Teamviewer Se

Ladies and gentlemen, welcome to the TeamHEAR conference call for the Q2 results of 2020. At our customer's request, this conference will be recorded. As a reminder, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions. If any participant has difficulties hearing the conference, please press star key followed by zero on your telephone for operator assistance. May I now hand you over to Carsten Keller, Head of Investor Relations and Capital Markets. Please go ahead.

Good afternoon and welcome to the TeamViewer Q2 half-year 2020 results call. Before we start with the presentation delivered by Oliver and Stefan, I'd like to remind you quickly of the note on forward-looking statements that you can find on page two of the presentation. Now, without much further ado, I'd like to hand over to Oliver.

Thank you, Carsten. Good afternoon to you all. Thanks for joining. As always, before Stefan is going to present the financials in quite some detail, I would like to take you through the highlights of the second quarter and also beginning of the third quarter. So generally speaking, we continue to see very strong profitable growth also in Q2 amid a global crisis. Clearly, Strong organic performance continued. That has been translated into significant subscriber growth, 45% year-over-year subscriber growth to 534,000. In combination also with a high net retention rate, 105%, that led to billings increase of 45% in the second quarter to 105.9 million in billings. Naturally, a good portion of the additional billings also fell through to adjusted EBTA. Adjusted EBTA was 57.3% with a 60% year-over-year growth, also translating into a high free cash flow of more than $44 million, which then in turn led to the fact that we have achieved our net leverage target earlier than originally planned. We stood at 1.9 times adjusted EBITDA. We have been continuing to expand into the enterprise segment, both organically and inorganically. We have announced the acquisition of Ubimax, which I'm going to cover on the next slide in more detail. But I think it's important to know that we continue with use case discovery, more use cases, more innovation around customers. We have continued to have a very high NPS score of 47. We're seeing continued traction in the enterprise in EMEA and also more and more in the Americas. And then we've added Ubimax both due to their presence in enterprise but also due to their presence in augmented reality solutions, workflow improvements for the worker. I'd like to walk you through the... UVMAX acquisition on the next page. Again, what we try to build is a global leader in industrial workplace technology. What does it really mean? There's many industrial sectors, be it in logistics, production, services, and so forth, where companies really try to enable their workers, shop floor workers, blue collar workers, by enhanced IT technology. to improve the workflow, to help these workers perform their tasks in a more efficient way, also collect data around how different tasks are performed, analyze this data with data science and artificial intelligence, and out of that develop recommendations on how to improve the workflows going forward. And all of this UbiMax is active in. Ubimax has a very interesting solution suite, which is called Frontline, which will become the TeamViewer Frontline solution suite with dedicated solutions for manufacturing, inspection, servicing, and picking logistics. So very interesting sectors where traditionally we as TeamView have been less present or if we were present we had provided the basic connectivity across all those devices but the workflow knowledge, the business process modeling knowledge and the data analytics knowledge is not something where we were strong and we're adding this to our solution set so to say. Clearly we believe that the frontline solution suite for many companies has become business critical. It's a deep integration into their workflow. It has most of the time connections to the backend systems like the ERP systems and it allows for efficiency gains across the entire value chain. So very attractive place. It's high growth in subscription. We will integrate the SaaS offering into our solution suite. The hardware offering that Ubimax is in part providing, this is not own hardware, just to be clear, this is third-party hardware. I think in the lifecycle of augmented reality, it's quite natural that players who want to be successful and win larger projects need to make sure that the solution works end-to-end. And in that respect, Ubimax is also providing the configuration and the management of hardware. We believe that over time this will be phased out as this industry segment is growing to maturity. There will be more plug-and-play hardware. The standard operating systems will become more capable and therefore the need to control and manage hardware will be less important. That's why we believe if we look at the Ubimax numbers, the estimated Billings for 2020 of 11.2 million, out of which 6 million is subscription, and there is a portion of 2 million of hardware. We believe that a reasonable expectation in the midterm will be that it will be 80% software-as-a-service subscription and 20% services, which is also good because it shows the embeddedness of these solutions into customers. and helps customers to create value out of very modern and very innovative deployments. The growth rate going forward we would see as Ubimax standalone. at 45 to 50 percent CAGR, but of course we will strive for full integration. The other interesting piece, apart from the use cases and the technology, is clearly the logos that Ubimax has been able to acquire. 