TeamViewer : Transcript

	TeamViewer AG Q2 2022 Results Call & Webcast
Company:	TeamViewer
Conference Title: TeamViewer AG Q2 2022 Results Call & Webcast
Moderator:	Michael Lönne
Date:	3 August 2022
Conference Time: 09:00 (UTC +1)
Operator:	Good day, and welcome to the TeamViewer AG Q2 2022 Results Call, and Webcast.

Today's conference is being recorded. And at this time, I'd like to turn the call over to Michael Lönne. Please go ahead, sir.

Michael Lönne: Good morning, and welcome to TeamViewer's Q2 2022 earnings call. I'm Michael Lönne for Investor Relations. And I'm joined by TeamViewer's CEO, Oliver Steil; and CFO, Stefan Gaiser. They will now present our business and financial update for the second quarter of 2022. As always, the presentation will be concluded by a Q&A. Please pay attention to the note regarding forward-looking statements on page two of the slide deck. Oliver, over to you.

Oliver Steil: Thank you, Michael. Good morning. Thank you for joining TeamViewer's Q2 Earnings

Call. Let me start with an update on our business highlights, which is then followed by Stefan

who will guide you through our financials in detail. Let's begin with a high-level summary. As you can see on this slide, in Q2, we achieved double-digit Billings growth, and Revenue growth, and a strong adjusted EBITDA margin above market expectations.

The same goes for the first half. Again, double-digit Billings and Revenue growth, and a margin above expectations, also slightly above our full-year guidance. Given the overall current economic and political environment, our results are solid. We remain confident in our future growth trajectory, and our strategy also works in the current environment.

We continue to grow and do so very profitably. This is particularly true for SMB, where the resumption of our monetization campaigns resulted in a 10% billings increase compared to Q2

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2021. So, a major uptick from the 4% year-over-year growth that we saw in the first quarter. But obviously, like many other firms, we began to feel the effects of the current macroeconomic uncertainties and geopolitical tensions.

We see decisionmakers around the globe becoming more cautious. And we experienced tightened procurement processes resulting in overall longer sales cycles. This began to translate into a softer order intake for both of our business segments. Enterprise in particular saw slower- than-usual pipeline conversion.

But still the segment grew by more than 20%. We now have more than 3000 Enterprise customers. And we have a growing pipeline for Q3 and Q4. And as you know, the Enterprise business generally is leaning more towards the end of the year, and particularly to the fourth quarter. And TeamViewer remains in a strong position to navigate through the current headwinds in the second half of the year.

We are very profitable, and have proven repeatedly that we can maintain this profitability even in challenging environments. We further optimized our financial profile by strengthening our financing structure, which increases resilience and flexibility. We successfully concluded the cost optimization part of our ReMax program resulting in a further sustainable lowering of expenses.

We continue to win key customers, and to enter into high-level partnerships. And last but not least, we continue to record the highest growth rates in the largest ACV buckets, in both the SMB segment as well as Enterprise. And that clearly shows the ongoing shift of our business towards high-value customers.

So, we will most likely have to cope with ongoing lower visibility due to the economic uncertainties in the coming months, but we are well prepared. Fundamentally, the demand for our products

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and services remains strong. And if anything, the megatrends fueling our business model are getting even more relevant.

And with that, let's move to the next slide. Taking a quick look at TeamViewer's regional performance. So, the regional breakdown nicely illustrates the benefits of our globally diversified structure because the strongest increase in Billings on a year-on-year basis was recorded in the Americas.

Here, Q2 billings increased by 22% to €48 million, and by 20% to a €101 million in the first half respectively. Our strong operational performance in the Americas was also significantly driven by the US dollar appreciation against the euro obviously as seen by the comparison with constant currency rates.

In EMEA, like in the previous quarter, Q2 growth continued at a stable 8% year on year to a total of €69 million. However, the ramification of macroeconomic uncertainties and geopolitical tensions became particularly evident here, and consequently impacted our pipeline conversion. Our decision to terminate business activities in Russia and Belarus also negatively impacted Billings in EMEA in the first half.

Lastly, APAC is clearly challenging, and clearly not what we had expected. As you can see, Billings in Q2 grew slower by 4% year on year to €19 million. And our leadership team in APAC is continuously working on the transformation of the business. Remember our President, APAC joined at the beginning of December only.

However, new COVID-19 outbreaks and the lockdowns in several APAC countries, China in particular, temporarily slowed down sales activities. Hypothetically, if we would exclude China, then APAC would have recorded the same growth rates as EMEA. We are happy with the

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strategic path of our business and the changes we made, and therefore expect the business momentum to increase again.

If we go to the next slide, I mentioned large customer wins and strategic partnerships in my intro. And as always, let me provide some insights into three relevant additions to our Enterprise portfolio from the second quarter. So, firstly, we're really pleased to announce a strategic partnership with Siemens Digital Industries Software.

I think that's another example of how our technology helps digitalizing industrial processes. So, together with Siemens, we will innovate in the product lifecycle management space. With our AR platform Frontline, we allow Siemens' global customers to improve their product development process based on experiences with interactive 3D content, which is then connected to the digital twin of the product.

I think after SAP and Google Cloud, the Siemens partnership is the third really high-profile collaboration to expand our access to global tier-1 technology players. Let me continue with another example of leveraging again our mixed reality technology, which is also a part of the Siemens piece.

DB Netze is the railway infrastructure manager of Deutsche Bahn. And they use TeamViewer Frontline Spatial, that's how it's called, to train their employees in maintenance procedures. So, more specifically our solution enables the client to illustrate training rooms, and embed virtual information, including projections of technical equipment such as components or malfunctions.

And generally, we see that remote maintenance and virtual training environments gained a lot of traction during the beginning of COVID-19, and the pandemic, and clearly are here to stay. This is a promising growth market with increasing importance for more and more businesses and industries.

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And let's conclude the customer spotlights with the customer Wendy's, as you know, the global restaurant chain with operations in 27 countries. While leveraging the potential of our AR platform Frontline, Wendy's can improve critical areas such as food safety and quality for instance by monitoring suppliers and complaint investigations.

In this context, the experts in Wendy's centralized restaurant support center perform remote product evaluations or supplier walkthroughs via smart glasses. In total, the mentioned partnerships and customer cases further demonstrate how TeamViewer solutions are increasingly integrated into different business critical processes at commercial customers around the world, clearly meeting their demand for solutions that foster digitalization of their operations.

With that, let me now hand over to Stefan.

Stefan Gaiser: Thank you, Oliver. And good morning to you all. It's my pleasure to guide you through the financial details for actually one last time in my role as TeamViewer CFO. As you all know, Michael Wilkens will take over my role as of September 1st. And actually, in the past few weeks and months, Oliver and I already touched base with Michael repeatedly to make sure that we have a really smooth transition.

And I'm pretty sure that from day one on, Michael will be up to speed with respect to all major strategic and financial topics. And just on a personal note, thank you all for the collaboration and very open discussions over the past years, which I really thoroughly enjoyed. So, now let me start with the financial highlights in terms of topline profitability and cash flow.

On slide ten, total billings, up 12% to a €136 million or 7% in constant currency rates, which then basically brings total H1 Billings to nearly €300 million, up 12% or 8% at constant currencies.

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