In This Article:
-
ARR Growth: 12% increase, reaching $742 million.
-
Free Cash Flow Growth: 16% increase, with $73 million generated in Q2.
-
Subscription Revenue: $39 million, up double-digit year-on-year.
-
SaaS Revenue: Grew 8% year-on-year but declined sequentially.
-
SaaS ACV: $9.4 million, nearly double that of Q1 2024.
-
Maintenance Revenue: Grew 11% in Q2 2024.
-
Total Revenue Growth: 5% increase in the quarter.
-
EBIT Growth: 7% increase, with a margin of 37.4%.
-
Net Profit Growth: 11% increase.
-
EPS Growth: 8% increase.
-
Cash Conversion: 121% LTM cash conversion.
-
Net Debt: $563 million, with leverage at 1.4 times.
-
Revised 2024 Guidance: ARR growth of about 13%, total software licensing growth of 3% to 6%, EBIT growth of 7% to 9%, and free cash flow growth of at least 16%.
Release Date: July 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
-
Temenos AG (TMSNY) reported a healthy 12% growth in Annual Recurring Revenue (ARR) and a 16% increase in free cash flow, indicating strong business resilience.
-
The company successfully launched the Temenos SaaS Foundation, a next-gen SaaS platform for banking, which is expected to drive future growth.
-
Temenos AG (TMSNY) saw a significant increase in customer engagement, with 101 go-lives in Q2, up from 62 in Q1, showcasing strong customer adoption.
-
The company has reinforced its executive leadership team with internal promotions and new hires, bringing in experienced leaders to drive growth.
-
Temenos AG (TMSNY) maintained a strong cash flow position, with $73 million of free cash flow generated in Q2, and continued to reduce Days Sales Outstanding (DSOs).
Negative Points
-
The company faced challenges due to a short seller report earlier in the year, which impacted sales campaigns and led to a revised guidance for 2024.
-
Despite growth in ARR, the SaaS revenue declined sequentially due to elevated downsell and churn in Q1, which only normalized in Q2.
-
Temenos AG (TMSNY) had to lower its software licensing ambitions for the year, indicating potential challenges in achieving previous growth targets.
-
The company is facing a competitive landscape in the US, with a need to invest in sales force and product adjustments to close gaps in regulation and compliance.
-
There is a reliance on large deals to achieve guidance in the second half of the year, which could pose a risk if these deals do not materialize as expected.
Q & A Highlights
Q: You've lowered your software licensing ambitions for the year but kept EBIT unchanged. How do you reconcile these incremental investments with the lower OpEx in the guidance? A: We are looking at an $80 million plus incremental cost in H2 versus H1, mainly on the variable side like commissions and bonuses. We have seen efficiencies over the last six months, freeing up space for investments. Even if we hire now, the in-year impact will be minimal, allowing ample room to invest this year. (Paniagotis Spiliopoulos, CFO)