TEAMVIEWER SE Quarterly Statement Q1 2023
GOPPINGEN, GERMANY, 3 May 2023
TeamViewer well on track to meet 2023 guidance: Q1 Revenue growth of 13% and strong Adjusted EBITDA growth of 18%
- Q1 revenue growth of 13% yoy, mainly driven by successful up- and cross-selling measures, resulting in a sustained high NRR of 107%
- Strong underlying profitability supported by diligent cost management leading to an Adjusted (Revenue) EBITDA margin of 42%
- Increased growth momentum in SMB underpinning TeamViewer's leading position in the core remote business
- Launch of new partner program "TeamUp" to strengthen channel eco system and sales organization
- Consistent delivery in EMEA and APAC; AMERICAS with new leadership and new sales hub in Mexico
Oliver Steil, TeamViewer CEO
« Building on our successful year-end finish, we started 2023 with strong financials and a good momentum in
the business. Our primary metric 'Revenue' grew clearly double-digit by 13%. On the bottom line, our adjusted EPS increased by 38%. In Q1, we prepared the successful launch of our next-level core remote access and support product, and we invested in existing and in new relationships. Engaging with partners and customers from all sectors and visiting events across regions is paramount to building our pipeline for the year and helps us to further deliver on our strategy. »
______
Michael Wilkens, TeamViewer CFO
- We achieved double-digit revenue growth in Q1, which we successfully translated into a strong Adjusted EBITDA margin of 42%. Our SMB business in particular saw a strong momentum. While we continued to
execute our share buyback program, we still managed to further optimize our gross debt. This was enabled
by TeamViewer's strong cash position and profitability. In view of rising financing costs, this leads to additional stability to our already resilient business. Although it is still very early in the year, we are confident that we are well on track to meet our full-year guidance. »
TeamViewer | Q1 2023 | 1 |
Quarterly Statement Q1 2023
Key Figures (consolidated, unaudited)
Q1 2023 | Q1 2022 | Δ yoy | |
Sales | |||
Revenue (in EUR m) | 151.3 | 134.5 | +13% |
Billings (in EUR m) | 176.8 | 163.5 | +8% (+8% cc1) |
Number of subscribers2 (LTM) (in thousands) | 631 | 611 | +3% |
Net retention rate (NRR LTM) | 107% | 99% | +8pp |
Profits and Margins | |||
Adjusted (Revenue) EBITDA3 (in EUR m) | 64.1 | 54.3 | +18% |
Adjusted (Revenue) EBITDA3 margin | 42% | 40% | +2pp |
EBITDA (in EUR m) | 54.1 | 41.2 | +31% |
EBITDA margin | 36% | 31% | +5pp |
EBIT (in EUR m) | 40.4 | 28.1 | +44% |
EBIT margin | 27% | 21% | +6 pp |
Cashflows | |||
Cash flows from operating activities (in EUR m) | 59.0 | 29.2 | +102% |
Cash flows from investing activities (in EUR m) | (8.9) | (3.3) | +171% |
Levered Free Cashflow (FCFE) | 51.4 | 21.9 | +135% |
Cash Conversion (FCFE / Adjusted EBITDA) | 80% | 40% | +40pp |
Cash and cash equivalents (in EUR m) | 78.6 | 424.3 | -81% |
Other | |||
R&D Expenses (in EUR m) | (18.9) | (16.8) | +13% |
Employees full-time equivalents (end of period) | 1,418 | 1,342 | +6% |
Basic earnings per share (in EUR) | 0.13 | 0.07 | +75% |
Adjusted basic earnings per share (in EUR) | 0.22 | 0.16 | +38% |
- cc = constant currency
- Adjusted for Russia and Belarus
- Since beginning of FY 2023, TeamViewer uses an updated KPI framework, with Revenue (IFRS) moving more into focus. On the back of this, the definition of the Adjusted EBITDA changed from a Billings to a Revenue perspective.
Business Highlights
Within the first quarter of the year, TeamViewer made good progress in executing its strategic initiatives, especially in its core SMB business. With an improved e-commerce customer experience and targeted monetization campaigns, the company showed increased SMB growth dynamics, underpinning its leading position in the core remote business.
This was paralleled by the Nordics soft launch of TeamViewer Remote, the company's major upgrade of its core remote access and support product. Based on very promising user feedback and adoption rate, the new product was then rolled out globally to the market as planned, with its commercial launch at the end of April. With a reworked user experience, improved security and new features, TeamViewer Remote is set up to increase attractiveness within the main target audiences and therefore create momentum in the free user ecosystem, increase the potential to cross- and upsell and thus accelerate growth in the SMB business. The new web-first approach with advanced APIs will speed up TeamViewer's ability to innovate and pave the way to integrate the entire product portfolio and additional 3rd party applications on the same technical architecture.
