Temenos (TEMN) Q1 2025 earnings summary

Executive summary

• Q1-25 saw 9% year-over-year ARR growth (USD 741m), strong free cash flow up 12%, and 8% EBIT growth, with margin expansion of 1 percentage point.

• High-teens growth in software licensing offset a SaaS downsell from a BNPL customer; some deals delayed to Q2 due to macro uncertainty.

• Profitability improved through cost control and ongoing savings initiatives.

• Strategic investments included a new U.S. Innovation Hub and senior hires to support growth.

• Full-year 2025 guidance reconfirmed despite macroeconomic uncertainty; exceptional Q2 growth outlook provided.

Financial highlights

• ARR up 9% year-over-year in Q1-25 (USD 741m), with free cash flow of USD 49m, up 12% year-over-year.

• Subscription and SaaS revenues down 2% due to deal slippage, but high-teens growth in software licensing compensated.

• Maintenance revenues up 11% with strong premium maintenance sales.

• EBIT grew 8% to USD 69.5m (proforma), margin at 31.5%, up 1 percentage point.

• Net profit up 14% year-over-year, EPS up 17% due to lower share count.

Outlook and guidance

• Full-year 2025 guidance reconfirmed: at least 12% ARR growth, 5-7% EBIT growth, 7-9% EPS growth, and at least 5% free cash flow growth.

• Q2-25 subscription and SaaS revenue expected to grow 6%-10% (USD 106m-110m); ARR growth of at least 10%.

• 2025 reported tax rate guided at 15%-17% due to a one-off USD 15m tax benefit expected in Q3/Q4.

• No change in ARR attrition assumption (3% per annum).

• FY-28 targets: ARR > USD 1.2bn, EBIT ~USD 450m, FCF ~USD 400m.