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Investing.com -- Temenos Group AG (SIX:TEMN) shares surged more than 14% on Wednesday after the Swiss banking software maker reported third-quarter results that beat expectations and raised its full-year guidance for the second consecutive quarter.
Revenue for the period reached $258.5 million, a 5% increase above both Morgan Stanley and consensus estimates.
Revenue grew 11% year over year in constant currency, driven by maintenance revenue up 14%, subscription and SaaS revenue up 10%, and services revenue up 3%.
Operating profit also exceeded forecasts. EBIT rose 36% year over year to $84.6 million, with a 32.7% margin, 27% above consensus.
The company said the performance was “driven by strong revenue growth and operating leverage,” with costs contained through “ongoing cost efficiencies and good cost control.”
Free cash flow came in at $29.3 million, up 30% from a year earlier, an acceleration from the 8% growth posted in the second quarter.
Following the results, Temenos increased its full-year 2025 outlook. The company now expects adjusted EBIT growth of more than 14% in constant currency, up from 9% previously, and adjusted EPS growth of 15% to 17%, compared with 10% to 12% earlier. Subscription and SaaS revenue growth is projected at “at least 7%,” up from “at least 6%” before.
Acting chief executive and chief financial officer Takis Spiliopoulos said the company is maintaining a cautious stance but reaffirmed its longer-term goals.
“We remain prudent in our outlook, given there are a number of large deals expected in Q4-25,” Spiliopoulos said.
“However, based on our Q3-25 performance and the stable sales environment, we are raising our guidance for FY-25 and reconfirming our FY-28 targets.”
Temenos’ 2028 targets include annual recurring revenue above $1.2 billion, adjusted EBIT of $450 million, and free cash flow of $400 million, all in constant currency.
Chairman Thibault de Tersant said the company is progressing in its search for a new chief executive.
“We are making good progress and are actively considering a number of internal and external candidates,” de Tersant said.
“The Board is pleased the executive team are working well together under Takis’ leadership and would like to thank them for their focus and dedication in driving continued momentum in the business.”
The company completed a CHF 250 million share buyback during the quarter. Leverage stood at 1.4 times net debt to non-IFRS EBITDA, within the firm’s target range of 1x to 1.5x. Temenos said sales hiring continued “at pace,” with the company on track to increase its sales headcount by 50% by year-end.
Morgan Stanley described the results as “Another strong beat and FY25 raise,” noting that implied fourth-quarter guidance appeared conservative given that EBIT growth for the first nine months of 2025 was 36% year over year.