Investing.com -- Temenos AG (SIX:TEMN) beat first-quarter profit and revenue forecasts on Tuesday and reaffirmed its full-year targets, sending shares up by 5% on Wednesday.
The Swiss banking software maker posted non-IFRS revenue of $253 million for the three months ended March 31, up 15% versus the year-earlier proforma period excluding Multifonds, and 3% above consensus.
Non-IFRS earnings before interest and tax rose 19% to $82.7 million, a 6% beat versus consensus. The EBIT margin expanded 2 percentage points in constant currency to 32.7%.
Annual recurring revenue rose 13% in constant currency to $860.7 million.
Non-IFRS subscription and SaaS revenue grew 12% in constant currency to $87.2 million, in line with Morgan Stanley and consensus estimates.
Maintenance revenue rose 15% in constant currency to $131.8 million, while services revenue grew 8% in constant currency to $33.9 million.
Non-IFRS earnings per share rose 20% to $0.90, against consensus of $0.81. Free cash flow was $59.5 million, up 22%.
On the IFRS basis, operating profit was $56.6 million, up 41% from the year-earlier period. Diluted EPS was $0.58, up 45%.
Chief executive Takis Spiliopoulos, who is also serving as interim chief financial officer, said the company saw "good traction across geographies and client segments," citing Tier 1 wins in Japan and the Asia-Pacific region and expanded relationships with banks in the Middle East, Switzerland and the United Kingdom.
"In the US, we are making good progress on several deals in our pipeline and we expect to announce further signings this year," Spiliopoulos said.
Morgan Stanley, which carries an "underweight" rating and a price target of 76.95 Swiss francs on the stock, said the beat was "skewed more towards maintenance and services rather than a clear inflection in Subscription & SaaS growth," and flagged that maintenance growth was running ahead of the expected full-year run-rate.
Temenos reaffirmed its fiscal 2026 guidance for ARR growth of approximately 12% in constant currency, subscription and SaaS growth of approximately 9%, EBIT growth of approximately 9%, EPS growth of approximately 7% on a reported basis and free cash flow growth of approximately 16% on a reported basis. The company said guidance includes a headwind from the termination of one buy-now-pay-later client in fiscal 2025, with no further impact after fiscal 2026.
For fiscal 2028, the company reaffirmed targets of ARR of at least $1.23 billion, EBIT of approximately $480 million and free cash flow of approximately $410 million.
Temenos also announced Daniel Schmucki, currently CFO of SIX Group, as its incoming CFO effective August 3.