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Temenos (CH:TEMN)
:TEMN
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Temenos
(OTC:TEMN)
Rating:72Outperform
Price Target:
CHF66.00
▲(14.09%Upside)
Positive Factors
Asset Disposal
The disposal of Multifonds is seen as a positive move, allowing investors to focus on future growth prospects.
Company Performance
Raising the price target to CHF75 indicates confidence in the company's future performance.
Investor Sentiment
2Q25 is seen as an opportunity for broad-based improvement, both operationally and in terms of communication.
Negative Factors
Operational Performance
Temenos delivered soft 1Q25 results, with the promise of an improved performance in 2Q25 and 2H25.
Revenue Performance
Subscription and SaaS growth came in at -2%, which will be seen as a weak result and it missed consensus by 9%.
Temenos (TEMN) vs. iShares MSCI Switzerland ETF (EWL)
Market Cap
$3.95B
Dividend Yield1.8%
Average Volume (3M)242.74K
Price to Earnings (P/E)36.3
Beta (1Y)0.72
Revenue Growth-25.15%
EPS Growth-3.55%
CountryCH
Employees6,212
SectorTechnology
Sector Strength87
IndustrySoftware - Application
Share Statistics
EPS (TTM)0.64
Shares Outstanding71,907,150
10 Day Avg. Volume278,179
30 Day Avg. Volume242,736
Financial Highlights & Ratios
PEG Ratio-1.01
Price to Book (P/B)7.11
Price to Sales (P/S)0.00
P/FCF Ratio20.39
Enterprise Value/Market Cap1.19
Enterprise Value/Revenue1.13
Enterprise Value/Gross Profit6.82
Enterprise Value/Ebitda3.39
Forecast
1Y Price Target
$61.64Price Target Upside6.55% Upside
Rating ConsensusHold
Number of Analyst Covering6
Temenos Business Overview & Revenue Model
Company DescriptionTemenos AG develops, markets, and sells integrated banking software systems to banking and other financial institutions worldwide. The company provides Temenos Transact, a banking solution that offers banking software, and data and analytics; and Temenos Payments, a payment solution that gives banks real-time control, customer service experience, and cost efficiencies and risk management solutions. It also offers Temenos Infinity, a digital banking product; Temenos Multifonds, a fund administration solution; Temenos SaaS solution that supports banks in various sectors and geographies; Temenos Quantum, a multi-experience development platform that delivers digital transformation; and Temenos AI that provides frictionless customer experiences and automate processes. In addition, the company provides Temenos Financial Crime Mitigation that allows banks and financial institutions to avoid regulatory fines, detect fraud, and mitigate reputational risks; Temenos Analytics, a reporting, analytics, and business intelligence product; and Temenos Regulatory Compliance, which is used to address fraud, remain compliant with regulations, and manage risk. Further, it offers retail and private banking, corporate and business banking, Islamic banking, wealth management, financial inclusion, mobile banking, consultancy and training services, and support services. Additionally, the company provides Temenos Developer Community, an open API catalogue that brings standardized out-of-the-box APIs to fast track innovation with online support and resources. The company was formerly known as Temenos Group AG and changed its name to Temenos AG in May 2018. Temenos AG was founded in 1993 and is headquartered in Geneva, Switzerland.
How the Company Makes MoneyTemenos generates revenue primarily through the sale of software licenses and the provision of related services such as maintenance, support, and consulting. The company offers its products through both on-premise installations and cloud-based solutions, catering to a wide range of banking needs. Recurring revenue from maintenance and subscription services forms a significant portion of Temenos' income, providing a stable and predictable revenue stream. Additionally, the company engages in strategic partnerships with technology and consulting firms to enhance its offerings and expand its market reach. Temenos also earns revenue through customization and implementation services provided to its clients, ensuring that the software solutions meet specific customer requirements and regulatory standards.
Temenos Earnings Call Summary
Earnings Call Date:Apr 22, 2025
(Q1-2025)
| % Change Since: -4.72%|
Next Earnings Date:Jul 22, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong growth in software licensing and ARR, successful cost management, and strategic expansions, particularly in the U.S. market. However, challenges such as a decline in subscription and SaaS revenue due to macroeconomic uncertainty and the impact of a downsized BNPL customer were noted. Despite these challenges, the company remains optimistic about its long-term growth prospects.Q1-2025 Updates
Positive Updates
Strong Growth in Software Licensing
The company reported high teens growth in software licensing, primarily driven by subscription services, despite some macroeconomic uncertainties.
Solid ARR and Maintenance Growth
Annual Recurring Revenue (ARR) increased by 9%, and maintenance revenue grew by 11%, supported by strong sales in premium maintenance and subscription renewals.
Expansion in Key Markets
The company made significant strides in expanding its U.S. market presence, including the opening of a U.S. innovation hub in Orlando and a partnership with Cognizant in Australia.
Successful Cost Management
The company delivered EBIT growth of 8% and expanded its EBIT margin to 31.5% due to excellent cost control and ongoing cost savings initiatives.
Share Buyback Announcement
A share buyback program was announced for up to CHF 250 million, expected to be accretive to EPS by the end of 2025.
Negative Updates
Subscription and SaaS Revenue Decline
Subscription and SaaS revenues were down 2% for the quarter, primarily due to deals being pushed to Q2 due to macroeconomic uncertainty.
Impact of BNPL Customer Downsizing
The downsizing of a large Buy Now Pay Later (BNPL) customer affected SaaS revenue. This was anticipated but still impacted overall revenue.
Macroeconomic Uncertainty
The company expressed concerns about increased macroeconomic uncertainty affecting customer decision-making and potentially delaying deal closures.
