Investing.com — Shares of Temenos Group (SIX: ) jumped over 8% on Tuesday after reporting better-than-expected fourth-quarter FY24 results, beating analysts’ forecasts in several key areas.
The company reported growth in both revenue and operating profit, reflecting the benefits of a reset strategy under new management.
The improvements, which came earlier than expected, were highlighted by Temenos’ previous better-than-expected Q4 2024 announcement, showing progress across all aspects of its financials.
According to analysts at Jefferies, Temenos delivered impressive results, with annual recurring revenue growth reaching 12%, the upper end of its guidance range of 11-12%.
This sets the stage for FY25, with the company entering the new fiscal year on a positive note.
Software licensing growth for the fourth quarter exceeded guidance of approximately 5%. During FY24, total software licensing revenue rose 2%, beating earlier “reckless” guidance.
As a result, total revenue for the fourth quarter of fiscal 2024 exceeded consensus estimates by 2%, or $5 million, based on data from Visible Alpha.
On the profit side, Temenos also exceeded expectations. Fourth quarter EBIT was $120 million, beating consensus estimates by 19%, or about $19 million.
This increase in operating profit, which was greater than the increase in revenue, reflected the benefits of cost-saving measures.
The company’s positive cash flow was another highlight, with free cash flow growth of 17% for FY24, ahead of guidance of “at least 12%”.
Although Temenos has yet to provide guidance for FY25, analysts at Jefferies expect the company to maintain its cautious stance and refrain from issuing overly optimistic growth assumptions, given its better-than-expected results in FY24.
However, the company’s solid end to FY24, with EBIT growth 5% ahead of consensus expectations, is likely to weigh in on higher expectations for FY25.
