Temenos Earnings Rise In 2023; Shares Weighed After Short-Seller Claims

Tom Burroughes

2 April 2024

, the Zurich-listed banking and wealth technology firm whose share price has been hit by a short-seller accusing it of wrongdoing over accounts, this week reported $301.3 million in earnings before interest and tax (EBIT), rising 15 per cent year-on-year.

Total revenues for last year rose 5 per cent to just over $1 billion. Total software licensing revenues stood at $443.6 million in 2023, up 10 per cent and also up 10 per cent in constant currency terms. Term license revenues slid by 42 per cent, year-on-year, to $78.1 million, it said in a statement on Monday.

Shares in the firm were hit hard last week following a report from activist hedge fund – which said it has taken a short position in the firm – claiming a series of wrongdoings and failings by Temenos in its accounts. Temenos said it refutes the claims.

As of midday today, Temenos shares fetched SFr61.7 ($69.9) per share, down 6.46 per cent. Since the start of January, prices have fallen from SFr76.1 per share, with prices falling off a cliff on February 15 after news of the Hindenburg Research note circulated.

In its results statement, Temenos non-executive chairman Thibault de Tersant, said: “With regards to the recent short seller report and further to the statement made by the board in the press release on February 15, 2024, we reiterate our position. As chairman and former audit committee chair, I want to assure you of my confidence that Temenos is running a sound business with good financial controls in place. The board places the upmost importance on its responsibilities to all stakeholders and will oversee a thorough examination of the allegations raised, with independent third parties.”

Details
Temenos said it achieved continued “strong performance in Europe” during 2023, chalking up multiple deals with large banks signed in the final quarter of the year. It has “sustained momentum” with tier 1 and 2 banks, contributing 46 per cent of total software licensing in Q4 2023 and 43 per cent in 2023 as a whole. The firm said it has a net promotor score of +54, based on views of more than 900 clients. It’s churn rate of clients is low, with only 3 per cent of such churn, it said.

Annual recurring revenue (ARR) stood at $730 million last year, rising 16 per cent on a constant currency basis.

The firm said its long-term profit and cash flow strength supported its proposal to raise its dividend by 9 per cent on a year before to SFr1.20.

“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,” Andreas Andreades, chief executive, said. “The sales environment remained stable through Q4, with our European and American businesses performing particularly well. We signed a number of deals with tier 1 global banks that put their trust in Temenos as a strategic partner to support their transformation programs to enable future growth.”