Investing.com -- Shares of Temenos Group (SIX:TEMN) jumped over 8% on Tuesday after reporting stronger-than-expected fourth-quarter results for FY24, surpassing analyst forecasts in multiple key areas.
The company reported growth in both revenue and operating profit, which reflected the benefits of a reset strategy under new management.
The improvements, which came earlier than anticipated, were highlighted by Temenos' better-than-expected 4Q24 preannouncement, showing progress in all aspects of its financials.
As per analysts at Jefferies, Temenos delivered impressive results, with Annual Recurring Revenue growth reaching 12%, at the top 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.
The growth in software licensing for the fourth quarter surpassed the guidance of approximately 5%. During FY24, total software licensing revenue grew by 2%, exceeding the "flattish" guidance provided earlier.
As a result, overall revenues for the fourth quarter of fiscal 2024 exceeded consensus estimates by 2%, or $5 million, based on Visible Alpha data.
On the profit side, Temenos also exceeded expectations. Fourth-quarter EBIT amounted to $120 million, beating consensus estimates by 19%, or about $19 million.
This beat in operating profit, which was stronger than the revenue beat, 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 the guidance of "at least 12%".
Although Temenos has not yet provided guidance for FY25, analysts at Jefferies expect that the company will maintain its cautious stance and refrain from issuing overly optimistic growth assumptions, given the stronger-than-expected results in FY24.
However, the company’s solid finish to FY24, with EBIT growth running 5% ahead of consensus expectations, is likely to influence higher expectations for FY25.