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Teamviewer Se
2/7/2023
Ladies and gentlemen, thank you for standing by. Welcome and thank you for joining the TeamViewer AGQ4 and Fiscal Year 2022 results call and webcast. Throughout today's recorded presentation, all participants will be in a listen-only mode. The presentation will be followed by a question and answer session. If you would like to ask a question, you may press star followed by 1 on your touchtone telephone. Please press the star key followed by 0 for operator assistance. I would now like to turn the conference over to Ursula Caret, Head of Investor Relations. Please go ahead.
Thank you, operator. Good morning, everyone, and welcome to TeamViewer Q4 and fiscal year 2022 earnings call. My name is Ursula Caret, and I'm pleased to host today's earnings call. I am joined by our CEO, Oliver Steyl, and our CFO, Michael Wilkins. 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 will 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 change 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 billing to a revenue perspective, which will be particularly relevant for our full year 2023 guidance that we disclosed on IFRS revenue and the corresponding adjusted 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 Stahl.
Thank you for the introduction, Ursula. 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 and finished with a strong momentum in Q4. Of course, the overall macroeconomic environment remained challenging, but Intimio 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 of 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 EBTA margin based on billings of 51% compared to previous year's Q4 with an improvement of 7 percentage points. Michael will give you a few more details on this later. Thirdly, we continue to focus on targeted sales campaigns We created 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 also able to successfully implement type adjustments, which we had announced in Q3. 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 APEC 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, driven by the new management and tour team. I think this quarter proves once again that our regional diversification is clearly paying off. Look at our customers. Our enterprise business retained its growth momentum, showing 47% doing so every year. And the ever-growing ticket sizes prove our continued shift from SMB to enterprise and the relevance and value add of our products for large businesses. And last but not least, also our large regional core business keeps growing. In the fourth quarter, SMB billings were up 18% year-over-year. The increase stems not only from larger ticket sizes and higher pricings 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. If we 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 those times, we help them to securely manage remote operations, increase efficiency and sustainability to overcome also labor shortage. 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 us look at SMB and enterprise billing split. I think with an overall shift towards higher ACB 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 euros. This was driven by our very successful cross- and upselling efforts. resulting in the higher buckets actually growing stronger. In 2022, our highest SMB bucket, between €1,500 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 license for enterprise connectivity. And this clearly shows the continued intent of success for larger customers who are looking for more efficient and highly secure solutions. That's the right answer actually in these challenging times. Total 2022 LTM billings in our enterprise segment increased by 42% year-over-year, which is then 132 million euros. And this growth originated across all ACV buckets, as you can see on the chart on the right. Let's go to the next slide, please. I just mentioned the growth among all the SUV buckets of our enterprise business. And as usual, let me give you two examples of recent large enterprise deals in your attention, 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 Henkel. The IT team uses TeamViewer to streamline their global IT support for around 60,000 IT devices running on different operating systems with Tenso. Our solution in that case replaced several others that they were using before, making their workflows simpler and faster. Go to that saying that Tenso meets all the strict security and compliance standards that are mandatory for Henkels. 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 solution is highly appreciated by IT decision makers in global cooperation. 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 correspondence in 140 countries with CBO and chose our solution because they need a secure and stable connection to work reliably in breaking new situations. And I think what's interesting, notably, that we won this contract via a European-wide public tender as the Deutsche Welle is a public state or broadcast station bound to the EU's public tender regulations. Next slide, please. So I want to touch upon financial highlights on a full year perspective. So to begin with, we continued our top line growth. Billings and revenue increased by 16% and 13% respectively. With total billings of 635 million euros and revenues of 566 million euros, 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. We continue to establish DreamViewer as the go-to partner for high-impact strategic investments in digital transformation across various industries. At the same time, we help our customers to increase short-term automation and efficiency. This is key in the current economic environment. All these factors made us achieve a strong net retention rate of 107% on Google level. And compared to 2021, we improved net retention rate by 9%. In addition, TeamView is again growing very profitably. Our adjusted billing CBDA grew by 16% to almost €300 million, and our adjusted billing CBDA 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 a 46% growth year on year. This was driven by the strong increase in our net income, obviously, as well as our accretive share buyback program 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 solution remains strong. And with that, let's have a closer look at our regional performance on the next slide. And 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 APEC performance. With a billing flow 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 euros. We actually accelerated our sales momentum and further penetrated our well-developed base of satisfied customers. Our business in the Americas The chief billing sold off 16% in Q4 to 64 million euros and 18% to 223 million euros in the full year. Clearly, if you look at performance and at constant currency, it was weaker than we had hoped for, but we remain quite confident in our resilient product offerings. and the further growing IT spend for digitalization in the Americas. So looking at our current market share in the U.S., we believe there's still significant room to grow. APEC further accelerated its growth with a new organizational structure settling in and achieved a 32% billings increase in the fourth quarter. On a full-year basis, APEC billings were up 14%. This growth reflects two very different half years and resulted in APEC billings of 72 million euros for the entire year. So not so strong first half, very strong second half of the year and good acceleration there. And also the easing COVID restrictions towards the year end. They also allowed for more customer interaction, translating into strong pipeline business and enterprise momentum. I think as you can see from the slides, TBO 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. Let me now explain our strategic focus area to reach our business goals and growth targets in 2023 and beyond. As you can see from the slide, we're focused on four main segments. First one is our objective to defend our leading position in the remote access and support market. We are currently preparing a major upgrade of our core connectivity product. The new release will come with a new modern user interface to improve usability and overall experience and we will introduce new security and also many other features. We are confident that this will further increase the attractiveness of our products, our core target audiences across SMB and also private users. Second, within remote access and support, we will offer additional features like remote monitoring and management of devices or ticketing functionalities. With these features, we can add significant value to larger SMB customers and also managed service providers. When it comes to enterprise connectivity, the third area, we will focus on remote access and control of operation technologies, in short, OT devices, such as industrial equipment, machines, and other smart and IoT devices. A good example of this are the, for example, coffee machines of the Italian vendor, La Cimbali. I think we've talked about this use case already in one of our previous talks. This is exactly the type of remote connectivity, so-called embedded devices, that becomes more relevant as companies aim to streamline and digitalize support and maintenance processes. And once rolled out to hundreds or thousands of those devices, this becomes very sticky and attractive for us. The fourth area is then our frontline platform for digital workflows with step-by-step instructions and frontline workflow systems. I think with those, we have established ourselves as a key player in the so-called industrial metaverse, which means the digital transformation of frontline work processes, for example, logistics, manufacturing, or after sales, using augmented reality on glasses or handheld devices. And going forward, Our augmented reality offering should be further supported by megatrends like shortage of skilled labor and the need for digital onboarding, training, and more efficient front-line processes. As you can see, we are targeting IT and OT use cases in companies of all sizes to leverage the full potential of our solutions. Next slide, please. Just as a reminder, you can see our product portfolio that matches the strategic focus areas that I just explained. We offer three main product lines. TBO Remote is our core connectivity product for SMB customers and private users. With different license tiers and add-on features, we target different use cases and different company sizes. Then in the middle, for larger companies and critical infrastructure, we offer our enterprise connectivity platform, TensorFlow. that provides relevant security features and can be deployed really at scale. It also includes capabilities to connect to the OT, operations technology, and embedded devices that I just spoke about on the previous slide. And the third product line is Frontline, our AR-based enterprise productivity platform that enables digital workflows and assistance for smart frontline operations. The platform includes cutting-edge capabilities based on mixed reality, but also artificial intelligence to run frontline operations even smarter. And with this, summing on the product, I'd like to hand over to Michael for the financial highlights.
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