Earnings Call: Q1 2019

Apr 16, 2019

Thank you for standing by, and welcome to the Temenos Q1 2019 Results Call. At this time, all participants are in a listen only mode. There will be a presentation followed by a question and answer session. I must advise you this conference is being recorded today, Tuesday, 16th April, 2019. And I would now like to hand the conference over to your speaker today, Max Schwab, CEO. Please go ahead, sir. Good afternoon, and thank you for joining today's call. I hope you've been able to access our results presentation on our website, which we'll be talking through on this call. I will start with some comments on our Q1 performance, and then I will hand over to Thakis for an overview of the financials before giving some concluding remarks. Takis joined us at the start of this month as our new CFO, I am delighted to be doing our first of many quarterly results together. Starting on Slide 7, I'm pleased to say as my Q1 as the new CEO of Telenor's, that we had a very strong start to the year. The urgency for banks to change their IT has never been greater. Digital regulatory and cost pressure are intensifying and forcing banks to adapt and modernize. It is only through an end to end transformation that banks can become truly digital. And we are capitalizing on this momentum and demand as the leader in our market, driving significant growth in revenue and profit. In Q1, we delivered total software licensing growth of 28%, which is a very strong performance given we grew total software licensing by 35% in Q1 2018. Total revenue grew 23%, and EBIT grew 27% this quarter. We also had very strong cash generation, and we continued to bring our DSOs down by another 6 days. We also announced some very exciting deals with ABN AMRO for terminals continued deployment and with Alwazi Bank for its digital transformation to enhance its Islamic lending and financing product capabilities. Alwazi is a Tier 1 bank and the largest Islamic bank in the world. Our view on the market dynamics is supported by leading industry analysts like Joost Cropperman from Forrester Research, who shares the sense of urgency. Joost recently commented that if banks don't modernize with an end to end solution in the next 5 to 7 years at the latest, they will face huge challenges. IT spend for banks is strategic and not discretionary. If they want to do more than just survive the next decade, they have to invest in IT Innovation. On Slide 8, I'd like to give you some color on our sales performance in the quarter. The demand in Q1 was broad based across regions, peers and products. We see similar pressure on our clients across all the geographies we operate in. The challenges of open banking are particularly concerning for our clients with diverse competitors, increasing regulation, cost pressures and greater demand for personalized experiencing, forcing banks to look at the IT and consider how to adapt to a rapidly changing market. We had a strong contribution in the quarter from our installed base as we continue to focus on growing our share of wallet in our existing clients. We continue to see very good demand from Tier 1 and Tier 2 banks, which contributed 53% of the mix over the last 12 months. We also continued to take market share and win the majority of new competitive deals that came to market. We are able to do this as we are the only vendor with the winning combination of complete package functionality, localized consumer data banks and advanced and agnostic technology. We won 22 new customer in the Q1, and a number of these were for our SaaS offering. Lastly, we continue to invest in sales and marketing to ensure we have the right teams in place in order to capture the market opportunity in front of us. Turning to Slide 9. We are seeing strong incremental growth in demand for SaaS and cloud adoption. Our total contract value over the last 12 months had reached $66,000,000 by the end of Q1, an increase of over 6 times. And SaaS revenue grew by 71% in the quarter. Banks see multiple benefits from using the plaza, including the reworking and accelerating the implementation process, saving costs through elasticity as infrastructure automatically can scale up and down to meet the demand and benefiting from the highest level of security and multi cloud resilience. We see demand for cloud adoption across all geographies and tiers, with some very large institutions looking to optimize delivery by using the cloud as well as ultimately deploying and running in the cloud. We have a highly differentiated offering with the launch of our new product, T24 TRANZACT and Thermos Infinity. These products combine market leading banking functionality with cloud native and cloud agnostic technology. We are the only vendor with the winning combination of complete package functionality, localized quantum model banks and advanced and agnostic technologies. Our traditional competition like the modern technology platform and the newer cloud based vendors have more limited banking functionalities. On Slide 10, I'm pleased to report that the integration of Avoca is progressing very well. Avoca specializes in customer acquisition and onboarding and has been integrated as part of Pembina's Infinity, our independent digital front office product. We have already won some key deals with Avoca in Q1, including with a Tier 1 European retail bank that is an existing PEMOS client and a major U. S. Regional bank. We are successfully cross selling the Avoca product into the Temenos client base, in particular on the back of the Temenos community forum, and this is