Q3 Financial and Operating highlights
â¢ Like-for-like licence growth +38%, reported licence growth +41%
â¢ Proportion of Tier 1-2 licenses return to pre-crisis levels
â¢ Completed largest acquisition to date â Odyssey transaction creates PWM leader
â¢ Increasing contribution from partner-sourced deals
Commenting on the results, Temenos CEO Andreas Andreades said, âThis is an excellent set of results. The trends we saw in Q2 continue to materialize. Deal size has been supported by the return of Tier1-2 banks, particularly within Europe. In addition, we are seeing larger projects as the increased urgency of legacy replacement combines with greater confidence in implementation capability to drive customers to initiate multi-site projects.
We are also very happy that our partner strategy is developing at a faster pace than we initially anticipated. We observe partners beginning to function as an additional sales channel, sourcing deals which closed in the quarter at an increasing pace. Furthermore, partners are also taking an increasing share of our implementation business and this will help us to scale our business and grow profits faster in the future.
Our leadership allows us to play the role of consolidator and we are very happy to have made our largest acquisition to date â one that will elevate us into the position of clear leader in the private wealth management market. Our success with our recent integration of Viveo has given us the experience and confidence to undertake larger acquisitions. As part of the Temenos organization, we believe that Odyssey will enjoy faster growth and bring enhanced value to all stakeholders.
Given our excellent performance year to date, we are well on track to meet our full year outlook, which we reiterate at this time.â
Revenue for the third quarter was USD 104.0m, up from USD 88.6m in the same period last year, representing an increase of 17%. Licence revenue for the quarter was USD 37.7m, 41% higher than in 2009. For the LTM 2010, total revenue was USD 416.8m, up 11% on LTM 2009, with licence revenue at USD 143.2m, 9% higher than the same period last year.
Adjusted EBIT (EBIT before restructuring charges and amortization of acquired intangibles) was USD 29.2m in the quarter, 16% higher than in Q3 2009. Adjusted EBIT for the last twelve months was USD 102.5m compared to USD 88.5m in the prior period, representing a 16% increase. The adjusted EBIT margin was 28%, flat on the prior year, with LTM 2010 adjusted EBIT margin at 25%, 99 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 0.40 in the quarter, up from USD 0.34 in the same quarter of the previous year, which represents a growth of 18%.
Operating cash was an inflow of USD 14.1m in the quarter, representing a 42% operating cashflow into EBITDA conversion. On a twelve month basis, operating cashflow was USD 80.7m, representing a 71% operating cashflow into EBITDA conversion.
For the full year, the guidance range for total revenue is unchanged at between USD435m and USD445m.The company increases its full year license revenue outlook to approximately USD 155m, which represents 15% l-f-l growth. The range for adjusted EBIT of USD110-115m is left unchanged. Incorporating Odyssey for the balance of the year raises our total revenue expectation to USD 451-461m, our license revenue to USD 161m, and has no impact on adjusted EBIT.