The Geneva-based software company announces a profit slump and revised guidance. A leadership change was also made, with activist investor hinting there could be more to come.
Banking software provider Temenos saw revenue drop 8 percent to $212.8 million in the third quarter of 2022. Meanwhile, Ebit plunged 53 percent year over year to $40.8 million, leaving an Ebit margin of 19.2 percent, compared to the previous year's 37.2 percent. In terms of earnings per share, Temenos reported a 59 percent drop to $0.38, according to a media release issued Thursday evening.
De-Risking
Temenos CEO Max Chuard said «I am disappointed by our results this quarter, which were severely impacted by banks delaying signing decisions in the last weeks of the quarter due to uncertainties linked to the worsening macro environment, as well as sales execution. We have a greater-than-average number of large deals in the pipeline at present, and we saw the sales cycles lengthening on several of these. We have conducted a thorough review of our pipeline and de-risked our full-year guidance on this basis».
Revised Guidance
Given the results, the Geneva-based software provider revised its fiscal 2022 guidance «after a thorough review.» Recurring revenue is now expected to grow by 17 to 18 percent, compared to earlier guidance of 18 to 20 percent.
It said it now expects total software licensing growth to be flat compared to 16 to 18 percent in previous guidance, while Ebit will decline 25 percent compared to previously expected growth of 9 to 11 percent.
Leadership Change
It appears that the result cost the chief revenue officer his job with Chuard announcing that «we have also taken appropriate actions on leadership, with the Chief Revenue Officer leaving the business».
Temenos appointed Erich Gerber to its executive committee and as president and chief revenue officer, effective March 1, as finews.com reported. A check of Temenos' website and its executive committee showed no reference to Gerber there. Temenos declined further comment on the matter when contacted by finews.com.
Activist Investor
Activist investor Petrus Advisers recently took a stake in Temenos and issued a statement today that said «We understand that the company’s major shareholder, Martin Ebner, as well as the broad institutional long-only community, are also appalled by Temenos’ share price development. We will now be in touch with him and other shareholders to discuss whether we can continue with the current leadership team and setup».
It also said it will increase its shareholding in the company «on cheap days to further accelerate the catharsis of Temenos». With the company's share price trading around 20 percent lower this morning, today would seem to be one of those days.
