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Temenos to conduct independent review of Hindenburg allegations

Shares in embattled core banking vendor Temenos continued to wobble as the company reported full year results ahead of guidance but forecast slower growth in 2024 net earnings.

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Temenos to conduct independent review of Hindenburg allegations

Editorial

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Temenos shares last week plummeted by 33% after Hindenburg Research shorted the stock, alleging "accounting irregularities, failed products and an illusive turnaround".

Temenos refuted the allegations and drew support from activist investor Petrus Advisers which rejected some of Hindenburg's criticisms of the Swiss fintech, arguing that it has recently made "substantial progress".

In its results statement, Temenos reported Annual Recurring Revenue (ARR) up 16% to $730m and total revenue up 5% to $1bn.

Full-year revenue from software licensing was up 10% at $443m. SaaS was up 25% at $205.1m, subscriptions revenue was up 52% at $160.4m and “legacy” term license revenue was $78.1m. For FY23 Temenos delivered EBIT of $199.4m (representing growth of 22%) and Free Cash Flow of $243m (up 26%).

Despite the positive momentum, Temenos said it expected EBIT to grow by just 7-9% in 2024, knocking the stock down by three percent, having closed on Monday up 8.8% at 66 Swiss francs.

Thibault de Tersant, non-executive chairman of the Board comments: "As chairman and former audit committee chair, I want to assure you of my confidence that Temenos is running a sound business with good financial controls in place. The Board places the upmost importance on its responsibilities to all stakeholders and will oversee a thorough examination of the allegations raised, with independent third parties."

In defending the company against the "hearsay" allegations of Hindenburg, Petrus Advisers nonetheless called for the departure of interim CEO Andreas Andreades.

Petrus has been calling on Andreades to leave Temenos since 2022, when he was chairman. However, rather than leave, he took on the interim CEO role when another Petrus target - incumbent Max Chuard - left in early 2023.

On this issue, de Tersant says: "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."

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