Temenos's revenue rose by 13 percent in the third quarter to $292.8 million, the company said in a statement. Reported operating profit (EBIT) increased by 41 percent to $84.8 million. Adjusted for special items, EBIT came in at $109.3 million, up 29 percent. This clearly exceeded analysts' expectations of $99.9 million.

The adjusted operating margin improved from 32.7 percent to 37.3 percent. Adjusted earnings per share rose by 32 percent to $1.23. Temenos beat analysts' expectations for EBIT and earnings per share, while revenue came in slightly below consensus.

AI lowers costs

Temenos attributes the significantly higher profitability in part to efficiency gains from the use of artificial intelligence. This is complemented by strict cost control and operating leverage. However, the company did not quantify the specific contribution AI made to the savings. The statement also did not include any information on headcount development.

Software revenue below expectations

The business involving software subscriptions and software-as-a-service (SaaS) developed less favorably. Revenue in this area rose by 23 percent to $121.8 million. On a currency-adjusted basis, however, growth was only 22 percent. Temenos had previously signaled an increase of at least 30 percent this summer. The company cites a larger contract in Africa that was not signed until early October and therefore in the fourth quarter. Annual recurring revenue (ARR) reached $903.6 million.

Profit forecast raised

Given the improved profitability, Temenos is raising its forecast for full-year 2026. The company now expects currency-adjusted growth in adjusted operating profit of around 12 percent, after previously forecasting 9 percent. Adjusted earnings per share are expected to rise by 10 percent instead of 7 percent. The other full-year targets remain unchanged. Temenos still expects annual recurring revenue to grow by around 12 percent, subscription and SaaS revenue to increase by 9 percent, and free cash flow to rise by around 16 percent.

Integration of Additiv progressing

Temenos also reported progress in integrating Zurich fintech Additiv. The acquisition, completed in July, is intended to strengthen the business of software solutions for banks and wealth managers. The acquisition is not expected to have any material impact on the 2026 profit forecast.

Temenos confirmed its medium-term targets for 2028. Accordingly, adjusted operating profit is expected to reach around $480 million and free cash flow around $410 million.