Ad hoc announcement pursuant to Art. 53 LR
Preliminary FY-22 results in line with revised guidance, predictability of deal closures restored in the quarter
GENEVA, Switzerland, January 16, 2023 –Temenos AG (SIX: TEMN), the banking software company, today pre-announces its preliminary fourth quarter and full year 2022 results.
Income statement and Free Cash Flow
Q4 and FY-22 business update
- Preliminary FY-22 results in line with revised FY-22 guidance with Free Cash Flow significantly exceeding guidance
- Effective action taken early in Q4-22 to strengthen sales execution and sales leadership, predictability of business and sales performance restored
- No further lengthening of sales cycles witnessed compared to Q3-22
- Banks remain cautious in their decision making given future macro-economic uncertainty; however, good number of large deals with tier 1 institutions signed in Q4-22
- Move to subscription continues at pace, with 48% of licence revenue in Q4-22 signed as subscription, consistent with substantial completion of the move to subscription by the end of 2023
- Higher term license sales in Q4-22 driven by greater mix of sales to existing clients and tier 1 deals
- Announcement in December that a leading US financial institution extended its relationship with Temenos to include its international private banking business, with Temenos supporting the bank’s strategic transition to a cloud-based core banking system to help drive growth in Europe and the Asia-Pacific
- SaaS continues to perform well, with SaaS revenue up 36% c.c. in Q4-22 driven by a mix of new business and additional consumption from existing clients
- Services revenue declined this quarter due to the ongoing shift to a partner model
- Good progress was made on ongoing implementations; services costs expected to trend strongly downwards in 2023 as respective projects approach completion
- FY-23 guidance will be provided with the release of full Q4 and FY-22 results on 20th February
- Capital Markets Day to be held on 21st February in London and via webcast
Q4 and FY-22 financial summary (non-IFRS)
- USD 47.3m of non-IFRS subscription licenses signed in Q4-22 and USD 105.7m signed in FY-22
- Non-IFRS SaaS revenue of USD 45.7m in Q4-22 and USD 163.7m in FY-22
- Non-IFRS total software licensing revenues down 4% in Q4-22 and 0% in FY-22 c.c.
- Non-IFRS total revenue down 1% in Q4-22 and up 1% in FY-22 c.c.
- Non-IFRS EBIT decline of 28% in Q4-22 and 25% in FY-22 c.c.
- Q4-22 non-IFRS EBIT margin of 33.8% and FY-22 non-IFRS EBIT margin of 28.7%
Commenting on the results, Temenos CEO Max Chuard said:
“I am pleased with the dedication and commitment everyone at Temenos has shown to execute and deliver on our fourth quarter, the largest and most important of the year. We took decisive action early in Q4 to strengthen our sales leadership and sales execution and this resulted in normalized execution of deal closures in the quarter. Whilst overall it has been a difficult year with macro uncertainty impacting sales cycles in the second half of the year, in Q4 we had strong signings across subscription and term licenses with demand across client tiers. I was particularly pleased with the ongoing strength in our SaaS business in the quarter and our continued shift to a more recurring revenue model as well as our better than expected cash generation in the quarter. Whilst our revenue ended up being marginally ahead of 2021, the significant inflationary impact on costs fed through the P&L. The transition to subscription licensing is continuing at pace and our SaaS business is reaching critical mass and is increasingly underpinning both the revenue and profitability visibility.”
This press release and all information herein is preliminary and unaudited.
Fourth quarter and Full Year 2022 results announcement
Temenos’ fourth quarter and full year 2022 results will be announced on Monday 20th February after market close, and a webcast will be held at 18.30 CET / 17.30 GMT / 12.00 EST on the same day. Registration details for the webcast will be made available shortly.
Capital Markets Day
Temenos will host an in-person Capital Markets Day on Tuesday 21st February in London. The event will also be webcast. Registration details for the Capital Markets Day will also be available shortly.
Move to subscription revenue and impact on future reporting
Temenos moved to selling five-year subscription contracts for on-premise license and maintenance as standard from 2022, including for renewals. This will accelerate growth by capturing greater contract value and accelerate the shift to more financial performance driven by a much higher proportion of recurring revenues. To reflect this change, on the P&L the License revenue is split into either Subscription license or Term license, depending on the nature of contract.
The impact of the move to a subscription model on P&L, cash and ARR is shown below for illustrative purposes:
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, acquisition related charges such as financing costs, advisory fees and integration costs, charges as a result of the amortisation 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.
SaaS ACV is Annual Contract Value which is the annual value of incremental business taken in-year. This includes new customers, up-sell and cross-sell. It only includes the recurring element of the contract and excludes variable elements. Total Bookings includes fair value of license contract value, committed maintenance contract value on license, and SaaS committed contract value. All must be committed and evidenced by duly signed agreements.