EQS-News: TeamViewer AG
/ Key word(s): Annual Results/Forecast
GOPPINGEN, GERMANY, 7 February 2023
TeamViewer delivers on 2022 targets and increases earnings per share by 46%
Oliver Steil, TeamViewer CEO
« Our solutions are highly relevant for customers as they help them to securely manage remote operations, increase efficiency and sustainability and to overcome labor shortage. We were able to successfully upsell customers into significantly higher value tiers. The EMEA region was particularly strong, and we saw a clear acceleration in APAC. In 2023, we will continue our journey to become a more enterprise-focused software provider, leveraging our large customer base and our partnerships to win new business and deliver double-digit revenue growth. »
Michael Wilkens, TeamViewer CFO
« We closed the year 2022 successfully and delivered in line with our guidance, even after discontinuing business in Russia and Belarus. TeamViewer is a highly profitable and cash-generative business. With a 46% EPS increase in 2022 we created significant value for our shareholders. Going forward, we expect continued high cash conversion. Therefore, in line with our existing capital allocation strategy, we announced a new share buyback program of up to EUR 150m. »
1 Starting in 2023, TeamViewer’s financial performance will be reflected in an updated KPI framework, whereby Billings change from a primary into a secondary KPI, and Revenue (IFRS) moves more into focus. On the back of this, the definition of the Adjusted EBITDA will change from a Billings to a Revenue perspective. The focus of the full year 2023 guidance also shifts towards Revenue (IFRS) and the corresponding Adjusted (Revenue) EBITDA margin.
2 cc = constant currency
3 Adjusted for Russia and Belarus
In 2022 and particularly in Q4, TeamViewer again demonstrated the high relevance of its connectivity solutions and proved its strong resilience in a volatile economic environment. The company won new blue-chip customers and upgraded existing accounts into significantly higher value segments, emphasizing strong customer satisfaction. For example, global consumer goods and adhesives provider Henkel chose TeamViewer’s enterprise connectivity solution Tensor to streamline their IT support for 60,000 devices worldwide running on various operating systems. Decisive factors for Henkel were the easy integration of TeamViewer in their existing IT landscape and the leading security standards. This also applies to industrial multinational ABB who expanded their existing Tensor subscription to remotely support their clients across the world with connected devices such as robots and industrial machines.
Additionally, with its industry-leading Augmented Reality workflow platform Frontline, TeamViewer has established itself as a major player in the Industrial Metaverse space. The existing SAP partnership was broadened by more integrations into SAP solutions. This led to first pipeline conversions in Q4 with, for example, a large TeamViewer Frontline deal for a Mexican logistics supplier for the healthcare industry. Other significant AR-related partnerships include a Mixed Reality collaboration with Siemens for their product lifecycle management software as well as a strategic partnership and a first billings tranche with Hyundai Motor Company supporting their automotive smart factory in Singapore.
On the organizational side, TeamViewer’s leadership has been strengthened with Michael Wilkens as new CFO and Peter Turner as new CCO. New country heads in Korea, Japan, and India have joined the leadership team in APAC. The newly opened R&D Hub in Portugal has complemented the company’s global software engineering setup. TeamViewer reinforced employee retention by granting tax-free energy cost bonuses and by implementing an attractive employee share program.
Moreover, TeamViewer has structured its ESG activities by bundling them under the roof of its sustainability program c-a-r-e. Focusing on climate neutrality, access to technology, reduced emissions and equality topics, the increased transparency has been acknowledged by Sustainalytics and MSCI and resulted in improved ESG ratings.
At the end of 2022, TeamViewer and Manchester United reached a mutual agreement under which Manchester United has the option to buy back the rights to the club’s shirt front sponsorship. This allowed Manchester United to commence a focused sales process for a new long-term shirt front partner with the expectation for TeamViewer to transition out of this role as soon as practicably possible. TeamViewer would then step down into the role of a global partner at the cost of a single-digit million USD amount per year, resulting in a significant positive impact on TeamViewer’s profitability.
On the back of this operational development, TeamViewer delivered strong 2022 financials in line with its guidance. Billings grew by 16% (11% cc) yoy to EUR 634.8m in FY 2022, and revenue was up 13% to EUR 565.9m. Profitability even reached the upper end of the guided range with an Adjusted (Billings) EBITDA margin of 47%. Despite the discontinuation of its Russian and Belarusian operations, TeamViewer’s subscriber base increased yoy, amounting to 626k at the end of Q4 2022 (Q4 2021: 617k). A growing Net Retention Rate (“NRR”) is proof of a large and loyal customer base.
