Temenos cuts growth forecast after Hindenburg attack

Geneva (awp) – Temenos' sales rose slightly in the second quarter. However, the banking software maker expects significantly lower growth in software licensing revenue for the year as a whole. The Hindenburg affair also weighed on the second quarter.

In the months from April to June 2024, sales reached $248.4 million (+4%), Temenos announced Tuesday evening. Adjusted operating earnings before interest, taxes, depreciation and amortization rose to $90.4 million, up 7%. The corresponding margin rose to 36.4% from 35.4% a year earlier. The final result was earnings per share of $0.94 (+8%).

The adjusted figures exclude, among other things, the costs of stock-based compensation programs. With these results, the group did not quite meet analysts' estimates in terms of sales, but it exceeded them in terms of earnings before interest, taxes, depreciation and earnings per share.

Completing pending transactions

She added that all contracts delayed in the first quarter due to the Hindenburg affair were concluded in the second quarter. However, the two-month delay in most sales also had an impact on the reporting quarter.

In mid-February, American short seller Hindenburg accused Temenos of “serious irregularities” in its accounting. The software maker then launched an external investigation. According to Temenos, auditors were unable to find any evidence of wrongdoing.

The company said Tuesday that due to the performance in the first half of the year, it has now lowered its full-year outlook. The company now expects software licensing revenue to grow 3 to 6 percent. It had previously forecast an increase of 7 to 10 percent. In the second quarter, software licensing revenue fell 1 percent to $101.9 million.

EBIT is expected to continue to grow at a rate of 7 to 9 percent, EPS is expected to continue at a rate of 6 to 8 percent, and free cash flow is expected to increase at least 16 percent.

Strategy update and new medium-term goals in November

Medium-term targets are also under review. On November 12, management under new CEO Jean-Pierre Broulard plans to present a revised strategic plan and financial targets at an investor day in London. So far, EBITDA is expected to reach more than $570 million over the medium term, and free cash flow should reach more than $700 million.

Broulard began his tenure as president on May 1. He got to know employees, partners and customers in the first three months. It also became clear that there were areas where Temenos needed to improve and where the company needed to invest, he was quoted as saying in the statement.

Initially there were some management changes. As previously announced, Will Moroney was promoted to Chief Revenue Officer. Additionally, Rodrigo Silva was named President of the Americas and there were some new hires in the US: Isabel Joyce as Chief Marketing Officer and Monty Bhatia as Executive Vice President of Alliances and Partnerships.

Yes/KW