DGAP-News: TeamViewer AG
/ Key word(s): Quarterly / Interim Statement
GOPPINGEN, GERMANY, 3 August 2022
Q2/H1 2022: TeamViewer with continued strong profitability and 12% topline growth amid macroeconomic uncertainties
Oliver Steil, TeamViewer CEO
«Our growth and profitability remain very attractive. In addition, our highly cash-generative business allowed us to significantly improve our financing structure. A repayment of higher interest-bearing debt and optimized terms for remaining long-term debt enhance our flexibility going forward whilst reducing overall costs. Looking back at the past quarters, we clearly did our homework, optimized bottom line results and thus preserve our outstanding profitability. Especially in times like these, our balance sheet gives us a competitive edge against peers.»
Stefan Gaiser, TeamViewer CFO
1) At constant currencies
In the second quarter, billings were up 12% yoy (+7% cc) at EUR 136.1m (Q2 2021: EUR 121.6m) and came in at EUR 299.6m in H1 2022, up 12% yoy (+8% cc) (H1 2021: EUR 268.1m). With an adj. EBITDA of EUR 58.1m in Q2, TeamViewer exceeded expectations and achieved an adj. EBITDA of EUR 141.3m in H1, representing an adj. EBITDA margin of 47.2%, thus slightly above the predicted full year range. The subscriber base increased again to 626k (Q1 2022: 620k), mainly supported by the reintroduction of monetization campaigns. Churn Rate developed well, decreasing to 14.0% (Q2 2021: 15.5%) despite the effects of TeamViewer’s decision to pull out of Russia and Belarus, while a Net Retention Rate of 97% yoy indicates high and growing customer satisfaction (88% in Q2 2021). On an LTM basis, the NRR stood at 101% (Q2 2021: 95%), again underlining the stickiness of TeamViewer’s business.
TeamViewer recently joined forces with Siemens to innovate in the Product Lifecycle Management (PLM) space with Augmented and Mixed Reality solutions. The partnership focuses on embedding TeamViewer’s Frontline spatial module into Siemens’ PLM software. This collaboration allows Siemens’ global customers to improve their product development process based on immersive experiences with interactive 3D content connected to the digital twin of a product. After SAP and Google Cloud, the Siemens partnership is the third high-profile collaboration of TeamViewer in the Enterprise space set to bolster sales activities and expand access to Enterprise customers around the world.
In July, TeamViewer’s Executive Board welcomed Peter Turner, formerly Chief Commercial Officer at Czech multinational and publicly listed cyber security software company Avast plc, as Chief Commercial Officer. As previously announced, Chief Financial Officer Stefan Gaiser will leave the company in mutual consent upon expiry of his contract in August this year. Following a smooth transition, Michael Wilkens will then join TeamViewer as Chief Financial Officer on September 1, 2022.
For TeamViewer’s SMB business, a solid billings improvement of 10% yoy to EUR 109.3m (Q2 2021: EUR 99.3m) was supported by a resumption of monetization campaigns. Within the SMB business, the higher ACV cohorts continue to grow steadily at 17% yoy on an LTM basis, whilst the entry segment remains under competitive pressure. At the same time, the ASP continues to increase, now reaching EUR 753 (Q2 2021: EUR 702). Overall subscriber numbers in SMB grew to 623k from 617k in the previous quarter, starting to even out a decrease from Q4 2021 at a stable subscriber churn rate of 14% (LTM).
In the Enterprise business, billings for Q2 increased by 21% yoy to EUR 26.9m from EUR 22.2m in Q2 2021. On an LTM basis, total Enterprise billings rose 62% to EUR 109.5m (Q2 2021: EUR 67.4m). Billings in the segment thus accounted for 19% of total billings. Against the background of the uncertain macroeconomic environment and resulting caution from Enterprise decision makers, pipeline conversion slowed down. However, TeamViewer was nevertheless able to further increase the quality of its contracts, reflecting successful up- and cross-selling activities. Notably, billings for Enterprise customers in the ACV 100-200k bucket more than doubled year on year to EUR 14.4m (Q2 2021: EUR 7.1m). At the end of the second quarter, the number of TeamViewer’s Enterprise customers amounted to 3,062.
In the second half of the year, TeamViewer intends to launch a dedicated campaign aiming at transitioning additional SMB customers currently using TeamViewer’s core solution to TeamViewer Tensor, the Enterprise edition of the company’s remote connectivity software. This will improve functionality for customers by unlocking key Enterprise features included in the Tensor solution. On the back of TeamViewer’s experience from past upselling activities which were based on individual approaches to selected SMB customers, the company expects the dedicated campaign to offer further growth potential.
TeamViewer’s solutions are increasingly integrated into different business-critical processes at commercial customers around the world. For instance, global fast food restaurant chain Wendy’s is leveraging TeamViewer’s enterprise AR platform Frontline to monitor suppliers and improve food safety as well as quality. This results from TeamViewer’s existing partnership with NSF International Food Safety, LLC, announced in January.
In addition, railway infrastructure manager DB Netz AG relies on TeamViewer’s mixed reality solutions for training employees in maintenance procedures. The enhanced illustration of components, processes and possible malfunctions leads to a better understanding of workflows and helps workers of DB Netz AG to improve transfer between theory and real-world operations.
