Temenos AG

Temenos reported Q1 2026 constant-currency non-IFRS performance with ARR up 13% to $860 million, product revenue up 14%, subscription and SaaS up 12%, maintenance revenue up 15%, total revenue up 13%, and non-IFRS EBIT and EPS both up 20% year over year. EBIT margin improved 190 basis points to 32.7%, net profit rose 19%, and free cash flow was $60 million, up 22% year over year. Management reiterated 2026 guidance and 2028 targets, kept full-year maintenance growth guidance at 7% to 8%, and said the 2026 guidance includes the BNPL client headwind but no further headwind beyond 2026.

Takis Spiliopoulos said the quarter reflected strong execution across product, sales and operations, with growth above market and a stable sales environment. He emphasized deal momentum in the Middle East and Africa, a strengthening U.S. pipeline, and ongoing investments in sales, product and AI. His tone was confident but measured, repeatedly saying the company is staying prudent on guidance because large-deal timing and macro conditions remain uncertain.

As interim CFO, Spiliopoulos highlighted strong operating leverage: EBIT and EPS were both up 20%, EBIT margin reached 32.7%, and free cash flow came in at $60 million. He said the cost base reflects investments made in 2025, with incremental 2026 investment planned at $28 million to $35 million, partially offset by about $10 million of efficiencies. He also noted $204 million of operating cash, $104 million of share repurchases in the quarter, net debt of $609 million, leverage of 1.3x, and a full-year tax rate expected at 19% to 21%.

Analysts focused on whether Middle East disruption or U.S. softness hurt the quarter, but management said there was no negative impact seen so far on pipeline generation or conversion rates in the Middle East and that the U.S. developed as planned. On guidance, management said it was staying prudent after a strong Q1 because Q1 is the smallest quarter, there are macro uncertainties, and large deals are risk-weighted in the plan. Questions on maintenance and AI led management to say maintenance growth should slow into single digits later in the year, while AI demand is currently centered on use cases around core, digital and FCM, plus using AI to speed implementations and upgrades, not yet on AI embedded in core banking itself.