Third Quarter Results Ended September 30, 2015. This presentation contains statements, including...

Third Quarter ResultsEnded September 30, 2015

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.

Forward Looking Statements Disclaimer

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 non-GAAP 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

5

27% increase in Q3 EPS to $0.75; above guidance range

Q3 operating margin increased to 25.2% compared to 18.5% last year

Q3 cash flow increased 47%, to $50M

Q3 2015 Highlights*

Product revenuegrowth of 13%

Increased full year 2015 EPS guidance

Q3 operating profit;grew 45% to $56M

7% Q3 revenue growth to $221M; 10% revenue growth excluding FX impact

Q3 gross margin increased to 69.8% compared to 67.2% last year

* All numbers, except cash flow, are Non-GAAP and exclude Intelligence and Physical Security divisions

Q3 2015 Highlights

Income Statement


Outlook

Good Growth and ExecutionQ3 2015

REVENUES (Non-GAAP, $M)

Q3 14 Q3 15180

190

200

210

220

230

208

2216.5%

Q3 14 Q3 150.1

0.3

0.5

0.7

0.9

0.59

0.75 27%

EARNINGS PER SHARE (Non-GAAP, $)

• 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

• 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

8

GAAP and Non-GAAP Income Statement – Q3 2015

$M (except EPS) Q3 2015 Q3 2014

GAAP revenue 221.1 207.5

Valuation adjustment on acquired deferred service revenue - 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)

Restructuring expenses - (2.2)

Non-GAAP operating expenses 98.6 101.0

* Errors due to rounding

9

$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 -

Restructuring expenses - 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


GAAP and Non-GAAP Income Statement – Q3 2015 (cont.)

Revenue Breakdown by Region (Non-GAAP)

Q3 2015

AMERICAS$145M, +4% YoY

66%

APAC$26M, +15% YoY

12%

EMEA$50M, +10% YoY

22%


Revenue Breakdown by Business Unit (Non-GAAP)Q3 2015

CUSTOMER INTERACTIONS$164M, -0.6% YoY

74%

FINANCIAL CRIME & COMPLIANCE$57M, +35% YoY

26%


Gross MarginQ3 2015 (Non-GAAP)

Gross Margin

69.8%| +260bp

Q3 14 Q3 15

Gross Margin67.2%

Gross Margin69.8%

Q3 14 Q3 15

Product GM87.7%

Product GM 87.2%

Product Margin

87.2%| -50bp

Q3 14 Q3 15

Service GM58.9%

Service GM62.0%

Services Margin

62.0%| +310bp

Gross margin expansion is the result of an increase in product revenue and favorable product mix


Continued Operating Margin ImprovementQ3 2015 (Non-GAAP)

Q3 14 Q3 15

Operating Margin18.5%

Operating Margin25.2%

• 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


Cost Ratio – Increased Operating Efficiency Q3 2015 (Non-GAAP)

R&D

As % of revenue

Q3 14 Q3 15

R&D14.7%

R&D14.0%

Q3 14 Q3 15

S&M24.4%

S&M22.1%

S&M

As % of revenue

Q3 14 Q3 15

G&A9.5%

G&A8.5%

G&A

As % of revenue

• Operating expenses decreased as a percentage of revenue, reflecting further progress in the Company’s operational plan to improve efficiency and profitability


Analytic Applications As % of bookings

Q3 11 Q3 12 Q3 13 Q3 14 Q3 1520%

30%

40%

50%

60%

32% 31%

37%

47%

55%

• 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


Outlook

17

Balance Sheet September 30, 2015

Assets ($M) 09/30/2015 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 20.9

Current assets of discontinued operation

11.4 36.4

Total current assets 647.1 506.4

Long term Investments 376.8 246.7

Other long term assets 27.5 25.9

Property and equipment 38.2 40.2

Other Intangible assets 78.3 109.5

Goodwill 654.3 659.6

LT assets of discontinued operation

3.1 53.6

Total Assets 1,825.3 1,642.0

Equity & Liabilities ($M) 09/30/2015 12/31/2014

Trade payables 11.7 9.1

Deferred revenue and advances from customers

150.0 122.5

Accrued expenses and other liabilities

204.6 192.3

Current liabilities of discontinued operation

38.3 54.3

Current liabilities 404.7 378.2

Deferred tax liabilities 18.2 23.3

Other long term liabilities 18.0 19.0

LT liabilities of discontinued operation

5.7 8.1

Total long term liabilities 41.9 50.4

Equity 1,378.6 1,213.5

Equity & Liabilities 1,825.3 1,642.0


18

Strong Cash Flow From OperationsQ3 2015

$M Q3 2015 Q3 2014 %∆

Cash flow from operations 49.5 33.8 47%

- Capital expenditure 3.0 3.8 (21%)

Cash flow from operations after capex 46.5 30.0 55%

Cash flow from operation after capex as % of revenue

21.0% 14.5% 6.5pp

Cash conversion rate * 1.0 0.8 25%

Days sales outstanding (DSO) ** 54 57 (5%)

* Cash Conversion Rate = (Cash Flow from Operations after CAPEX / Non-GAAP Net Income )

** All numbers, except cash flow, include Intelligence and Physical Security divisions

19

Cash Movement and LiquiditySeptember 30, 2015

Total liquidity (1) 12/31/14$500M

Operating CF$211M

Proceed from sales of Divestitures

$168MOther

$18MCAPEX -$11M Buyback

-$48M Total liquidity (1)09/30/15$808M

1) Total Liquidity = Cash and Cash Equivalents + Current Investments + Long Term Investments

Dividend

-$29M

Q3 2015 Highlights

Income Statement


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.


Third Quarter Results Ended September 30, 2015. This presentation contains statements, including...

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