TeamViewer : Transcript

		TeamViewer Q1 2022 Results Call & Webcast
Company:		TeamViewer
Conference Title:	Q1 2022 Results Call & Webcast
Moderator:		Michael Lönne
Date:		4 May 2022
Conference Time: 09:00 (UTC + 1)
Operator:	Good day, and welcome to the TeamViewer First Quarter 2022 Results Call and

Webcast. Today's conference is being recorded. At this time, I would like to turn the conference over to Michael Lönne. Please go ahead, sir.

Michael Lönne: Good morning and welcome to Team Viewer's Q1 2022 Earnings Call. I'm Michael Lönne, for Investor Relations and I'm joined by TeamViewer CEO Oliver Steil and CFO Stefan Gaiser. They will now present our business and financial update for the first quarter of 2022. As always, the presentation will be concluded by Q&A. Please pay attention to the note regarding forward-looking statements on page two. Oliver, over to you.

Oliver Steil: Yeah, thank you, Michael. Good morning and thank you for joining. We are pleased to

take you through TeamViewer's Q1 2022 results. I will start with an update on our business followed by Stefan, who will provide you with a detailed look at our financials. As always, we will

conclude today's call with a Q&A and are looking forward to your questions. Before we dive into the business update, I would like to point out some highlights of the first quarter. We believe we had a robust start into 2022. Our company continued to grow and simultaneously increased profitability. Our profitable growth was driven by both segments, Enterprise and SMB. And in simple terms, in both segments, billings are up, revenues are up, ASPs and ACVs are up, and at the same time, costs are down.

These positive developments translated into a number of key figures, shown on this slide. We increased our total Q1 billings by 12% year on year to now $163.5 million. Our adjusted EBITDA margin stood at 51%, which is an increase of seven percentage points compared to the previous

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quarter and above expectations. And despite a normalizing working environment, post-COVID, and overall economic uncertainties, we manage to retain substantial pandemic cohorts resulting in a total net retention rate of 101% in the first quarter. Our SMB business grew by 4%. Its higher quality tiers grew significantly stronger with 15% but this growth, on the other side, was countered by a decline in the entry segment, which remains competitive. Enterprise continues to gain momentum with the first quarter billings growth of 51% year on year. And this was driven by intake of new customers, a strong continuously improving net retention rate, and rising ASPs and ACVs.

Continued product innovations and our high-profile strategic partnerships further supported this trend. Enterprise in the first quarter accounted for 22% of total billings now, illustrating the ongoing mix shift within our business, meaning the fact that our business continues to lean more towards sticky enterprise business. Our essentially flat subscriber development in Q1 is not really representative anymore. It looks broadly flat whilst, in fact, we have a strong development in the higher value tiers of that business and the decrease in the entry business, which accounts for roughly 20% of our billings but 50% of subscribers. Therefore, there is an increasing trend towards a decoupling between the subscriber and billings growth, which continued in the first quarter. Stefan will talk you through this in much more detail during the presentation.

Finally, our liquidity remains solid with a net leverage ratio of 1.8 at the end of the first quarter. If you continue and look at the regional performance, first, the Americas, our second-largest regional market posted the strongest increase in billings on a year-on-year basis. Here we achieved an increase of 18% to €53.1 million, which was also supported by FX tailwind. That being said, we see very strong reception and growth rates in our enterprise business in the Americas. In absolute terms, EMEA is still our largest regional market and in the first quarter we recorded billings of €93.8 million. This is an increase of 8% in comparison with the first quarter 2021.

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EMEA overall was a bit softer than we would like it to be. We did not experience any major deal slippages but overall customer tonality was a bit more cautious compared to the fourth quarter. As you know, we've been putting a focus on the APAC region for some time since we consider it a key growth region with strong billings growth of 11% to €16.6 million, year on year, confirm that we are on the right track with our updated strategy there. As mentioned last quarter, we appointed Sojung Lee as President of APAC in December. Sojung and I recently celebrated the opening of our Singapore office. Working from there, our new APAC leadership team is already showing very promising progress in building strategic alliances in the region, which is a core initiative of our revised APAC strategy.

