.23 in the quarter compared to USD 0.19 in the prior year. LTM 2014 non-IFRS EPS was USD 1.34, up 17% on the previous 12 months. IFRS EPS for the quarter increased from USD 0.12 per share to USD 0.20 per share.
Pre-tax operating cash
Operating cash was an inflow of USD 21.6m in Q2 2014 compared to USD 18.9m in Q2 2013. For LTM to June 2014, operating cash was USD 184.3 representing a 115% conversion of EBITDA into operating cash.
Our reaffirmed guidance for 2014 on a non-IFRS basis is:
* Based on the currency assumptions set out below.
Currency assumptions for 2014 guidance
In preparing the 2014 guidance, the Company has assumed the following currency assumptions, which remain unchanged from those announced at the company’s Q4 and FY 2013 results:
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