Ladies and gentlemen, welcome to the Temenos Q4 2024 Results Conference Call and Live Webcast. I would like to remind you that all participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by Q&A session. [Operator Instructions]. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Jean-Pierre Brulard, CEO. Please go ahead.

Thank you, operator. Good evening, good afternoon. Thank you for joining us for our Q4 2024 results call. So I would like talk through our key performance and operationalize that of the quarter before handing over to Takis. So starting with the highlight, as a management team we have put a lot of focus on consistent execution in the last few months, and so I was pleased that we ended the year with a strong Q4. If we look at two of our KPIs, ARR and free cash flow, we deliver strong ARR growth of 12% year-on-year and free cash flow growth of 25% in the quarter. We have also a strong SaaS ACV of $24.8 million, our strongest SaaS ACV quarter ever. The sales environment was stable through the quarter and we have positive pipeline development, and we also made good progress on our strategic execution, which I will talk more about in a few minutes. We announced the sale of Multifonds earlier this month, and this is in line with the strategy we announced in November to be more focused in our product portfolio and the investment to support our gross levers. And we have issued guidance for 2025 and also updated our 2020 high targets to account for the sales of Multifond. Let me start with customer success. Customer success is my number one priority, which is why we created the one global customer experience team. Put it the customer really at the center of everything we do. We have made some excellence new hires included a new Chief Delivery Officer to strengthen our customer lifecycle. This built on our success in 2024 where we had a total of 347 go lives across all products reflecting our scale and industry position. An Aldermore is a great example of our customer centric approach. They signed a deal with Temenos for business and Corporate Enterprise Services all deliver as SaaS. As part of this, they will migrated multiple system onto a single SaaS solution from Temenos, and Aldermore goals is to modernize the existing saving operation to scale rapidly and increase agility. They clearly see the value of working with Temenos in order to achieve these critical objectives. I also like to share one of other great win in Europe, CEC Bank is a major bank in Romania with over 2 million customers. They chose to work with us to migrate from the legacy systems to our core banking included our solution for payments and analytics with the goals of faster time to market and increasing efficiency. We are delivering this project with two of our key partners in line with our partner first strategy. I was delighted that both Aldermore and CEC Bank and many other client chose to work with Temenos in 2024. It demonstrate what I have said before, that we are highly relevant to our customers and critical to their success. We presented our new strategic plan in November, so I am sure that many of you have seen this slide already, but I wanted to remind you our three gross levers. Number one, we will expand our leadership in best of street for Tier 3 to Tier 5 banks, in particular in the U.S. and Western Europe. And this lever will be the largest contributor to our growth. Second, we will enhance our modular core solution, especially for Tier 1 and Tier 2 banks in retails and corporate. These banks are running legacy course at very high cost and with a lot of operational risk and they need modular and open solution to progressively modernize. Lastly, we will accelerate adjacent point solution like our digital banking capabilities for the U.S. market, payments and compliance. We have a structural investment plan building on our strong foundation to outperform the market. So in terms of execution, we have defined the key business enabler to deliver the strategic plan, which are focus, product, technology and go to market investment, in particular in key geographies like the U.S., UK and Western Europe and investing in the customer life cycle, which I've already talked about and investing in our operating model. Alongside of all of this, we continue to prioritize our corporate culture to increase empowerment, accountability and foster collaboration across the business. I would like to give an update on the progress we have made on our strategic plan and roadmap. The sale of Multifonds was a key step to focus on our product portfolio and research and development investment in line with our strategy. We have continued to attract senior talent. I already mentioned our new Chief Delivery Officer and Barb Morgan, our new CPTO where you met at CMD, just hire a new Chief Product Officer with a very strong background coming from major U.S. banks and financial technology providers. It's a first step to elevate our product and technology organization to the next level in terms of processes and skill sets. Lastly, we are updating our disclosure to reflect industry-based practice and evolving customer demand. Importantly, including new disclosure of cloud ARR. This is highly relevant and strategic given the direction the industry is moving in, as I highlighted in Capital Markets Day. Many banks in the U.S. and Western Europe in particular are developing their own in-house cloud skills to encompass proper cloud governance, taking into account security and regulation obligation. So as you can see, we are very busy and we are absolutely focused on execution and delivering our strategic plan and we will continue to update you on our progress. With that, I would like now to hand over to Takis to get through the financial highlight of the quarter.

