Temenos Faces Stock Price Decline

Temenos experienced a further decline in its shares on Tuesday following allegations made by short-seller Hindenburg Research, despite the company's commitment to conduct an independent review of the claims.

Share Price Plummet

The Swiss banking technology company witnessed a 30% drop in its share price within the past week after Hindenburg Research accused Temenos of manipulating its balance sheets to artificially inflate its stocks.

Allegations and Company Response

Published on Feb 15, Hindenburg's report claimed that Temenos utilized "aggressive accounting practices" to mask underlying issues within the company, causing dissatisfaction among customers. In response, Temenos released a statement declaring the intention to collaborate with independent third parties to thoroughly investigate the allegations.

Denial of Accusations

Temenos refuted the claims made by the short seller, dismissing them as "inaccurate and misleading." The company's chairman, Thibault de Tersant, expressed confidence in Temenos' business operations and financial oversight.

Market Reaction

Despite efforts to address the situation, Temenos shares plummeted by an additional 8% on Tuesday, compounding the 30% decline triggered by Hindenburg Research's report. Prior to the publication of the report, Temenos shares had experienced a 30% increase over the year.

Temenos Responds Swiftly to Allegations

During a call with investors, Tersant, former CFO of Dassault Systems, affirmed that Temenos' review of Hindenburg's allegations would be both swift and thorough, expecting results within five months.

Top Firms Engaged for Thorough Analysis

The company is actively engaging a top accounting firm to conduct a forensic analysis, complemented by plans to retain leading law firms in Switzerland and the US for a comprehensive review.

Financial Performance Exceeds Expectations

Despite the share price decline, Temenos reported exceptional full-year 2023 results. Sales in the fourth quarter exceeded expectations at $298 million, while earnings before interest and tax reached $101.3 million. The company also raised its dividend by 9%.

Leadership Transition in Progress

While the search for a new CEO is ongoing following the departure of former chief Max Chuard, the company remains focused on identifying the next generation of leadership. Chuard's decision to step down after 20 years was aimed at propelling the company into its next phase of growth.

Challenges and Analyst Expectations

Analysts anticipated a positive market response to the strong financial performance and proactive stance taken by Tersant in addressing the allegations, potentially leading to a rebound in share value defying predictions.