Customer Billings Split
TeamViewer’s SMB business improved by 18% yoy (14% cc) in Q4, supported by targeted cross- and upselling, successful price increases, as well as continued USD exchange rate tailwinds. On the back of this strong year-end finish, full-year SMB billings were 11% (6% cc) higher yoy at EUR 502.8m. The SMB subscriber base increased from 614k (adjusted for discontinued business in Russia and Belarus) at the end of Q4 2021 to 622k at the end of Q4 2022.
With an increase by 47% (43% cc) in Q4 2022, Enterprise business growth remained at a high level despite the uncertain macroeconomic environment. Growth was particularly driven by the EMEA region, an improved pipeline conversion, customers committing to growing ticket sizes (including migrations from SMB) and a higher share of multi-year deals. Full year 2022 Enterprise billings amounted to EUR 132.0m, corresponding to an increase of 42% (35% cc) yoy. The Enterprise subscriber base increased by 954 customers to 3,666 at the end of 2022.
Regional Billings Split
From a regional perspective, with a yoy billings growth of 28% (same in cc) in Q4 2022, EMEA significantly outgrew its already strong performance shown in Q3. Reasons being the above-mentioned campaigns, and an increasing number of multi-year deals, combined with a well-developed and loyal customer base. On a full-year basis, with an increase of 15% (14% cc), EMEA reached the strongest fundamental growth of all three regions.
In the AMERICAS, TeamViewer achieved a billings growth of 16% in Q4 and 18% for the full year. On a currency-adjusted basis, billings grew slower, at 4% and 6% respectively. As in Q3, this can be explained by temporarily longer procurement cycles in the current environment. However, TeamViewer remains confident in the resilience of its product portfolio and customers’ IT spend for automation and digitalization in the AMERICAS going forward.
APAC delivered another strong quarter in Q4 with the new organizational structures settling in. On a yoy comparison, billings were up 32% (34% cc) in Q4, and 14% (11% cc) for the full year. The lifting of COVID restrictions towards the year end generally allowed for more events translating into a strong enterprise momentum.
While billings grew by a strong 24% in Q4 yoy, recurring costs increased by 8%, which resulted in a significant Adjusted (Billings) EBITDA margin improvement by 7pp, from 44% in Q4 2021 to 51% in Q4 2022. In a full-year comparison, with seasonality effects balanced-out, recurring costs increased largely in line with billings. As a result, the full year Adjusted (Billings) EBITDA margin remained stable at 47% despite the full effect of sports sponsorships and increasing inflationary cost pressure. In relation to revenue, the (same) recurring cost base increased stronger in a full-year comparison, resulting in an Adjusted (Revenue) EBITDA margin of 41% in FY 2022.
Recurring cost (adjusted for non-recurring items and D&A)
1 Incl. other income/expenses and bad debt expenses of € 3.2m in Q4 2022 and € 3.7m in Q4 2021 / € 12.4m in FY 2022 and € 16m in FY 2021.
With cost of sales largely growing in line with billings, the gross profit margin remained stable at 94% in a Q4 comparison, and 93% on a full year comparison. Main reasons for the yoy increase in sales expenses were the expansion of the enterprise sales force, higher bonus payments and currency effects. The growth in marketing expenses on a full-year basis was due to the first-time full consideration of sports sponsorships in 2022. This increase was partly compensated by scaling effects in G&A costs on a full-year comparison. Full-year R&D costs increased largely in line with billings. The main R&D focus was on enriching the core technology platform and enhancing the digital workflow offering. The strong yoy decrease of “other” operating expenses in Q4 and FY 2022 was mainly driven by lower bad debt expenses due to a higher share of the Enterprise business with better payment behavior.
The described cost development led to a yoy increase of the Adjusted (Billings) EBITDA by 44% to EUR 97.4m in Q4 2022. On a full-year comparison, the Adjusted (Billings) EBITDA increased by 16% to EUR 298.7m in FY 2022. Deducting the full-year changes in deferred revenue of EUR 68.9m (FY 2021: EUR 46.5m) leads to an Adjusted (Revenue) EBITDA of EUR 229.8m in FY 2022, up 9% yoy.
Due to TeamViewer’s strong operating performance and an improved financial result net income increased by 35% yoy to EUR 67.6m in FY 2022.
Net income per share (Basic EPS) increased even stronger, by 46% yoy from EUR 0.25 to EUR 0.37 due to the lower share count in FY 2022 following the completion of the EUR 300m share buyback.
As most of TeamViewer’s investments in innovation and partnerships are directly accounted for in the operating expenses, capital expenditures in general are relatively low. In FY 2022 they even decreased in a yoy comparison, from EUR 15.2m in FY 2021 to EUR 8.8m in FY 2022. This was mainly due to the finalization of a new application landscape project at the end of 2021.