Thank you, Jean-Pierre. On Slide 14, I'll start with an overview of the quarterly financials. All figures are non-IFRS and in constant currency unless otherwise stated. We delivered strong ARR growth of 12% in Q4, which was helped by a very strong SaaS ACV of $24.8 million, as well as healthy growth in subscription. ARR continues to increase as a percentage of our product revenue now equal to 88% and equal to 77% of our total revenue in 2024. Our transition to subscription from term license is now largely complete and we expect the contribution from term license to be very limited going forward. I would also like to flag the strong growth in maintenance in Q4 of 12%, which again benefited from strong sales in premium maintenance, as well as the value uplift on subscription signings and renewal. Free cash flow grew 25% under our old definition or 24% on our new definition, which includes the impact of IFRS 16 leases and interest costs. We will be using this new definition going forward. In total, we generated $121 million of free cash flow under our new definition. DSOs were 152 days at quarter end, up 11 days due to the strong growth in subscription revenue in Q4. For 2025, we expect DSOs to marginally increase over the coming year and then to start declining from 2026 onward, as we will benefit from the cumulative cash flow from subscription deals sold from 2022 onward. Lastly, we ended the year with net debt of $595 million and leveraged at 1.3x, well within our target range of 1x to 1.5x, and we have announced a dividend of 133 for 2024 up 8% on last year to be voted on at the AGM. Moving to Slide 15, I would like to flag the new cloud ARR disclosure we are introducing which Jean-Pierre mentioned earlier, this includes ARR from both SaaS contracts as well as subscription contracts where the client is using cloud infrastructure to run the software. This is an important metric as it reflects client demand. We see growing appetite for use of hybrid and public cloud. We spend on public cloud expected to grow at around 16% CAGR over the next few years. Therefore, cloud ARR will give an insight into the demand for cloud infrastructure across our client base. We expect cloud ARR to grow as a percentage of total ARR in 2025 and to continue increasing in the mix of the following year. Looking at our services revenue, this continued to decline in line with our partner first strategy, but there was a strong improvement in the services profitability in the quarter, I would expect service revenues to grow low single digit in 2025. Looking at our cost base, operating costs were up 1% in the quarter as we benefited from the efficiency program we started in H2 ‘24. This must the underlying acceleration in the investment in R&D and sales and marketing. We have not seen the full P&L impact of our investment program in 2024, and these investments will become more visible as the cost base continues to grow in 2025. Lastly, we delivered strong growth in our EBIT margin up 3 percentage points for the full year to reach 34%. On Slide 16, we have like-for-like revenues and costs adjusting for the impact of M&A and FX. The figures are all organic and therefore in line with our constant currency growth. As I mentioned, services margin continue to improve with costs down 11% in the quarter and 7% for the full year. Product related costs including services were up 4% in the quarter as we have started to ramp investment in R&D and sales and marketing, and this will continue under our investment plans for 2025. As a reminder, we have flagged that the CMD, we expected to invest an incremental $30 million to $40 million in total in 2025. I would also like to flag that our net capitalized development cost decline significantly in 2024 to $10 million down from $18 million in 2023. Looking at FX, there was roughly a $2.5 million headwind on EBIT, largely due to Euro weakness against a dollar impacting revenue and some impact from AGM. On Slide 17, net profit was up 44% in the quarter versus EBIT growth of 18% with the outperformance mostly due to a one-off tax benefit of $15 million. EPS was similarly up 47% in the quarter. The underlying tax rate was 20.7% within the guidance range of 20% to 22%. For 2025, we expect a similar tax benefit, so our expected tax rate for 2025 is 15% to 17% and the normalized underlying tax rate excluding the one-off benefit is 19% to 21%. Moving to Slide 18, we have the changes to group liquidity in 2024, we generated $391 million of operating cash, paid $97 million of dividend and bought back $227 million worth of treasury share. We also used our debt facilities to repay a $150 million bond in April, 2024. We ended the quarter with $114 million of cash balance sheet and net borrowings of $727 million. Our leverage stood at 1.3x, well within our target range of 1x to 1.5x and without M&A our share buy bank will continue to deleveraged further in 2025. In conclusion, we have ample flexibility and optionality to do further buybacks. Moving to Slide 19, I'm sure you all saw the sale of Multifonds we announced earlier this month for an EBIT of around $400 million, including an earn-out. We expect the deal to close in Q2 ‘25. This aligns with our strategy to simplify our product portfolio and focus R&D investment. In 2024, Multifonds contributed around $40 million to total software licensing and $50 million of EBIT, keeping in mind it has a solid maintenance revenue base as well as some service revenues. We have adjusted our 2025 guidance, 2028 target and 2024 performer figures to exclude the contribution from Multifonds. Moving now to Slide 20, I would like to briefly discuss the change in a revenue disclosure. As I mentioned earlier, we have introduced new disclosure on cloud ARR to give greater transparency in the progress we are making on cloud. We are also changing our revenue line items to reflect changes in customer demand and industry best practice. We are replacing total software licensing and its parts with a single line called subscription and sub, which brings our guidance metrics and disclosure in line with global software players. We expect term license to continue trending down to around $20 million to $30 million per annum at a steady state, so the majority of the revenue in this line item will be from subscription and SaaS contracts. On Slide 21, we have our guidance for 2025, which is non-IFRS and in constant currency, except EPS and free cash flow, which are reported. Both the 2025 guidance and the 2024 performer numbers exclude any contribution from Multifonds and free cash flow is, of course, under our new definition, including IFRS 16 leases and interest costs. We are guiding for ARR growth of at least 12% and subscription and SaaS growth of 5% to 7%. We expect EBIT growth of at least 5% and EPS growth of 7% to 9%. And we expect free cash flow growth of at least 12%. And lastly, on Slide 22, we have our 2028 targets, which we have updated for the sale of Multifonds. It is important to note that the implied covers have not changed from the targets we announced at the CMD in November. We now expect ARR to be more than $1.2 billion, implying a CAGR of 13%, EBIT to reach around $450 million, implying a CAGR of 10%, and free cash flow now to reach about $400 million at a CAGR of 16%. With that operator, please can we open the call for questions?

