- EXCELLENT QUARTER WITH REVENUES GROWING AT 17% COMPARED TO Q3 2005
- SERVICES REVENUES UP 34% COMPARED TO Q3 2005 AND RETURN TO POSITIVE MARGIN AT 3%
- T24 LICENCE REVENUES UP 39% FOR Q3 2006
- LARGEST EVER TIER ONE DEAL SIGNED IN OCTOBER RESULTS IN INCREASED REVENUE AND EARNINGS OUTLOOK FOR 2006
- OUTLOOK FOR 2007 RECONFIRMS THE COMMITMENT MADE BY MANAGEMENT IN 2004
TEMENOS Group AG (SWX: TEMN), a provider of integrated core banking software, today announced its third quarter 2006 financial results.
Highlights â Third Quarter 2006
Â· Excellent quarter with revenues growing at 17% compared to Q3 2005
Â· Services strategy gaining traction, with service revenues up 34% compared to Q3 2005 and return to positive margin at 3%
Â· For the last 12 months:
o LTM Revenues up 29% (Like for like Revenues up 33%)
o LTM License Revenues up 60% (Like for like Licence Revenues up 69%)
o LTM Operating Costs up 26%
o LTM EBIT up 47%
o LTM EPS up 76%
o LTM Cash Flow from Operations up 6%
Â· In October 2006, we signed our largest deal ever with one of the largest global Tier One Banks. This deal will contribute to an exceptionally strong performance in Q4 2006, and a strong finish to the year, as well as providing much improved visibility into the next 3 years.
Â· TEMENOS increased its License Revenue outlook for 2006 from US$ 85-90 million to US$ 90-95 million. License Revenues are now expected to grow by 44% compared to 2005.
Â· Our outlook for 2006 Revenues is therefore revised to between US$ 210 million and US$ 215 million compared to our previous outlook of between US$ 205 million and US$ 210 million (2005: US$ 168.7 million) up 26% on prior year.
Â· Our 2006 earnings outlook is increased to US$ 49 cents per fully diluted share (2005: US$ 32 cents), a growth in excess of 50% from the prior year. This compares to our previous outlook of fully diluted EPS growth in excess of 40% on 2005.
Â· High contracted future revenues from this yearâs large contracts, a strong pipeline for the next 12 months and consistent execution allow us to provide the outlook for 2007, reconfirming the commitment made in 2003.
Andreas Andreades, Chief Executive, commented:
âWe had an excellent quarter and we are delivering exceptional growth, while we are positioning TEMENOS as the leading banking software vendor. Momentum continues as banks seek to restructure their operations and become competitive. Our performance allows us to upgrade our 2006 outlook for the third quarter in a row. We have reached a key milestone in October by signing our largest deal ever with one of the largest global tier one banks. This deal will contribute to an exceptionally strong performance in Q4 2006 and a strong finish to the year.
TEMENOS is now in excellent shape with product superiority, global sales coverage, domain expertise and a strong management team. The revenue and earnings outlook for 2007 is strong and reconfirms the commitment made by the management team in 2004. In 2007, we will continue to leverage strong cumulative maintenance revenue growth, an improving services margin and the significant investment we have already made in TCB. This will result in exceptional shareholder value creation.â
T24 license revenue growth continued to be exceptional with growth in Q3 2006 of 39% compared to same period last year. On a 12 month basis T24 license revenues grew by 57% compared to the same period last year. On a like for like basis (revenues adjusted for the legacy of percentage completion and currency impact) T24 license revenues in the last 12 months grew by 68% compared to the same period last year. In October we signed our largest deal ever with one of the largest global tier one financial institutions.
New name client wins during the quarter totalled 9 (2005: 6) bringing the total for the last 12 months to 40 (2005: 24). This is the result of better territory coverage and consistent execution as well as higher win ratios against competition.
Growth in license revenues for the last 12 months came from Asia Pacific where license revenues grew by 155% and EMEA where license revenues grew by 52%. Americas license revenues increased by 1% on deal seasonality. The faster growth in Asia Pacific is resulting in a better balanced regional mix. On a 12 month basis EMEA represents 63% of license revenues, Americas 11% and Asia Pacific 26%. Total revenues in the last 12 months grew by 122% in Asia Pacific, 19% in the Americas and 14% in EMEA.
In 2006 the share of license revenue from Tier 1 and Tier 2 institutions has increased from approximately 25% in 2005 to approximately 40%. Also in 2006 the share of our retail and universal banking license revenues is settling at approximately 80% compared to 77% in 2005, which is in line with our focus on retail and universal banking â segments of growth.
During the quarter price dynamics were good across all regions and business lines, including license and services.