opening up opportunities in many geographies. On Slide 11, we continue driving growth in the number of third party consultants available to implement Telenor software, having already reached over 5,000 by the end of the year by the end of last year. Our industrialized training platform that we call the Pembina's Learning Community has been a key part of this, and is seeing great traction with partners and clients. We had 20 implementation go live in the quarter and also announced our new implementation methodology for large and complex institutions, build and renovate, which we have developed from our extensive experience of taking 1,000 of banks live on our software over the years. The majority of implementation costs and complexities come from integrating new software with legacy systems. Build and renovate enables the largest banks to quickly create a new fully digital stacker and to continuously migrate products and customers across from the legacy systems, removing the need for integration. We can do this through our reach functionality, our package approach and our country model banks. This will dramatically decrease the cost and complexity of implementation for our largest clients and speed up the time to market. Moving to Slide 12. I'd like to share some of the highlights from the Terrence Committee Forum, which we held earlier this month. This is our annual client event, and we've had nearly 2,000 people from across the Temoz community attending, making it our largest TCF ever. We made a number of very exciting announcements at the event, including formally launching our new products, Thermos T24 Transact and Thermos Infinity. Thermos T24 Transact is our next generation core banking software. It takes the deep and extensive banking capabilities of Pembina C24 core banking and replatforms them onto a new cloud native and cloud agnostic platform. Telenorx Infinity is a comprehensive omnichannel digital banking product ready to be deployed independently or integrated with 10OS C24 transaction. TENOS Infinity is powered by APIs, enabling banks to easily connect TENOS Infinity to any core banking system and obviously to Telnos T24 transact. We also announced the Temenos data lift. With this product, banks can now store and process all the data from one single source. The data can be both structured and unstructured as well as blended with any external data source. By using multiple data sources, banks can leverage our technology to gain valuable insights into customer behavior and tailor recommendations using AI. For the last few years, we've been using DevOps capabilities internally to improve the speed of testing and releasing software. We've now made it available to our customers in the form of Telenor's continuous deployment. This is packaged software that dramatically accelerate testing cycles. Banks can provision the complete new environment in minutes rather than the days or weeks it would typically take. As I said, no other vendor has a winning combination of both package functionality with more than 100 countries of localization and revolutionary cloud native and cloud agnostic technology. We are the only clear leader in both functionality and technology. On Slide 13, I'd like to spend a minute on one particular deal we announced in April. 3 Finnish banks have selected TENOS T24 transaction under TENOS payment server for the digital transformation. The unique aspect of this deal is that we'll be using a shared banking as a service platform that will be implemented and managed by Cognizant. This provides a very efficient and cost effective way for banks to modernize the core banking systems. We plan to offer this banking as a service platform in Finland at first and then to roll it out across the Nordic region. We also have the opportunity to replicate this platform model with all the partners across all the geographies as well. On Slide 14, I'd like to share some thoughts on how our market is developing. We continuously invest in our products and innovation, which means we are able to address an increasing amount of bank IT spend over time. Today, our total addressable market is estimated to be $57,000,000,000 And an increasing amount of this is being spent with 3rd party software vendors like Temenos as banks are under intense digital, regulatory and cost pressures. Telenoroz has a leadership position in the market as the number one vendor of package, integrated and upgradable software that can be run-in any environment the bank chooses. We are also benefiting from our growth product portfolio, which give us multiple drivers of growth. We've seen a significant increase in demand for SaaS and cloud adoption. We also have good momentum in the U. S. With multiple wins in the last two quarters. This is further strengthened by the acquisition of Avoca, which has already generated new deals and leads. We are confident we can deliver sustainable growth in the medium term through the strength of our pipeline and the committed spend we have from existing clients, in particular, Tier 1 and Tier 2 banks. With that, I will now hand over to Takis to take us through the financials. Thank you, Max. Good afternoon, everyone. Before I start, I would like to say that I'm honored and excited to have joined Zenith as CFO at the start of this month, and I look forward to meeting many of you over the coming months on the road. Moving to Slide 16. I will walk you through the financial highlights of the quarter. As Max said, it was a very strong start to 2019 with total software licensing growth at 28%, driven by growth based demand