[Operator Instructions] The first question is from Toby Ogg with JPMorgan.

Maybe just on the subscription and SaaS guide 5% to 7% in 2025, how should we think about the implied growth rates embedded within the different components here across SaaS and the term plus subscription revenues? And then just secondly, just on the SaaS piece, obviously Q4 was 4%. I know the SaaS ACV of almost 25% in Q4 should help drive some of the re-acceleration in 2025 on SaaS. But outside of that, could you give us a sense for how the SaaS pipeline is evolving and how we should expect the SaaS ACV to evolve through 2025?

Hi, Toby. Yeah, I was expecting this question. So, there is a reason why we haven't given any more specific SaaS guidance for what we have outlined, our disclosure in terms of being aligned with the global software player. No one else discloses SaaS specifically. And it also reflects the reality of the buying decisions from clients, which ultimately dictate the delivery and consumption model. And we see an increasing combination of on-premise hybrid public cloud and SaaS. So, clearly, we will focus on ensuring that our world-class software services and support deliver the model clients have chosen. On SaaS ACV, it is strong. And it was strong. And we had guided a bit for a stronger performance. Several reasons here, clearly, we had seen a negative impact also on the SaaS ACV business in the first two quarters of the year with the push outs due to Hindenburg happening. So clearly, we had this in terms of catch up coming in well in Q4, and we also have to acknowledge that there was a sizable contribution from the Multifonds business in Q4 on source ACV, which also contributed to this very good number in Q4. And finally on the SaaS ACV pipeline. We have seen in the last few years, as we had commented already back in ‘23, clearly a negative impact from the funding challenges of fintechs. But clearly, we have seen now as for the rest of the business and a quite good improvement in the underlying, let's say, pipeline development. So we would expect over the next quarters to see a good performance of our SaaS ACV business, but at this point we can't give them any further closure.

