Teamviewer Se

Good day and welcome to the TeamViewer Q4 and full year 2020 preliminary results call and webcast. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Carsten Keller, Head of Investor Relations and Capital Markets. Please go ahead, sir.

Thank you. Good morning, ladies and gentlemen, and welcome to our TeamViewer Q4 and full year 2020 results call. I'm here with Oliver Steyl, CEO of TeamViewer, and Stefan Geiser, our CFO. who will take you through our presentation with a business update and then details on our Q4 and full year 2020 financials. Following the presentation, we will open the floor for your questions. However, before we start, I would like to remind you of the note on forward-looking statements that you can find on page two of the presentation. Let me now hand over to Oliver.

Thank you, Carsten. Good morning to all of you. Hope you're all well. Thanks for joining our results call. So it's a pleasure to discuss Q4 and financial year 2020 outcome. Actually very pleased with the year, as you could see from the numbers. I think we were very happy to see that Q4 was a continuing normalization of the business after the corona pandemic effect in the first half of the year, second half of the year. much more normal, quote, unquote, and also very successful in that sense in digitalization projects for enterprises. So very pleased with the numbers. Overall billings came out at 456.7, which is slightly higher than our outlook. That's the organic billings total, including the Ubimax acquisition for the last four months was 460.3 million. Very nice growth overall for the year. Of course, very different quarters, as you remember, but also the last quarter then contributing very nicely. Very pleased with the adjusted EBTA as well. We got to a margin of 56.8%, which is also higher than our outlook, which was 56. And that brought us to a total adjusted EBTA of 261.4 million, which is 44% reported growth, 48% constant currency growth. So very healthy numbers. I think what is equally important is where the growth came from and that we really see our initiatives that we've put in motion three, four years ago when Stefan and I joined are really successful. So we saw an increase in enterprise billing by more than 200%, 170% growth in enterprise customers, tensor billings, which is the enterprise product which we built and brought to market a bit more than two years ago, two and a half years ago, was more than 300% up. Remote access, the home working product, clearly driven by effects from the pandemic, up almost 390%. And pilot, the augmented reality product, the one that we had built organically, clearly on a small basis, but still 360% up, which of course was also one of the reasons why we doubled down on the AR space through the Ubimax acquisition. So very good to see that our initiatives are successful. We have exceeded our results for the full year despite even increasing currency headwind towards the fourth quarter. Very important. Q4 was the strongest enterprise quarter. It's now actually 12% of the billings of fiscal year 2020. If you go back to the IPO when that was this relatively small percentage and we said it's going to be a more significant part of the business, this is now true. And we're also very pleased with the Sake and Acquisition Strategy. We have done UBMax last year and we recently did Xaleon to broaden our solution portfolio. And we believe this is really a very important foundation for the growth going forward. So clearly, one of the key drivers of our success in 2020 were again the various use cases that we address with our innovative products. Of course, meeting state-of-the-art security standards and also very high performance requirements. And let me go give you two examples on the next slide. Let me move on, Robert. So, very happy to be able to quote those names. Also, Siemens Healthineers, to give an example, I think we were talking about medical equipment and the medical devices sector for quite a while. Specifically, Siemens Healthineers uses TeamViewer to support its imaging and laboratory diagnostic equipment, such as, for example, MRIs, CTs, and the likes, which are deployed in hospitals and doctors' offices globally. In this case, TeamViewer is pre-installed on those devices, enabling remote troubleshooting by having specialists connect directly to the affected devices. by a very fast and secure high-performance connection. So it's remotely connecting into these devices and being able to troubleshoot. Clearly, when you have that rapid assistance from the distance, that avoids travel, so really physical travel. It also helps clinic operators and staff to ensure that you have continuous medical care for the patient. So you're reducing downtime, of course. You increase the uptime. of these machines, which are incredibly complex and also costly, so very clear ROI. Looking ahead, the number of use cases for this remote access that Siemens Health India sees within the clinical environment is actually increasing, and that's why such partnerships with innovation leaders in their field become increasingly important. We learn what they want to do. We continue to build our product around it. and thereby increase the potential for digitalization in certain industries and certain sectors. And that's why we like those partnerships and we see very big potential in building those partnerships. Another interesting case, different industry, kind of comparable is from Lely, a leading designer and manufacturer of automated systems for dairy farmers around the world. So this is in the smart farming area. Lely has upgraded to TeamViewer's Tensor Enterprise Suite. As increased demand, scalability, and auditability have become requirements. So the broader scale, more people using it, more devices connected, and higher auditability requirements out of this. And of course, it's a large organization growing customer base, so they had to go from TeamViewer Classic Core to Tensor. what Lely does with it is actually remotely accessing equipment that streamlines their support processes and allows them to troubleshoot really from the distance the support technician can instantly remotely connect to equipment in any location really