Temenos Announces Q4 and FY-24 Results; ARR and TSL at Top End of Guidance, EBIT and FCF Above Guidance
• Q4 and FY-24 results in line with pre-announcement
• FY-24 ARR grew 12% c.c. to USD804m, at top end of guidance of 11-12%
• Total software licensing growth of 10% c.c. in Q4-24 vs guidance of about 5% and 2% c.c. in FY-24 vs. flattish growth guidance
• FY-24 EBIT growth of 14% c.c. vs. guidance of 7-9% growth
• FY-24 EPS grew 23%, vs. guidance of at least 6-8% growth
• FY-24 free cash flow (old definition excluding IFRS 16 leases and interest costs) grew 17% to USD285m, significantly exceeding guidance of at least 12% growth
• New cloud ARR disclosure introduced and revenue disclosure updated, with ‘total software licensing’ and its constituent parts replaced by a single line of ‘Subscription and SaaS’, incorporating subscription, term license and SaaS revenue, to reflect customer demand and industry best practice
• FY-25 guidance announced (non-IFRS, constant currency, excluding Multifonds) with ARR growth of at least 12%, Subscription and SaaS growth of 5-7%, EBIT growth of at least 5%, EPS growth of 7-9% reported and free cash flow growth of at least 12% reported
• FY-28 targets updated to exclude Multifonds, with no change in implied CAGR; ARR to reach more than USD 1.2bn, EBIT to reach c.USD 450m and Free Cash Flow to reach c.USD 400m
• Proposed dividend of CHF 1.30 for FY-24 to be voted on at AGM on May 13, 2025
Ad hoc announcement pursuant to Art. 53 LR
GRAND-LANCY, Switzerland, February 18, 2025 – Temenos AG (SIX: TEMN), the banking software company, today announces its fourth quarter and full year 2024 results.
Annual Recurring Revenue
Income statement and Free Cash Flow
The definition of non-IFRS adjustments is provided below. * Constant currency (c.c.) adjusts prior year for movements in currencies
Q4 and FY-24 business update
- Sales environment remained stable in the fourth quarter, with continued positive pipeline development
- Consistent execution in Q4-24 across regions delivered strong end to the year
- Ongoing execution of strategic plan with targeted US sales hiring complete
- Issued FY-25 guidance and revised FY-28 targets to account for sale of Multifonds for around USD 400m including an earnout (announced in February 2025)
Q4 and FY-24 financial summary (non-IFRS)
- Annual Recurring Revenue (ARR) of USD 804.2m, up 12% c.c.
- Non-IFRS total software licensing revenue up 10% in Q4-24 and 2% in FY-24 c.c.
- Non IFRS maintenance revenue growth of 12% in Q4-24 and 11% in FY-24 c.c.
- Non-IFRS total revenue up 8% in Q4-24 and up 5% in FY-24 c.c.
- Non-IFRS EBIT up 21% in Q4-24 and 14% in FY-24 c.c.
- Q4-24 non-IFRS EBIT margin of 37.6% and FY-24 non-IFRS EBIT margin of 34.0% up 3% pts c.c. on FY-23
- Non-IFRS EPS up 47% in Q4-24 and 23% in FY-24 reported
- Q4-24 free cash flow of USD141.7m, up 25% y-o-y, FY-24 free cash flow of USD285.0m, up 17% y-o-y under old definition excluding IFRS 16 leases and interest costs
- FY-24 free cash flow of USD 243.2m up 20% y-o-y under new definition including IFRS 16 leases and interest cost
- Leverage at 1.3x at end of Q4-24
- DSOs at 152 days
- Long term profit and cash flow strength support proposed dividend of CHF1.30, an 8% annual increase
Commenting on the results, Temenos CEO Jean-Pierre Brulard said:
“I am particularly pleased with the consistent execution across the business in the fourth quarter, which has been a key area of focus for our leadership team. We presented our new strategic plan in November with three growth levers; extend market leadership in best of suite, enhance modular core solutions and accelerate adjacent point solutions to deliver above-market growth. The critical first step was to deliver a strong Q4-24 which was comparing to a strong Q4-23 last year and to meet the revised guidance for the full year 2024.
We have also made good progress on the execution of our new strategy. We continued to strengthen our leadership with hirings including a new Chief Product Officer and Chief Delivery Officer and have completed our targeted US sales force hiring. We are also finalizing a review of the product and technology organization to elevate it to the next level in terms of processes and skill set. I was also pleased that we were able to announce the sale of Multifonds, which aligns with our strategy of focusing our product portfolio and R&D investments to support our three growth levers.”