Let me add, its Jean-Pierre, that in a way when we say customer demand is mostly for very large bank in the U.S. UK and where in the countries that hyperscalers are developing as well a significant footprint, I met a lot of customer and even a very important one here in London, which has deploy overseas. I mean the software and what they told me is the following is they say, we like your software. We think that we can derive a lot of value from that, but with the regulation, with DORA and all the investment we have done in our skill set in cloud operation, we started to encompass non-critical application, like, I don't know, Salesforce or Workday. And now, we are applying the same governance as the same regulation for emission critical application like yours. So our duty in term of architecture is to build modular application, either, I mean, run by us in the SaaS model, and it's mostly successful in Tier 3 banks and some point’s sales as well, or in a way to provide the best software for our customers. And I'm glad as well. We have delivered that in a multi-cloud environment as today we have customer not only on Azure, but as well on AWS on Google Cloud and IBM Cloud as well. So it's giving, I mean, much more possibilities as well to please our customers. And let me add as well that we have almost completed the term license evolution as pointed out by Takis. So there is no obvious reason to aggregate term license and subscription. And after three years of subscription license as many, I mean, companies, the software are doing as well to regroup in a way SaaS and subscription together to give a more recurring and predictable revenue strain as well. So it's a reason why we have done that. And not a surprise, we just announced as well this concept in capital market date when we have different growth rate about cloud and SaaS as well.

The next question from Josh Levin with Autonomous Research.

Two questions from me. When you think about the 2025 guidance, what are the greatest areas of uncertainty? That is, if you were to miss or beat guidance, what would be the most likely driver of each? And the second question is, what do you intend to do with the $400 million of proceeds from the Multifonds sale?

Hi, Josh. Let's go step by step. I think on subscription and SaaS, which we have guided 5% to 7%, if you look at what we communicated at the capital market stay where we said we expect the market, which is product growth to be around 7%. Maintenance we expect around 7%. So if you take the midpoint where, let's say close to market growth, what we are expecting this is in line with our stable sales and environment commentary, and clearly we want to be a bit prudent at the start of the year. I think that's one thing. So if the market is developing better, more favorable than our current assessment, you can -- we're probably ending then on the upper end and vice versa. On the ARR growth, we had a good performance in 2024, despite the headwinds we were facing at the start of the year. I think on ARR, and given this is an important metric, we have been focusing a lot. Clearly, I would say, the mix towards subscription is continuing there is, as you've seen, there is little left in term, which will further decline. I think that's had -- that's helping. The premium maintenance business is also having -- helping maintenance and ARR and clearly, ACV performance should also help ARR. So this is why we're actually quite comfortable with this one. But there is obviously a direct link to the underlying product investment and product growth. EBIT, we said back in November, that this will be a year of investment. If you take the guidance, this is about flat margin, there is still a substantial investment program ahead of us. As we have seen also in Q4, clearly the efficiency gains, they kicking very quickly. So that was a benefit. So let's see if we if we are able to deliver all our investment plans, we will be in the guidance range. Clearly, always as in the past, we have clearly some prudence in our EBIT guidance. EPS is as a consequence of that. And then finally, free cash flow, we have consistently delivered few over the last quarters. It's clearly has been a good performance. Now, I think on free cash flow growth, it's nothing special there. We are prudent in our guidance. And clearly, if the inflows come in better, and we manage -- we manage to do to deliver the rest of the guidance, then there could be clearly. The one thing which we need to consider is clearly we have -- it's not an adjusted number. So the impact of the restructuring done last year and also being done this year, this is obviously a headwind to free cash flow because there is cash out impact on this one. So I would say these are the moving parts. In a nutshell, we start with a prudent guidance. It's only mid-February.

Let me add, I mean, before I mean, maybe Takis is taking the second part of your question, Josh, that this year is a year of investment. I'm glad that we have completed our hiring on U.S. salespeople, initial hiring, and that we have committed to do to cover our sweet spot, which is the Tier 3 original bank. So it is done. They were all of them were in sales kick-off, and they are onboarding as we talk. And, but really in the sales cycle duration, I'm not expecting to be materially visible until the end of the year, and mostly in '26, '27. So, and we will do as well. I mean, the second step of our product and technology, as well investment, self-funded by a couple of product simplification and rationalization. So again, I'm not expecting that there will be meaningful visible this year, even if we have this 5% to 7% growth rate. But let me reiterate my confidence that we will achieve the plan by 2028. And as you have seen, we have not modified the CAGR without Multifonds in the landscape as well. So, maybe I will hand over to you, Takis, again for the use of proceed for capital allocation.

