Welcome to Temenos

What we believe in

Our VISION

To provide financial institutions, of any size, anywhere in the world, the software to thrive in the digital banking age

how we achieve it

We do this by building, delivering and supporting the world’s best packaged, upgradeable and open banking software

Temenos is The Banking Software Company
41

of the top 50 banks in the world run Temenos

500m

end customers rely on Temenos software

150+

countries with Temenos clients

3,000+

financial institutions use Temenos software

25 years of innovation in technology

Chairman’s statement

It is with great pleasure that we present our annual report for 2017 to our shareholders.

Banking represents the single largest untapped vertical market, that is only gradually converting to packaged software. The market opportunity that we address with our software is estimated to be USD 48 billion. Given this opportunity, the Temenos business model was always about growth.
Andreas Andreades
Executive Chairman
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OUR VALUES IN DEPTH

We operate responsibly to build a sustainable business

We walk the extra mile to build strong and lasting relationships with our stakeholders and create sustainable value for them.

We believe in the power of people

People make things happen. People define our destiny.

We place clients at the core of what we do

Everything starts and ends with our clients’ goals.

We see things differently from everyone else

Average people see difficulties, exceptional people see opportunities.

We inspire, through living up to our full potential

We dream big and pursue our goals fearlessly.

Technology driving innovation

Our market opportunity

europe

23
offices in the region

Asia Pacific

18
offices in the region

Americas

15
offices in the region

Middle East and Africa

8
offices in the region
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Total REVENUE

Europe
48%
Asia Pacific
19%
Americas
18%
Middle East and Africa
15%

tOTAL SOFTWARE LICENSING REVENUES

Europe
50%
Asia Pacific
19%
Americas
22%
Middle East and Africa
9%
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A number of technology trends are driving change across the banking landscape and influencing the approach banks take to their IT renovation

What makes Temenos unique

Our Investment case

We believe that there are five key areas that make Temenos unique

Same software, any bank, anywhere in the world

Software
We supply the same software to all of our clients – regardless of their size and location. There are optional modules within this which a bank can choose from, but we produce the same software for all our clients.

Proven, integrated, upgradeable product

Product
We make our products integrated and upgradeable. Our products are designed to work separately and together and, once installed, upgraded as new versions of the software are released. This means that our clients benefit from our ongoing investment in the product.

Stable business model; committed community

Stability
Temenos has a stable business model, shown in the strength of our financial results and also by the long tenure of the management team. We benefit from a strong and committed ecosystem of Partners working closely with us.

Predictable and faster implementation

Implementation
In order for banks to enjoy the benefits of our software, it is important that it is implemented quickly and in a predictable manner and timeframe. Temenos invests both in its own staff and implementation tooling, as well as working with its Partners to build a large ecosystem of implementation capability outside of the Company.

Relentless focus on innovation

Innovation
Temenos has a long history of investing in its products. This has ensured our position as the leading solution in our sector and, together with the upgradeability, means that clients can continue to enjoy the benefits of our industry leading investment in the future.
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A Year of success

HIGHLIGHTS OF THE YEAR

Total software licensing

+23%
2017
USD 316m
2016
USD 256m

Maintenance

+10%
2017
USD 275m
2016
USD 250m

Total revenue

+16%
2017
USD 737m
2016
USD 635m

EBIT Margin

30.3%
2017
30.3%
2016
29.4%

Operating cash flow conversion

114%
2017
USD 300m
2016
USD 258m

Earnings per share

+18%

DIvidend per share

+18%
2017
CHF 0.65
2016
CHF 0.55

2017 non-IFRS financial highlights

  • Total software licensing revenue growth of 23%.
  • Maintenance growth of 10%.
  • Total revenue growth of 16%.
  • Services margin of 9.7%, improvement of 0.6 percentage points.
  • EBIT margin of 30.3%, up 98 bps.
  • Operating cash flows of USD 300 million, up 16%.
  • Operating cash conversion of 114% with DSOs down eight days in the year.
  • Strength of cash flows and growth in profit support 2017 dividend of CHF 0.65 per share, an increase of 18% (2016: CHF 0.55 per share).

2017 operational highlights

  • Outstanding performance in 2017 driven by strong execution across the business in a growing market.
  • Digital and regulatory pressure, as well as the move to open banking, are driving banks to accelerate their IT investment strategies.
  • Temenos had strong double-digit growth across all geographies in the year with high volumes of deals across client segments.
  • In particular, there was significant activity with tier 1 and 2 clients, which constituted 59% of total software licensing revenue in the year. Notable deals included Openbank, Santander’s digital bank, and Itaú, the largest bank in Latin America.
  • We won 65 new clients, and new and competitive deals contributed 41% of software licensing in the year.
  • Temenos continues to be a market leader, pulling ahead of the competition and raising barriers to entry through the strength of our reference client base.
  • Temenos has significant revenue visibility going into 2018 driven by committed spend and the strength and quality of the pipeline.
  • We continue to work very closely with our Partners across technology and implementation, with Partners involved in the majority of our implementations. The launch of the Temenos Learning Community will be a key driver of Partner engagement in the future.

SOLUTIONS FOR THE DIGITAL AGE

OUR SOLUTIONS

OUR SOLUTIONS

We offer our clients a set of complete front-to-back, integrated banking and finance software solutions which provides them with the full package for their specific needs.