Commenting on the results, Temenos CFO Takis Spiliopoulos said:
“We had a strong fourth quarter with most areas of the business delivering well against expectations. Despite the headwinds in 2024 we were still able to grow ARR 12% driven by our excellent progress on our subscription transition which is now largely complete, as well as a healthy contribution from SaaS even with lower market growth rates than we had previously forecast. Maintenance again showed strong growth, up 12% constant currency in the quarter, in particular due to strong sales of premium maintenance. Our services revenue continued to decline in line with our Partner-first strategy but showed a strong improvement in profitability. Looking at our cost base, we benefited from the efficiency program launched in H2-24 and did not see a significant impact yet from the investments we made, in particular in Sales and Marketing and R&D.
We generated USD 141.7m of free cash flow in Q4-24 under our old definition, or USD 121.1m under our new definition including IFRS 16 leases and interest costs. We ended the year with leverage at 1.3x net debt to non-IFRS EBITDA, well within our target operating leverage of 1.0–1.5x.
We have made the decision to introduce new cloud ARR disclosure and update our revenue disclosure, replacing total software licensing and its constituent parts with a single revenue line called “subscription and SaaS”. This reflects client demand and industry best practice. We increasingly see clients using a combination of on-premise, hybrid, public cloud and SaaS, and our focus is on ensuring we can offer our clients world-class software, services and support irrespective of their chosen consumption model.
We also announced the sale of Multifonds in February 2025 for an enterprise value of about USD 400m including an earnout. The sale is expected to close in Q2-25. Our guidance for FY-25 reflects the change in revenue disclosure, excludes any contribution from Multifonds and is constant currencies. Our free cash flow is under the new definition including IFRS 16 leases and interest costs. We are guiding for ARR growth of at least 12%, subscription and SaaS growth of 5-7%, EBIT growth of at least 5%, EPS growth of 7-9% reported and free cash flow growth of at least 12% reported.
We have also revised our FY-28 targets to exclude Multifonds. The implied CAGRs have not changed since the Capital Markets Day in November 2024. We now expect ARR to reach at least USD 1.2bn, EBIT of c.USD 450m and free cash flow to reach c.USD 400m including IFRS 16 leases and interest costs.”
Revenue
IFRS and non-IFRS revenue was USD 318.9m for the quarter, an increase of 7% vs. Q4-23.
IFRS and non-IFRS total software licensing revenue for the quarter was USD 168.2m, an increase of 9% vs. Q4-23.
EBIT
IFRS EBIT was USD 86.1m for the quarter, an increase of 26% vs. Q4-23.
Non-IFRS EBIT was USD 120.0m for the quarter, an increase of 18% vs. Q4-23.
Non-IFRS EBIT margin was 37.6%, up 4% points vs. Q4-23.
Earnings per share (EPS)
IFRS EPS was USD 1.08 for the quarter, an increase of 80% vs. Q4-23.
Non-IFRS EPS was USD 1.51 for the quarter, an increase of 47% vs. Q4-23, including one off tax benefit of c. USD 15m from prior years.
Cash flow
USD 141.7m of free cash flow (old definition excluding IFRS 16 leases and interest costs) was generated in Q4-24, an increase of 25% vs. Q4-23.
Dividend
Taking into account the profit and cash generation in 2024, as well as the expected strength of future cash flows, Temenos intends to pay a dividend of CHF1.30 per share in 2025 subject to shareholder approval at the AGM on May 13, 2025. The timing for the dividend payment will be as follows:
- 13 May AGM approval
- 15 May Shares trade ex-dividend
- 16 May Record date
- 19 May Payment date
The dividend will be taken from the retained earnings (cash dividend) and therefore taxable (WHT 35%).
Sale of Multifonds
On February 6, 2025, Temenos announced the sale of Multifonds to Montagu Private Equity for a total Enterprise Value of about USD 400 million including an earnout (please view the press release here). The sale of Multifonds simplifies the Temenos product portfolio and aligns with Temenos’ new strategic and operational plan to drive above-market growth. In FY-24, Multifonds contributed c. USD 40m to reported non-IFRS total software licensing and c. USD 50m to reported non-IFRS EBIT. FY-25 guidance excludes contribution from Multifonds, and FY-24 proforma figures also exclude Multifonds and are in constant currency.