200 plus real enterprise customers, household names like DHL, Siemens, Lumberjee, Coca-Cola, Airboats and so forth, BMW, with very different use cases in their core processes. So that was the other attraction that we felt. is something which would be a perfect fit with TeamViewer and then hence we embarked on this acquisition. We are starting now the integration planning. Our view is that it will be a full integration with the full integration of the solution portfolio and also the organization. Clearly, it helps that the cultures of the two companies are very similar on the one hand, and also the locations, headquarter in northern Germany, will make it relatively easy to integrate, which was an important part of the decision for this first acquisition, apart from the size and the product fit. When you turn to page six, I'd like to talk a little bit about enterprise, as we've always discussed that. As you know, we want to show you the traction that we're having in the enterprise. Now, this is clearly without Ubimax, and you can see a deeper and broader penetration of the enterprise segment is paying off, really, as it has become a meaningful buildings contributor. First KPI that we like to report is the number of customers with an annual contract value of more than €10,000. This has increased compared to the same period last year by 181%. It has also significantly increased in the second quarter as compared to end of quarter one, which shows you that despite Apart from the demand spike that we saw in the first quarter of the year, also second quarter show nice development. Why is that? There's a much broader routing now of selling these larger ticket items across our inside sales and also our reseller sales force across the globe. And hence we see this very strong growth in this segment, ticket sizes above 10K. The other KPI that we'd like to report, because it shows the real upper end of our deals, is the contribution of the top 50 deals and the accumulated contract value of those. This has grown to 6.3 million in the second quarter. which is a 133% increase compared to the second quarter in 2019. So also very strong traction there. I think we have mentioned a few of the larger deals in the first quarter. But we continue to see good traction in this segment also in the second quarter, which is clearly very promising. Because as we know, we are embarking on the rollout of our enterprise sales force. We've started this initiative in Europe some time ago. We are now in good rollout speed in the Americas, specifically US and Canada. And we're also investing a bit more in selected markets in APEC. Talking about the deals, if you go to the next page, there's an illustration of our diversified customer base and the deal flow. The table here contains a selection of Q2 transactions with existing and new clients located around the globe. Again, we've seen demand from sectors including media, industrial, consumer and retail, as well as medical technologies and pharma. Also clients in the education and public sector have requested remote management and access solutions to support their staff or enable working from home and also manage a wide range of devices. So you see here tensor, you see pilot, you see remote management clearly as a representation of our product portfolio. As you can see, TeamViewer is really used to address a variety of use cases across, on the one hand, the IT space, but also the OT space, so the operational technology landscape, which is very, very important for us as it is a key growth driver. To take an example, there's a Canadian broadcasting organization running multiple television and radio stations. They use TeamViewer Tensor to remotely access more than 50 different on-premise systems. and provide a comprehensive working from home solution to its employee independent of the device or the operating system. So that's a very common use case. The IT department there, they can set up and manage the user account centrally and remotely without any configuration of a typical VPN that you would normally see. The customers also conduct online remote trainings of employees all over the country which has, of course, resulted in a drastic reduction of travel costs or was just necessary given the corona pandemic. And the key reasons why this customer has chosen TeamViewer Sensor were, on the one hand, security and the full auditability of remote sessions, very rapid and easy deployment with the single sign-on integrations that we provide, and seamless remote sessions, even for CPU, intensive graphics, and media tasks. So the performance of the connectivity that we provide, even if there is a lot of imagery and data flowing, is very strong, and that performance was also a key driver. Other interesting examples of team data deployments include MedTech, PharmaCustomers. They enable their technicians to remotely support installed devices. or scientists to connect to lab equipment, as well as media company connecting high-performance cameras in stadiums around the world to record sporting events with 3D technology. So a very wide array that we're providing here. And as you know, Tensor provides the connectivity backbone, so to say, for the enterprise customers. What we see that the pilot solution, so the remote, the augmented reality solution has become increasingly popular, where enterprise customers try to improve their support processes, support of things, service technician processes. They found that pilot is actually a solution. very easy plug-and-play solutions that helps them to improve the processes with devices which are any way present in the organization, i.e. tablets and phones based on either ARKit or ARCore of Apple and Google. Just to give you an example here as well, there's a global provider of precision instruments of laboratories for laboratories and manufacturing. They have added Pilot to its Tensor license as a plug-in to enable their service technicians to