and that allows them to centrally support farmers thousands of farmers in more than 45 countries by now We're also working with Lely to explore the possibilities of using TeamViewer IoT to collect even more data and learn more from the data that has been provided by the equipment and then play that back to their organization and work with this data. Two examples, really many situations where we collaborate very closely with our customers and partners to create and package these connectivity solutions. in different areas of the organization to drive the value of digitalization. If we move to the next slide, we see a few more deals, selection of further deals that we've closed in the fourth quarter. Again, we were able to close a good amount of larger tensor and frontline tickets, especially with customers across the industry, so industrial applications, industrial sectors. And if I highlight a few transactions here, then you can see how we differentiate against competition. So there's a very large frontline deal, for example, comes from the U.S. automotive. It's an automotive customer that has implemented X-Assist for augmented reality-backed remote work guidance. at their car dealers. So the classical use case, you have mechanics that are out there in the field. They are less trained than the experts that are in a central location. And the mechanics receive technical instructions via smart glasses to perform their service tasks. And through this way of augmented reality supported collaboration, the knowledge is actually shared in a very efficient manner and the down times are reduced because you can have all the knowledge that is sitting centrally in the headquarter and any repair center, you can basically provide that knowledge to workers in the field. Currently rolled out in the US and the UK, and the customer wants to implement the solution also in other regions around the globe. It's typically processed. They take one location or one part of the company They install the solution, and then they scale from there, which is a very common way how the frontline solution is being rolled out. There's another example, also frontline. It is the U.S. manufacturer of medical devices, also using X-Assist, to guide clinical staff via smart glasses through medical treatments, even to patients. So basically, there's a frontline remote expert And that expert participates in the treatment as if he was on site and instructs the doctor through AR to ensure that the procedure is being conducted correctly. So it's a different case. So this is not troubleshooting or maintenance of any devices, but it's actually the regular business process medical treatment of a patient where the expert is participating So it's a live AR medical treatment, AR-supported medical treatment, and that's a great example of how we are moving from maintenance of equipment in supporting people who are on-site, supporting them in their regular processes. I think you have heard examples of XPIC in the warehouse. You have examples of XMAKE in the manufacturing plants where people are working on the assembly line, new technicians for remote maintenance, Here we have a different case. Here we have support of a knowledge worker, so to say, a doctor in this case, or paramedical treating patients. So very, very interesting. This is the frontline piece, just two examples on frontline. In addition, of course, we have also tensor deals, more horizontal deals, a big driver of our success in the last quarter as well. There's a couple of them on the very top of the list with contract values ranging from €100,000 to well above €200,000. Again, compare that to three years ago, very different world. And it's also worth highlighting that the financial services sector, including banks, insurance companies, are also increasingly interested in those solutions. I think here the pandemic has brought quite some extra push because also these organizations had to think about more remote work. For example, a large German financial institution has decided to roll out Tenso for their internal support. Why does it work now? Why is it interesting? With the Tensor product, there's features which are important like single sign-on, conditional access, state-of-the-art security standards. Those are very important for those type of customers and also for this particular customer. So just a few examples where customers around the world use our solutions to digitalize their processes, really of all types. And this success is built on continuous innovation, product improvement, such as the integration of co-browsing into the Tensor Suite. So this is the latest example where already last year we decided to pick a co-browsing solution and integrate it into the Tensor Suite, which has been delivered by Exaleon. And we then decided to acquire Exaleon because we've seen the significant interest from customers for this solution. Why is that? More and more companies are very dedicated now in virtualizing the sales and service interactions. If you order cars, if you order furniture, if you work on customer service with your insurance company, many of these situations are now virtual, partly remote, based on an interaction platform. You use chat. You use co-browsing. You also finalize a contract. You have electronic signatures. So all of this is a customer engagement suite, as we call it, which Xaleon is a provider of, and we decided to integrate this into our platform. So very interesting to broaden the solution portfolio like this, and I think you can see on our stats that this has paid off. So if you go to the next slide, just to give you a bit more color on the enterprise development. During the fourth quarter, we have one additional 227 enterprise customers with annual contract values of €10,000, and also growing this customer base to 1,885 enterprise around the globe. Remember, it's very important. We've picked this €10,000 number because we believe this is kind of a threshold whereby all sales channels are positioning the Tenso product which comes with much higher security features and allows for significant up and cross potential going forward. So this increase is 170% increase over the last 12 months and 350% more than at the