Revenue line items and new cloud ARR disclosure
Temenos is introducing new annual disclosure of cloud ARR to provide transparency on the growth in cloud adoption. Its revenue disclosure will also be updated to reflect changes in customer demand and industry best practice, with increasing use of hybrid and public cloud. ‘Total software licensing’ is being renamed as ‘subscription and SaaS’ to bring disclosure in line with leading global software players. ‘Subscription and SaaS’ will comprise subscription, term license and SaaS revenue. Term license is expected to continue declining to around USD 20-30m p.a. steady state.
FY-25 non-IFRS guidance
The guidance for FY-25 is non-IFRS and in constant currencies, except for EPS and FCF which are reported. The guidance excludes any contribution from Multifonds. Free cash flow is under new definition including IFRS 16 leases and interest costs.
FY-25 guidance
- ARR growth of at least 12%
- Subscription and SaaS growth of 5-7%
- EBIT growth of at least 5%
- EPS growth of 7-9% reported
- FCF growth of at least 12% reported
The Company has also assumed the following for FY-25 guidance:
- FY-25 tax rate expected to be between 15-17%, benefiting from one off tax impact of c.USD 15m from prior years; normalized tax rate of 19-21%
Currency assumptions for FY-25 guidance
In preparing the FY-25 guidance, the Company has assumed the following:
- EUR to USD exchange rate of 1.04;
- GBP to USD exchange rate of 1.24; and
- USD to CHF exchange rate of 0.89
FY-28 targets
FY-28 targets have been updated to exclude contribution from Multifonds. Free cash flow is under the new definition including IFRS 16 leases and interest costs. CAGRs are unchanged from the targets announced at the CMD in November 2024.
- ARR of at least USD 1.2bn (from >1.3bn) implying a CAGR of 13%
- EBIT of c. USD 450m (from c.500m) implying a CAGR of 10%
- FCF of c. USD 400m (from c.420m) implying a CAGR of 16%
The guidance provided above and other statements about Temenos’ expectations, plans and prospects in this press release constitute forward-looking financial information and represent the Company’s current view and estimates as of February 18, 2025. We anticipate that subsequent events and developments may cause the Company’s guidance and estimates to change. Future events are inherently difficult to predict. Accordingly, actual results may differ materially from those indicated by these forward-looking statements as a result of a variety of factors. More information about factors that potentially could affect the Company’s financial results is included in its annual report available on the Company’s website.
Conference call and webcast
At 18.30 CET / 17.30 GMT / 12.30 EST today, February 18, 2025, Jean-Pierre Brulard, CEO, and Takis Spiliopoulos, CFO, will host a webcast to present the results and offer an update on the business outlook. The webcast can be accessed through the following link:
Please use the webcast in the first instance to avoid delays in joining the call. For those who cannot access the webcast, the following dial-in details can be used as an alternative. Please dial in 15 minutes before the call commences.
Switzerland / Europe: + 41 (0) 58 310 50 00
United Kingdom: + 44 (0) 207 107 06 13
United States: + 1 (1) 631 570 56 13
Non-IFRS financial Information
Readers are cautioned that the supplemental non-IFRS information presented in this press release is subject to inherent limitations. It is not based on any comprehensive set of accounting rules or principles and should not be considered as a substitute for IFRS measurements. Also, the Company’s supplemental non-IFRS financial information may not be comparable to similarly titled non-IFRS measures used by other companies. The Company’s non-IFRS figures exclude share-based payments and related social charges costs, any deferred revenue write-down resulting from acquisitions, discontinued activities that do not qualify as such under IFRS, gain/loss from business disposals, acquisition/investment/carve out related charges such as financing costs, advisory fees and integration costs and fair value changes on investments, charges as a result of the amortization of acquired intangibles, costs incurred in connection with a restructuring program or other organizational transformation activities planned and controlled by management, and adjustments made to reflect the associated tax charge relating to the above items.
Below are the accounting elements not included in the FY-25 non-IFRS guidance.
- FY-25 estimated share-based payments and related social charges of c.5% of revenue
- FY-25 estimated amortisation of acquired intangibles of USD 45m
- FY-25 estimated restructuring/M&A related costs of USD 35m
Investor & Media Contacts
Investors
Adam Snyder
Head of Investor Relations, Temenos
Email: asnyder@temenos.com
+44 207 423 3945
International media
Conor McClafferty
FGS Global on belhalf of Temenos
conor.mcclafferty@fgsglobal.com
+44 7920 087 914
Swiss media
Martin Meier-Pfister
IRF on belhalf of Temenos
meier-pfister@irf-reputation.ch
+41 43 244 81 40