Yeah, just let me take part of the question. Given our strong free cash flow profile, both in '24, but also given our forecast for 2025, clearly, there is enough capacity for both share buybacks, but also do selective bolt on M&A, which is always difficult to time. And let's be clear, we don't have anything transformational or anything looking at and this clearly is something we also not intend to do. Now, let's be very clear here. I mean, ultimately it's the board deciding on use of proceeds, and clearly if we continue to delever like that, we will fall outside our target range. So I will put a high probability that there is there will be a sizable share buyback happening this year.

The next question from Charlie Brennan with Jefferies.

Just two questions for me actually. Firstly, just a high level question on the market backdrop. It feels like banks are in rude health at the moment, certainly healthier now than they've been for some time. Have you detected any change in the nature of your conversations with banks and is it in any way optimistic to think that you might start to get a bit of a macro tailwind as that feeds through to discretionary spending? And then secondly, just a small financial question. Just on Multifonds, it looks like it's $50 million of EBIT and about $20 million of free cash flow. What's the delta between EBIT and free cash flow there? It looks surprisingly wide. It would obviously help with our modeling to understand what's in the middle there.

So let me take the first question as well about the banking industry. I spend a lot of time, I mean, meeting, CEO, COO and CIO of banks all over the world, and basically they're facing these dilemma. So the most performing banks, that's the ones they are investing the most on technology in term of return on equity, [CI] NPS, et cetera. But at the same time, they are stuck by legacy bespoke core banking system, which are very difficult to move. And it is a dilemma that they are facing today. So there is no, according to of course, we are still using a couple of independent analysts and as well the conversations that we could have with all the bankers, there is no slowdown in the technology investment, and have a lot of project surrounding the core is a reason why we continue to invest on modular architecture and application on point solution, and many banks as well are replacing the core banking. So I'm glad with -- where you're observing Q4 that we have concluded a couple of SaaS solution with UK banks. We have changed as well, our leader in the UK and basically the pipeline I've seen both in the UK and U.S. in term of modernization is encouraging us as well in term of investment. And we have not seen in our pipeline any slowdown and any final of slowing down. So with that, regarding the specific question about Multifonds, I mean Takis, if you can take it.

Yes, Charlie, there is no magic in in the number. Your calculation is not entirely wrong. There is one element and we have shown this also in the appendix. DSOs will be quite a bit lower without Multifonds. So Multifonds especially last year had a very low cash conversion. If you want also EBIT to cash conversion, given a number of larger deals signed also with Tier 1 institution with payment terms not very favorable, i.e. high networking capital basically in the business, this explains how you get from the EBIT to the cash. And it is also something we would have seen over the next years. If you look at the 2025, 2028 updated targets, you see EBIT down $50 million by cash, only down $20 million. It's the nature of the business and it has been like that in the past.

Just -- sorry, it's a bit technical, but does that mean that you keep the work in capital and you now get the cash flow benefit of that or is that working capital been sold with Multifonds?

Okay. So you seem to be an M&A specialist. So, when we close, there will be because of the working capital shifts and let's assume we're going to close on time in Q2. There will be, depending on what we will see by then, whether it's end of April or end of May, there will be a netting of basically the balance sheet position with, this is why we said EV. Yeah, so if we get the benefit of cash flows coming in Q1 plus April, May this will be obviously netted as part of the transaction with the working capital transfer.

The next question from Frederic Boulan with Bank of America.

Two questions on my side. One on the U.S. side, if you can provide us an update on where you see the -- so you mentioned on the sales efforts, but anything you want to share in terms of product position and then traction that you've seen at this stage? And then secondly, just to clarify on the commentary around maintenance, I think you mentioned 7%, so if you can mention what kind of growth you expect this year? And just for us, in terms of modeling on the subs and SaaS side just to confirm you're not going to provide any split going forward there.

Good evening, Frederic. So I will take the first one. So in a way, as I mentioned earlier, we have completed the initial targeted recruitment in the U.S. So, and we are I'm very glad as well about you have attracting a good talent, which is not obvious for a non-U.S. company in sales as well. So we have a very good answer for the market of talent. So, no, they are all in Board. As I mentioned, in CMD, they are fully focused on list of accounts which are mostly Tier 3 original banks where we would like to implement our level one, which level A, which is a best of fit software. We are contemplating as well our investment to respond to the specific product needs in the U.S. So it's part of the investment that Takis talk about. And I'm glad as well that we will announce and I will be in the U.S. in two weeks. Now our new innovation up in Florida and as well, we are via a lot of new executive in the U.S. I mentioned the Chief Product Officer that came from a major U.S. bank and U.S. technology provider. We are as well recruiting a new UI design architect as well and many other executives that will reinforce as well our team to take into account the specific needs of the U.S. So I'm very encouraged by our progress and I would spend with Takis and the team as well a couple of weeks in the U.S. early March. So, on the second part of the question, Takis, if you can take it, please.

