Temenos AG (SWX:TEMN) says it will pursue an independent examination of the claims of financial irregularities raised by Hindenburg Research in a report shared this past week. Bloomberg reported that the review is expected to take less than 5 months. Temenos did not share who would be doing the review, which will be initiated by the company’s board of directors.
Hindenburg, a well-known short seller, claimed in a damning report that Temenos was manipulating earnings, hiding accounting irregularities while engaging in “sham partnerships.” Hindenburg said that it had completed an extensive investigation into Temenos, involving interviews with ex-employees.
The Board of Directors of Temenos AG countered the claims, stating that they “fundamentally refute” the report published recently by Hindenburg Research.
According to Temenos, the report contains “factual inaccuracies” and analytical errors, together “with false and misleading allegations, which are intended to impact the Company’s share price adversely.”
Temenos claims it was not contacted “in advance for any comment on the report.”
The company says it is confident in “the strength of its business, financial performance and cash position.”
On 19 February 2024, after market close, the company issued its earnings results for the year ended 31 December 2023, stating they are in line with the pre-results announcement made on 19 January 2024.” The company reported an EPS of $1.03 for the 4th quarter.
This highlighted Temenos’s Q4 and FY23 performance:
- 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 a survey of over 900 customers
As previously announced, the management of Temenos will hold a Capital Markets Day for investors on 20 February 2024.
Shares in Temenos continue to trade around the lows following the release of the Hindenberg report.