In terms of regional performance, AMERICAS led with a particularly strong yoy billings plus of 22% (8% cc) to EUR 47.6m (Q2 2021: EUR 39.0m) on top of Q1’s double-digit 18% yoy increase. This reflects the successful sales motion but also strong FX tailwinds, proving TeamViewer’s globally diversified presence a strong asset. Growth in EMEA continued at a stable 8% yoy (8% cc) to a total of EUR 69.2m (Q2 2021: EUR 63.8m). However, macroeconomic uncertainties became evident and slowed down pipeline conversion. In addition, TeamViewer’s decision to stop its business activities in Russia and Belarus had an impact on billings growth. Billings grew at a slower yet positive rate in the APAC region at 4% yoy (1% cc) to EUR 19.4m from EUR 18.7m. The leadership team in APAC is continuously working on the transformation of the business. However, new Covid-19 outbreaks and lockdowns in several APAC countries slowed down sales activities, with the most severe impact materializing in China.
Billings and Revenue per Region
1) At constant currencies
TeamViewer achieved a strong adj. EBITDA margin of 42.6% in Q2 and 47.2% for H1, slightly above the predicted range for the full year. Year on year, adj. EBITDA increased to EUR 58.1m from EUR 57.0m as a result of strong operating leverage, the successful implementation of Project ReMax, and lower bad debt expenses – a particularly strong achievement given last year’s second quarter reporting did not include any material costs from the marketing partnerships. For the first six months, adj. EBITDA was at EUR 141.3m (H1 2021: EUR 147.0m). The company’s IFRS revenues were up 12% yoy for Q2 at EUR 137.5m, while IFRS operating profit rose 16% yoy to EUR 33.8m from EUR 29.0m. For H1 2022, IFRS revenues were at EUR 272.0m (H1 2021: EUR 241.2m) and IFRS profits reached EUR 61.9m from EUR 57.8m. Levered free cash flow was at EUR 28.2m, down 13% yoy (Q2 2021: EUR 32.2m).
TeamViewer continues to operate with very little investment requirements, thus capital expenditures further decreased to EUR 2.4m in Q2 (Q2 2021: EUR 4.5m).
Cash and cash equivalents at the end of the quarterly reporting period were at EUR 383.4m (Q2 2021: EUR 465.6m). The net leverage ratio was at 2.1 as of June 30, 2022 (Q2 2021: 1.5).
TeamViewer’s share buyback program, which the company announced with its full year results in February 2022, is well on track. As of July 29, 2022, 19m shares reflecting a value of EUR 249m have been bought back by the company which corresponds to 83% of the EUR 300m maximum buyback volume. The company confirms that the program will be continued until the amount of EUR 300m is fully invested and increases the maximum number of shares to be repurchased under the program to 30m shares in total. Whilst the vast majority of the shares has been cancelled, around 3m of the shares will be used as Restricted Stock Units (RSU) for future employee retention, covering the requirements for the next two to three years.
TeamViewer’s strong cash generation and cash position allowed the Executive Board to further optimize the company’s financing structure. TeamViewer used its existing liquidity to repay higher interest-bearing long-term debt and achieved improved conditions for the remaining long-term debt. In combination with a EUR 450m revolving facility (EUR 300m undrawn), this significantly enhances TeamViewer’s flexibility going forward whilst reducing cash interest costs. In addition, the maturity profile of the remaining debt could be flattened. The financing is also linked to an ESG component.
For the full year 2022, TeamViewer continues to expect revenues to increase in the mid-teens to EUR 565-580m and an adj. EBITDA margin within the range of 45%-47%. Given the impact of pulling out of Russia and Belarus (accounting for approximately one percent of billings) as well as the operating environment experienced year-to-date, TeamViewer expects billings for the full year of 2022 to be at or around the bottom end of its guidance (EUR 630-650m).
For the longer term, TeamViewer does not intend to extend the sponsorship agreement with Manchester United beyond its term. While the partnership and its brand-building effect has been positive over the past year, the company has decided to reassess its long-term marketing strategy in light of the current macro environment. TeamViewer is committed to maintain its attractive financial profile and, after having successfully implemented short-term measures to improve the bottom line, such as parts of ReMax and the refinancing, the company is now increasingly focusing on medium-term measures to ensure and increase its high profitability. TeamViewer expects that the combined effect of these measures will result in significant improvement in the company's margin following the end of the current sponsorship agreement.
This Quarterly Statement and all information therein are unaudited.
Oliver Steil (CEO) and Stefan Gaiser (CFO) will speak at an analyst and investor conference call at 9:00 CEST on 3 August 2022 to discuss the results. The audio webcast can be followed via https://www.webcast-eqs.com/teamviewer20220803. A replay will be available on the Investor Relations website under ir.teamviewer.com. The accompanying presentation can also be downloaded there.