across geographies and peers. The strength of our license sales drove maintenance growth of 13% in Q1. Total revenue grew 23%, and we delivered very strong EBIT growth of 27% with an EBIT margin of 24.1% for the quarter. We also delivered strong EPS growth of 24%. We generated €55,000,000 of operating cash flow in the quarter, an increase of 19% year on year, and our DSOs declined at 6 days or 8 days pro form a excluding the impact of Avoca, reaching 111 days at the end of the quarter. Lastly, our services business continues to perform very well, benefiting from the growth in our partner strategy with our services margin reaching 9.1% in the quarter. On Slide 17, I will highlight some of the most important numbers for the quarter. I would note that with the adoption of IFRS 15 at the start of 2018, we have now moved to showing year to date rather than last 12 month comparisons as we did not restate our 2017 actuals under IFRS 15. Our total software licensing grew 28% at constant currency in the quarter, and total revenue grew 23%. We are benefiting from our broad based range of product offerings across terminals, T24 transact, terminals Infinity, wealth payments, fund management themselves, meaning we have more levers of growth than ever before. We have strong operational leverage in the business, which drove our EBIT up 27% in constant currency. Our EBIT margin increased by 86 basis points in the quarter, driven by the faster integration of Avoca and by our strong sales execution. On Slide 18, we show like for like revenues and costs adjusting for the impact of M and A and FX. As a reminder, we bought Avoca in December 2018, which is expected to contribute around $50,000,000 of revenue for the full year 2019. In terms of FX, the weaker euro was a headwind on revenue, while our cost base benefited from a number of currencies weakening against the dollar. Taking into account currency movements and hedging, FX was a small tailwind on Ebix this quarter. We delivered very strong like for like growth this quarter with total software licensing up 21% and maintenance up 13%, giving total like for like revenue growth of 17%. Total like for like costs increased 11% in the quarter, driven by our ongoing investment in sales and marketing as well as R and D. On Slide 19, we had very strong growth in net profit, which was up 24% in the quarter. The increase in tax was mainly driven by the stronger earnings this quarter with some additional impact from the increase of our book tax rate year on year. Our Q1 non IFRS tax rate was 15.7%, which is about the midpoint of our fiscal year 2019 guidance of 15% to 16%. We continue to benefit from unrecognized tax assets in 2019, which is why we are going for a tax rate of 15% to 16% for the full year. Our medium term tax rate is a normalized run rate for the business. EPS also grew 24% in the quarter to reach ZARF 0.521. Turning to Slide 20. Our DSOs continued to decline in Q1 driven by our strong cash collection. DSOs were down 6 days in the quarter or 8 days pro form a to reach 111 days. We remain on track to decrease DSOs by 5 to 10 days per annum to reach our target of 100 days in the medium term. Turning to Slide 21. Our cash conversion continues to be very strong and significantly ahead of our target of converting 100% of IFRS EBITDA into operating cash. This quarter, our LTM cash conversion was 115%. On Slide 22, we show the key changes in the group liquidity. We generated €55,000,000 operating cash in the quarter and repaid an outstanding bond in January for somewhat over €100,000,000 as well as repaying €110,000,000 of our revolving credit facility. We ended the quarter with €97,000,000 of cash on the balance sheet. Our total borrowings at the end of Q1 were $646,000,000 and our net debt was $549,000,000 with the leverage standing at 1.6x. With a strong cash flow generation, we expect to be below onetime leverage by the end of the year on our current plan. Moving to Slide 23. We have given our revised 2019 guidance on a non IFRS basis. The guidance is in constant currencies, and you can find that in the appendix. We are still guiding for full year total software licensing growth of 17.5% to 22.5% and total revenue growth of 16% to 19%. Our EBIT guidance is in the range of €310,000,000 to €315,000,000 which implies a full year margin of around 31.9%. We continue to expand our EBIT margin, which is expected to increase 150 basis points organically, excluding the impact of Avoca. Finally, we expect conversion of 100% of EZSTAR into operating cash in the 2019 tax rate of 15% to 16%, as already mentioned. With the strength of our pipeline and of our revenue visibility, I'm confident that our guidance for 2019 is achievable. With that, I will hand back to Max. Thank you, Thakid. So on Slide 25, I'd like to highlight our Capital Markets Day, which is in London on the 21st May. We will be discussing our strategy, product innovation and financial outlook for the medium term. It is a great opportunity to get a more in-depth understanding of our business as well as meeting our management team, and I would highly encourage you to attend it. You can find more details on our website on the Investor Relations section. Finally, on Slide 26, in conclusion, we've had a very strong start to 2019. Banks are under intense pressure from all sides and are investing in the IT platform to solve these problems. We've seen strong incremental demand for SaaS and cloud adoption as banks understand the benefits this can bring in terms of cost savings, efficiency, security and speed of implementation. Our sales execution