Temenos (TEMN) Q4 2024 earnings summary

Executive summary

• Q4-24 and FY-24 results met or exceeded guidance, with ARR and software licensing at the top end, and EBIT, EPS, and free cash flow above guidance; SaaS ACV reached a record $24.8 million, reflecting robust sales and pipeline development.

• Strategic focus sharpened by the sale of Multifonds for ~$400m, aligning with a more concentrated product portfolio and targeted R&D investments; deal expected to close in Q2 2025.

• Customer-centric initiatives included the creation of a One Global Customer Experience team, key executive hires, and completion of targeted US sales hiring to enhance delivery and product innovation.

• Notable client wins included Aldermore and CEC Bank, both migrating to SaaS and core banking solutions, demonstrating relevance and value to customers.

• New strategic plan and updated FY-25 guidance and FY-28 targets issued, excluding Multifonds.

Financial highlights

• FY-24 ARR grew 12% year-over-year in constant currency to USD 804m, now 88% of product revenue and 77% of total revenue for 2024.

• Q4-24 SaaS ACV was USD 24.8m; SaaS revenue up 4%, subscription revenue up 59%, and total software licensing up 10% year-over-year.

• Q4-24 EBIT up 21% year-over-year to USD 120.0m; EBIT margin at 37.6%, up 4 percentage points; FY-24 margin 34.0%.

• Q4-24 EPS up 47% to USD 1.51; FY-24 up 23% to USD 3.92, including a one-off tax benefit of ~$15m.

• Free cash flow (new definition) USD 121.1m in Q4-24, up 24%; FY-24 up 17% to USD 285.0m.

Outlook and guidance

• FY-25 guidance (excluding Multifonds): at least 12% ARR growth, 5-7% Subscription & SaaS growth, at least 5% EBIT growth, 7-9% EPS growth, and at least 12% FCF growth.

• FY-28 targets (excluding Multifonds): ARR ≥USD 1.2bn, EBIT ~USD 450m, FCF ~USD 400m; CAGRs of 13%, 10%, and 16% respectively.

• FY-25 tax rate expected at 15-17% due to one-off tax benefit; normalized rate 19-21%.

• Cloud ARR expected to grow as a share of total ARR, reflecting increasing client demand for cloud infrastructure.