Earnings call transcript: Teneo’s Q3 2026 revenue slump weighs on shares

Teneo said its third-quarter results reflected a steep drop in sales after the loss of a major U.S. reselling partner, even as the company cut costs, eliminated senior debt and advanced a rebuilt platform aimed at regulated enterprise customers. The stock was last quoted at $0.03, down 16.77% from the previous close, and remains close to its 52-week low of $0.02 to $0.8.

Teneo’s quarter was defined by a major revenue reset rather than by growth. Management said the decline stemmed mainly from the termination of a large U.S. reselling partnership, which sharply reduced sales and recurring revenue.

The company said it has rebuilt its organization into a leaner operation of about 22 to 23 people. It also cut roughly 50 employees and consultants since the start of 2024, bringing annualized operating expenses to about SEK 60 million.

Despite the lower revenue base, Teneo said its gross margin remained at 76%. Management argued that the margin could improve further as Teneo10 is deployed and delivery costs fall. The company also completed its exit from Spain, which should reduce future costs.

• Debt: senior debt eliminated through a debt-to-equity refinancing.

The company’s market capitalization stands at just $1.49 million, reflecting the severe revenue contraction. According to InvestingPro data, which tracks comprehensive financial health metrics for over 1,400 US equities, Teneo’s overall Financial Health Score is rated "WEAK" at 1.26 out of 5. An InvestingPro tip notes the company is "quickly burning through cash," aligning with management’s statement of 9 to 10 months of runway without revenue improvement.

No EPS or revenue consensus figures were provided for the quarter, so a direct beat-or-miss comparison is not available. The operating results, however, show a steep year-over-year decline in revenue and recurring revenue metrics.

The drop in net sales, SaaS ARR and total ARR suggests the quarter was weak in absolute terms, even though management emphasized that the company is now leaner and better positioned operationally. The most important change is not a surprise versus forecast, but a reset in the business model after the loss of a key partner.

The stock was last at $0.03, down 16.77% from the previous close, according to the latest available data. At that level, the shares are trading near the bottom of their 52-week range of $0.02 to $0.8. Year-to-date, the stock has declined roughly 90%, with a six-month return of negative 92%, according to InvestingPro data. Based on InvestingPro’s Fair Value analysis, the stock appears overvalued at current levels—investors can explore similar valuation insights on the platform’s Most Overvalued stocks list.

The move points to fragile investor sentiment around the name. Shares at this price can move sharply on limited trading, and the decline suggests the market remains focused on the revenue contraction and execution risk rather than the company’s restructuring progress.

Management said the company’s near-term focus is on converting existing implementations into revenue. The main projects include Medtronic, a Turkish partner project with FGS, and a Nordic telecom customer.

Per, the chief executive, said the company is 60% to 70% confident it can add about SEK 3 million in monthly revenue by the end of the first quarter of 2025, enough to move toward cash flow positive. He said the company is fully confident it can reach cash flow positive by summer 2025.

The company also said it is working on three Teneo10 workshops over the next two to three weeks. Management described these as large opportunities, but said they are not relying on them for the near-term cash flow target.

Per said the company has been rebuilt after a difficult year. “It is debt-free, recapitalized, and rebuilt to act,” he said, adding that the revenue drop from the former U.S. partner created “a severe cash squeeze.”

He also described the new platform as a ground-up redesign. “We rebuilt Teneo, but instead of taking sort of the old code and starting to recoding it, we still took 20 years of code and design principles,” he said.

On the product strategy, Per said the company’s architecture is designed for controlled enterprise use. He said Teneo uses language models only around verified facts and actions, with “all facts and actions running through a controlled, tested, auditable layers.”

Chief Financial Officer Fredrik said the cost reset is central to the turnaround. “The increased revenue is going to take us to cash flow positive and with the existing organization that we currently have,” he said.

• Customer adoption risk: Management said many customers are still experimenting with LLMs rather than deploying production systems.

