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Ladies and gentlemen, thank you for standing by. Welcome, and thank you for joining the TeamViewer SEQ1 2023 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'd like to ask a question, you may press star followed by one on your telephone keypad. Please press the star key followed by zero for operator assistance. I would now like to turn the conference over to Ursula Caret Head of Investor Relations, please go ahead.

Good morning, everyone, and welcome to TeamViewer's Q1 2023 earnings call. My name is Ursula Caret, and I am pleased to host today's 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 business and financial highlights of the first quarter of 2023. He will also give some details on the launch of TeamViewer Remote, the major upgrade of our core remote access and support product. As you have probably seen, we are hosting an investor and analyst event in London on 10th of May. Our CCO Peter Turner and our CPO Hendrik Witt will be on site to present the strategic relevance of key features of this new product and discuss our innovation pipeline in general. We are looking forward to welcoming many of you at this event. For those of you who have not yet registered, you can do so until tomorrow, Thursday, end of business. In the second part of today's call, Michael will guide you through our Q1 financials in detail and conclude with the key highlights of the quarter. As always, the presentation will be followed by a Q&A session. Please note that, as always, you can find the important notice and the APM disclosure on slides two and three. And with that, I hand it over to our CEO, Oliver Steyl.

Thank you for the introduction, Ursula. Good morning, everyone. Thank you for joining our Q1 2023 earnings call. Let me start with a glance at the first quarter of 2023 on the next slide. So from our perspective in Q1, we made good progress in executing our strategic initiatives and laid the ground to reach our targets for 2023. We invested in existing and new relationships, which is very typical for the first three months of the new year, and engaging and connecting with customers and partners and attending events across regions, especially important as we build our pipeline. Overall, we concluded Q1 with strong financials and good momentum in the business, especially in SMB. And with that, we are well on track to meet our full year guidance. Let me point out a few more highlights. First, revenue growth was clearly double digit and came in at 151 million euro, which is a plus of 13% compared to last year's first quarter. The development is particularly driven by our successful up and cross selling measures and resulted in the stable net retention rate of 107%. Secondly, I would like to highlight the strong momentum in our SMB business, where we have delivered very good Q1 results. And this was especially important as the enterprise business started a bit slower into the year. SMB strength was mainly driven by significant improvements to our e-commerce customer experience, as well as targeted cross and upselling measures that we consider one of our strengths, particularly in the SMB space. In addition, we were able to capitalize on price increases. Another highlight was, again, our strong underlying profitability. supported by an increased top line and diligent cost management. Adjusted EBDA in the first quarter amounted to 64 million euro. This is an increase of 18% compared to the prior year's quarter. An adjusted EBDA margin improved by 2 percentage points to 42%. Let's now look at our regional split. EMEA and APEC delivered consistent results in the first quarter. Our Americas region was again affected by longer procurement cycles. and a somewhat challenging macroeconomic environment. To further develop and strengthen the sales organization in the Americas, we have established a new leadership, Georg Beischlag, our former chief of staff and strategy. He's the new Americas president. And additionally, we opened a new office in Mexico to serve as a sales hub into Latin America. In total, all regions recorded double-digit growth rates in revenues in the first quarter. In addition, we continue to invest in our leading position in the core remote business. In Q1, we prepared and initiated the most important product launch of recent years, TeamViewer Remote. Based on the positive user feedback following a soft launch in the Nordic countries, we introduced the product globally end of April, actually last week. And I will provide some more details about TeamViewer Remote later in the presentation. Last but not least, we are continuously fostering our partnerships. With the launch of our new partner program, TeamUp, we are strengthening the channel ecosystem and support lead generation. The program will complement TeamViewer's global sales activities to drive growth across all regions. And seeing a high level of participation and interest at the regional launch events, which we had during Q1, was extremely encouraging. To sum it up, from our perspective, Q1, particularly strong growth momentum in the SMB business. which we intend to strengthen even further after the launch of TeamViewer Remote. And in parallel, we are working on building our enterprise pipeline for the remainder of the year. Bottom line, we are very satisfied with our start into 2023, both regarding the strategic initiatives, but also our key financial figures. Let's move on. Let's now take a closer look at our SMB and enterprise LTM billing splits. Looking at the chart on the left-hand side, You can see our increased growth momentum in SMB with LTM billings in Q1 2023 up 13% on a year-on-year basis to 517 million euro. Compared to all quarters in 2022, this is actually the strongest growth rate that we achieved. And in this context, it's worth mentioning that the lowest bucket with contract values below 500 euros continued to recover and LTM billings were nearly stable. As a comparison in the third quarter of the past year, this was down 12% and in the fourth quarter it was down 6%. So we really getting it to a stability now. The highest SMB bucket with annual contract values between 1500 and 10,000 Euro showed a 28% increase and was therefore again, the main driver of overall LTM SMB billings performance. When we look at enterprise on the right, LTM billings in Q1 2023 increased by 25% on a year-on-year basis and amounted to 131 million euro. The lower enterprise buckets saw healthy performance, supported by good tensor traction and an enlarged enterprise customer base. The higher bucket enterprise business, however, saw a slow start into the year. This was mainly due to a slower frontline business and longer procurement process of some high-profile deals, especially in the Americas region. However, we do expect a re-acceleration here. Our enterprise sales