TeamViewer | Q1 2023 | 2 |
Quarterly Statement Q1 2023
To complement TeamViewer's global salesforce and drive growth across regions, the company introduced the new global partner program "TeamUp" for resellers, distributors, referral partners, managed service providers, and systems integrators. High participation in the regional program launch events showed significant interest and strong potential to strengthen TeamViewer's sales efforts. Aiming at an improved collaboration with TeamViewer's channel eco system and geared towards benefitting from the partners' local market expertise, the new program contains comprehensive sales training, dedicated marketing material and a globally unified partner portal.
To further develop and strengthen the regional sales organization in the Americas and to leverage its full potential, TeamViewer established Georg Beyschlag as new President of TeamViewer Americas. The previous Chief of Staff & Strategy is the ideal candidate to accelerate growth across the region as he has proven to be an excellent leader in various roles at TeamViewer, where he successfully elevated departments to the next level and helped people thrive. Additionally, the company has opened an office in Mexico, serving as a hub for TeamViewer's further expansion into the important and dynamically evolving markets of Latin America.
In March, TeamViewer completed the company's conversion into a European stock corporation (Societas Europaea, SE). This underlines TeamViewer's commitment as a future-oriented European software company with an international employee base. By establishing a World Works Council, a global body of employee representatives, TeamViewer will further strengthen employee engagement and foster its open and international corporate culture.
On the back of its operational development, TeamViewer delivered strong Q1 2023 financials and is well on track to meet its full year guidance. Revenue was up 13% to EUR 151.3m, and billings grew by 8% yoy to EUR 176.8m in Q1 2023. With quarterly operating cost savings, less bad debt and positive foreign exchange effects, the adjusted (Revenue) EBITDA margin increased by 2 percentage points yoy to 42%. TeamViewer's customer base increased to a total of 631k (+3%) at the end of Q1 2023. In addition, a sustained high Net Retention Rate (NRR LTM) of 107% (+9 pp) proves TeamViewer's strong up- and cross-selling capabilities and is testament to the company's successful relationship management.
SMB and Enterprise Development
Revenue and Billings by Customer
EUR m | Q1 2023 | Q1 2022 | Δ yoy |
SMB | |||
Revenue | 122.4 | 110.6 | +11% |
Billings | 142.8 | 128.3 | +11% (+11% cc1) |
Enterprise | |||
Revenue | 28.9 | 23.9 | +21% |
Billings | 34.0 | 35.2 | -3%(-4% cc1) |
Total Revenue | 151.3 | 134.5 | +13% |
Total Billings | 176.8 | 163.5 | +8% (+8% cc1) |
1 cc = constant currency
During the quarter, the company made good progress in enhancing the e-commerce customer experience specifically for SMB customers and non-commercial users. This was paralleled by targeted cross- and upselling measures and the continued price increase motion in the SMB space. On the back of this, TeamViewer delivered
TeamViewer | Q1 2023 | 3 |
Quarterly Statement Q1 2023
a strong Q1 SMB performance, across revenue (+11% yoy), billings (+11% yoy) and subscribers (+3% yoy to 627k at the end of Q1 2023).
Also, the lower Enterprise buckets (EUR 10-50k and EUR 50-100k) saw a healthy performance, underpinned by a good Tensor business and a strong 31% increase of the Enterprise customer base to 3,777 at the end of Q1 2023. This, combined with the increased SMB performance, was able to offset a slow start into the year of the higher-bucket Enterprise billings (EUR >100k annual contract value). This was mainly due to a slower Frontline business and longer procurement processes of some high-profile deals especially in the AMERICAS region. A re- acceleration of the Enterprise billings is expected on the back of the growing sales pipeline following the intensified engagement with global customers and channel partners since beginning of the year. On the revenue side, the Enterprise business delivered a 21% yoy growth in Q1, driven by successful up- and cross- selling measures and the release of multi-year billings to revenues.
With a growing customer base both on the SMB and Enterprise side, the overall subscriber base increased by 3% to 631k customers at the end of Q1 2023. At the same time, and despite the ongoing uncertain macroeconomic environment, TeamViewer's new business stabilized again on a sequential quarter comparison with EUR 14.7m of net new billings in Q1 2023 (versus EUR 14.3m in Q4 2022).