Company Guidance
During the Q1 2025 results call, Temenos reconfirmed their full-year guidance despite recognizing increased macroeconomic uncertainty. The company reported high teens growth in software licensing, driven mainly by subscription, which largely offset the downsell impact from a large Buy Now Pay Later (BNPL) customer on their SaaS platform. The Annual Recurring Revenue (ARR) was up 9%, and maintenance revenue saw an impressive 11% growth. The company maintained excellent cost control, resulting in an EBIT growth of 8% and an EBIT margin expansion to 31.5%. Free cash flow increased by 12% to $49 million, and leverage remained stable at 1.3x. Temenos announced a share buyback program of up to CHF 250 million, with plans to cancel the shares at the 2026 AGM, which is expected to be accretive to EPS this year and even more so in 2026. The company provided indicative growth rates for Q2 2025, expecting subscription and SaaS revenues to grow between 6% to 10%.Temenos Financial Statement Overview
Summary
Temenos exhibits a strong financial profile with consistent revenue growth, solid profitability margins, and a robust balance sheet with zero debt. The company's effective cash flow management enhances its liquidity position. While operational cost increases are a concern, the overall financial health is robust, positioning the company well for future growth.Income Statement
Temenos demonstrates strong revenue growth with a 4.6% increase over the past year and robust gross and net profit margins of 65.6% and 16.6% respectively in the TTM. The EBIT and EBITDA margins are also healthy at 21.5% and 33.2%, indicating efficient cost management. However, there is a slight decline in EBIT margin from the previous year, which suggests potential increasing operational costs.78
Positive
Balance Sheet
Temenos maintains a strong balance sheet with zero debt in the latest TTM, a significant improvement from prior years. The equity ratio stands at 29.5%, reflecting a solid capital structure. The return on equity (ROE) is impressive at 25.5% in the TTM, highlighting effective use of shareholder funds. The consistent decrease in liabilities and increase in equity over the years further strengthens the financial stability.82
Very Positive
Cash Flow
The company displays a commendable 2.1% growth in free cash flow, demonstrating effective cash management. With a high operating cash flow to net income ratio of 2.12, and a free cash flow to net income ratio of 1.67, Temenos effectively converts its earnings into cash. The robust cash flow metrics ensure strong liquidity, though the decrease in investing cash flow indicates potential higher capital expenditures or investments.80
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.05B | 1.04B | 1.00B | 949.63M | 967.00M | 887.36M |
| Gross Profit | 686.80M | 752.41M | 709.09M | 631.20M | 641.52M | 588.11M |
| EBITDA | 347.37M | 362.34M | 224.19M | 309.54M | 384.98M | 382.63M |
| Net Income | 173.94M | 177.18M | 134.68M | 114.42M | 173.37M | 175.02M |
Balance Sheet | ||||||
| Total Assets | 2.32B | 2.28B | 2.33B | 2.23B | 2.23B | 2.22B |
| Cash, Cash Equivalents and Short-Term Investments | 134.56M | 170.30M | 176.67M | 125.03M | 146.08M | 110.19M |
| Total Debt | 0.00 | 726.72M | 764.68M | 840.80M | 959.86M | 977.86M |
| Total Liabilities | 1.63B | 1.64B | 1.64B | 1.68B | 1.76B | 1.69B |
| Stockholders Equity | 683.46M | 638.97M | 681.98M | 553.04M | 474.79M | 523.40M |
Cash Flow | ||||||
| Free Cash Flow | 290.79M | 284.87M | 242.45M | 192.88M | 358.01M | 296.88M |
| Operating Cash Flow | 368.34M | 363.35M | 331.03M | 297.91M | 460.13M | 382.96M |
| Investing Cash Flow | -77.58M | -71.18M | -84.19M | -137.12M | -131.53M | -47.74M |
| Financing Cash Flow | -459.82M | -279.25M | -235.62M | -207.97M | -295.96M | -381.29M |
Temenos Technical Analysis
Negative
57.85
Price Trends
60.08
Negative
64.65
Negative
63.68
Negative
Market Momentum
-1.03
Positive
42.42
Neutral
45.95
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CH:TEMN, the sentiment is Negative. The current price of 57.85 is below the 20-day moving average (MA) of 60.02, below the 50-day MA of 60.08, and below the 200-day MA of 63.68, indicating a bearish trend. The MACD of -1.03 indicates Positive momentum. The RSI at 42.42 is Neutral, neither overbought nor oversold. The STOCH value of 45.95 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CH:TEMN.
Temenos Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | $3.95B | 36.26 | 18.34% | 1.80% | -25.15% | -3.55% | |
63 Neutral | $34.04B | 6.14 | -11.52% | 1.82% | 5.53% | -18.79% | |
| $13.87B | 22.42 | 28.96% | 1.47% | ― | ― | ||
| $1.49B | ― | -13.29% | ― | ― | ― | ||
| $96.16M | 5.65 | -52.12% | ― | ― | ― | ||
| $923.15M | ― | -24.38% | 1.00% | ― | ― | ||
| CHF1.59B | ― | 3.27% | ― | ― |
* Technology Sector Average
Performance Comparison
CH:TEMN
Temenos
57.85
-4.82
-7.70%
LOGI
Logitech
92.69
-0.76
-0.81%
AUKUF
ams-OSRAM
9.65
-6.55
-40.43%
KDCXF
Kudelski SA
1.15
-0.02
-1.71%
UBLXF
u-blox Holding AG
124.77
22.48
21.98%
CH:SWON
SoftwareOne Holding Ltd.
7.85
-8.53
-52.08%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.