Temenos Reports Increase in Revenue and Earnings Amidst Short-Seller Controversy
Banking-software developer Temenos has reported a positive fourth-quarter performance, despite recent allegations questioning the company’s earnings and accounting practices. The company announced non-IFRS total revenue of $298 million for the last quarter of 2023, representing a 6% increase in constant currency compared to the same period the previous year. Furthermore, annual recurring revenue experienced a significant 16% jump, reaching $730 million.
Temenos also saw growth in its software licensing revenue, which increased by 6% to $153.9 million. Additionally, their earnings before interest and taxes rose by 5% to $101.3 million, maintaining a healthy margin of 34%.
Looking ahead to 2024, Temenos expects its annual recurring revenue to grow by approximately 15%. Furthermore, the company anticipates its total software licensing growth to be in the range of 7% to 10%. The growth in EBIT is projected to be between 7% and 9%.
Furthermore, Temenos plans to pay a dividend of CHF1.20 ($1.36) per share, representing a 9% increase from the previous year, pending shareholder approval at the annual general meeting on May 7.
Following allegations of accounting irregularities, Temenos shares closed at CHF65.96, experiencing an 8.8% increase from the previous day. In response to a report by Hindenburg Research that accused the company of earnings manipulation, Temenos vehemently defended its financial practices and refuted the claims. The company has reassured investors of its commitment to maintaining strong business operations and rigorous financial controls.
Temenos has announced its intention to thoroughly investigate the allegations with the assistance of independent third parties to ensure a transparent and credible examination of the matter.
Analyst comment
Positive
As an analyst, it is expected that the market will respond positively to Temenos’ increase in revenue and earnings despite the short-seller controversy. The company’s strong performance and growth projections for 2024, along with its commitment to addressing the allegations, are likely to instill confidence in investors. The increase in share price following the allegations further suggests that the market is optimistic about the company’s prospects.