in Q1 was strong across all geographies and segments, and we continue to invest in our sales and marketing teams to capture that market opportunity. We are the only vendor with a winning combination of complete package functionality, localized consumer the banks and advanced and agnostic technologies. We have very high revenue visibility driven by the pipeline growth and committed spend, which give us confidence in delivering 2019 and the medium term. Finally, I'm very pleased we already had a strong start to Q2, particularly in Europe. With that, operator, I'd like to open the call for Q and A. Thank you very much. Ladies and gentlemen, we will now begin the question and answer session. First question comes from the line of Josh Levin from Citi. Please go ahead. Thank you and good evening. I have two questions. On your last point about the strong start to Q2 in Europe, can you elaborate a bit on that? What countries are you talking about and what tier banks are you talking about? Yes, sure. Listen, I think I've been quite explicit on developing an opportunity that we signed in April. So I think it's obvious it's in Nordics, as you can imagine. And so it's a very exciting development for us of what we are doing in Europe. But as we said, we are starting in Finland. I mean, hopefully, we'd be able to develop that on the broader data. Okay. And a separate question. It looks like on Slide 32, it looks like there's been a pronounced shift towards sales coming from add ons to installed base versus competitive deals. Can you talk a bit about the dynamic here? I will not look at it too much on the quarter as such because clearly that I look at it over the trend. And clearly, one of the opportunity for us is to increase our wallet share within our existing customer base. And secondly, we're the largest one where, as I mentioned, we do less than 5% of what we could do with them. Clearly, this is one part of the strategy. But on the other hand, as I mentioned as well, we won 20 new names this quarter and since we continue to gain market share. So clearly, our strategy both focus on extending our lead with our existing customer, but at the same time, because of our winning combination of package functionality and advanced technology gaining the new customers. So I won't read too much into it. As I said, in the medium term, because of today, we've got 3,000 banks. So obviously, the trend will be more that in the future, I think we'll be trading towards probably 60% coming from existing customers and 40% coming from new customers. Thank you. Thank you. Our next question comes from Adam Wood from Morgan Stanley. Please go ahead. Hi, good evening everyone and thanks for taking the question. I wonder if I could just dig in a little bit on the SaaS business and the shift there that you see. Could you maybe just talk a little bit in more detail around whether you see that being more of an additive opportunity for you versus your existing customers switching towards subscription payments. It just seems a little bit unlikely that a bank is going to be making a minimum kind of 10 year decision, but probably more likely a 15 to 20 year decision. If they can afford it, would choose to subscribe rather than paying licenses? And then maybe just a little bit more detail about the contract value. That's obviously a very impressive improvement in total contract value. Would that be also representative if we look at the annual contract value, so that's coming from an improvement rather than just a kind of increase length of the contracts that you're signing? So that was, first of all, maybe around the SaaS business. And then maybe just on the data analytics and data like side, as in some of the other areas that brings you maybe more into competition with general software vendors who are providing data services. Could you just talk a little bit about the differentiation you bring focusing purely on banking technology and banking data versus those providers that are going to be competing more generally in the data space? Thank you. Adam, let me take the first and the last one, and I'll leave our new CFO to respond to the CPV one. On the first on cloud, as I mentioned a few times, it is incremental. And why is it incremental? Because those are customers that would not have taken our software on premise. And what is different what the cloud proposition makes it much more attractive to them financially. And hence, the flexibility give them the ability to, as I said, to elastically scale up and down the time to market. So those are elements that a bank would not have gone the traditional way on premise. So clearly, we see that as incremental and not starting to cannibalize our more traditional on premise business. So that's, if you want, on your SaaS question. And on the analytics, I think our full output position, I think why we are successful is because we offer integrated package, prepackaged products. And again, this data lake is totally integrated within the platform, both on the 10 of Infinity and the current transport transact, it takes the ability to take data, which, as I said, structure and unstructured from within our own platform but as well from different sources. And this is what is quite unique because it is prepackaged. It's very easy to deploy. So time to market is key and it is as part of their own infrastructure. So I think this is how we differentiate ourselves. And obviously, this is for customers that will take it as part of the PENOS platform as well. Perfect. Thank you very much. On your more bigger question, we have reported the TTV