For deeper analysis of Teneo’s financial position and turnaround prospects, investors can access the company’s comprehensive Pro Research Report, which distills complex financial data into clear, actionable intelligence. The report is one of 1,400+ available on InvestingPro, offering expert analysis and intuitive visuals for smarter investment decisions.

Analysts focused on how quickly the company can turn its pipeline into recurring revenue. One question centered on the confidence level around the Medtronic, FGS Turkey and Nordic telco opportunities. Per said all three are already sold and in implementation, and that the combined opportunity is larger than the SEK 3 million monthly target.

Another question addressed the number of Teneo10 engagements. Management said it is working on three large workshops and is reactivating some opportunities that paused after a June press release about cash position.

Analysts also asked about the pricing model. Per said the move from API-call pricing to minute-based pricing is mostly a rounding change and should not materially affect revenue per call or gross margin.

A final question covered the Spain exit and related costs. Management said most of the costs have already been booked, with only a few hundred thousand kronor expected to remain.

Per, CEO, Teneo: Good morning. It is top of the hour. It is 9:00 A.M. I suggest we get started. This presentation is being recorded, and it will be on our website later today. You can also find the presentation on the investors’ site on teneo.ai. With that said, we will go ahead and start. Today presenting is Per and Fredrik. It is, of course, the Q3 report. We have been around now for quite some time, Per and Fredrik, although last quarter was somewhat different than maybe we had hoped for when we started the year, since Q1, Q2. We do have a background from this area, both of us, so quite experienced in the business of software. I am going to start off with an update from me, and then Fredrik will go into the numbers. It is not too much to talk about in the numbers.

It is pretty much the same as we did forecast in our Q2 report, which of course, was in connection also to the rights issue. For those of you who were there, it is not that much news, but thank you all for joining again. We have three phrases to describe where we stand today. It is debt-free, recapitalized, and rebuilt to act. It was a very demanding year and quarter. It all, of course, has to do with our former U.S. partner that broke our contract, and there is just no way to sugarcoat this. It is a big drop in revenue, and that, of course, resulted in a severe cash squeeze. As they say, you never waste a good crisis. In the third quarter, we worked hard to make sure that we could emerge stronger, faster, more agile than before.

First of all, debt-free. Our balance sheet has been a major issue for shareholders, for M&A, and also for our large customers, and it has been so since Fredrik and I joined. What happened in the quarter is we completed a full debt-to-equity refinancing with Capital Four. We no longer have a loan, meaning that Teneo is now debt-free. Capital Four is likely to be our largest shareholder with 29.9% of the shares. We are also recapitalized, so thank you, shareholders, for supporting us in this tough period. You contributed through a rights issue of SEK 74 million. We ended the quarter with SEK 25.8 million. That has a lot to do with the fact that we, of course, had, during Q2, several months where we could not pay the bills at all.

There was also quite a lot of catch-up that we had to do, apart from also the transaction and some repayment of loans as a part of the transaction here, the rights issue. From October, we run the company at about SEK 5 million a month, which is close to half of where we were a year ago. The cost is about half of what we had a year ago. We also say we are rebuilt to act. What does that mean? The new organization is slim, it is small, it is agile. The first proof of this is the delivery of Teneo10 and its reception that we have seen in the market.

We rebuilt Teneo, but instead of taking sort of the old code and starting to recoding it, we still took 20 years of code and design principles, the concepts that we’ve been building on, the concepts that customers love, and we’ve redesigned the platform from the ground up. Why did we do this? There’s two reasons. Number one, we want to enable an AI-driven software development life cycle. What does that mean? Instead of developing where all code is written by humans, both the code and the coordination is done by the AI, meaning that we have a model in the middle, and then our developers are working towards that model. This enables a far faster development at a much lower cost than before.

Also, since Teneo10 builds on everything the customer’s required from a contact center solution, it’s the stability, it’s all the confidential compute, it’s the auditability, it’s security, and all this in one and the same platform. But now you don’t really need to log on to Teneo10 to change a flow or to build a solution in Teneo. You can simply prompt Claude or ChatGPT. This is what’s called headless. It is, of course, a big craze i