Temenos (TEMN) Q2 2024 earnings summary

Executive summary

• Q2 2024 saw all delayed Q1 deals close, strong customer engagement at the Temenos Community Forum, and 101 customer go-lives, up from 62 in Q1.

• The Temenos SaaS Foundation, a next-gen SaaS platform, was launched and already has a tier-one European bank live.

• Senior leadership strengthened with a new CEO, CRO, President Americas, CMO, and EVP of Global Alliances, with go-to-market investments in the US and Western Europe.

• Two-month sales delays from a short seller report impacted H1, leading to revised FY-24 guidance.

• Strategic and financial plan to be presented at Capital Markets Day in November 2024.

Financial highlights

• Q2-24 ARR reached USD 742.4m, up 12% year-over-year at constant currency, with sequential growth resuming after a Q1 dip.

• Total revenue grew 5% year-over-year; non-IFRS EBIT rose 7% to USD 90.4m, with margin expanding to 37.4%.

• Free cash flow was USD 73m, up 16% year-over-year, with cash conversion at 121% of IFRS EBITDA.

• EPS (non-IFRS) up 8% year-over-year; IFRS EPS was USD 0.50 (down 6%).

• SaaS revenue grew 8% year-over-year; maintenance revenue up 11% year-over-year.

Outlook and guidance

• Revised FY-24 guidance: ARR growth about 13% (was 15%), total software licensing growth 3-6% (was 7-10%), EBIT growth 7-9%, EPS growth 6-8%, and free cash flow growth at least 16%.

• Guidance assumes return to growth and de-risking for H2-24, with Q3 expected to be better than Q2 for total software licensing.

• FY-24 tax rate expected between 20-22%, with assumed FX rates: EUR/USD 1.08, GBP/USD 1.26, USD/CHF 0.89.

• Midterm targets to be revisited at the November Capital Markets Day.