Temenos pre-announces preliminary Q4 and FY-23 results, with ARR, Total Software Licensing, EBIT and FCF all well above guidance

Ad hoc announcement pursuant to Art. 53 LR

GENEVA, Switzerland, January 19, 2024 – Temenos AG (SIX: TEMN), the banking software company, today pre-announces its preliminary fourth quarter and full year 2023 results. This press release and all information herein is preliminary and unaudited.

Annual Recurring Revenue

Income statement and Free Cash Flow

This press release and all information herein is preliminary and unaudited. The definition of non-IFRS adjustments is below.
* Constant currency (c.c.) adjusts prior year for movements in currencies.

Q4 and FY-23 business update

• Strong Q4 and FY-23 performance
• ARR and FCF exceeding guidance and TSL and EBIT significantly exceeding minimum guidance
• Sales environment remained stable through Q4-23, with continued positive pipeline development
• Subscription transition substantially complete, minimal term license remaining in the pipeline for FY-24
• SaaS also continued to perform well, growing 19% c.c. in Q4-23 and 25% c.c. in FY-23 to reach USD205m as expected
• FY-23 Total Software Licensing growth of 10% c.c. vs. guidance of at least 6% growth
• Maintenance revenue grew 5% for FY-23 on back of strong license growth
• FY-23 EBIT growth of 12% c.c. vs. guidance of at least 8% growth, with good margin uplift in FY-23
• FY-24 guidance will be provided with the release of full Q4 and FY-23 results on 19^th February 2024
• Capital Markets Day to be held on 20^th February 2024 virtually and in person in London, registration details are available here

Q4 and FY-23 financial summary (non-IFRS)

• Annual Recurring Revenue (ARR) of USD 730.0m, up 16% c.c.
• USD 67.3m of non-IFRS subscription licenses signed in Q4-23 and USD 160.4m signed in FY-23
• Non-IFRS SaaS revenue of USD 54.9m in Q4-23 and USD 205.1m in FY-23
• Non-IFRS total software licensing revenues up 6% in Q4-22 and 10% in FY-23 c.c.
• Non IFRS maintenance revenue growth of 7% in Q4-23 and 5% in FY-23 c.c.
• Non-IFRS total revenue up 6% in Q4-23 and up 5% in FY-23 c.c.
• Non-IFRS EBIT up 5% in Q4-23 and 12% in FY-23 c.c.
• Q4-23 non-IFRS EBIT margin of 34.0% and FY-23 non-IFRS EBIT margin of 31.3%
• Q4-23 Free Cash Flow of USD113.6m, up 7% y-o-y, FY-23 Free Cash Flow of USD242.6m, up 26% y-o-y

Commenting on the results, Temenos CEO Andreas Andreades said:

“I am very pleased with our strong performance in 2023, significantly exceeding all our guidance KPIs, which was made possible by the focus and determination of everyone at Temenos. This demonstrates our ability to execute and deliver growth despite macro uncertainty. The sales environment remained stable through Q4. We signed many notable deals in the quarter, including a number of tier 1 global banks that put their trust in Temenos as a strategic partner to support their future growth. Our European and American businesses performed particularly strongly. Our transition to a recurring revenue business model continues at pace, with our ARR reaching USD730m by year end, representing 84% of our product revenues.  This was driven by our subscription transition and the strong growth in our SaaS revenue. I was particularly pleased with the strong Free Cash Flow growth of 26% for FY-23, and with the headwind from the shift to subscription behind us I expect our Free Cash Flow to continue to grow strongly in the coming years.”

Additional information

This press release and all information herein is preliminary and unaudited.

Fourth quarter and full year 2023 results announcement

Temenos’ fourth quarter and full year 2023 results will be announced on Monday 19^th 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 20^th February virtually and in person in London. Registration details for the Capital Markets Day are available here.

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/investment related charges such as financing costs, advisory fees and integration costs and fair value changes on investments, 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.

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