Thanks, Fred. On maintenance, we had clearly another strong performance both in Q4 and also for the full year at 12%. It was definitely helped by the easier base in 2023. So the base now becomes a tougher comparison. If we look at the drivers for maintenance growth, ultimately, it's growth of our subscription business with the value uplift. We continue to see we're just term license and also with the CPI locked in and also premium maintenance, which is something we have started to put these people on. And this is clearly delivering what we expected now. The basis is now a bit higher. This is why we say it should be around 7% growth for maintenance in 2025. Maybe a bit higher in Q1. And then you have a bit lower growth than in Q4. This is where we should arrive. It is correct. We're not going to guide for the individual components of subscription and SaaS.

The next question is from Chandra Sriraman with Stifel.

I have a couple. Firstly, I mean you mentioned a lot of hires and interesting hires that you have made. I'm just trying to get a sense of the incremental investment how much of it is already locked in just to get a better sense of the seasonality of these incremental costs. And my second question is in terms of geographies obviously Q4 was very good, but I couldn't see any significant change in terms of any geography contributing to the strength. So you have any -- would you like to call out any geography or that moved the needle significantly?

Hi Chandra. On the costs we have seen some slight pick up as I mentioned on say, some marketing in R&D costs in Q4, but this is obviously not yet visible for the full year. So I would expect that especially Q1 and Q2 maybe also Q3, but especially Q1 and Q2 would see mid high single-digit cost increases given the easier comps for both sales and marketing and R&D. Yes, I mean, some people have been hired in December, so it is visible in the exit rate. So this is why we say in over, you should see a cost increase mid to high single-digit in Q1. Don't forget, we still have services costs declining for let's say costs of I know 7% to 8% in Q1 and similar in Q2. And there is as Jean-Pierre mentioned, we had front loaded U.S. sales hiring. But Will Moroney is continued to hire salespeople across the world. It's not just the U.S. it's also Western Europe, UK, Ireland, and Clay also, [Indiscernible] and you have seen some of the announcements and he's bringing in senior talent in her product organization in Q1. And this will also continue. And this is what we have reflecting our model. Hiring is always usually takes longer, but we are committed to our investment plans and this is what we have guided for.

Yes, to give you some color about investment in product and technology as well. So of course we will go a little bit more details and once Bob and I, we will announce our new model for product and technology. But it's basically shared between products. Of course, I mentioned our U.S. product portfolio, but let me mention as well investment around digital and around corporate banking. And we continue to innovate on model architecture and modular solution to innovate and SaaS and cloud architecture. And lastly, and you will see that in our flagship event in Maine, Madrid, in Genua as well. So it's in a way a very focused investment that we will announce at the occasion of TCF in Madrid on the 20th and 21st of May. Regarding the second part of your question said, we have a significant traction coming from Asia-Pac for the first time in the year, which was in a way, I mean, mostly driven by a couple of larger deal. And I'm glad as well to have seen a very large bank converting on-prem to SaaS, which is basically a very good move. And as well, as I mentioned earlier, I'm feeling encouraged by a couple of SaaS transactions that we have concluded in the UK.

Chandra, just to add on the region's question. APAC saw a good performance. I think on the other regions they developed as expected. There was nothing specific actually to be said. As you saw from our performance, I think there were a few surprises. We delivered a good performance across the regions, in line with the budget. Also on products, nothing specific to highlight. Transact, our core product, being the main driver also of the performance. As we had mentioned, good contributions from multiple as well.

Just let me add as well that we have completed our sales management team. We just hired, as I mentioned earlier, a new leader in UKI. As well, I'm glad that we have hired a new leader in APAC that has immediate impact as well in Q4. If you remember as well that we have an issue in Middle East in Q3, so we will have our new leader in Middle East starting in March. We have completed as well all the sales leadership under Will Moroney.

