This article first appeared on GuruFocus .
-
Subscription and SaaS Revenue Growth:Expected to grow at least 30% year-on-year in Q3 '26.
-
Total Revenue Growth:Increased by 1% in Q2 '26 and 6% in H1 '26.
-
Non-IFRS EBIT Growth:Grew 4% in Q2 '26 and 10% in H1 '26.
-
Non-IFRS EPS Growth:Increased by 7% in Q2 '26 and 12% in H1 '26.
-
ARR Growth:Grew 11% to reach $881 million at quarter end.
-
Maintenance Revenue Growth:Increased by 12% in the quarter.
-
EBIT Margin:Improved by 1 percentage point to 41.3% year-on-year.
-
Net Profit Growth:Up 2% in the quarter.
-
Free Cash Flow:Generated $74 million in the quarter, up 14% year-on-year.
-
Leverage:Ended the quarter with leverage at 1.4 times.
-
Net Debt:Reported net debt stood at $691 million at quarter end.
Release Date: July 22, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
-
Temenos AG ( TMNSF ) reported a strong start to Q3 2026 with a robust pipeline of large and new logo deals, expecting subscription and SaaS revenue to grow at least 30% year-on-year.
-
The company successfully signed the majority of slipped subscription and SaaS revenue deals in the first three weeks of Q3 2026, including significant deals with major banks in Europe.
-
APAC region performed particularly well, securing a large new logo in the ASEAN region and multiple deals with existing customers.
-
Temenos AG ( TMNSF ) continues to execute on its strategic roadmap, making investments in core banking expertise and closing the acquisition of additiv to strengthen its wealth proposition.
-
The company achieved strong double-digit growth in free cash flow, reflecting solid financial management and operational leverage.
Negative Points
-
A small number of large and new logo deals were delayed at the end of Q2 2026, primarily in Europe, impacting subscription and SaaS revenue.
-
Subscription and SaaS revenue declined by 13% in Q2 2026 and 4% in H1 2026 due to the delayed deals.
-
Product revenue declined marginally year-on-year in Q2 2026, despite a healthy 6% growth in H1 2026.
-
The company's cost base was broadly flat in Q2 2026, with an increase in fixed costs offset by lower variable cost accruals.
-
There was a deceleration in ARR growth compared to Q1 2026, with ARR growing 11% to reach $881 million at the end of the quarter.
Q & A Highlights
Q: Can you explain the regional differences in performance, particularly the strong results in Asia compared to the US and Europe? A: The strong start to the quarter was consistent across regions, but larger deals and new logos in Europe were not closed by the end of June. Sales cycles for core solutions are typically 12 to 18 months, making precise timing difficult. Most slipped deals were signed in early Q3, including significant deals in Central and Eastern Europe. APAC had a good quarter due to larger deals, while the Americas faced tough comparisons. No specific issues were noted in the Middle East or Europe beyond timing.
Q: Does the 30% subscription and SaaS revenue guidance for Q3 assume all slipped deals are signed? What if they aren't? A: Yes, the guidance assumes all slipped deals will be signed in Q3. The slippage was mainly due to understanding procurement processes with new logos, not a lengthening of sales cycles. We expect to sign the remaining deals soon, which supports our confidence in the Q3 guidance.
Q: What drove the strong maintenance growth in Q2, and how should we view this going forward? A: Maintenance growth was 12%, slightly better than expected, driven by strong premium maintenance offerings and CPI-linked uplifts from subscription deals. We expect maintenance growth to moderate to around 8% for the full year, with tougher comparisons in the second half. Long-term, we anticipate maintenance growth to normalize around 5% to 6%.
Q: How much of the Q3 subscription and SaaS growth is underpinned by slipped deals, and how confident are you in the full-year guidance? A: The Q3 guidance includes the majority of the $20 million in slipped revenue. Our confidence in the full-year guidance is supported by a significant increase in the pipeline, particularly for new logos and larger deals. Early traction in Q3 confirms our expectations.
Q: Can you discuss the competitive landscape and how you differentiate from competitors like Pismo? A: We haven't encountered Pismo in our competitive landscape. In the US, we typically compete with incumbents like FIS and Fiserv. Globally, Infosys and Oracle are our main competitors. We see opportunities from banks using software from providers unable to modernize. The recent shift in ownership of Finastra core banking also presents opportunities. Our recent US bank signing aligns with our target market and is a significant SaaS contract.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