pipeline is growing because of the intensified engagement with global customers and channel partners since the beginning of the year. And the new leadership that we have set up in the Americas region will contribute to this development. And to reignite the frontline growth and activate our full potential here, we have put in place a cross-functional task force. This involves teams and work streams across product development, go-to-market, delivery, and operations. All in all, the numbers on this slide show that our transition into a more enterprise-focused software company is continuing, supported by our strength in cross and upselling, including the upsell from SMB to enterprise. To illustrate an exemplary team viewer customer journey and show in detail what up and cross selling looks like in practice, we included the journey of a real customer on this slide. And this is the example of a German hidden champion in the plastics processing industry with more than 3,000 employees globally. The company has actually been a customer since 2009 and started with one TeamViewer core premium license, very typical. In the following years, The contract was continuously renewed, but the volume remained relatively stable. And then in 2020, the customer started adding additional product features. After successful talks with our sales team, we were then able to convince them to upgrade to our Tensor product earlier this year. And the Tensor product better reflects the global needs of our customer to remotely support and manage devices in the production and office environment. And as a result, we doubled the contract volume from 2022 to 2023 and achieved a KGAR of 20% over the entire contract term. In addition, the company then transitioned from SMB to an enterprise customer. And of course, this is just one example of many, but our consistent strong results of upselling customers from SMB to enterprise show how successful our sales team is in that regard. Next slide, please. As always, let me continue with two more examples of customers from our enterprise segment. On the left, you find one of our customers from the APEC region. It's the global luxury cosmetics brand Aesop from Australia. Their IT team uses TeamViewer Tensor to remote into in-store IT devices at the point of sale for fast troubleshooting and fixing of IT problems. And for Aesop, Tensor is an important tool to keep their store operations running smoothly for their own customers. And furthermore, when we talk about Tensor in the enterprise sector, security is always a major requirement and a very strong sales proposition for basically all our customers in that segment. Same was true for Aesop. Besides ease of use, the integration into their IT landscape security was the main reason for them to opt for TeamViewer Tensor. On the right side, customer from the enterprise segment using Frontline. Samsung STS is part of Samsung Group and focuses on logistics. They use our augmented reality-based workflow solution TeamViewer Frontline to digitally transform the picking operations in their warehouse in the Netherlands. From this warehouse, they supply all of Europe with spare parts for Samsung products. Benefits are clearly the hands-free picking process, which led to an increase in picking efficiency of 30%. The warehouse workers are satisfied with the solution as they are working with smart glasses in our software because ergonomics have improved and they hardly make any errors. And besides the impressive improvement, this customer is particularly interesting for us from a business perspective. Samsung SDS operates many warehouses worldwide. So this project obviously has potential to scale. Let's now turn to our regional performance. On this slide, you can see how previous billings translated into Q1 revenues per region. All our three regions saw double-digit revenue growth, 10% in EMEA, 18% in the Americas, and 12% in APEC. This development is the result of successful up and cross-selling measures, targeted monetization campaigns, and an increasing number of multi-year deals in previous periods. Past currency tailwinds, mainly from the US, supported the positive development. On the next slide, let's see how billings developed, which will drive future revenue development. Overall, billings increased by 8% in Q1 2023, And as you can see, APAC performed particularly well in the first three months of the year, with a billings increase of 14% to 90 million euro. The region continued its successful turnaround. Our business in EMEA achieved solid billings growth of 8% in Q1 to 101 million euro, making a pretty good start into the new year. The region particularly benefited from successful up and cross-selling campaigns, as well as price increase motions. And with the billings increase, the billings growth of 6% to 56 million euro, the business in the Americas continue to be marked by longer procurement cycles, especially in the enterprise business and the challenging overall macroeconomic environment. Further develop and strengthen the regional sales organization, leverage its potential. We've taken measures in the first quarter to reaccelerate the local business. And I already mentioned the leadership change and the Latin American office opening. Next slide, please. An important milestone in Q1 was the successful soft launch of TeamViewer Remote in the Nordics. The product is a major upgrade of our core remote access and support solution. Based on the promising user feedback and good adoption rate, we rolled it out globally with the commercial launch last week. TeamViewer Remote clearly highlights our commitment to quality and our ambition to deliver best-in-class remote connectivity for our customers. Key highlight of the product, a new intuitive modern user interface, a unified web and desktop experience with a full featured web client and simplified connection with one click session invites. Moreover, we've enhanced security through mandatory account creation for those delivering support and by making the origin of incoming connections more transparent. The new web first approach with advanced APIs will accelerate our innovation capabilities and pave the way for the integration of the entire product portfolio and additional third party application on the same technical architecture. TeamViewer Remote is set up to increase attractiveness within the main target audience and thus create momentum in the free user ecosystem as well as in the SMB space. This will increase the cross and upsell potential in order to accelerate growth in the SMB business. As mentioned by Ursula in the beginning, we will host an investor and analyst event in London on 10th of May. There you will get a detailed briefing about the new product and it's relevant for our business. And with that, I'd like to hand over to Michael for the financial highlights.

