Temenos shares crash even further as Swiss firm vows to review short-seller's claims

By Louis Goss

Temenos shares fell further on Tuesday as the Swiss company continued to suffer from allegations raised against it by short-seller Hindenburg Research, despite vowing to launch an independent review of the claims which have caused its stock price to crash.

The Swiss banking technology company has seen its share price drop by 30% over the past week, in the wake of allegations made by the New York short seller that it manipulated its balance sheets to boost its stocks.

Hindenburg's report, published on Feb 15, alleged Temenos used "aggressive accounting practices" to "gloss over" deeper problems inside the company that are leading to widespread dissatisfaction with its products and driving away its customers.

In seeking to address the allegations, Temenos in results published on Tuesday vowed to work with "independent third parties" to carry out a "thorough examination" of Hindenburg's allegations.

The Swiss fintech company also denied that the short seller's claims are true and instead described them as "inaccurate and misleading".

"As Chairman and former Audit Committee Chair, I want to assure you of my confidence that Temenos is running a sound business with good financial controls in place," Temenos' chairman Thibault de Tersant said in a statement.

Nonetheless, shares in Temenos (CH:TEMN) fell another 8% on Tuesday after plunging by 30% since publication of Hindenburg Research's report on Feb. 15. Temenos shares had previously increased by 30% in the year prior to publication of the short seller's report.

In a call with investors, Tersant, who was previously CFO of French software developer Dassault Systems (FR:DSY), added that Temenos' review of Hindenburg's allegations would be "speedy but also thorough," as he indicated it would take no longer than five months.

The company chairman noted that Temenos is currently in the process of hiring a "top accounting firm" to carry out a forensic analysis of the company, in line with plans to hire a "top law firm in Switzerland and a top law firm in the US" to complete the review.

The continued drop in the Swiss firm's share price came as Temenos also posted better-than-expected results for the full-year 2023 that outstripped analysts' expectations in generating sales worth $298 million in the fourth quarter of 2023, compared to the $286 million predicted by 16 company watchers polled by the Swiss firm itself.

Temenos in turn generated earnings before interest and tax worth $101.3 million, as it also raised its dividend by 9%, to Fr 1.2 per share ($1.36 per share), and said it was making "good progress" in its search for a new CEO to replace acting chief Andreas Andreades.

Tersant said the review may also delay Temenos' search for a new CEO following former chief executive Max Chuard's decision to step down in January after 20 years at the company.

In a statement at the time, Chuard said the decision to step down would "allow the next level of leaders to take the company forward in its next stage of growth."

Temenos' plunging share price, meanwhile, flew in the face of forecasts made by analysts at JP Morgan who predicted the strong results paired with Tersant's "robust" response to Hindenburg's allegations would "drive some relief in the shares."

-Louis Goss

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02-20-24 0946ET

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