RETAILSUITE

The world’s leading retail banking solution designed for the new banking landscape.

WEALTHSUITE

WealthSuite is an integrated software solution for wealth managers. Its highly scalable technology offers integrated, multi-channel, front-to-back office capabilities.

CORPORATESUITE

CorporateSuite provides one system, one view for all corporate banking needs; today and tomorrow.

Islamicsuite

IslamicSuite, with its scalable innovative technology, provides superior features for lslamic banks to offer their customers Shari’ah compliant products and services that rival their Islamic or conventional counterparts.

INCLUSIVEBANKINGSUITE

InclusiveBankingSuite is an integrated banking software solution built upon 20 years experience serving retail community banking.

FUNDSUITE

FundSuite is an award winning fund administration software solution which provides fund accounting, portfolio accounting and investor servicing and transfer agency on a single platform.

Core banking

The Temenos T24 Core Banking platform has been the best selling solution on the market for 15 years, used by over 700 financial institutions.

Country Model Banks

We currently offer country model platforms for over 30 major countries.

Front Office

Front Office is an integrated, role-specific, multi-channel solution, designed to support banks’ daily interactions and long term relationships with their retail, corporate, mass affluent and HNW customers.

channels

Banks can accelerate time to market for all of their products and services across all digital and assisted channels and extend their reach to customers using any device today and in the future.

Analytics

Unlock the power of banks’ data to become analytically driven and drive profitability and efficiency improvements throughout their entire organization.

Payments

A uniquely flexible payment solution offering full, real-time control and a harmonized customer service experience.

Risk and Compliance

Enabling financial institutions to navigate the complex regulatory landscape in order to remain focused on serving customers, creating innovative products and improving profitability.

Financial Crime Mitigation

A uniquely flexible range of intelligent, versatile solutions for banks, large and small, to combat financial crime.

funds and securities

Our Funds and Securities products are the award winning fund administration software from Multifonds, providing fund accounting, portfolio accounting and investor servicing and transfer agency on a single platform.

VIEW OUR PRODUCTS

Data

Turn the lead weight of data into a golden opportunity: manage it, unlock it and extract value from it.

Design

Adapt banking system functionality and business processes better, faster and more frequently.

Integration

Be more agile and competitive with real-time event based integration.

Interaction

Opening banking platforms to accelerate the pace of innovation around services.

Platform

Reduce the cost of growth and complexity with a highly scalable, efficient and flexible platform.

VIEW OUR TECHNOLOGY

Thought Leadership

INSIGHTS

01

How Temenos enables open banking and the revised Payment Service Directive

Open banking is the adoption of common standards for collaboration between banks and other players within the banking ecosystem.
Kanika Hope
Strategic Business Development Director
02

The evolving landscape of bank-to-customer interactions

When banking began, banking interaction started physically by visiting a bank, and it was not until the 1980s that telephone banking came into play. Around the same time, Bank of Scotland launched Home-Link a service on Prestel’s View-Link system which could be accessed on a microcomputer.
Dharmesh Mistry
Chief Digital Officer
03

AI in payments

We analyze data by looking at multiple factors across multiple facets of our world, related to but not limited to, the task at hand. Humans have the ability to call on every aspect of their current surroundings, any outlying influencing factors including gained experience and use the data to make a decision. It isn’t always the right decision, but that gained experience helps the next time.

Is AI really capable of doing this?
Darryl Proctor
Product Director, Payments
04

Robotics in banking: more Iron Man than Terminator

Talk of robotics ending the world of work as we know it can be misleading and disingenuous. Rather than replacing our jobs, robotics and AI has the ability to enrich them, freeing up time to concentrate on what we do best – innovation and creativity.
Adam Gable
Product Director, Financial Crime, Treasury and Risk
05

Four banking models for the digital age

Digitization of the banking industry is making new banking business models possible. But, it is the combination of regulation and technology that is making new business models a necessity.
Ben Robinson
Group Strategy Director
06

Successful migration is all about choosing the right route

There are three basic routes to a new banking platform: Big Bang, Build and Migrate, and Progressive Migration.
Mark Gunning
Business Solutions Director
VIEW OUR THOUGHT LEADERSHIP

DRIVING INNOVATION
THROUGH PRODUCT INVESTMENT

RESEARCH AND DEVELOPMENT

VIEW RESEARCH AND DEVELOPMENT

investing in learning

Temenos Learning options

Delivering an outstanding 2017

Business review

“I am delighted with our performance in 2017, in which the business has continued to accelerate and capitalize on the significant momentum in our end market.”

We have ended the year in a very strong position, with double digit growth across all our geographies, which is a testament to the dedication and talent of all our colleagues and our ability to consistently execute at a very high standard year after year.
David Arnott
Chief Executive Officer
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Outstanding financial performance

Financial review

We have had a very strong performance in 2017, with total software licensing growth of 23% and total revenue growth of 16%. We delivered margin expansion of 98bps year-on-year and grew EPS by 18%. Our cash conversion of 114% for 2017 is significantly above our target of 100% of EBITDA and means we are recommending a 2017 dividend of CHF 0.65, an increase of 18% on 2016.

Max Chuard
Chief Financial Officer and Chief Operating Officer
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