TeamViewer : Transcript

TeamViewer AG

FY 2022 Results Call & Webcast

7th February, 2023 | 09:00 AM CET

Transcript

Speakers:

Oliver Steil

Michael Wilkens

Ursula Querette

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Ursula Querette	Good morning, everyone, and welcome to TeamViewer's Q4
	and Fiscal Year 2022 Earnings Call. My name is Ursula
	Querette, and I'm pleased to host today's earnings call. I am
	joined by our CEO, Oliver Steil, and our CFO, Michael Wilkens.
	Oliver will kick off the presentation by updating you on the
	specific business and financial highlights in the fourth quarter
	and the full year 2022. He will also give a quick update on our
	product offering and strategic direction.
	Michael will then go through our financials in detail, and we'll
	finish on our financial guidance and our capital allocation
	framework. As always, the presentation will be followed by a
	Q&A session. Before we start, I would like to draw your attention
	to our updated important notice and APM disclosure. As you
	already know, starting in 2023, TeamViewer's financial
	performance will be reflected in an updated KPI framework
	whereby billings has changed from a primary into a secondary
	KPI, and revenue moves more into focus.
	This means that the definition of adjusted EBITDA will change
	from a billings to a revenue perspective, which will be particularly
	relevant for our full year 2023 guidance that we disclosed on
	IFRS revenue and the corresponding revenue EBITDA margin.
	All our KPI definitions are included in the APM glossary on pages
	two and three of this presentation. And with that, I hand it over
	to our CEO, Oliver Steil.
Oliver Steil	Thank you for the introduction, Ursula. And good morning,
	everyone, thank you for joining our Q4 and Fiscal Year 2022
	Earnings Call. Let me start with a look at our fourth quarter 2022,
	on the next slide. Overall, we achieved a very successful year-
	end finish with strong momentum in Q4. Of course, the overall
	macroeconomic environment remains challenging, but
	TeamViewer once again displayed strong resilience amidst
	these circumstances, and our entire team was really leaning in.
	I would like to point out a few highlights in the fourth quarter.
	Firstly, strong development of our billings. Total billings came in
	at €191 million in Q4, which is a plus of 24% reported and 20%
	plus on a constant currency basis compared to last year's fourth
	quarter. And in addition, our profitability was again very
	convincing. For Q4 2022, we reported an adjusted EBITDA
	margin based on billings of 51%. Compared to the previous
	year's Q4, this is an improvement of 7 percentage points, and
	Michael will give you a few more details on this later.
	Thirdly, we continued to focus on targeted sales campaigns. We
	traded additional value by upselling customers into significantly
	higher value tiers, but also by attracting new customers and thus
	actually enlarging our global customer base. In addition, we once
	again proved the stickiness of our business model as we were
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also able to successfully implement price adjustments which we had announced in Q3.

And fourth, if we look at our regional split, in the fourth quarter billings growth was particularly driven by the strong performances of our EMEA and APAC regions. Our largest region, EMEA, grew by 28% year over year, and with an increase of 32% we also saw clear acceleration in Asia-Pacific, clearly driven by the new management and her team. And I think this quarter proves, once again, that our regional diversification is clearly paying off.

If we look at our customers, our enterprise business retained its growth momentum, showing 47% billings growth year over year, and the ever-growing ticket sizes proved our continued shift from SMB to enterprise as a relevant and value-add of our products for large businesses.

And last but not least, also our large original core business keeps growing. In the fourth quarter, SMB billings were up 18% year over year, and the increase stems not only from larger ticket sizes and higher pricing with existing subscribers, actually our SMB subscriber base also grew slightly again, by 8,000 in the last three months of the year, to a total of 622,000.

To sum it up, we are actually very satisfied with our year-end finish. I think our solutions are highly relevant for our customers, even in these times. We help them to securely manage remote operations, increase efficiency and sustainability, to overcome also labour shortages. This is particularly visible in our steadily- growing ticket sizes. And I would like to take a closer look at this on the next page.

Let's look at the SMB and enterprise billing split. I think there was an overall shift towards higher ACV buckets. We again successfully increased the quality of our customer base. When we look at SMB on the left, the LTM billings in 2022 increased by 11% on a year-on-year basis, and amounted to €503 million. This was driven by our very successful cross and upselling efforts, resulting in the higher bucket actually growing stronger. In 2022, our highest SMB bucket, between €15,000 and €10,000, significantly increased by 27% and amounted to a strong €225 million.

