Temenos AG

Temenos reported Q1 2026 constant-currency non-IFRS results including ARR of $860 million, up 13%, product revenue growth of 14%, subscription and SaaS growth of 12%, maintenance growth of 15%, total revenue growth of 13%, and non-IFRS EBIT and EPS growth of 20%. 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. Operating cash was $204 million, shares repurchased totaled $104 million in the quarter, leverage ended at 1.3x, and reported net debt was $609 million. Management reconfirmed 2026 guidance, including maintenance growth of 7% to 8%, an expected full-year tax rate of 19% to 21%, and said 2028 targets were also reaffirmed.

Takis Spiliopoulos said the company had a strong start to 2026, with above-market product revenue growth and broad operational momentum across regions and products. He emphasized a stable sales environment, particularly strong activity in the Middle East and Africa and improving U.S. pipeline conversion prospects, while noting several large deals are still in process and expected to sign later this year. He also framed AI as a strategic advantage for Temenos, arguing that banking’s high product complexity and risk aversion make generic AI less applicable and strengthen Temenos’ moat as it embeds AI into its platform.

As interim CFO, Spiliopoulos highlighted that both non-IFRS EBIT and EPS grew 20% in the quarter, driven by strong top-line growth and efficiency gains despite a higher cost base from 2025 investments. He said EBIT margin expanded to 32.7%, free cash flow reached $60 million, and the company generated $204 million of operating cash while keeping leverage at 1.3x within the 1.0x to 1.5x target range. He also said the share buyback launched in December continued, with $104 million repurchased in the quarter, and noted the completed CHF 100 million buyback in April plus the prior CHF 250 million program completed in August 2025. On the outlook, he reiterated maintenance growth guidance of 7% to 8% for the full year, an unchanged tax rate expectation of 19% to 21%, and a planned investment budget of $28 million to $35 million partially offset by about $10 million of cost efficiencies.

Analysts pressed on whether Middle East disruption or U.S. flatness hurt Q1, but management said there was no visible negative impact in the Middle East and that U.S. performance was broadly in line with expectations. Questions also focused on why full-year revenue and EBIT guidance stayed unchanged despite a strong Q1; management replied that Q1 is the smallest quarter, macro uncertainty remains, and the prudent stance is appropriate. On maintenance, management said premium maintenance growth should normalize to single digits through the rest of the year, and on AI and the U.S., they said customers are mainly asking for use cases in digital/FCM and for help accelerating implementation and upgrade timelines, while Orlando is becoming an important U.S. innovation hub with 70-plus employees.