TeamViewer operates a highly cash-generative business, where growing operations are positively mirrored in its cash flow development. In FY 2022, the Levered Free Cash Flow (FCFE) increased by 9% to 171.8m (2021: 157.8m), which results in a 75% cash conversion in relation to the Adjusted (Revenue) EBITDA. This is stable compared to previous year, despite the full-year effect of sports sponsorships in 2022.
Cash and cash equivalents were at EUR 161.0m at the end of FY 2022. The reduction by EUR 389.5m compared to the end of 2021 was mainly driven by the 2022 share buyback program in the amount of EUR 300m and debt repayments of net EUR 286.1m, offset by net cash inflows.
The share buyback program resulted in the acquisition of a total of 24,093,675 shares, the majority of which were cancelled in 2022. At the end of FY 2022, the number of outstanding shares, excluding 9,538,600 shares held as treasury shares, amounted to 176,977,256.
The debt repayments of net EUR 286.1m during FY 2022 led to a debt volume of EUR 632.6m (incl. lease liabilities) at the end of 2022, of which EUR 300m promissory notes and EUR 300m bank loans. With the refinancing in July 2022, the share of variable interest-bearing debt was reduced, and all debt has been converted to Euro. TeamViewer has access to undrawn credit facilities in the amount of EUR 350m.
The net leverage ratio (net financial liabilities of EUR 471.6m at the end of FY 2022 in relation to the FY 2022 Adjusted (Billings) EBITDA of EUR 298.7m) was at 1.6x at the end of the year (December 31, 2021: 1.3x). In relation to the 2022 Adjusted (Revenue) EBITDA, the net leverage ratio was at 2.1x at the end of 2022.
In 2023, TeamViewer will continue to capitalize on global megatrends in the modern workplace, such as shortage of skilled labor, digital transformation in industrial environments and more sustainable ways of working. Hence, TeamViewer sees continued high demand for its remote connectivity and frontline productivity solutions. Its large and loyal customer base holds significant cross-selling and upselling potential, while TeamViewer will leverage successes in specific verticals to win new customers.
1 Based on average 2022 EUR/USD exchange rate of 1.05.
On the back of this, and despite prevailing macroeconomic headwinds, TeamViewer expects double-digit revenue growth within a range of 10-14% for 2023.
TeamViewer also aims for stable profitability reflected in the Adjusted (Revenue) EBITDA Margin, which is expected at around 40% for the full year 2023. This margin forecast takes into account continued investments into R&D to reinforce TeamViewer’s leading position in remote connectivity and the Industrial Metaverse.
Beyond 2023, TeamViewer sees significant margin upside following a potential early exit by Manchester United from the shirt front partnership.
TeamViewer’s business model remains highly cash generative, with continued high Cash Conversion rates. Therefore, the company reiterates its existing capital allocation strategy whereby the company targets a recurring leverage ratio of around 1.5x Net Debt to Adjusted (Billings) EBITDA. This leverage target provides the company with sufficient flexibility to support organic growth and to pursue tuck-in M&A to expand competencies. Based on TeamViewer’s strong cash flow generation and high confidence in its 2023 outlook, the company announced on 06 February 2023 that it will return excess cash to its shareholders by way of a new share buyback program of up to EUR 150m, which will be executed in two tranches. The first tranche of up to EUR 75m is expected to start mid of February 2023.
On March 14, 2023, TeamViewer will publish its 2022 annual report including the non-financial report.
Oliver Steil (CEO) and Michael Wilkens (CFO) will speak at an analyst and investor conference call at 9:00am CET on 7 February 2023 to discuss the Q4 and FY 2022 results. The audio webcast can be followed via https://www.webcast-eqs.com/teamviewer-2022-fy. 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 more than 620,000 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 more than 1,400 people globally. In 2022, TeamViewer achieved a revenue of around EUR 566m. TeamViewer AG (TMV) is listed at Frankfurt Stock Exchange and is a member of the MDAX. Further information can be found at 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 TeamViewer’s 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. TeamViewer 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 preliminary and unaudited.
Percentage change data and totals presented in tables throughout this document are generally calculated on unrounded numbers. Therefore, numbers in tables may not add up precisely to the totals indicated and percentage change data may not precisely reflect the change data of the rounded figures for the same reason.
This document contains alternative performance measures (APM) that are not defined under IFRS. The APMs (non-IFRS) can be reconciled to the key performance indicators included in the IFRS consolidated financial statements and should not be viewed in isolation, but only as supplementary information for assessing the operating performance. TeamViewer believes that these APMs provide an additional, deeper understanding of the Company's performance.
TeamViewer has defined each of the following APMs as follows:
Consolidated Profit & Loss Statement (unaudited)
Consolidated Balance Sheet (unaudited)
Consolidated Cash Flow Statement (unaudited)
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