conduct the troubleshooting on the customer side. Pilot connects the technician with an expert engineer who is then providing repair instructions. And at the same time, the details of the technical failure that the field technician sees on site are also directly documented. and they use Pilot for remote product demonstrations when on-site presentations are not possible or when there are any travel restrictions. Again, pretty obvious use case in corona lockdown times. And that customer has chosen Pilot because it's the perfect integration into TensorFlow. So everything you do with Pilot, the entire account logic management console It's fully integrated into Tensor and has the same security standards that people are expecting from Tensor, for example. Clearly, these are only a few examples. You can see the ACVs, you can see the regions, you can see the use cases. So we're really getting broad traction here. And what is also important is that in these enterprise discussions, We are often asked for integrations with other players, so whether we are integrated with, for example, ITSM like ServiceNow and so forth, and very often the answer is yes, and therefore we are successful in winning these projects. We have been asked quite a bit about what are we developing, what are new innovations, How do we compete? How do we keep our competitive edge? And what are the key partnerships that we think of? If you go to page 8, you see quite some examples here for our different product modules. And you can always see examples of what we developed. I'm not going to read all of that. And you see the logos of new or existing integrations, which are very important. So, for example, yesterday we announced the universal Android add-on. that enables remote access with active control and keyboard input on all Android smartphones running version 7 or higher. That's important, of course, that we are able to connect the full range of devices, as we always said, for private and business customers. Other improvements of our core Tensor license will include feature upgrade to the Tensor remote access bundle for working from home use case, so that you can really plug that in quite nicely, as well as browser-based TeamViewer versions. That will enable remote support without the need to install a client, so also very important. On IoT, we will focus on advanced data analytics and facilitating advanced customization by IoT integrators via custom mesh modules and also additional support, including attended IoT scenarios as the link to our expanded augmented reality offering with Pilot and Ubimax Frontline. So there's really a nice... Convergence of what we do on IoT in terms of data collection, edge computing, edge visualization combined with the augmented reality solution suite that we now get through Ubimax and also have through Pilot. So really try to combine that or integrate that as much as possible. to make sure that customers can leverage both the access to the device and the data they can collect from the device, but also the augmented reality features to help a remote workforce. So very important. If we talk about augmented reality, we have already communicated that we have enhanced the augmented reality via Apple's LiDAR technology and also Google's That's API. We do have OCR for text enhancement so that you can use your phone and use ACR and then you get additional information into the session. We're working on live content sharing and enhanced guided workflows that you can put into the pilot session to allow for certain downloads and manuals that are being part of the session. And, of course, we're trying to move more and more into the data analytics field where also Ubimax will be an important addition for us. Remote management, we focus on patch management, backup and protection improvements. And we will do an easy web monitoring, which will come out soon. Remote scripting, very important. So significant enhancement of our offering there to have a full bundle available remote management for medium-sized and large customers. Especially for large customers, we need to have the multi-tenancy approach. which is also something we are actively progressing to have something available for next year. So significant effort and investment into our own product roadmap, putting Ubimax and other partnerships aside. And then the other part of the equation is that we make sure that TeamViewer is very nicely integrated into important, Other players, Salesforce, we talked about a lot, ServiceNow as well. We're also discussing now intensely with SAP. We have an integration into Microsoft Teams. Atlassian integrations into Jira, enhancement there. IBM Maximo, so really the big players with their very successful platforms. we are trying to have back-end integrations such that there's a seamless user experience between the application that is used by our customers and then the move into remote sessions powered by TeamViewer, be it classical access sessions or a pilot session using augmented reality. So quite busy. You also heard before that this is a year of significant investment into our R&D force. So we enjoy very significant hiring speed there. Clearly the IPO last year and also the very peculiar circumstances during the pandemic helped us to win over interesting talent in all areas of the business. and therefore we are progressing well in our hirings into R&D as well. We're growing our Greek location and also our arts school location. We're now also getting additional development capacity with Ubimax, so we feel very good about our roadmap and our ability to keep our competitive edge in the fields that we're most active in. And with this view on products, partnerships, and large enterprise deals, I'd like to hand over to Stefan for a more detailed look into the overall financials.