TeamViewer is a leading global technology company that provides a connectivity platform to remotely access, control, manage, monitor, and repair devices of any kind – from laptops and mobile phones to industrial machines and robots. Although TeamViewer is free of charge for private use, it has around 625,000 subscribers and enables companies of all sizes and from all industries to digitalize their business-critical processes through seamless connectivity. Against the backdrop of global megatrends like device proliferation, automation and new work, TeamViewer proactively shapes digital transformation and continuously innovates in the fields of Augmented Reality, Internet of Things and Artificial Intelligence. Since the company’s foundation in 2005, TeamViewer’s software has been installed on more than 2.5 billion devices around the world. The company is headquartered in Goppingen, Germany, and employs around 1,400 people globally. In 2021, TeamViewer achieved billings of around EUR 548 million. TeamViewer AG (TMV) is listed at Frankfurt Stock Exchange and belongs to the MDAX. Further information can be found at https://www.teamviewer.com/.
Certain statements in this communication may constitute forward looking statements. These statements are based on assumptions that are believed to be reasonable at the time they are made, and are subject to significant risks and uncertainties, including, but not limited to, those risks and uncertainties described in TeamViewer's disclosures. You should not rely on these forward-looking statements as predictions of future events and we undertake no obligation to update or revise these statements. Our actual results may differ materially and adversely from any forward-looking statements discussed in these statements due to several factors, including without limitation, risks from macroeconomic developments, external fraud, lack of innovation capabilities, inadequate data security and changes in competition levels. The Company undertakes no obligation, and does not expect to publicly update, or publicly revise, any forward-looking statement, whether as a result of new information, future events or otherwise.
All stated figures are unaudited.
Alternative performance measures (APMs)
This document contains certain alternative performance measures (collectively, “APMs”) including billings and Adjusted EBITDA that are not required by, or presented in accordance with, IFRS, German GAAP or any other generally accepted accounting principles. TeamViewer presents APMs because they are used by management in monitoring, evaluating and managing its business and management believes these measures provide an enhanced understanding of TeamViewer’s underlying results and related trends. The definitions of the APMs may not be comparable to other similarly titled measures of other companies and have limitations as analytical tools and should, therefore, not be considered in isolation or as a substitute for analysis of TeamViewer’s operating results as reported under IFRS or German GAAP. APMs such as billings and Adjusted EBITDA are not measurements of TeamViewer’s performance or liquidity under IFRS or German GAAP and should not be considered as alternatives to results for the period or any other performance measures derived in accordance with IFRS, German GAAP or any other generally accepted accounting principles or as alternatives to cash flow from operating, investing or financing activities.
TeamViewer has defined each of the following APMs as follows:
Billings represent the value (net) of goods and services invoiced to customers within a specific period and which constitute a contract as defined by IFRS 15.
“Adjusted EBITDA” is defined as operating income (EBIT) as per IFRS plus depreciation and amortization of tangible and intangible fixed assets (EBITDA), adjusted for change in deferred revenue recognized in profit or loss during the period under consideration and for certain transactions that have been defined by the Management Board in agreement with the Supervisory Board (income and expenses). Business events to be adjusted relate to share-based compensation models and other material special items of the business which are presented separately to show the underlying operating performance of the business.
“Adjusted EBITDA margin” means Adjusted EBITDA as a percentage of billings.
Operational metrics and other financial measures for information purposes
This document also includes further certain operational metrics, such as Net Retention Rate, and additional financial measures that are not required by, or presented in accordance with IFRS, German GAAP or any other generally accepted accounting principles (collectively, “other financial measures”). TeamViewer presents these operational metrics and other financial measures for information purposes and because they are used by the management for monitoring, evaluating and managing its business. The definitions of these operational metrics and other financial metrics may not be comparable to other similarly titled measures of other companies and have limitations as analytical tools and should, therefore, not be considered in isolation or as a substitute for analysis of TeamViewer’s operating results, performance or liquidity as reported under IFRS or German GAAP.
TeamViewer has defined these operational metrics and other financial measures for information purposes as follows:
“Levered free cash flow” (FCFE) means net cash from operating activities less capital expenditure for property, plant and equipment and intangible assets (excl. M&A), payments for the capital element of lease liabilities and interest paid for borrowings and lease liabilities.
„Net leverage ratio“ means the ratio of net financial liabilities (sum of interest-bearing loans and borrowings, current and non-current, less cash and cash equivalents) to Adjusted EBITDA (LTM).
“Net retention rate” or “NRR” is calculated as recurring billings (subscription renewals, up-selling and cross-selling activities) over the last twelve months attributable to retained subscribers (subscribers who were subscribers in the previous twelve-month period) divided by the total recurring billings from the previous twelve-month period.
“Retained Billings” means recurring billings (renewals, up- and cross sell) attributable to retained subscribers who were subscribers in the previous twelve-month period.
“New Billings” means recurring billings attributable to new subscribers.
“Non-recurring Billings” means all billings that do not recur such as professional services and hardware reselling.
Consolidated Profit & Loss Statement (unaudited)
Consolidated Balance Sheet (unaudited)
Consolidated Balance Sheet (continued) (unaudited)
Consolidated Cash Flow Statement (unaudited)
Consolidated Cash Flow Statement (continued) (unaudited)
03.08.2022 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.
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|EQS News ID:||1411977|
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