At the same time, we launched a new regional office in Adelaide to further strengthen TeamViewer's footprint in the strategically important region of Australia and New Zealand. And most recently, we welcomed Helen Lee as the new Country Manager, Head of Sales for South Korea, who joined us from IBM and will be responsible for growing TeamViewer's presence in the Korean market, increasing brand awareness, as well as establishing a strong ecosystem with strategic partnerships and alliances. She's a seasoned IT specialist with over 30 years of experience and we are very pleased to have her on board. With our ReMax program, we have made further substantial progress since we last updated you on all agenda items. We are either on track or overdelivering in terms of execution. Therefore, we expect to successfully conclude ReMax by the end of the second quarter.

And let me run you through a few achievements since our last update. As mentioned, APAC development is well on track. We're also intensely working on a UI/UX update for our TeamViewer core products, a modernization of the product, that we expect to release in the second quarter. In EMEA, we adjusted our enterprise sales setup for greater efficiency and effectiveness. And looking at our organization, we've been able to add new faces in key positions. And as you will be aware, we have found a successor for Stefan. So the future set up

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of our management board has become very concrete with the announcement of Michael Wilkins as incoming CFO and Peter Turner as our new Chief Commercial Officer.

As already mentioned, we recently welcomed Helen Lee as the new Country Manager and Head of Sales for South Korea. Our industry-leading position goes hand in hand with cutting-edge security standards. And our new CISO, Robert Haist, brings valuable experience in threat intelligence and incident response from his past at German cybersecurity organization DCSO. Robert will drive our security agenda with our team of about 50 security and data protection experts. Now let me provide a bit of detail on our incoming CFO, Michael Wilkins who will succeed Stefan from September on. Let me elaborate a bit on his background. Michael currently is Senior Vice President, Group Controlling of Deutsche Telekom AG with over 30 years of experience in the telecoms industry.

He has global responsibility for the financial steering of Deutsche Telekom's comprehensive portfolio and in addition, leads the group's risk, governance and reporting. Coming from Deutsche Telekom, he has deep understanding of subscription business models as well as a strong commercial background after holding profit and loss and sales responsibility there. Michael also has a remarkable execution cost discipline track record. Furthermore, he gained M&A experience, particularly during the T-Mobile US and Sprint merger. We are convinced that Michael is a great fit for TeamViewer. Stefan and Michael are of course working closely together already now to plan and ensure a smooth transition. In addition, we would like to organize a roadshow in the fourth quarter of this year to give you the chance to get to know Michael and understand the way he works and thinks.

And then another appointment following the remarks on future CFO, allow me to provide you with some information on our new future Chief Commercial Officer, Peter Turner. We are delighted that after an intense search process, we found an experienced industry expert for our board. Peter Turner will start with his duties as the team - as a member of TeamViewer's executive

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board in mid-July this year, so relatively soon. He's an expert for growth companies, has established an impressive track record in the software industry. And at Team Viewer, his focus will be on advancing the company's commercial strategy and on re-accelerating growth of our SMB business. And lastly, let me briefly touch on a different topic. Security is very important.

BitSight, which is the leading cybersecurity rating platform, has recently ranked TeamViewer as the number one remote connectivity provider and among the top five most secure of the 75,000 global tech companies monitored. Great to see that our continuous investment in security pays off and that we clearly outperform all of our peers within the remote connectivity space. To further drive our leading position here, we have hired Robert Haist, as mentioned, as CISO, and Robert leads our team of about 50 security and data protection experts. To add some background on our security measures, our system landscape is monitored by a 24 by seven security operations center. We carry out regular penetration tests of TeamViewer's infrastructure as well as our entire product portfolio.

Moreover, we recently introduced the Bug Bounty Program and we have been authorized as CVE numbering authority. The latter underlines our contribution to the global cybersecurity community in understanding and fixing software vulnerabilities. We also engage continuously in fraud prevention and user security awareness campaign. With that, I will hand it over to our CFO, Stefan, who will provide a detailed update on our financials.

Stefan Gaiser: Thank you, Oliver. Hello, good morning, also, from my side. I'm on Slide 11. So let me start with the financial highlights in terms of top-line profitability and cash flow. Total billings in Q1 increased 8%, constant currencies, and 12% including currency effects mainly coming from the US dollar strengthening. IFRS revenues grew 40% year on year to $134.5 million and to a large extent, this accelerated revenue growth compared to last year's single-digit growth is due to the completion of our shift to a pure subscription-based business model. So finally, it's really like for like. In terms of profitability, Q1 margin slightly exceeded our expectations by achieving an

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