Third Quarter Results
Ended September 30, 2015
Forward Looking Statements Disclaimer
This presentation contains statements, including statements about future plans and expectations, which
constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of
1995. Such forward looking statements are generally stated in terms of the Company’s plans,
expectations and intentions. These statements are based on the current beliefs, expectations and
assumptions of the Company’s management and the current economic environment. Forward looking
statements are inherently subject to significant economic, competitive and other uncertainties and
contingencies, many of which are beyond the control of management. The Company cautions that these
statements are not guarantees of future performance. There are or will be important known and unknown
factors and uncertainties that could cause actual results to differ materially from those expressed or
implied in the forward looking statements. These factors, include, but are not limited to, risks associated
with the global economic environment on the Company’s customer base (particularly financial services
firms) potentially impacting our business and financial condition; competition; changes in technology and
market requirements; decline in demand for the Company's products; inability to timely develop and
introduce new technologies, products and applications; difficulties or delays in absorbing and integrating
acquired operations, products, technologies and personnel; loss of market share; an inability to maintain
certain marketing and distribution arrangements; and the effect of newly enacted or modified laws,
regulation or standards on the Company and its products; and other factors and uncertainties discussed
in our filings with the U.S. Securities and Exchange Commission (the “SEC”). You are encouraged to
carefully review the section entitled “Risk Factors” in our latest Annual Report on Form 20-F and in our
other relevant filings with the SEC for additional information regarding these and other factors and
uncertainties that could affect our future performance, and undue reliance should not be placed upon
these statements. The forward-looking statements contained in this presentation are made as of the date
hereof, and the Company undertakes no obligation to update or revise them, except as required by law.
Explanation of Non-GAAP measures
Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude:
amortization of acquired intangible assets, re-organization expenses, restructures expenses,
share-based compensation, certain business combination accounting entries, settlement and
related expenses and tax adjustment re non-GAAP adjustments. The purpose of such
adjustments is to give an indication of our performance exclusive of non-cash charges and
other items that are considered by management to be outside of our core operating results.
Our non-GAAP financial measures are not meant to be considered in isolation or as a
substitute for comparable GAAP measures, and should be read only in conjunction with our
consolidated financial statements prepared in accordance with GAAP. Our management
regularly uses our supplemental non-GAAP financial measures internally to understand,
manage and evaluate our business and make operating decisions. These non-GAAP
measures are among the primary factors management uses in planning for and forecasting
future periods. Business combination accounting rules requires us to recognize a legal
performance obligation related to a revenue arrangement of an acquired entity. The amount
assigned to that liability should be based on its fair value at the date of acquisition. The nonGAAP adjustment is intended to reflect the full amount of such revenue. We believe this
adjustment is useful to investors as a measure of the ongoing performance of our business.
We believe these non-GAAP financial measures provide consistent and comparable measures
to help investors understand our current and future operating cash flow performance. These
non-GAAP financial measures may differ materially from the non-GAAP financial measures
used by other companies. Reconciliation between results on a GAAP and non-GAAP basis is
provided in a table immediately following the Consolidated Statements of Income.