end of 2018. So you can clearly see how much traction we win there. If you compare this to our overall subscriber growth, you can clearly see how fast the enterprise business has been ramping as a result of innovative product, the much broader solution portfolio, and, of course, significant investments into our global enterprise sales team, which we have started to do three years ago. Overall billings from this customer has tripled in size. Now we are at 53 million in 2020, which is now 12% of total billings, as I said before. So it's getting really significant. Also, in terms of total billings, we've told you, that as a percentage of new billings, of course, it's even higher and even more relevant, but it's also now kind of making an impact on the total billing. While the majority of our billings have been generated from customers with ACBs below €10,000, that continues to be the case, we are very pleased with this shift towards higher price subscription in 2020. Clearly, this is one growth initiative, Remember, we were also rolling out to APEC countries. We were doubling down on the Americas. More and more use cases of that enterprise motion has actually worked extremely well. Clearly, higher price, higher price subscription. This is fueled by up and crosser. It's not fueled by price increases. We still haven't done almost any price increases during last year. So this is really positioning more solutions, either tensor or frontline, or acquiring new customers with more differentiated solutions. It's a qualitatively different type of business we do with these customers. And as you can see, the share of enterprise billings with ACVs of 100K and above has already been 25% by year end. I think these numbers show that our investments that we have done, strategic growth initiatives to increase the enterprise footprint have really paid off. And I think the key thing to note is that we are operating in a world where there's lots of changes. We have talked about these trends already years ago and at the IPO. And I think by now what is really clear is that the way we work actually did really change. And I think, as we always said, the pandemic was a catalyst to this. companies of all sizes and in all sectors do see what is possible, and there will be more change coming. There will be more digitalization coming, and that's the key driver for our success going forward. And in order to really leverage those trends and those developments in the best possible way, we have invested quite significantly to broaden our solution portfolio. So if you look at the next page, we really have something to offer now across the entire value chain. Clearly, areas like the product development, where you have shared workspaces, work from anywhere, this is where TeamViewer core has been successful for long years. The same is true in the corporate environment, in the IT environment, where we talk about IT support, asset management, asset monitoring, tracking, quality insurance, and so forth. These were areas where TeamViewer has been very successful for years. We've told you and we've shown you at the IPO Roadshow that we are decisively moving into non-office applications and that we have connectivity in these places as well, in vehicles, in buildings, in manufacturing, footprints, machinery of all kinds. And we have doubled down on this. So in manufacturing and supply chain, we have doubled down by doing the Ubimax acquisitions. Clearly there we have an AI suite. We are now able to support robotics more or at least call it semi-robotics while we're supporting frontline workers. We have solutions for shop floor and warehouse manufacturing servicing applications through frontline. So this is why it's shown in red here because frontline comes as a kind of red color. And then at the other end of the spectrum, sales and service, clearly sales doubling down with the Xaleon acquisition, being able to drive customer engagement solutions, customer interactions even more in an integrated way. And on service, we have the classical customer support where TeamViewer was strong. And now we have repair and maintenance with frontline and pilot where we're supporting experts which are out there in the field either completely remotely or or in a hybrid model where the expert is remote and another operator is on site. And if you think about the Siemens Healthineer example, it could be any flavor of doing work completely from the distance or with the help of somebody who is on site. So very interesting positioning now. We have the offices in all markets. We have the offices in all major markets now. We have increased our footprints in APEC. We have doubled down in the Americas. We have a new solution portfolio, a much broader solution portfolio with Tenzorg, Saleon, Frontline, and, of course, the continuous development of TeamViewer Core and TeamViewer Remote Management. And in that sense, we've delivered significantly across these three dimensions that we have been showing you at the IPO, which is use case expansion into all parts of an enterprise, getting ready for enterprise customers by having the latest and best security features and then also having a global footprint. We have done so organically. We have invested a lot into our R&D force. We have done selected M&A as tuck-ins to improve the portfolio. We have shown that we can grow into enterprise and we know that the whole market is anyway growing at 27% plus in all its different elements and that's why we believe We have all the room to grow with our solution portfolio for the next coming years. We believe the 30% around this, 30% growth over the next year's CAGR is something which we will achieve. And logically, that will be 1 billion euro revenues by the end of 2023. And we wanted to give that midterm objective because I think with the corona pandemic and the turmoil around it last year, we got asked quite often what the midterm outlook would be. And how this all fits together and now with the full portfolio our sales footprint enterprise readiness We feel strongly that this is the direction of travel going forward And with this I would like to hand over to Stefan thanks Oliver good run-through so Warm welcome from my side as well.