Andreas Andreades – Chief Executive Officer
Passion for our people, clients and future.
Return to growth
Thoughts on our performance in 2023
The key focus for us was moving to a recurring revenue model through our transition to subscription revenues and further development of our SaaS business.
Looking back on 2023, it was a critical year for Temenos in many ways, and one which I think we will see as a milestone in the Company’s history. After an unusual 2022, with macro uncertainty causing a slowdown in our end market, we were
looking forward to a year of greater stability and focusing on executing on our strategic initiatives without the distractions of previous years. The key focus for us was moving to a recurring revenue model through our transition to subscription
revenues and further development of our SaaS business.
And we achieved both of these, with our transition to subscription from term license substantially complete by the end of the year, and we continued to put in place the foundations for further growth in our SaaS business. Reflecting on our financial performance, 2023 was a successful year for Temenos, in which we delivered growth across all of our KPIs. We listened to the feedback from our shareholders, and set guidance at the start of the year that we considered realistic and achievable based on strength of our pipeline. With our strong performance through the year we were then in a position to progressively raise our guidance through the year. ARR is now the key metric of measuring the progress with our shift to a recurring revenue business model, and we delivered a strong 17% growth in this metric for the full year. More broadly, we saw good growth across our revenue, profit and margins, and in particular had very strong growth in our free cash flow, reflecting the progress we have made on our subscription transition and SaaS acceleration.
2023 was a highly productive year for Temenos from both a client perspective as well as our own innovation and investments. We signed a number of landmark deals during the year that are testimony to our market leadership position, in particular among tier 1 global banks. Early in the year, we signed a deal with a tier 1 global bank eadquartered in Europe to renovate its international private bank, capitalizing on our Wealth product expertise and deep understanding of banking across multiple geographies. We also expanded our relationship with a tier 1 US bank to upgrade its international corporate banking platform in the cloud, after already signing a deal with them in 2022 to renovate their international private bank. This continued penetration of an existing customer, and one of the world’s largest banks, demonstrates the value our clients achieve by using our platform as well as the trust our clients put in us.
We also won a landmark core banking renovation with Regions Bank, a top 30 domestic US bank.
We have now firmly established our cloud-native credentials, as demonstrated by the number of clients running on SaaS with Temenos or running their Temenos platform in the public cloud themselves.
None of this would be possible without the ongoing support and references from our existing client base. We were very pleased to announce we achieved a market-leading Net Promoter Score (NPS) of +54 following a survey of over 900 customer contacts.
According to our clients who took part in the NPS survey, one of the key factors driving customers to recommend Temenos to others is our product capabilities. We made significant investments in 2023 in our organization to further enhance our
platform and product capabilities, in particular around SaaS and cloud. There were a number of exciting new product launches such as the launch of Temenos Enterprise Services, our end-to-end SaaS services for retail, business and corporate
banking that come with over 120 pre-packaged banking products and 700 pre-configured APIs. Using Temenos Enterprise Services, our clients can deploy software solutions in just 24 hours and significantly reduce modernization costs,
complexity and risk while accelerating time to value. Temenos also recently announced Leap, a new AI-powered offering that helps customers to modernize faster and to seamlessly and quickly move to the latest cloud-native Temenos technology.
With the investments planned over the next 12 months, I am confident we will continue to be at the forefront of innovation in our industry.
We have now firmly established our cloud-native credentials, as demonstrated by the number of clients running on SaaS with Temenos or running their Temenos platform in the public cloud themselves. We are clearly putting more distance between
ourselves and our competitors, both the established global vendors we have always competed with, and the newer cloud-native competitors that have sprung up over the last decade. We are confident we have a highly differentiated cloud-native offering against both sets of competitors, and fully intend to increase our competitive advantage through our robust innovation roadmap over the coming years.
Looking at our end market, 2023 was broadly a good year for our client base globally. Despite a number of events that triggered concerns of contagion across the industry, notably the collapse of Silicon Valley Bank and First Republic in the US, and emergency rescue of Credit Suisse by UBS in Europe, the wider banking system continued to operate without any widespread disruption. Rising interest rates have boosted bank profits whilst at the same time making it more challenging for fintechs
and other new entrants to raise capital and fund investments.
Incumbent banks are, of course, still contending with a highly competitive landscape, where leading traditional players are investing in their IT platforms and product offerings, and fintechs with new business models are trying to capture market share. And banks are also having to consider the role of AI in their operations which can be both an opportunity if properly leveraged to drive efficiency and greater understanding of their client base, and a threat in terms of retaining their competitive positioning, especially in terms of resilience and security of their operations and data.
In this context, 2023 was a year that Temenos did what it is known best for. We continued to be the leader in the sector, pushing the boundaries of the banking software market. We are at the forefront of the move to the cloud in banking and
believe we are creating the market through our relentless focus, and in the process delivering success for all our stakeholders.
Our performance and the progress Temenos made in 2023 set us up very well for further growth and success in 2024. We expect to see continued growth in both our subscription and SaaS businesses as we leverage the advantages of a single platform with industry-leading levels of investment. We have excellent momentum with both new and existing clients and we benefit from very strong client references that give new clients the confidence to partner with Temenos to solve their business goals. Of course our success is only possible with the effort of every Temenosian, and I am incredibly proud of the commitment our people show every day to Temenos, their clients and the banking industry.
Temenos is able to succeed because of the values that are at the heart of everything we do. We call our values the four Cs; we challenge, we commit, we collaborate and, most importantly, we care. We care about each other, our clients, our Partners
and the communities we serve and operate in. And this is reflected in our approach to ESG, which we have integrated across our operations and business processes. ESG is a Board-level issue for our clients, which expect their Partners to meet the highest ethical and sustainability standards. Not only have we been recognized as a leader in ESG in the software industry, but we are also helping our clients achieve their own
ESG targets, in particular through our cloud-native platform, enabling our clients to track and significantly reduce their carbon emissions. And I am confident that Temenos will retain its position as a leader in ESG and sustainability going forward.