The next question is from Sven Merkt with Barclays.

Can I just check how you will report Q1 and Q2? Is Multifonds moving into discontinued operations? So you will provide us with the P&L and cash flow on a continued basis? And then, secondly, how big is the Multifonds turnout of the $400 million and when would you get it?

Thanks, Sven. On the first one, no, it does not, given the size of the business and the accounting requirements, multi-funds is not discontinued operations. So, it will be, as you look at the balance sheet, it's what we call assets held for sale and on the opposite side, liabilities held for sale. So, it will be reported as part of the operating business. However, because of our guidance, we will clearly exclude the impact of Multifonds. But it will be visible, it's not part of our guidance, definitely for Q1. And then Q2, we'll see whether it's a few weeks, one, two months, but it's not going to be a discontinued operation. So, yeah, that's what it is. What was the other question?

On the earn-out.

So, the earn-out, clearly, we have agreed with Montagu not to disclose all the details of the transaction. It's something which, given management, Multifonds -- the existing Multifonds management is also investing in the business. So, it's basically aligned with the incentive plan for the management. So, we're in the same boat. It's a multi-year earn-out. The very vast majority more of 80% is up front. So, we're going to get this at closing. Yeah. And then the remaining part is split over the next few years.

The next question is from Laurent Daure with Kepler Cheuvreux.

Gentlemen, I also have two questions. The first one is, if we could have a little bit more disclosure on Multifonds to help us to deconsolidate it. Particularly, I was a bit surprised on the very high profitability. Could you share with us the total revenues this company is doing and maybe a little bit of granularity on the split of revenue by region? And my second question is more, if an update on Europe, which has been relatively weak for years, do you consider now you have the right team and do you start to see the very early signs of potential inflection in this region.

Hi Laurent. I think, we have provided already the details which we are comfortable with. It's again, part of the confidentiality with the buyer. We said think about there was a sizable maintenance base in the business. Multifonds was a highly profitable business. There was also some services, I think this is as much as we can see.

Hi Laurent, its Jean-Pierre. So in your second question as well. So we have made a couple of changes in our European operation last year. We have two teams in a way a geographic team and a strategic account coverage about the top 10 accounts that we have in Europe. So in a way, we came back to a more linear organization based on geography, and across four different sub region. I already mentioned that we change our leadership in UK. We have done the same in France and Benelux as well a new leadership. And the rest is organizer in a southern Europe and in Germany and Eastern Europe, which was traditionally working well because it's a market of first equipment. It's more a market of buy that built, as well I met a lot of customers in Europe. So in a way they're all waiting for us just to release our modular architecture. It's a different market that in the U.S. or in emerging countries. And as I said before, I'm encouraging with the first SaaS success that we have in UKI, and we will double click on the wealth where we have a very good traction across a couple of countries, but we would like to extend to countries that the UK, for instance, which we are our sweet spot in Europe. And lastly, as well, we have fortunate to have a top 10 Tier 1 and Tier 2 banks in Europe that in a way are ready to develop all there, I mean, investment with us as well. So if I summarize in Europe, three priorities, UKI, wealth and strategic account.

The next question from Michael Foeth with Vontobel.

Just two more questions on Multifonds. Sorry to get back on that. I was just puzzled by the high profitability of the business and you're selling it for an EV of $400 million. You can share any comments on the valuation and your motivation to sell the business for what seems at least a low price. Maybe tying into that, you are taking out only $50 million of the $28 million EBIT target as well. So that implies that you wouldn't expect any growth in that business. So maybe that explains the low valuation. Anything you can share in addition, please.

Yes, let, let me start with the strategic reason first. As we mentioned in CMD as well, we would like to focus on really what's matter for us, which is our core business. And it's fair to recognize that Multifonds was ring fence within the organization in term of go-to-market in term of products. And we will never, I mean, got, I mean the in a way, the interlock that this business will deserve with the main Temenos, they are mostly in very few limited Tier 1 banks. And the personnel within the account as well are far different. So in a way, we have made the strategic assessment of Multifonds, and we have considering different option as well to keep in the landscape of Temenos. And we have pro and cons. And at the end as well, we have taken the strategic decision to put Temenos on the market. And we are satisfied with the transaction we have done with Montego. And I will hand over to Takis to give you the reason why we are glad with the results of the transaction.