Thank you, Oliver. Good morning and a warm welcome to all of you. I'm happy to guide you through our financials for the first quarter of 2023. Next slide, please. Oliver already mentioned our 13% revenue increase. A large portion of the Q1 revenue number of €151 million stems from previous billings periods, which are released into revenue monthly along the duration of the contract. Our new metric ARR, which is an LTM figure, annualizes the billings value of active contracts increased by 12% year over year. Oliver also mentioned the 8% Q1 billings increase, driven by a strong SMB performance and looked at billings from the regional perspective. I will go into the constituents of the 177 million euro on the next slides. Our LTM net retention rate remains strong at 107% on group level and is up 8 percentage points year over year. NRR is clearly an indicator for customer loyalty and resilience of our business. We have a large customer base, which holds a significant untapped upsell and cross-sell potential. And with our TeamViewer remote, we now have a very attractive product to drive up and cross-sell within the SMB space. At the same time, our Tensor product is a key growth driver in the enterprise business. In Q1, TeamViewer grew very profitably, The adjusted EBDA increased by 18%, translating into an adjusted EBDA margin of 42%, which is up two percentage points year over year. As you know, TeamView is highly cash generative. In Q1, our lever-free cash flow grew significantly by 135%, which resulted in 51 million euros. the adjusted EPS grew by 38% to 22 euro cents year over year. To sum it up, our two guidance metrics, revenue and adjusted EBITDA margin, are well in line with our guidance. And due to the predictable nature of revenue and the cost management we put in place, we are well on track to meet our 2023 outlook. With that, let's have a closer look on quarterly sequential developments globally and for SMB and enterprise. We already explained our revenue and our margin growth. You can see quarter over quarter developments on top of slide 14. Let me now spend a bit more time on billings while looking at the lower end of the slide. In addition to the growth rates on reported billings, we plotted constant currency growth rates into the graph. You might remember that we provided a translation into billings with our full year guidance, where we outlined an expected growth rate of 6 to 11% for 2023. This was based, amongst others, on the assumption of continued macroeconomic challenges and eliminating currency effects. So comparing constant currency growth rates, Q1 billings grew at the same rates in 2023 as in 2022. By the way, we also told you in our full year outlook that the billings forecast was based on an average euro to dollar exchange rate of 105. So if we had applied this exchange rate instead of the actual average FX rate of 107 to our Q1 billings, they would have been higher at 179.1 million euros. Coming back to the reported Q1 billings, they were generated on the back of an increased subscriber base of 631,000 customers as of quarter end. It is also worth highlighting that they include a new business volume of 14.7 million euros that is starting to stabilize again on a quarter-over-quarter comparison. So let's move to the next slide, please, where I will focus on our SMB business, which clearly drove our global Billings development in Q1. Slide 15 very well depicts the growing momentum in SMB over the last quarters. This is the result of the progress we made in enhancing the e-commerce customer experience. Big kudos to Peter Turner and his team. Examples for specific measures are our new approach for smarter in-product advertising, improved marketing efficiency of our digital advertising, and last but not least, continued optimizations to the website and customer journey, including specific pages to help customers to find what they want, when they want, and as quickly as possible. Translated into KPIs, we achieved 11% SMB revenue and Billings growth in Q1 at a stable subscriber churn rate of 14%. With our price adjustment motion, which started in Q4, our average selling price continues to increase on an ATM basis. We were also able to add more subscribers to our SMB customer base. Hence, at the end of Q1 2023, we counted 627,000 paying SMB customers. Since our global team via remote launched last week, these 627,000 customers are now able to enjoy our next generation remote access and support solution. Next slide, please. Looking at revenue, enterprise contributed with a 21% plus to our total revenue growth in 2021. On billings, Oliver mentioned before that the lower enterprise buckets saw a healthy performance with our Tenzer product being highly accepted by our customer base. This is underpinned by the strong 31% increase of the enterprise customer base from 2,900 to 3,800 year over year. At the same time, we saw a slow start in our higher bucket enterprise business and especially in the sales success of our frontline product. As Oliver already explained, main reasons are longer procurement processes in the current macro environment, especially in the Americas region. But Oliver also mentioned the task force we put in place to reignite the frontline business. The effect of the Q1 enterprise billings development can also be seen in the decline of the average selling price in the upper right chart. Against this background, after a very strong Q4, total Q1 enterprise billings decreased by 3% on a reported and on 4% on a constant currency basis. The enterprise NIR was lower year over year at 109%. However, we see this development as temporary. And please be reminded that we initiated various counteracting measures in the quarter, as Oliver already laid out. Next slide, please, where I will talk about the cost development in Q1. Recurring costs consisting of cost of sales and total OPEX increased by 9% and therefore grew slower than revenue. Hence, the adjusted EBITDA margin increased by 2 percentage points to a strong 42% in Q1 2023. The absolute cost increase of 7 million euros was mainly employee-related, but let's have a look at some operating cost items in a little bit more detail. Besides an increased FTE cost base and higher bonus levels, sales costs also increased due to lower benefits from sales bonus activation. I already mentioned in our last call that we started to apply IFRS 15 bonus accounting in Q3 2021 and the positive effects of which are gradually fading out until 2025. Like in Q1 2022, the largest portion of the marketing cost was made up of sponsorships. This cost item will be reduced once Manchester United exercises the option to buy back the rights to the club's shirt front sponsorship. As of today, we have nothing new to report on this. The R&D costs increased as expected with investments into the future product offering. In the other item, we saw a major cost improvement in a year-over-year comparison. Q1 2023 profited from significantly lower bed debt due to improved dining processes and better payment behavior, which comes with an increasing enterprise customer base. On top of that, we recognized a gain from our US dollar hedges. One last remark before I move to the next page. This favorable cost situation in Q1 was also due to some timing effects, meaning that, for example, marketing expenses and cost of sales will partially catch up in the next quarters. Having said that, we are very confident in reaching our profitability guidance for the year. The table on slide 18 dives deeper into our different profitability metrics, starting with the adjusted EBDA. As already mentioned, this increased by 18% year over year due to our strong operating performance. Deducting a decreased amount of non-recurring items fueled the unadjusted EBITDA, which is 31% higher year over year. The decrease in non-recurring items was mainly due to the fact that Remax still had an impact last year in Q1 2022, but was completed thereafter. With only slightly increased DNA expenses and improved financial result and taxes increased in line with profit before tax, our net come grew by 58% year over year to 23.1 million euros. Our earnings per share increased even stronger by 75% from 7 euro cents to 13 euro cents, which also reflects the creative effects of our share buybacks. I already mentioned the adjusted EPS increase of 38%. This KPI, which we introduced in Q4 already, gives you a less volatile and more operational perspective on EPS growth. Compared to the unadjusted EPS, it mainly adjusts for the same non-recurring items as in the adjusted EBITDA and takes into account PPA amortization and related tax effects. Both EPS metrics benefit from a creative share buyback program. Next slide, please. This slide is a testament of our highly cash generative business. It shows different cash flows and related cash conversion KPIs. Pre-tax operating cash flow increased by 69% year over year due to our good business performance and positive networking capital effects. Deducting capex, which is generally relatively low as most of TeamViewer's investments in innovation and partnerships are directly expensed in the operating expenses. Then deducting the stable amount of lease payments brings us to the pre-tax unlevered free cash flow, which increased by 75% year over year. Putting this in relation to the adjusted EBTA leads to a cash conversion of 100% for Q1 in 2023, 32 percentage points higher year over year. The levered free cash flow you see on this slide also takes into account cash tax and interest paid. It increased even stronger by 135% in Q1. The respective cash conversion rate was 80%, and therefore 40 percentage points higher than the year before. For your information, cash tax decreased due to a tax refund we received in Q1 2023, and interest paid grew only slightly based on our focused debt management. This nicely feeds into the next slide, where you can see that we also paid back 100 million euro of debt and despite the cash spent on our share buybacks, we still have a very comfortable cash position of 79 million euros at the end of Q1 2023. Netting this cash position and total financial liabilities delivered a further net debt improvement to 452 million euros as of 31st of March. With the resulting leverage ratio of 1.5 times We are fully in line with our capital allocation target, which, by the way, is still calculated on the adjusted Billings EBITDA metric. This leveraged target provides the company with sufficient flexibility to support organic growth. It would also leave us the option to pursue TAC and M&A in case we saw the need to expand our technical solution competencies. With the reiteration of our leveraged target in February, we also announced a new share buyback program. This program has a volume of up to 150 million euros. The first tranche of up to 75 million euros is ongoing. As of end of March, we had acquired a total of 1.7 million shares corresponding to an aggregated amount of around 26 million euros. Together with previously acquired shares, we held around 11 million shares as treasury shares, which do not count into the EPS calculation. At our AGM on 24th of May, we propose a renewal of our buyback authorizations. On the basis of this new authorization, we can start the second tranche later in the second half of this year. With our Q1 performance, we had a good start into 2023. The revenue growth of 13% was clearly in line with expectations, even despite continued headwinds in the Americas region. And therefore, we confirm our annual revenue guidance, expecting double-digit revenue growth within a range of 10% to 14% for 2023. This translates into an IFRS revenues in the range of between 620 million and 645 million euros. The Q1 2023 adjusted EBITDA margin at 42% was two percentage points stronger year over year. While we expect some catch-up effects in our cost development, we are also confident in reaching our adjusted EBITDA margin target of around 40% for 2023. Next slide, please, where I will summarize today's earnings call. First, in the first quarter of the year, we made good progress in strengthening our core SMB business. This was paralleled by the global launch of TeamViewer Remote. Second, our transition towards a more enterprise-focused software company continues, with Tensor as the key product offering. To re-accelerate enterprise billings, we have identified and put in place the right measures. Our global sales force is strong and up in cross-selling, and our large customer base holds a significant potential. While fourth, in Q1, we were also able to stabilize our new business on a sequential quarterly basis. Fifth, with diligent cost management in place, we achieved an adjusted EVDA margin of 42% in the quarter. And last, with our high cash generation, we are constantly creating value for our shareholders. And our share buyback program has an additional accretive effect on EPS. With that, I would like to end the presentation. Thank you all very much for your attention. We now look forward to your questions.

Ladies and gentlemen, at this time, we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by one on your telephone keypad. If you wish to remove yourself from the question queue, you may press star then too. Anyone who has a question may press star followed by one at this time. One moment for the first question, please. First question is from the line of George Webb with Barclays. Please go ahead. Excuse me, the first question is from the line of James Goodman with Barclays.

I thought I'd been replaced. Morning. Thanks very much for my questions. Firstly then, maybe just digging into the enterprise softness that you spoke quite a bit about on the call. You talked a lot about the Americas and clearly the growth rate is still lagging there. But if I look at the growth rate versus Q4, actually EMEA was much stronger in Q4. So was the deal lengthening there across All regions, and can you talk a bit about those slip deals, whether they've been closed post period end or whether there was a sort of competitive dynamics there. And then also on conversely second question around the strength on the SMB side of the business. I wondered if you could put that a bit in the context of the COVID effects that we're now lapping three years later. Are we seeing now really the end of that period of tough comps and Do you think the sort of attrition in the low end is behind us, given the stabilization and growth we're seeing in the SMB subscriber number? So really what I'm getting at with SMB is, should we expect actually a growth acceleration as we move through Q2 and Q3, given the smaller base effect and the fact that the new business intake should have a bigger effect? Thank you.

Let me start with the later one, SMB. Yes, we clearly see an improvement in SMB based on multiple levers. First, our improved website helps a lot. Pricing, as we mentioned, is another driver. Also, and we do it very cautiously and not as disruptive as in earlier years, we do our free-to-pay campaign. So these were all levers. And we also see a slowly but steadily improving base, as you said, in the cohorts of COVID, which is nice. And Oliver laid it out. Minus 12 Q3, minus 6 Q4, minus 1% on an LTM basis on the lowest bucket shows that it is clearly a stabilizing trend. This is too early for us to talk about an acceleration in the outer quarters. We feel very comfortable with a mid-sized percentage growth as we move forward, but we obviously continue to invest into our core and we are very happy on that one.

Maybe to add on this one, I think what you also see, if you just look at our website, the communication, the campaigns we're doing, Clearly also we have Peter now on board for nine months or so. And we really also changed a bit of the leadership structure underneath him with focus on SMB marketing, SMB lead gen, and also kind of offerings campaigning. So I think that more and more this is coming through that we've gained or regained some strength in this segment as well where I think more recently before we had focused a lot on enterprise as we had discussed multiple times and maybe SMB was we were a little bit too too passive in a way and this is now really really changed and this is starting to come through so again as as Michael said too early to to change any any outlooks there but we feel good about what's happening and and obviously the potential effect of TeamViewer remote is only coming. So now we feel very good about the new product. We get very good feedback. So all in all, that makes us very positive regarding the SMB segment. And you're right, there is the effect that now we are in the third anniversary after COVID and the base effect obviously is important. So we do see this movement coming to an end and we're adding, as you also see, we're adding subscribers now, which hasn't been the case for a while. which is also good early indicator.

And then let me tackle your first question on enterprise. First of all, again, strength in the enterprise revenues with a nice growth of 21% year over year in the quarter. This is strong. And what is also very strong is the free lower buckets of our enterprise cluster, which is fueled by the very strong tensor product. And we see that it's nicely developing as well as our SMB to enterprise cross and upsell. So this is all very strong. And yes, indeed, in the highest bucket, it's a mix of frontline. It's a mix of slowness, continued slowness, as also Oliver mentioned. It's also a mix of some slip deals. And it's a big portion of Americas, but you are absolutely right. It's not just the Americas, also in EMEA. And here, it's important to note, I mean, Q4 was very, very strong. with from the top of my head 54% growth here in Q4. And the interesting part in Q4 in EMEA was where we had deals with a very low probability of only 20, 30 and 40% in the last month. They all came in as a deal. And where we had the same part now in Q1 with lower probability of those deals from the pipeline, we saw that they slipped and they did not come in in Q1. So we had a little bit of a learning in Q4, and obviously it didn't work out now in Q1. This is something for us which is important. This is why we also mentioned that we are now working on the measures, that we also work especially on the slip deals, and we are building the pipe so that we come back even stronger in the remaining quarters of the year.

Excellent. Thank you.

Next question is from the line of George Webb with Morgan Stanley. Please go ahead.

Hi, morning, Ola and Michael. Just a couple from my side. Firstly, just to focus in on that higher end of the enterprise business and frontline. Clearly, there's a very significant AR market opportunity there, but requires a slightly different go-to-market, different opportunity set. doesn't seem to have been growing quite as strongly or consistently as it may have been hoped for when you acquired Unimax initially. So kind of wondering when you reflect back why perhaps that is and in the context of being very diligent on costs at the group level over the recent past, can you talk a little bit about how much investment you've been putting into that AR business over the last couple of years from an organic perspective? And then secondly, just on the RSU charges, which started in Q1, is that 3.8 million charge A fair runway run rate moving forward. So I've only front loading in there. Thank you.

Yeah, I can take this so frontline business in general. Clearly, this requires companies to invest into digital digitalization and and workflow processes. I think we had very good deals in certain periods where we added significant rollout, added customers with significant rollout potential, for example, in the automotive industry, in service networks, and we reported on those. So I think we had periods where we had very good wins. It's correct that over the last quarters, especially in the Americas, there is a slowdown. APEC as a region is still in pipeline creation mode on the frontline side. And I think in EMEA, we have good deals here and there. We reported some of them. So I think it's a very mixed bag, which we're seeing here. We are going to put and we have put in place a task force on frontline. I think it's mostly on some product evolutions that we should see and should have and should have accelerated. That's one area we will work on. But a lot, quite honestly, is go-to-market marketing, content marketing, and then also the right sales approach and the right sales training. I think we probably focused a little bit too much on IT, TensorFlow, and the likes in the past, and we need to make sure that our sales activities mirror the big potential that we're seeing in frontline. It's a very diverse picture country by country. And I think we have great solutions, for example, in the logistics space and in the inspection field service space. We just need to leverage that more. What's also not helping is clearly that Many of the pipeline opportunities we're seeing are together with SAP, for example. And this is all slow in deal conversion. So there is a good deal pipeline, large ticket sizes, but this all takes longer than we had originally hoped for. Then relating that to the cost development, I think it's fair to say that in the AR business, after acquisition of the different entities, cost development on the AR frontline side is relatively stable. So it's not that we have massively invested there, but it's like a continued build up of resources for solution delivery in some region, but that is pretty much it. I think if anything, you could argue that Maybe we should have been a bit more active in marketing these solutions on specialized events, which was difficult during COVID. And then in the aftermath, we should have accelerated that a bit further. But it's not a significant burden on the cost side. We're just missing the deal conversion.

And on RSU, we had close to 4 million in Q1 and we expect for the full year, 16 million, roughly.

Okay, that's helpful. And maybe just one follow up, Oliver, on the starting point of frontline AR on the AR piece. When you look across the business now, can you give any sort of flavor of how many FTEs you have, which are which are solely focused or predominantly focused on on that AR business?

Yeah, so that is, you have to go, I mean, really solely focused on the frontline business is some of the development of R&D. I wouldn't be able to give you the exact number because we're using more and more also across the whole company because the web, for example, the web functionalities, the web capabilities, we were using now also partly for TeamViewer Remote because we really If you look at the different tech stacks of the different products, clearly Frontline was always, and also Skylight that we bought from Upscale, very much web first, web first, API first, whereas the TeamViewer product is more client-based. So there's quite some technical functionalities and features where we can use R&D people from Frontline also for the rest of the product. and therefore the 100% dedicated developments in this field is hard to call out. And then clearly the people that we can fully allocate to Frontline is the salespeople, and this is one sales team, I don't know exactly the number, but about 10 people or so for EMEA and another one for the Americas. But we really integrated the organizations in such a way on the R&D side that we're sharing resources now.

Okay, thank you.

Next question is from the line of Toby Ogg with JP Morgan. Please go ahead.

Yes, hi, good morning, and thanks for taking the questions. Perhaps just again on the enterprise side, appreciate a few different dynamics contributing there in Q1. But when thinking about sort of building the confidence in the acceleration going forward, you talked about pipeline growing, new leadership, and the cross-functional task group. Could you just give us a sense for any buffers that you've built in there around the closure rates, just to help give us a sense for any headroom in the event that deal closures continue to remain difficult, given the macro. And then maybe just one on the, just on the billings guidance. So I think you'd given us this at the Q4 with the six to 11% growth. So just wanted to double check whether that was still confirmed. And then lastly, just on the pricing side, I know this has started to feed in more meaningfully in Q4 and you'd said high single digit million contribution back then. What was the magnitude of that in Q1? And have you noticed any changes in customer behavior as a result of those price increases so far? Thank you.

Let me start with the last one. Pricing. It's all based on what we expected. So we see, especially in Q1, This year, where we were also a little bit nervous because it's a different cohort, whether we might be faced with higher additional churn because of our pricing measures, we see that this is not happening. So we are also very confident with the further outlook of our pricing measures going forward. This is number one. Number two, on your question with regard to the billings and the guidance, this is very important. We gave and give a guidance on revenue and revenue margin and EBDA margin. We only delivered to your comfort a mirrored how it would have looked like if we would have guided on billings. And this is exactly the number of 675 to 705 and the 6 to 11%. And we feel very happy also with the mirror guidance. But this is not a guidance. This is for your convenience to see how it would have looked like, let's call it in the old world. But there's no change on this. And we are very positive also on Billings.

First question on Enterprise and Headroom. I think this is a region by region thing that we need to look at. First of all, the pipeline is very significant towards the later quarters of the year. And it's very natural because many of these larger items, they are also together with partners, different partners, and also our own enterprise salespeople. And they tend to be more scheduled towards Q3 and then Q4 closing and partly Q2. So this is the underlying dynamic in any case. I think if we take a sober look, then clearly the Americas is affected by macro. I think we were working on building pipeline and converting pipeline already for two, three quarters. And I think that weakness has been visible throughout the periods. So even when you typically have a strong Q4 end, We were not able to pull the bigger deals in as we wanted to. And in Q1, naturally, this is even worse from a starting point of view in the Americas. And their pipeline is there. We are very active with customers and partners on conferences or SAP Sapphire conference to come up and so forth. So I think on that one, we need to be a bit better to get on track there. So it doesn't take much to get to the growth that we wanted. But it will need work in the region, clearly. It's very different in EMEA. I think, as Michael mentioned, we had a very good run in Q4. We converted many deals, quite honestly, I think, in the first quarter. we probably could have been a bit more growth focused in enterprise. There were deals we could have converted a bit more and we now need to work on the slip deals and pull them in as soon as possible. That I would allocate more to internal planning execution and sense of urgency than to macro clearly. And then APEC, they'll be building great pipeline with partners. We focus on a few key markets, Korea, Japan, In the Australia and that looks very promising but it's early days, because the enterprise development in a peg is anyway earlier in its development, but there we have a very good pipeline build with a significant petrol in terms of. discussion what you call it to be able to make the numbers.

Thank you.

Next question is from the line of John Michael Conti with Deutsche Bank. Please go ahead.

Great. Thank you for my questions. Great to see some new wins increase on a sequential basis this quarter. I guess my first question is whether the free to pay campaign activation was the main driver of this. I guess how many of those new billings came from this versus enterprise, if any at all. And could you also give some color on whether you expect to keep up the free-to-pay campaign active throughout the year on a similar run rate to how it was in Q1? I'll ask a couple follow-ups after. Thank you.

I think on the free-to-pay, that shouldn't come across in the wrong way. I mean, we did some normal, I would say, Regular free-to-paid activities like we always did no big campaigns. No extra contribution I think in the first quarter was like around four million or so so Less than in the past significantly less than in the past in certain quarters Just a regular inflow and a better conversion on those because we have the better customer journey and the better campaigning and offer presentation, if you wish. So I wouldn't put significant contribution to that as a driver of the SMB. Much more important is the continued up and cross-sell in SMB, as we saw, and also just generally improving our go-to-market, our e-commerce, and also our lead flow from web to inside sales. That's the key driver of this one. And the end of the free to paid monetization, I mean, going forward in the quarters, we can assume this will, there will always be a contribution in that order of magnitude, nothing else.

Understood. I mean, um, just on this, I'll follow up on this one and a couple of others, uh, 4 million this quarter, if I'm not mistaken, I think previously it was something like 20 million a year, 20 to 25 million a year. So it feels like it's, it's awfully close to the contribution that it was previously. Um, so maybe just a verification there and then second question would be, um, I, I heard you, you know, uh, you opening a new hub in Mexico to, to help, you know, uh, expand sales in that time. Um, will you be ramping up Salesforce there and should we expect an increase in fixed employee costs on that front?

No, so first of all, it's, yeah, it's like for a quarter, typically the later year, the later part of the year is more enterprise driven and the contribution is then mostly tapering off towards the end of the year. So yes, in the past we were like 20, 25, but I think by now we are significantly lower and you see a quarter contribution of four. I think if you take an assumption for the year, it will not be, four times four, I guess. So therefore, some significantly lower than in the past, but still a meaningful contribution, obviously. As for your second question, sales hub, yes, we are putting inside sales into this office in Guadalajara. That's the overall idea, partly in addition and partly as a substitute for salespeople that we have in Clearwater, just to cover different languages in a more cost-efficient way. So it's actually the opposite of what you said. It's also meant to optimize our cost structure in the Americas. So if we put people there, that's not as an extra invest, but like for like should make our sales force more efficient, so to say, in the region.

Understood. Thank you.

And quick correction, because you assume 20 last year, it was way lower, because we didn't do anything in q1. Almost nothing in q2. So in total, Jenny, it was roughly 12 below you was 2020.

In previous years, it was before 2022.

Yeah, so way lower, way more cautious. Of course, it's a customer intake drive to further develop them.

Your next question is from the line of Gustav Hulberg with Berenberg. Please go ahead.

Hi, Ron. Thank you for taking mine also. I just have a quick follow-up, please. Just on price increases, you talked about them a little bit, but I might have missed the contribution to growth in the quarter. Could you just please remind me how much price increases drove your growth rates in Q1, please?

Yeah, roughly 6 million, 6.5, I think exactly.

Super. Thank you.

Next question is from the line of Victor Chang with Bank of America Security. Please go ahead.

Morning. Thanks for taking my questions. Maybe can you give us some color on what's different with the new partner program team up and is it more focused on SMB or enterprise? And then secondly, on multi-year dues, it appears lower quarter on quarter. How much of that is driven from the demand side and what's the mix in multi-year deals for enterprise and SMB this quarter. Thank you.

Let me take the first one on the product, on partner program team up. Really, I mean, it's both, it's called higher end SMB and it's enterprise. So it's everything which is direct touch customer. So it's not a kind of, I mean, it's also covering distributors that, in principle, do very small ticket items. But what we're really looking at is activating and work with resellers more and also small system integrators, local system integrators, all the way up to larger integrators. So all the partnerships which sit outside of, say, SAP, Siemens, Google, Microsoft, and the likes. Classical channel program with a... proper partner portal, deal registration, proper incentive system, back-end rebates, policies on renewal, upsell, cross-sell, and the likes and the likes. The way to think about it is that we now have a structured program which is consistent, homogeneous across regions, very transparent, clearly communicated with clear rules of engagement. The whole channel business, reseller business of TeamViewer before was in different shapes across different regions. And we didn't have this broad activations of partners. And this is now a step change in how we approach this and has been very well received. We did three regional launches. I actually was participating in all three of them. And the feedback of the partners was incredibly positive because they see TeamViewer as clearly a product switch which they can work with and like to work with, but they were always missing a structured channels-less reseller program like other companies have it. And I think it's a major step forward now that we have clear structures, incentives, and also the technical means to work in a much different way.

Yeah, no mighty year deals, Victor. So as we said, they become a normal course of business for us. And we always said that they're also, it's a mix. It's more enterprise and a little bit of SMB. This quarter show a little bit more skewed towards SMB. But all in all, we see not a massive downturn on mighty year deals.

Got it. Thank you. And maybe one follow-up is, did you see a change in competitive dynamics or win rate in enterprise? And I guess in particular, the frontline business?

Not really, honestly, not really. I think we always, we see the same competitors. I think if we go to the first IT side, I come to frontline. So if we go to IT tensor side, There's no real change there. And I think it's still the really only competitors we run into is Beyond Trust and LogMeIn. But most of the time we feel very good about our win rate there. So don't see any issue there. Frontline, it's kind of the same. I mean, the point with Frontline, it's not that it's terribly competitive. This is really, there's only very few players that make the market. We are one of them. with those solutions. And clearly there is overall, I think there was a bit of noise in the market. Google, Microsoft pulling out some of their developments, actually releasing some of their development people in this field. So certainly that has created a bit more uncertainty in the market. And it has created more uncertainty in the market. And therefore, if there is no deal, then it's not because we lost it, but it's more because customers are still waiting. So I think in general, it is difficult on frontline, but it's not because of competitive situation. We have a great product. I think when we go to events, Hanover Fair was just the other week, a week ago, very good attendance on the booth, very good discussions. People like what they see, but it's just not the perfect time at the moment to land those deals.

Maybe to a couple of add-ons with regard to competition. Actually, we think it's the other way around. With regard to our remote launch, we think, especially vis-a-vis Splash Top and AnyDesk, we are building on our lead vis-a-vis the two of them. This is for us super important. I mean, this needs time in order to see that our lead versus competition is also then paying off. But all in all, we think we are strengthening rather our positioning.

it thank you ladies and gentlemen there are no further questions and with this we conclude today's conference thank you very much for joining and have a pleasant day you may now