In addition, we saw again a net upsell from SMB to enterprise, this time of €20.5 million. This was largely driven by shifting larger SMB clients to our Tensor licence for enterprise connectivity. And this clearly shows the continued tender success for larger customers who are looking for more efficient and highly secure solutions as the right answer during these challenging times. Total 2022 LTM billings in our enterprise segment increased by 42% year on year, which is then €132

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million, and this growth originated across all ACV buckets, as you can see from the charts on the right.

If we go to the next slide, please, I just mentioned the growth among all the ACV buckets of our enterprise business, and as usual let me give you two examples of recent large enterprise deals with TeamViewer Tensor, our enterprise connectivity platform, just to give you an idea on what's happening on the enterprise side. First, let us look at German multinational corporation Henke. The IT team uses TeamViewer to streamline their global IT support for around 65,000 IT devices running on different operating systems with Tensor. Our solution in that case replaced several others that they were using before, making their workloads simpler and faster.

It goes without saying that Tensor meets all the strict security and compliance standards that are mandatory for Henkel, but also worth mentioning that Tensor seamlessly integrated in Henkel's IT infrastructure, consisting of, obviously, many other software products from vendors like ServiceNow or Microsoft. And this flexibility of our solutions is highly appreciated by IT decision-makers in global corporations.

Another example, very different, of large Tensor deals that we closed in 2022 was the German global broadcast station Deutsche Welle. They managed all devices of their correspondents in 140 countries with TeamViewer, and chose our solution because they needed secure and stable connections to work reliability in breaking new situations. And I think what's interesting, notably, is that we won this contract via a European-wide public tender, as Deutsche Welle is a public state or broadcast station bound to the EU's public tender regulations.

The next slide, please, is where I want to touch upon the financial highlights from a full-year perspective. To begin with, we continued our top line growth. Billings and revenue increased by 16% and 13% respectively. With total billings of €635 million and revenues of €566 million, we fully achieved our guidance for the full year 2022, and the share of enterprise business increased by 4 percentage points year on year.

Our products are highly attractive to a wide range of customers from various verticals or industries, and we continued to establish TeamViewer as the go-to partner for high-impact, strategic investments in digital transformation across various industries and, at the same time, allowed our customers to increase short-term automation and efficiency. Clearly, this is key in the current economic environment.

And all these factors, they have achieved a strong net retention rate of 107% at the group level and, compared to 2021, we

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improved the net retention rate by 9 percentage points. In addition, TeamViewer is again growing very profitability. Our adjusted billings EBITDA grew by 16%, to almost €300 million, and our adjusted billings EBITDA margin was stable at 47%. And that's actually the upper end of our guided range, from 45% to 47%.

This is also a result of our effectiveness and execution and, in turn, we raised our basic earnings per share to 37 euro cents, which represents 46% growth year on year. This was driven by the strong increase in our net income, obviously, as well as our accretive share buyback programme of last year. Michael will elaborate more on the drivers of our net profit in his part of the presentation. In total, we are well-positioned to continue our strong performance in the current economic environment as well, in 2023 and beyond, and we believe the fundamental demand for TeamViewer's solutions remains strong.

And with that, let's have a closer look at our regional performance on the next slide. Here, you can see that in 2022 EMEA has proven to be very robust, as it delivered the strongest growth of all regions, followed by an accelerating APAC performance. With a billings growth of 28%, to €109 million in the fourth quarter, EMEA significantly improved its already strong performance which we've seen in Q3. And on a full-year basis, EMEA billings grew by 15% to €340 million. We actually accelerated our sales momentum and further penetrated or well- developed base of satisfied customers.

Our business in the Americas achieved billings growth of 16% in Q4, to €64 million, and 18% to €223 million in the full year. Clearly, if you look at performance at constant currency, it was weaker than we had hoped for, but we remain quite confident in our resilient product offering and the further growing IT spend for digitalisation in the Americas. So looking at our current market share in the US, we believe there is still significant room to grow.

APAC further accelerated its growth with a new organisational structure settling in, and achieved a 32% billings increase in the fourth quarter. And on a full-year basis, APAC billings were up 14%. This growth reflects two very different half-years, and resulted in APAC billings of €72 million for the entire year, so not such a strong first half, very strong second half of the year, so good acceleration there. And also the easing COVID restrictions towards the year-end also allowed for more customer interaction, translating into strong pipeline build and enterprise momentum. As you can see from the slide, TeamViewer is well- positioned for the future. Our global footprint is growing, our products are highly relevant for our strong and loyal customer base, and we address major customer needs. Next slide, please.

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