Temenos confident in future prospects whilst fending off Hindenburg criticism


Amidst a public war of words with key investor Hindenburg Research, Swiss core banking group Temenos has published ad hoc financial results for the fourth quarter and full year 2023.

The group reported that its ‘sales environment remained stable’ throughout 2023, with Q4 total revenues – according to International Financial Reporting Standards (IFRS) – standing at $298m, up 7% on $277m the year prior. EBIT for the quarter was also up 7% from $63.5m

Meanwhile, the firm closed the full year with total revenue of $1bn, a 5% increase to $950m in 2022 with accompanying EBIT of $199.4m up 22% from the previous year’s figure of $155.5m.

Temenos CEO, Andreas Andreades, remarked: “I am very pleased with our strong performance in 2023, where we delivered results that significantly exceeded all our raised guidance KPIs, which was made possible by the focus and determination of everyone at Temenos.

“This demonstrates our ability to execute and deliver growth despite macro uncertainty. The sales environment remained stable through Q4, with our European and American businesses performing particularly well. 

“We signed a number of deals with tier one global banks that put their trust in Temenos as a strategic partner to support their transformation programs to enable future growth. 

“Our pipeline continued developing positively in the quarter including a number of large deals, giving revenue visibility for 2024, and our increasing percentage of recurring revenues as a percent of total revenues gives us increasing profit visibility.”

Operationally, Temenos outlined a ‘strong performance’ in Europe where it signed ‘multiple deals with large banks’ during the final quarter of the year. 

Good momentum among tier one and two banks was highlighted in particular, contributing to 46% of software licensing in Q4 and 43% for the full year.

A product breakdown saw non-IFRS revenue from software-as-a-service operations rise 20% in Q4 to $54.9m ($44m) and 25% for the full year to $205m ($153.7m).

Meanwhile, non-IFRS total software licencing revenue was up 6% in Q4 to $153m ($143.8m) and 10% for the full year to $443m ($398.7m), whilst maintenance revenue grew 7% for the final quarter to $109.6m ($101.9m) and 5% for the full year to $423.7m ($402.5m). 

Temenos CFO, Takis Spiliopoulos, explained the group’s future expectations: “We have announced our FY-24 guidance which is non-IFRS and in constant currencies. We are expecting ARR growth of about 15%, total software licensing growth of 7-10%, EBIT growth of 7-9%, EPS growth of 6-8% and Free Cash Flow growth of at least 16%.”

The group’s financial update comes against the backdrop of criticism by Temenos investor Hindenburg, which published a report last week claiming historic manipulated earnings and major accounting irregularities.

Temenos has criticised the report as inaccurate, whilst another investor, Petrus Advisers, has also come to its defence to some extent, in particular taking aim at Hindenburg’s reliance of “based on hearsay talk from former disgruntled Temenos executives”.

However, both Hindenburg and Petrus agree on one thing, that being that Temenos needs to appoint a new permanent CEO, with Andreades currently filling the role on an interim basis.

Closing off Temenos Q4/FY23 report, Thibault de Tersant, Non-Executive Chairman of the Board, said: “We are seeking an exceptional individual to lead the next phase of Temenos’ development and I am leading the Board Committee overseeing this, with the support of external advisors. 

“We were close to an appointment for this role in the second half of 2023, which unfortunately did not proceed. We are making good progress toward hiring an alternative and managing the transition.”