Q4 2023 Results Press Release & Primary Statements
Q4 2023 Results Presentation
Annual Recurring Revenue
Income Statement and Free Cash Flow
The definition of non-IFRS adjustments is set out below and a full reconciliation of IFRS to non-IFRS results can be found in Appendix II.
Constant currency (c.c.) adjusts prior year for movements in currencies
Q4 and FY-23 business update
Strong Q4 and FY-23 performance; sales environment remained stable through Q4-23, with continued positive pipeline development
ARR of
Subscription transition substantially complete, minimal term license remaining in the pipeline for FY-24
Non-IFRS SAAS revenue was up 19% c.c. in the quarter and 25% c.c. in FY-23
SaaS ACV of
Continued strong performance in
Sustained momentum with tier 1 and 2 banks, contributing 46% of total software licensing in Q4-23 and 43% in FY-23
Delivering for our clients with 391 implementations on our software in 2023
Significant progress on customer engagement, NPS score of +54 based on survey of over 900 customers
Industry-leading client retention with churn of only c.3% p.a. on a dollar basis
Capital Markets Day to be held on
Q4 and FY-23 financial summary (non-IFRS)
Annual Recurring Revenue (ARR) of
SaaS Annual Contract Value (ACV) of
Non-IFRS SaaS revenue of
Non-IFRS total software licensing revenues up 6% in Q4-23 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% up 2% pts c.c. on FY-22
Non-IFRS EPS up 4% in Q4-23 and 13% in FY-23 reported
Q4-23 Free Cash Flow of
Leverage at 1.6x at end of Q4-23
DSOs at 141 days
Long term profit and cash flow strength support proposed dividend of
Commenting on the results, Temenos CEO
'I am very pleased with our strong performance in 2023, where we delivered results that significantly exceeded all our raised 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, with our European and American businesses performing particularly well. We signed a number of deals with tier 1 global banks that put their trust in Temenos as a strategic partner to support their transformation programs to enable future growth. Our pipeline continued developing positively in the quarter including a number of large deals, giving revenue visibility for 2024, and our increasing percentage of recurring revenues as a percent of total revenues gives us increasing profit visibility.
We have made a number of exciting announcements recently, in particular the launch of Temenos Enterprise Services, with over 120 pre-configured products, processes and 700 APIs which help our clients to reduce modernization cost, complexity and risk and accelerate time to value, and Temenos LEAP, our program to support our clients to move to the latest cloud- native Temenos platform and get them ready to benefit from cloud and SaaS.
With our ongoing investments in Sales & Marketing and R&D I am confident we will continue to execute on our strategies to drive innovation for our clients, enhance our market-leading position and deliver value for all our stakeholders.'
Commenting on the results, Temenos CFO
'We have seen strong growth in recurring revenue in 2023, with ARR of
Cash Flow in the quarter and the year was also strong reflecting the underlying growth in profits. Looking at the balance sheet, we ended the quarter with leverage of 1.6x net debt to EBITDA.
DSOs were up at 141 days which was expected given the transition to subscription which is now substantially complete.
We have announced our FY-24 guidance which is non-IFRS and in constant currencies. We are expecting ARR growthof about 15%, total software licensing growth of 7-10%, EBIT growth of 7-9%, EPS growth of 6-8% and Free Cash Flow growth of at least 16%.'
'The business has performed very well in 2023. Focused execution of the strategic roadmap has delivered strong growth in the face of ongoing macroeconomic uncertainty. We have a talented Executive team currently led by Andreas, who are performing well as evidenced by results released today and strengthened by the recent appointments announced at the start of 2024.
We are seeking an exceptional individual to lead the next phase of Temenos' development and I am leading the Board Committee overseeing this, with the support of external advisors. We were close to an appointment for this role in the second half of 2023, which unfortunately did not proceed. We are making good progress toward hiring an alternative and managing the transition.
With regards to the recent short seller report and further to the statement made by the Board in the press release on
Revenue
IFRS and non-IFRS revenue was
IFRS and non-IFRS total software licensing revenue for the quarter was
EBIT
IFRS EBIT was
Non-IFRS EBIT was
Non-IFRS EBIT margin was 34.0%, up 0.2% point vs. Q4-22.
Earnings per share (EPS)
IFRS EPS was
Non-IFRS EPS was
Cash flow
IFRS operating cash was an inflow of
Dividend
Taking into account the profit and cash generation in 2023, as well as the expected strength of future cash flows, subject to shareholder approval at the AGM on
7 May AGM approval
10
13
14
The dividend will be taken from the retained earnings (cash dividend) and therefore taxable (WHT 35%).
FY-24 non-IFRS guidance
The guidance for FY-24 is non-IFRS and in constant currencies.
ARR growth of about 15%
Total software licensing growth of 7-10%
EBIT growth of 7-9%
EPS growth of 6-8%
FCF growth of at least 16%
The Company has also assumed the following for FY-24 guidance:
Cash conversion of 100%+ of IFRS EBITDA into Operating Cash
FY-24 tax rate expected to be between 20-22%
Currency assumptions for FY-24 guidance
In preparing the FY-24 guidance, the Company has assumed the following:
EUR to USD exchange rate of 1.08;
GBP to USD exchange rate of 1.27; and
USD to CHF exchange rate of 0.87
Mid-term targets
Temenos reconfirms its mid-term targets. The targets non-IFRS and in constant currencies.
ARR to reach at least
EBIT to reach at least
FCF to reach at least
The guidance provided above and other statements about Temenos' expectations, plans and prospects in this press release constitute forward-looking financial information and represent the Company's current view and estimates as of
Conference call and webcast
At 18.30 CET / 17.30 GMT / 12.30 EST today,
Q4 2023 webcast link
Please use the webcast in the first instance if at all possible to avoid delays in joining the call. For those who cannot access the webcast, the following dial-in details can be used as an alternative. Please dial in 15 minutes before the call commences.
Capital Markets Day
Temenos will host a Capital Markets Day on Tuesday 20th February virtually and in person in
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.
Investor & Media Contacts
Head of Investor Relations, Temenos
+44 207 423 3945
asnyder@temenos.com
+44 7920 087 914
conor.mcclafferty@fgsglobal.com
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