Temenos has responded to a report published by Hindenburg Research describing the allegations as “false and misleading”.
The banking software company has said that the report intended to negatively impact Temenos’ share price, stating the report contained “factual inaccuracies and analytical errors” as well as “false and misleading allegations”.
Hindenburg, an activist investment firm, claimed to have uncovered hallmarks of manipulated earnings and major accounting irregularities. The report included a four-month investigation into Temenos, which involved interviews with 25 former employees, including senior company leaders.
Hindenburg reported: “This includes evidence of roundtripped revenue, sham partnerships, rampant pulling forward of contract renewals, backdated contracts, excessive capitalization of seemingly non-existent R&D investments, and other classic accounting red flags.”
The firm’s report highlighted a series of unsuccessful product installations and questionable licensing agreements, which it said, were aimed at assisting the vendor in achieving its annual targets.
Hindenburg wrote: “These aggressive accounting practices seemed to be an open secret among many of the former employees we spoke with. Several indicated that CEO Andreas Andreades encourages the practices, which help gloss over significant customer product dissatisfaction and attrition.”
One section of the report was titled “Top Temenos Executives Have Cashed Out Over $1.1 Billion Over The Last Decade”, accusing Temenos’ Executives of consistently selling stock.
This news comes after the Software-as-a-Solution (SaaS) platform underwent a boardroom reshuffle last month, with William Moroney and Philip Barnett promoted to its Executive Board.
Following the damning report, Temenos’ share prices fell, experiencing a 25% decline during morning trading. In response to the report, the company has said it “is confident in the strength of its business, financial performance and cash position.”
The firm posted: “On 19 February 2024 after market-close the Company will issue its audited results for the year ended 31 December 2023 and confirm that they are in line with the pre-results announcement made on 19 January 2024.”
