Temenos Raises 2026 Operating Profit Growth Forecast to 12% and EPS Growth to 10%
Key Facts
Temenos raised its 2026 forecast for non-IFRS operating profit growth to around 12% in constant currencies, from around 9% previously, and increased its forecast for earnings per share growth to around 10%, from around 7%. The Swiss company announced the revision alongside its third-quarter results, citing profitability growth and operating performance during the period. The higher forecasts mean the company now expects a stronger trajectory for operating profit and earnings per share in the current financial year. Temenos said its operating profit growth forecast was "around 12%, up from around 9%" and that expected earnings per share growth was "around 10%, up from around 7%." Operating profit growth figures are based on constant currencies, while the earnings per share forecast was stated on a reported-growth basis.
In the third quarter, the company posted non-IFRS operating profit of $109.3 million, up 29% year on year. Non-IFRS earnings per share came to around $1.23, up 32% from the year-earlier period. Non-IFRS revenue also reached $292.8 million, an annual increase of 13%. Subscription and software-as-a-service revenue rose to $121.8 million, up 23% from the third quarter of the previous year. These figures provide context for the higher operating profit and earnings per share forecasts, with subscription and software-as-a-service revenue growing faster than total revenue.
By contrast, Temenos kept its forecast for annual recurring revenue growth at around 12% in constant currencies, and its forecast for subscription and software-as-a-service revenue growth at around 9% in constant currencies. Its free cash flow growth forecast also remained at around 16% on a reported basis. In the second quarter, the company had recorded annual recurring revenue of around $881 million, up 11% year on year in constant currencies. Subscription and software-as-a-service revenue fell 13% in constant currencies that quarter, while free cash flow was $74 million, up 14%. Those earlier quarterly results put the annual subscription forecasts in the context of a recovery from the second-quarter decline, with the company leaving its full-year estimates for the business unchanged.
The company attributed improved profitability to efficiency savings, cost control and operating leverage. It said that "efficiency savings, good cost control and operating leverage" supported profit growth. In the Middle East, Temenos pointed to good performance and deals with new and existing customers in the Gulf. It also announced a major deal with a global Tier 1 bank to run its European operations. In North America, it said it had signed four new software-as-a-service deals, including with a U.S. regional bank and a major deal in Canada.
Chief Executive Takis Spiliopoulos said the company closed all revenue deferred from the second quarter during the third quarter, adding: "We signed all the revenue that was deferred from the second quarter." He also noted that a major deal in Africa was signed in the first days of the fourth quarter, affecting subscription and software-as-a-service revenue growth in the third quarter. In July, the company had said most of the revenue deferred from that business had been signed in the first three weeks of the third quarter, and had then forecast growth of at least 30% in subscription and software-as-a-service revenue for the quarter. Before the results announcement, analysts' average forecast for third-quarter revenue was $296.3 million, based on 13 analysts, compared with actual revenue of $292.8 million. The average forecast for non-IFRS operating profit was around $98.8 million, based on estimates from 14 analysts, while the company recorded $109.3 million.
Temenos has set February 23, 2027, as the date for announcing its fourth-quarter and 2026 full-year results. Those results will follow the company's announced 2028 targets, which include annual recurring revenue of more than $1.23 billion, operating profit of around $480 million and free cash flow of around $410 million. The company said its 2028 targets for annual recurring revenue and operating profit are calculated in constant currencies. The fourth-quarter and 2026 full-year results announcement will be the next date the company has set to provide an update on its annual performance. The 2028 targets place the revised 2026 forecasts within the longer-term financial trajectory announced by Temenos.