increased 6 times over Q1 LTM for 2019. We've started giving this 1 quarter ago. Now we're currently looking into what we're going to communicate going forward in terms of sales metrics. As you know, there is a Capital Markets Day scheduled 21st May. So we're looking into what is best practice. Is it going to be ARR, ACV, bookings? So what is basically best going to reflect our business also going forward? What we can say so far is in terms of the sales revenue, we still expect this to double in 2019, definitely with organic growth plus the acquisition of Avoca. Your next question comes from the line of Chandra Spearman from MainFirst. Yes, hi. Thank you all for taking my question and congrats on a solid start to the year both to Max and Tuckers. Just a couple of questions from my side. You obviously, Max, you alluded to the opportunity to sell more into your existing installed base. Can you comment a bit more in the context of some of your large deals they've been signed a few years ago, particularly the largest one you signed? Can you see more opportunities to sell into this installed base? And also, can you comment on this revenue visibility in the same context? That's my first question. And the second one is in terms of services growth, it has accelerated quite a bit in Q4. Any concerns in terms of or any specific reasons for this? And number 2 is, should we be worried about services profitability if there's a drop in terms of services growth sometime in the future? Thanks. Hi, Chandran. Let me take the first one. And I think I'm very pleased to say that we've recreated very strong partnership with those largest banks. And when you come to the TCF, you can see that committee. And obviously, you can imagine that as part of my new role, I went and met with most of them. And I can see how close the relationship is with Temenos and those Tier 1 banks and how strategic we are in the relation. And I think with all of them, we have discussion on how to extend the use of the software because as soon as they get to get to use our software, very quickly, they see the benefit. It is the first pitch, the first time we implement, we demonstrate the benefit. Once it is there, very quickly, we are able to increase the scope of work. And a very good example has been Abi Anamu, who was on stage with me at CCS. And with ABN, over the years, we consistently increase and continuously, if you will, renovate the bank. And that's really our goal is with those Tier 1s, how do we continuously renovate part of that venture. It's very strategic discussions usually at the top of the organization with the CEO and so on. So I'm very confident that, that angle of this part of the strategy, which is to grow more and to be able to support more our largest customer, is clearly working extremely well. And it's part of why we are confident that we can grow sustainably in the medium term. So that's on your point. I will leave the services question to Pacif. Yes. Hi, Camilo. Maybe first on the visibility. As you know, we still have very strong revenue visibility on around 85% of the product revenue, and that still remains valid. If you look at the medium term there, our revenue visibility is driven by our growth in recurring revenue in the committed spend and also from clients and our sales into the installed base. So there, we're still actually very confident. To your services question, yes, services revenue grew pretty fast. It was 34% in constant currencies in Q1. A couple of reasons for that. Q1 'eighteen was a low comparative for service revenues. So I wouldn't read too much into that or draw any trends from this. We still expect for the full year services to be around 20%, so that's unchanged. If you look at the services margin here, obviously, we do more involve our partners in implementations, and our services organization is also maturing. We have more rigorous implementation methodologies, as we just heard before. So we're pretty confident that profitability in the medium term for all this will move towards a 15% services margin. Thank you. Our next question comes from Michael Ford from Bontobao. Please go ahead. Yes. Hi, gentlemen. I have a question on the Americas region. You report pretty strong growth for licenses of around 60% in the Americas. And I was wondering if you could give us a sense for the underlying trend, if we exclude the acquisition, how this is developing? Thank you. Michael, listen, yes, the Americas, we've had we continue to have very strong performance, I have to say, and I'm very pleased with that. And I think what was what is interesting in the Americas and, let's say, specifically in the U. S. Over the last few quarters is that we are starting to sell our different products in the U. S. So we are selling core, we are selling payments, we are selling now the Infinity platform. So I have to say that is working extremely well. Also, the traction that we've seen with Avoca and the opportunity that it brings to sell to cross sell Infinity is quite very strong. So I have to say, I'm very pleased with the development. Now on the underlying growth that we've seen in the U. S, we've seen for that 35% was the underlying growth, which ultimately is in line with where we said that in the medium term, we do expect that part of the world to be growing faster than the other regions. And so we've been growing at a bit more than 30% underlying, if you want, when you move the impact AbbVacar. Great. Thank you. Our next question comes from Hannes Sleitner from UBS. I have also a couple of questions. The first question is on IFRS 16. Can you