Hi, Michael. Indeed, we're very happy with the outcome. EV is a good number. Let me respond to the question from two different angles. Number one, why is the 2028 target now only $50 million less? As we mentioned a couple of times, Multifonds had a very strong 2024 year on the back of a relatively weak '23, also held by a strong finish to the year. So clearly, we would not expect this performance to continue if we look at the business plan we had. So clearly, there is an outsized impact in Q4. That's reason number one. Reason number two, which you don't see, but contrary to the rest of the products, Multifonds has really only started in the second half of '24, its transition to SaaS. We mentioned they had a good ACV quarter. Now, you know what this means. If you transition to SaaS, there will be a multi-year headwind to your model. That was also something clearly we didn't want to carry forward. So it's not visible, but clearly, it's visible in the investment plan that this SaaS transition is only starting. And then finally, we mentioned that we want to be focused in our R&D investments. Clearly, the Multifonds business for the transition to SaaS is also requiring quite some investments. For us, this explains [Indiscernible] why we think there are better owners than this one. And then finally, unfortunately, this is not the way buyers look at. They look at, and I think we gave in the footnote, the adjusted cash EBITDA multiple. Now, there is limited amortization within the business. So the EBITDA is maybe slightly higher than the EBIT. But the way private equity looked at this was clearly you need to subtract a number or a plethora of items, standalone costs, day-to-day adjustments for the billing. How we book subscriptions. There were sales commission, a number of adjustments, which basically then get you to an adjusted cash EBITDA, which is materially lower than the basically reported EBIT. And this, the 20 to 24 times adjusted cash EBITDA multiple, depending on the year, I think this is a good outcome and was really in line with the similar transactions. So there's a bit long response, but this is how we think about this and why we're happy with the EV of $400 million.

We have a question from Knut Woller with Baader Bank.

Just two quick questions. The first one, looking at deferred revenues, they have been down 5% year-over-year in Q4 and showed the lowest sequential uptick with a plus of $45 million quarter over quarter in many years. Can you just give us some more color here what drove this development? And then secondly, can you also please provide some more color on the one-off tax benefit that you cited in 2024 and that you expect to persist in 2025?

Yeah. Hi, Knut. Let me take those two questions, maybe first on the tax rate. As you've seen, the underlying tax rate was 20.7%, so in line with our guidance range for 2024. And we're actually structurally going the right way. So the underlying one for 2025, we see at 19% to 21%. So, clearly, we're moving in the right direction. We had in 2024 success on a few call it uncertain tax positions and tax filings from prior years which we benefited from. I think, this is what it is. And I think, the same if we look at what we have done now. We are going -- we definitely going to see we've been conservative in the past and clearly those uncertain tax positions are moving in our favor. And also tax authorities are usually very late with confirming some of the filings. So these are what we will call one of benefits in the amounts we have stated. On deferred revenues. Yes, we grew, I'm not sure about the absolute number, but the growth was just 1%, that's correct. I think if you look at deferred revenues, the balance sheet is clearly without Multifonds. You don't really see a, like for like view on deferred revenues. We had a health increase in our deferred revenues excluding funds which is masked by the asset health for sale accounting position. That's clearly one reason. Secondly, there was quite a substantial negative FX impact on our balance sheet at the end of the year. And different revenues is a balance sheet position, so clearly recurring revenues are constant currency, but it's not really comparable to the balance sheet movement. And finally, I think 2023, we had 14% deferred revenue growth and recurring revenue growth was lower. So clearly there is some timing difference. However, I think what's more important, I think we'll see deferred revenues growing in the next few quarters also due to be comparative, and the momentum we have in maintenance and in ACV growth should support an acceleration in deferred revenue growth. But I think we're guiding on enough metrics and I think that's should be okay for now.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Jean-Pierre Brulard, CEO for any closing remarks.

Thank you for your time and your question and your support. It's a long journey, but let me reiterate my full confidence for our midterm plan by 2028. I look forward to seeing you in our earning calls in April. And as well to welcoming you in our flagship event, Temenos Community Forum in May 22nd. And we have pleasure to announce that we will restart the investment breakout during this event as well. Thank you a lot. Have a nice evening. Bye.

Ladies and gentlemen the conference now over. Thank you for your participation. You may now disconnect your lines. Goodbye.