This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.

Teamviewer Se
5/7/2024
The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Bicera Grubesic, Vice President IR. Please go ahead.
Thank you, Operator, and good morning, ladies and gentlemen, and welcome to TeamViewers Q1 2024 Earnings Call. I am Bicera Grubesic, and I am joined by our CEO, Oliver, and CFO, Michael, today. As per usual, Oliver will run you through the quarterly business highlights, and in the second half of our call, Michael will present the Q1 financials. The presentation will be concluded by a Q&A session. Please note that you can find the important notice and the APM disclosure on slide two and three of our presentation. And with that, I hand it over to Oliver to kick off our presentation.
Thank you, Bezira. Good morning, everyone. Also, warm welcome from my side. Thank you for joining our Q1 2024 earnings call. And as usual, let us kick off with the highlights of this quarter. So overall, we had a good start into the year. As usual for the first quarter, we focused a lot on customer work, partner relationships, and also investing in our product offering, really to lay the ground for the quarters to come really throughout the year. From a financial standpoint, we delivered an overall 9% year-over-year revenue growth in constant currency in Q1. And in the mix, the enterprise business contributed a very strong revenue growth of 19% in constant currency. Besides all of those early investments, development of profitability exceeded our expectations. So our adjusted EBITDA increased to 65.2 million euros. That's resulting in an adjusted EBITDA margin of 40%. This is remarkable, as already now in the first quarter, we have strategically reinvested part of the Manchester United sponsorship contract savings. That will then positively affect our cost base in the second half of the year, I think, as we explained it multiple times. We specifically invested in marketing and sales. We've also strengthened our R&D and our R&D function. In the last month, we have developed new AI features for remote connectivity offering, and we plan a comprehensive AI-related product enhancement later in the year. We are convinced that the impact of these investments will become apparent over time then. We've clearly seen that our efforts in terms of engagement with customers brought great results. On the one hand, we recorded a new all-time high of subscriber numbers in both categories. By the way, also supported by continuously improved brand equity. It's great to see how our investment in brand and marketing is paying off really with new customer wins. Regarding partnerships, we are proud to have joined forces with Manhattan Associates, top-tier provider of supply chain solutions. They will integrate our vision-picking solution into their cloud-based Manhattan Active Warehouse Management Platform. Moreover, we've entered into a go-to-market partnership with Deloitte, also in the warehouse operations and logistics space. With these new partnerships, we underlined our position as leading vendor of vision-picking software. In addition, we further strengthen our debt maturity profile with an agreement to issue a promissory note loan in the amount of 100 million euros in May. We will refinance part of our outstanding debt with repayment in two tranches. We've not only extended maturities, but also flattened out the overall maturity profile. The first month has clearly set a positive tone for the year with our strategic initiatives in full swing. Both of our product enhancement and strong partnerships, we are firmly on track to deliver on our guidance for fiscal year 2024. Now let's look on the annual contract value split of our SMB and enterprise billings over the past 12 months. Let's start with our SMB business. As you can see on the chart on the left-hand side, the highest SMB bucket with contract volumes between €1,500 and €10,000 increased by 8%. and thus saw the highest growth rate in this category. And regarding enterprise, we also saw particularly strong growth in the larger volume of business. The highest bucket, which includes contracts with an ACV of over €200,000, grew by an impressive 38% over the last 12 months, which is really good, especially in the context of the current macro environment. This achievement is based on winning new enterprise customers as well as successful upsellings. Now, let's look at our regional performance and customer category split. In the first quarter, all our region and categories contributed to our 9% revenue growth in constant currency. Our largest region, EMEA, showed the highest revenue growth with 11%, followed by APEC with 10%. In America, we can clearly see the effect of last year's weaker billings momentum in the region, which resulted in a 6% revenue growth. All values are in constant currency and on a year-on-year comparison. With growth in all our regions, we maintain well diversified from a regional mix perspective. And looking at our customer categories, we saw a strong contribution from enterprise with revenue up by 19% in constant currency year over year. And SMB segment also recorded good growth with 7% increase in constant currency compared to the previous year. And with a stronger growth in enterprise, this customer base is slightly up in the mix, now contributing 21% to our total revenues. Let me finish my part with two enterprise customer examples, as always. They are both from the healthcare sector this time, but it's quite different use cases, which illustrated nicely how customers use our solutions in many diverse ways. And at the same time, how broad the benefits are that they achieve with our software. So we have a frontline and a tensor example here. So on the left, we have Uniting Care. This is an Australian provider of healthcare services. Their clinical nurses used TeamViewer Frontline on smart glasses to get a second opinion from a remotely connected doctor on clinical issues when they are on site in patient care. As a result, they were able to remarkably reduce hospital admissions, also meaning less stress for patients, and referrals are processed much faster. They saved on travel time and cost, which made it pretty much a cost-neutral investment for Uniting. Finally, they could also expand their operations geographically due to TeamViewer Frontline. I think this is a great example from TeamViewer in the healthcare sector with not only a decent business case, but also significant societal impact. Furthermore, addressing global challenges such as clinical staff shortage, so absolutely replicable in other markets, which is actually happening already. Skill labor shortage is also a challenge in the success story of the customer on the right side. This is Integris Neuro. Integrous Neuro offers an EEG patient data monitoring service for hospitals. They have a team of skilled certified technicians that use TeamViewer Tensor to remotely monitor the EEG data 24 by 7, 365 days a year. So they are really heavy users because each technician has several TeamViewer sessions permanently open and is monitoring several EEGs at a time. And thanks to TeamViewer, integrists can easily scale and basically address the whole U.S.-American market with a relatively small team and also hire their own staff from coast to coast, as most of them obviously work remotely. On the other hand, by outsourcing this task, U.S. hospitals save cost and time and, again, mitigate the shortage of clinical staff, same as in the Uniting case. As you can imagine, sensitive patient data is transferred and processed in integral service offering, which is only possible because TeamViewer is compliant with the necessary security standards. In this case, it's HIPAA standard, which is a must for the U.S. healthcare sector. This use case, again, easily replicable. We have several other customers that use TeamViewer in exactly the same way. So the bottom line is very diverse use cases for our solutions, many opportunities for process digitalization. And with this, I hand it over to Michael for the financial overview.
You're reading a preview of the TMVWF Q1 2024 earnings call.
Free account.