remind us of the margin uplift of in your guidance is coming from IFRS 16 adoption as your depreciation increased or picked up in the quarter? And then in regards to the Avoca acquisition, what is the contribution of the SaaS TCF to the €66,000,000 coming from Avoca? And also, what's the split of Avoca licenses versus the subscription revenues? That's to start with. Okay. On the last two ones, as you know, we give guidance for the full year on total revenues expected from Avoca, which is €50,000,000 We don't give a split on the individual lines. Then on the impact of IFRS 16, what we mentioned is the balance sheet impact. The impact on the EBIT is immaterial. And on the TCF? Okay. On the TTV, I mean, we're again, as I mentioned before, we're saying we're collecting now what is going to be best practice going forward. So again, no further disclosure at this point in time. Thank you. Thank you. Our next question comes from Charlie Brennan from Credit Suisse. Please go ahead. Great. Thanks for taking my questions. I've got 2, if I can. The first is just on your full year guidance. I know Q1 is seasonally small for you, but generally speaking, the growth rates in Q1 are trending ahead of your full year guidance. And arguably, that's against some very strong comps in the prior year. You're talking about having decent revenue visibility for the year. You've talked about the Q2 starting well. I was just wondering if you could run us through the puts and takes and what's holding you back from nudging through your guidance higher? And then the second question is just a small detail question. The FX impact during the period was a little bit stronger than I was expecting. Can you just call out the big FX impacts during the period? Hi, Charlie. Listen, as I said, I'm very pleased that we started like that the year. And it's a great start. And I always say to my team that, that's the only way to start the year. And so pleased that this is how we started. And also the fact that, as we mentioned, Q2 is also starting very well. So this give us clearly very strong confidence on delivering the year, which is what you would expect from us. Now we are only in April, and the year is still long. I think we are very confident that we can deliver this year. I know we'll be obviously giving you an update every quarter on how things progress and how our visibility increases. But at this stage, I think we feel very pleased with how we started the year, Q2 and as well Q2 and very confident on the full year. I'll leave Pacis to give the update or the to respond to the FX impact on the quarter. Thanks, Charlie, and thanks for the question. As we said, there was a small positive on the details on the revenues. We essentially had some headwinds on the euros. That was more than €4,000,000 And the other currencies were smaller for a total of around €5,800,000 to be precise. On the costs, we obviously had almost from all currencies some tailwinds also from the euro but also the Indian rupee and then some other currencies. So slightly above €6,000,000 positive impact on the cost side. So with net tailwind on the EBIT of quite a bit below €1,000,000 So really not that material. Okay. Thank you. Thank you. Our next question comes from Alex Toot from Deutsche Bank. Please go ahead. Yes. Hi, guys. Thanks for taking the question. Congrats on a good start to the year. Just zooming in on one of the cost lines, G and A spend declined in the quarter, the only line to see decline in absolute terms. I know it can be a bit lumpy. But as you look to the rest of the year, is that the key line where you would expect to get some leverage on the kind of growth that you're seeing? Can you keep G and A flattish for the year overall? Or was that an exceptionally good performance in 1Q? And then just secondly, I mean when we think about your targets, is it really the cash conversion target that needs to change kind of most urgently because you're coming in pretty consistently above that. And now you have the rise of the cloud as well and the deferred revenue building seems that 100% will be quite an easy level to achieve? Thanks. Okay. Thanks for that. I'll take both of them. First, on the G and A costs, they were down 1%. That's correct. Again, Q1 is a small quarter, but there were some small impacts from the timing of some variable costs, social charges on stock option exercises and some other small methods. We expect still for the full year the G and A line to grow around 3% to 5%. So it should normalize. But definitely, it's going to grow less than our total revenues. Then on the cash conversion, definitely, this is something, yes, we have almost acknowledged. However, with all the things we're going to look into in terms of SaaS and providing metrics, we're obviously also going to review our cost conversion and DSO targets. So stay tuned for more on the CMD. Thank you. Thank you. Our next question comes from the line of Jacob Kruse from Autonomous. Please go ahead. Thank you. Just two questions. Can I first ask on the revenues from the new sales or the competitive deals? Is that low number a reflection of you doing relatively worse in terms of taking deals in the quarter? Or is it just a question of few deals happening in this quarter? And then the other question I wanted to ask was on the Finnish Savings Banks. You talked about rolling this out across the other Nordic countries. Could you just explain what you mean there? Is that other banks in the Nordics signing up to the same platform that the savings banks in Finland are building off? Or how should I understand this? It's