Temenos (TEMN) AI Stock Analysis

• Market Cap: CHF4.38B
• Dividend Yield: 1.97%
• Average Volume (3M): 359.37K
• Price to Earnings (P/E): 21.0
• Beta (1Y): 0.50
• Revenue Growth: -24.73%
• EPS Growth: 86.66%
• Country: CH
• Employees: 6,212
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 1.01
• Shares Outstanding: 71,907,150
• 10 Day Avg. Volume: 149,175
• 30 Day Avg. Volume: 359,374
• PEG Ratio: 0.91
• Price to Book (P/B): 7.96
• Price to Sales (P/S): 4.87
• P/FCF Ratio: 17.84
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: CHF67.93
• Price Target Upside: 3.08% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 7

• Rating: 76 Outperform
• Price Target: CHF74.00 ▲(12.29% Upside)

Temenos is well-positioned with strong financial performance and positive earnings call insights. While technical indicators are mixed, the company's strategic growth initiatives and robust financial health support a favorable outlook.

Positive Factors

Revenue Growth

Strong revenue growth in subscription and SaaS indicates robust demand for Temenos' offerings, enhancing its market position and future revenue streams.

Balance Sheet Health

A debt-free balance sheet provides financial stability and flexibility, allowing Temenos to invest in growth opportunities without financial strain.

Strategic Partnerships

Strategic partnerships and market expansion enhance Temenos' competitive edge and open new revenue channels, supporting long-term growth.

Negative Factors

Operational Costs

Rising operational costs can pressure margins, potentially impacting profitability if not managed effectively over the long term.

SaaS Segment Challenges

Challenges in the SaaS segment could hinder growth prospects, requiring strategic adjustments to maintain momentum in this critical area.

Cash Flow Concerns

Cash flow concerns, if persistent, could limit Temenos' ability to fund new initiatives or respond to market changes, affecting long-term financial health.

Temenos Business Overview & Revenue Model

Company Description

Temenos 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 Money

Temenos generates revenue primarily through software licensing, subscription services, and professional services. Its core revenue streams include the sale of licenses for its banking software, which can be deployed on-premises or via the cloud, allowing clients flexibility in their IT infrastructure. The company also earns significant income from subscription fees for its Software-as-a-Service (SaaS) offerings, which provide clients with ongoing access to its technology and updates. Additionally, Temenos offers professional services such as consulting, implementation, and support, contributing to its revenue. Strategic partnerships with cloud providers and financial institutions further enhance its market reach and capabilities, driving additional revenue growth.

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 Temenos well for future growth in the competitive software application industry.

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.

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.

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.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.08B	1.04B	1.00B	949.63M	967.00M	887.36M
Gross Profit	728.62M	752.41M	709.09M	631.20M	641.52M	588.11M
EBITDA	509.56M	362.34M	224.19M	309.54M	384.98M	382.63M
Net Income	301.59M	177.18M	134.68M	114.42M	173.37M	175.02M
Balance Sheet
Total Assets	2.39B	2.28B	2.33B	2.23B	2.23B	2.22B
Cash, Cash Equivalents and Short-Term Investments	370.03M	170.30M	176.67M	125.03M	146.08M	119.32M
Total Debt	0.00	726.72M	764.68M	840.80M	959.86M	977.86M
Total Liabilities	1.85B	1.64B	1.64B	1.68B	1.76B	1.69B
Stockholders Equity	533.72M	638.97M	681.98M	578.38M	474.79M	523.40M
Cash Flow
Free Cash Flow	273.22M	284.87M	242.45M	192.88M	358.01M	296.88M
Operating Cash Flow	348.57M	363.35M	331.03M	297.91M	460.13M	382.96M
Investing Cash Flow	227.89M	-71.18M	-84.19M	-137.12M	-131.53M	-47.74M
Financing Cash Flow	-485.60M	-279.25M	-235.62M	-207.97M	-295.96M	-381.29M

Temenos Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 65.90
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CH:TEMN, the sentiment is Positive. The current price of 65.9 is above the 20-day moving average (MA) of 64.20, below the 50-day MA of 68.23, and below the 200-day MA of 66.17, indicating a neutral trend. The MACD of -0.55 indicates Negative momentum. The RSI at 52.56 is Neutral, neither overbought nor oversold. The STOCH value of 87.31 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CH:TEMN.

Temenos Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TEMN	76 Outperform	CHF4.38B	21.02	41.83%	1.97%	-24.73%	86.66%
IFCN	73 Outperform	CHF2.53B	27.33	―	2.03%	-0.84%	-8.41%
SWON	68 Neutral	CHF1.80B	―	―	3.49%	-5.87%	-224.75%
UBXN	65 Neutral	$1.01B	―	-20.37%	1.09%	-27.51%	-36.15%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
AMS	46 Neutral	$1.16B	―	-9.68%	―	-5.11%	88.12%
LEHN	45 Neutral	CHF566.86M	65.84	5.60%	5.57%	-24.36%	-87.16%