Q3 2015 Highlights
Income Statement
Balance Sheet and Cash Flow
Analysis
Outlook
Q3 2015 Highlights*
7% Q3
revenue
growth to
$221M; 10%
revenue
growth
excluding FX
impact
27% increase
in Q3 EPS to
$0.75; above
guidance
range
Q3 operating
profit;
grew 45% to
$56M
Q3 gross
margin
increased to
69.8%
compared to
67.2% last
year
Product
revenue
growth of
13%
Q3 cash flow
increased
47%, to $50M
* All numbers, except cash flow, are Non-GAAP and exclude Intelligence and Physical Security divisions
5
Q3 operating
margin
increased to
25.2% compared
to 18.5% last
year
Increased full
year 2015
EPS guidance
Q3 2015 Highlights
Income Statement
Balance Sheet and Cash Flow
Analysis
Outlook
Good Growth and Execution
Q3 2015
REVENUES (Non-GAAP, $M)
230
6.5%
220
210
221
•
•
208
•
•
200
190
Excluding currency impact, revenue growth
was 10%
Business model focus on product revenue
leads to double-digit product revenue
growth
Strong growth in analytic solutions
Good contribution from recent innovations
180
Q3 14
Q3 15
EARNINGS PER SHARE
(Non-GAAP, $)
•
0.9
0.7
27%
0.75
0.59
•
•
0.5
0.3
0.1
Q3 14
Q3 15
Strong growth in EPS due to revenue
growth and improved gross and operating
margins
Excellent operating leverage
Continued successful execution of
operational plan
* All numbers exclude Intelligence and Physical Security divisions
GAAP and Non-GAAP Income Statement – Q3 2015
$M (except EPS)
Q3 2015
Q3 2014
221.1
207.5
-
0.0
Non-GAAP revenues
221.1
207.5
GAAP Cost of revenue
74.6
76.0
Amortization of acquired intangible assets on cost of product
(6.9)
(7.2)
Cost of product revenue adjustment
(0.1)
(0.1)
Cost of services revenue adjustment
(0.8)
(0.7)
Non-GAAP cost of revenue
66.8
68.0
GAAP gross profit
146.5
131.5
Gross profit adjustments
7.8
8.0
Non-GAAP gross profit
154.3
139.5
GAAP operating expenses
108.7
114.1
Research and development
(1.4)
(0.3)
Sales and marketing
(3.1)
(3.2)
General and administrative
(2.5)
(3.2)
Amortization of acquired intangible assets
(3.1)
(4.2)
-
(2.2)
98.6
101.0
GAAP revenue
Valuation adjustment on acquired deferred service revenue
Restructuring expenses
Non-GAAP operating expenses
* Errors due to rounding
8
GAAP and Non-GAAP Income Statement – Q3 2015 (cont.)
$M (except EPS)
Q3 2015
Q3 2014
GAAP taxes on income
9.9
(2.6)
Tax adjustment re non-GAAP adjustments
1.0
6.7
Non-GAAP taxes on income
10.9
4.1
GAAP net income (loss) from continuing operations
29.5
20.9
Valuation adjustment on acquired deferred revenue
-
0.0
Amortization of acquired intangible assets
9.9
11.4
Share-based compensation
6.9
7.5
Re-organization expenses
1.0
-
-
2.2
Tax adjustments re non-GAAP adjustments
(1.0)
(6.6)
Non-GAAP net income from continuing operations
46.3
35.4
GAAP diluted earnings (loss) per share from continuing operations
0.48
0.34
Non-GAAP diluted earnings per share from continuing operations
0.75
0.59
Restructuring expenses
9
* Errors due to rounding
Revenue Breakdown by Region (Non-GAAP)
Q3 2015
22%
66%
AMERICAS
$145M, +4% YoY
EMEA
$50M, +10% YoY
12%
APAC
$26M, +15% YoY
* All numbers exclude Intelligence and Physical Security divisions
Revenue Breakdown by Business Unit (Non-GAAP)
Q3 2015
74%
CUSTOMER
INTERACTIONS
$164M, -0.6% YoY
* All numbers exclude Intelligence and Physical Security divisions
26%
FINANCIAL CRIME &
COMPLIANCE
$57M, +35% YoY
Gross Margin
Q3 2015 (Non-GAAP)
Gross Margin
69.8%| +260bp
Product Margin
87.2%| -50bp
Product
GM
87.7%
Gross
Margin
67.2%
Q3 14
Services Margin
62.0%| +310bp
Product
GM
87.2%
Gross
Margin
69.8%
Service
GM
58.9%
Q3 15
Q3 14
Q3 15
Q3 14
Gross margin expansion is the result of an increase in product revenue and favorable product mix
* All numbers exclude Intelligence and Physical Security divisions
Service
GM
62.0%
Q3 15
Continued Operating Margin Improvement
Q3 2015 (Non-GAAP)
Operating Margin
25.2%
Operating Margin
18.5%
Q3 14
•
•
•
Q3 15
Operating margin improvement is a result of an increase in gross margin and
continued cost structure improvement
Excellent operating leverage
Increased profitability following Security divestitures
* All numbers exclude Intelligence and Physical Security divisions
Cost Ratio – Increased Operating Efficiency
Q3 2015 (Non-GAAP)
R&D
As % of revenue
S&M
As % of revenue
G&A
As % of revenue
S&M
24.4%
R&D
14.7%
S&M
22.1%
R&D
14.0%
G&A
9.5%
G&A
8.5%
Q3 14
Q3 15
Q3 14
Q3 15
Q3 14
Q3 15
• Operating expenses decreased as a percentage of revenue, reflecting further progress in the
Company’s operational plan to improve efficiency and profitability
* All numbers exclude Intelligence and Physical Security divisions
Analytic Applications
As % of bookings
60%
55%
50%
47%
37%
40%
32%
31%
30%
20%
Q3 11
•
Q3 12
Q3 13
Q3 14
Q3 15
Analytics applications are the growth driver of the business. In Q3 2015
Analytics reached 55% of bookings.
* All numbers exclude Physical Security division
Q3 2015 Highlights
Income Statement
Balance Sheet and Cash Flow
Analysis
Outlook
Balance Sheet
September 30, 2015
Assets ($M)
12/31/2014
Cash and cash equivalents
332.7
187.5
Short term investments
98.7
65.7
Trade receivables
136.8
155.6
Other receivables and
prepaid expenses
38.4
33.3
Inventories
7.6
6.9
Deferred tax assets
21.5
Current assets of
discontinued operation
Equity & Liabilities ($M)
12/31/2014
9.1
Deferred revenue and
advances from customers
150.0
122.5
Accrued expenses and other
liabilities
204.6
192.3
20.9
Current liabilities of
discontinued operation
38.3
54.3
11.4
36.4
Current liabilities
404.7
378.2
Total current assets
647.1
506.4
Deferred tax liabilities
18.2
23.3
Long term Investments
376.8
246.7
Other long term assets
27.5
25.9
Other long term liabilities
18.0
19.0
Property and equipment
38.2
40.2
LT liabilities of discontinued
operation
5.7
8.1
Other Intangible assets
78.3
109.5
Total long term liabilities
41.9
50.4
Goodwill
654.3
659.6
3.1
53.6
Equity
1,378.6
1,213.5
1,825.3
1,642.0
Equity & Liabilities
1,825.3
1,642.0
Total Assets
* Errors due to rounding
Trade payables
09/30/2015
11.7
LT assets of discontinued
operation
17
09/30/2015
Strong Cash Flow From Operations
Q3 2015
$M
Q3 2015
Q3 2014
%∆
Cash flow from operations
49.5
33.8
47%
- Capital expenditure
3.0
3.8
(21%)
46.5
30.0
55%
21.0%
14.5%
6.5pp
Cash conversion rate *
1.0
0.8
25%
Days sales outstanding (DSO) **
54
57
(5%)
Cash flow from operations after capex
Cash flow from operation after capex as % of revenue
* Cash Conversion Rate = (Cash Flow from Operations after CAPEX / Non-GAAP Net Income)
** All numbers, except cash flow, include Intelligence and Physical Security divisions
18
Cash Movement and Liquidity
September 30, 2015
Proceed from sales of
Divestitures
$168M
Other
$18M
CAPEX
-$11M
Operating CF
$211M
Total liquidity (1)
12/31/14
$500M
1) Total Liquidity = Cash and Cash Equivalents + Current Investments + Long Term Investments
19
Dividend
-$29M
Buyback
-$48M
Total liquidity (1)
09/30/15
$808M
Q3 2015 Highlights
Income Statement
Balance Sheet and Cash Flow
Analysis
Outlook
Outlook (Non-GAAP)
Q4 2015
Revenue ($M)
262-278
EPS ($)
0.97-1.08
FY 2015
Revenue ($M)
916-932
EPS ($)
3.06-3.17
The outlook is provided as of October 29 2015. There is no guarantee that the Company will change or update these figures in
this presentation should a need arise in the future to update the outlook. This is in addition to the forward-looking statements
disclaimer at the beginning of the presentation.
* All numbers exclude Intelligence and Physical Security divisions