Max. Listen, on the competitive deals, listen, I want to reach into the quarter. Clearly, as I said, we've got a very clear strategy, which is going after and aggressively after all the new business and with our winning proposition of package functionality and best technology, we are winning most of the deals from the computer. So again, 22 new names were in the quarter. Now at the same time, we go after and we want to grow our existing customer base, and we want to extend our wallet share with our largest customers. And if you want, our strategy and ultimately, our sales force is structured that way. And I'm pleased that in Q1, we had a very strong start, growing 28% of our software licensing and both capturing 20 new names, but at the same time, extending what we did in with our existing customers. So very pleased with Q1. Now on the announcement for Finland with KamiCenter, I think what we are saying is we want to replicate the platform. If you want the platform that is now that we are offering for Finland, we could offer that platform for different Nordic countries, which will be still running, let's call it, as a BPO by Cognizant, but will give the opportunity for banks that wish to have that type of deployment, the ability to do it with on our software, if you want. So I think that's very exciting. But as well, it doesn't mean that we cannot replicate this with other partners in other geographies. And I think this is also very exciting. Okay. Thank you very much. Thank you. And our next question comes from Deepshik Agarwal from Goldman Sachs. Please go ahead. Hi, this is Priti Kannova from Goldman Sachs. So I had two quick questions. First one, you've highlighted growth in your banks being one of the key factors driving the growth momentum. So are we seeing an inflection point in terms of contribution from trustees? Or is there more acceleration in growth to come? Can you give some more color on the kind of opportunity that you see here? The second one being on the U. S. Market. So given both FIS and Fiserv have announced acquisitions of large payment processors, do you see any change in the overall competitive landscape in the region from a Telenorx perspective? On the first let me start with the second one. So the first one, I have to understand AY. But The second one on the U. S. Front, clearly, yes, we see some of the M and A activity there. I think, again, this is what differentiates Theranos. I think Theranos is very focused on what to do. We only do banking end to end integrated. I think this is the strength of Telenor. And also, I think what is part of our strength is to have a modern on the platform and one single platform where all our R and D gets spend on that single platform, we don't believe, if not, on libraries of platform or products. And that is clearly a key differentiator for us. So I think on our side in the U. S, we've been clearly it's a newer market for us. We've invested a lot. We are doing it the same way as we are doing internationally with this single platform, localized for the market, fully integrated, fully packaged. I think this is very appealing for them. So I think we'll continue to see lots of success. And as you've seen in Q1, the growth underlying has been very strong. So very pleased with that. Now on the second question that you asked, can you maybe repeat it because I couldn't understand the question. So basically, you highlighted some of the growth came from the growth in the new from the new banks. So my question was basically like are we seeing an inflection point as in will this be the kind of growth that we're going to see in the near future? Or is there still more acceleration to come? And what are the main factors driving this particular growth in this particular segment? Yes. Okay. Listen, Mailbanks or Challenger Banks, I think it's very interesting. And I think, again, this year, I would say, one of the drivers coming from technology because technology allows those new banks to come up and with a cloud deployment very quickly, very effectively that can be up and running and start to challenge through a digital bank, start to challenge the more established banks. So I think this is also, I would say, pressure that we see in the market, which is clearly helping more traditional banks affect the digital transformation because clearly, we see that there are new banks, Telesis Bank within Qumonga, up and running on the cloud with a very efficient infrastructure using our software, I think that's clearly very interesting. We've had quite a lot of success over the last 12, 20 months. I think we'll continue to see those challenging banks coming up with very modern and, I would say, interesting technology. So I think we'll continue to monitor that. I think our platform, as you know, is cloud native and cloud agnostic, which because of that, they can get the full benefit of cloud vendors, which means that the kind of elasticity scale, it's on demand. And so it's really interesting, the level of resilience. We can even offer multi cloud resilience or what we call active active, which we are the only ones to offer that. So I think we are extremely well positioned to capture this new market of challenger banks, and we've seen this both in the U. S. And in Europe. Thank you. And that was our last question. I would now like to hand back for closing comments. Thank you very much for joining us today and look forward meeting you and seeing you at the Capital Market Day in London on the 21st May. Thank you. Thank you very much. Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect.