Hindenburg Research, a short seller that pumps its own book after it sells shares, is targeting Banking as a Service (BaaS) provider Temenos (SWX:TEMN).
In a report published today, Hindenburg claims that Temenos is manipulating its earnings, hiding accounting irregularities while engaging in “sham partnerships” and more.
Shares in Temenos are tanking on the report, sinking by around 30% today wiping out billions in value from its market cap.
A short while ago, Switzerland-based Temenos issued a statement responding to the short seller’s claims. Temenos stated that it is confident in its business and its cash performance. The Board of Directors said that Hindenburg’s report incorporates analytical eerros and factual inaccuracies.
Temenos adds that it will release audited numbers for the end of the year on February 19th indicating a strong performance. To quote Temenos:
- Annual Recurring Revenue exceeding guidance and Total Software Licensing and EBIT significantly exceeding minimum guidance
- Strong free cash flow growth ahead of guidance in FY23, up 26% to $242.6m – the Board expects free cash flow to continue to grow strongly in the coming years
- c. 3,000 customers – industry-leading churn of only c3% p.a. on a dollar basis
- The Company’s transition to a recurring revenue business model continues at pace – 391 go-lives on our software in 2023
- Significant progress on customer engagement, NPS score of +54 based on survey of over 900 customers
Hindenburg claims that Temenos trades at a “rich premium” when compared to its peers, which it believes is not justified.
Hindenburg describes Temenos as presenting “hallmarks of heavily manipulated earnings – Fake Deals, Rampant Pulling Forward Of Renewals, Backdating Of Contracts And Excessive R&D Capitalization.” Hindenburg claims to have interviewed 25 former Temenos employees in putting together its report.
Last year, Hindenburg targeted Block in a damning report, claiming inflated user accounts. This attempt, while initially causing shares to sink, generated little traction.
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