Regional Development
Revenue and billings by region
EUR m | Q1 2023 | Q1 2022 | Δ yoy |
EMEA | |||
Revenue | 79.7 | 72.8 | +10% |
Billings | 101.4 | 93.8 | +8% (+9% cc1) |
AMERICAS | |||
Revenue | 54.0 | 45.9 | +18% |
Billings | 56.4 | 53.1 | +6% (+3% cc1) |
APAC | |||
Revenue | 17.6 | 15.8 | +12% |
Billings | 18.9 | 16.6 | +14% (+17% cc1) |
Total Revenue | 151.3 | 134.5 | +13% |
Total Billings | 176.8 | 163.5 | +8% (+8% cc1) |
1 cc = constant currency
From a regional billings perspective, APAC showed the strongest growth in Q1 2023, followed by EMEA and the AMERICAS. The performance in the latter region continued to be marked by longer procurement cycles, especially in the Enterprise business, and a challenging macroeconomic environment. Revenue-wise, all regions showed double-digit growth rates in Q1 2023 with previous period billings continuously converting into revenues. Besides currency tailwinds especially in the AMERICAS region, the main growth drivers were successful up- and cross-selling measures, targeted monetization campaigns and an increasing number of multi-year deals meeting a well-developed and loyal customer base.
Earnings Development
While revenue increased by 13% yoy, total recurring costs increased at a lower rate, by 9 %. This led to a yoy increase of the Adjusted (Revenue) EBITDA by 18% to EUR 64.1m in Q1 2023, which translates into a 2 percentage point higher Adjusted (Revenue) EBITDA margin of 42%.
TeamViewer | Q1 2023 | 4 |
Quarterly Statement Q1 2023
Due to this strong operating performance, lower non-recurring items, almost stable D&A and an improved financial result, net income increased by 58% yoy to EUR 23.1m in Q1 2023. The basic EPS increased even stronger, by 75% to EUR 0.13, and the Adjusted (basic) EPS increased by 38% to EUR 0.22.
Recurring cost (adjusted for non-recurring items and D&A)
EUR m | Q1 2023 | Q1 2022 | Δ yoy | ||
Cost of Sales | (10.8) | (9.8) | +9% | ||
Sales | (21.7) | (17.1) | +27% | ||
Marketing | (31.8) | (28.9) | +10% | ||
R&D | (15.0) | (12.9) | +16% | ||
G&A | (8.1) | (7.1) | +14% | ||
Other1 | 0.1 | (4.3) | -103% | ||
Total COGS and OpEx | ( | 87.2) | (80.2) | +9% | |
1 Incl. other income/expenses and bad debt expenses of EUR 2.4m in Q1 2023 and EUR 4.4m in Q1 2022.
The absolute yoy cost increase by EUR 7.0m, which is distributed across all major cost items, was mainly employee-related, i.e., increasing workforce, salary increases and higher bonus levels. In addition, part of the yoy increase in sales expenses was due to lower benefits from sales bonus activation (CTOC, started in Q3 2021). Like in Q1 2022, the largest portion of the marketing expenses in Q1 2023 was made up of sponsorships. The R&D costs increased, as expected, with investments into the future product offering. While the "other" item in Q1 2022 mainly consisted of bad debt expenses, Q1 2023 "other" items profited from lower bad debt due to improved dunning processes and better payment behavior (with an increasing Enterprise customer base), and was also positively impacted by a gain (EUR 1.9m) from USD hedges.
Financial position
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 a yoy quarterly comparison they remained almost stable (Q1 2023: EUR 1.1m; Q1 2022: EUR 1.3m).
TeamViewer operates a highly cash-generative business, where growing operations are positively mirrored in its cash flow development. In Q1 2023, both, the (pre-tax)Unlevered Free Cash Flow and the Levered Free Cash Flow (FCFE) increased significantly, by 75% to EUR 64.4m (Q1 2022: EUR 36.8m) and 135% to EUR 51.4m (Q1 2022: EUR 21.9m), respectively. This was mainly due to the strong increase in operating cash, supported by positive working capital effects. FCFE was additionally driven by tax refunds. The resulting cash conversion metrics in relation to the Adjusted (Revenue) EBITDA were 100% (+32 pp) and 80% (+40 pp).
Cash and cash equivalents were at EUR 78.6m at the end of Q1 2023. The reduction by EUR 82.4m compared to the end of 2022 was mainly driven by the 2023 share buyback program, which started in February (EUR 25.6m counter value of shares bought in Q1 2023) and a debt repayment of EUR 100m, offset by net cash inflows.
TeamViewer has not been affected by the recent developments in the global financial industry that arose in the first quarter. Nevertheless, on the back of the company's continued strong cash generation, the Management Board decided to minimise counterparty risk by repaying the drawn revolving credit facility in the amount of EUR 100m in March 2023, which will consequently lead to lower financing costs. This debt repayment led to a debt volume of EUR 530.5m (incl. lease liabilities) at the end of Q1 2023, of which EUR 300m promissory notes and EUR 200m bank loans.
TeamViewer | Q1 2023 | 5 |
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TeamViewer AG published this content on 03 May 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 03 May 2023 05:20:03 UTC.
