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Ladies and gentlemen, welcome to the Q3 9-month 2025 Results Conference Call. I'm Sergan, the Chorus Call Operator. I would like to remind you that all participants will be in listen-only mode and the conference being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and then 1 on your telephone. For operator assistance, please press star and 0. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to turn over to Bezira Grubesic, Vice President, Investor Relations. Please go ahead.

Thank you, operator. Good morning, ladies and gentlemen, and welcome to TeamViewer's Q325 earnings call. I am Bezira Grubesic, Head of Investor Relations here at TeamViewer, and today I am joined by our CEO, Oliver Steyl, CFO Michael Wilkins and CRO Mark Banfield. We rescheduled this call to today from the originally planned date of 4 November in the financial calendar, following the publication of our ad hoc statement yesterday evening. We wanted to provide you with a comprehensive overview of our Q3 performance and the updated full year guidance today. Today, Oliver and Mark will run you through the quarterly business update and Michael will present the financials. The presentation will be concluded by a Q&A session. Same as in previous quarters, we will present non-IFRS pro forma top line and adjusted EBDA performance. And also, please note, you can find the important notice and the APM disclosure on slides two and three. With this, I hand it over to Oliver to kick off our presentation.

Thank you, Vizsera. Good morning, everyone. Also welcome from my side. Thank you for joining our call today, which we had to organize in short notice, as Bizzaro just mentioned. Apologies for that short notice. But based on our Q3 performance and following a comprehensive review of the remaining deal pipeline for the fourth quarter in 2025, we decided to update the full year 2025 pro forma guidance yesterday evening. And then obviously we worked hard to be able to provide you today with the complete picture of where we are. But let me begin with an overview of the last quarter. Close the quarter with 4% revenue growth as well as 4% ARR growth year over year in constant currency. Proforma ARR reached 757 million euros now at the end of the quarter. Our enterprise business remained the key growth driver, with TeamViewer's standalone enterprise ARR up 18% year-over-year in constant currency. Our profitability continued to be high in Q3, with pro forma adjusted EBITDA margin at 46% and adjusted EPS up 15% year-over-year. This demonstrates the resilience of our operating model and our ability to deliver strong margins through all macroeconomic cycles. Additionally, we improved our pro forma net leverage ratio to 2.8 times in line with our deleveraging target. We also made further progress with product innovations and integration, particularly in the emerging category of autonomous endpoint management or AEM. which is the main building block for the future digital workplace offering. We also progressed with DEX Essentials, which is our SMB DEX offering, as well as with TeamViewer One, which is the digital workplace platform. Moreover, we are well on track regarding our agentic AI roadmap. I will share a few more details on this topic later in the presentation. but obviously also need to address one topic where we clearly perform below our expectations the one is standalone business one is arr decreased by two percent year over year in constant currency and mark will provide more details on this later but i can already say that we have immediately taken first actions we will continue to implement further measures and we are confident that this action will strengthen this part of the business going forward Ultimately, the slow pipeline conversions of 1E standalone business negatively impact our top line guidance for this fiscal year. Michael will explain the guidance update in the financial part of the presentation in detail then. And as usual, let's now take a look at the regions and customer categories and how they developed in the quarter. Revenue grew in constant currency across all regions in Q3. demonstrating the resilience and adaptability of our business. EMEA was once again our strongest region, delivering €101.5 million in revenue, which is up 6% year over year in constant currency. This very solid performance reflects the continuous robust enterprise momentum, and it underlines the relevance of our offering in this market. EMEA remains a reliable growth engine for TeamViewer, supported by a strong demand for our high-value solutions. In the Americas, revenue came in at 72.1 million euros, which is up 2% in constant currency, despite a generally subdued market environment in the US. This impacted deal volumes and slowed decision-making, particularly regarding the 1E business and in the public sector, where the recent government shutdown has been overshadowing customer conversations for quite some time now, after Doge in the second quarter. This was the next topic. APEC delivered €18.3 million in revenue, which is up 3% in constant currency, also driven by solid enterprise performance. We also secured promising DEX pilot wins in markets like South Korea, which is really reinforcing our strategic directions in the region, because it's clearly a new topic in the regions where we can position ourselves very nicely. If you look at our customer categories, enterprise continued to demonstrate strength. Revenue grew by 8% year over year in constant currency to now 57.9 million euros, and enterprise ARR increased by 12%, reaching 230.5 million euros in constant currency. And as I already said, this performance was driven more by TeamViewer's standalone enterprise, which grew ARR by 18% year-over-year in constant currency. This growth was then partially offset by the already mentioned disappointing performance from the 1E business. If we turn to SMB, Revenue grew by 3% in constant currency, reaching €134.1 million, while ARR remained broadly flat at €526.3 million. This reflects a course correction regarding our free user ecosystem and our SMB subscribers. To reduce churn and encourage product usage, for example also AI, We started to abandon all short-term monetization measures like free-to-paid and price-up campaigns in the third quarter and will continue with this approach in Q4 and beyond. As a consequence, short-term billings are negatively impacted and ARR growth is stabilizing around 0% constant currency. And of course, after significant upsets from the highest value segment into enterprise, as always. I mean, we take the highest value customers, move them up into the 10th product range. And what you see on SMB is the net effect after these migrations. Let's now look at the ARR value ranges in enterprise and SMB, where you can see some of the underlying dynamics. So all value ranges delivered good growth in enterprise underlying the healthy demand for our solutions across a wide range of customer profiles. The 100,000 to 200,000 range showed strongest momentum with 30% growth and even the largest value range of above 200,000 euro grew by 4% year over year. despite the weak performance from 1E, because 1E with its generally much bigger ticket sizes is clearly affecting that value segment of the stack, and therefore with the most negative impact in this segment. If you look at SMB, the new customer inflow was more muted. As I said, some strategic decisions we did on free-to-paid monetization, for example, and hence the ARR declined slightly in the lower value ranges. However, highest SMB value range of €1,500 to below €10,000 still grew by 5% year over year, reflecting the successful upselling into these higher product packages. So from the middle bucket into the higher bucket and then out of the higher bucket into enterprise, as you know. This is further supported by a continued net upsell from SMB to enterprise. which was 15.6 million this time, which I think demonstrates the effectiveness of this strategy of moving customers up the chain. We continue. Let me quickly explain where we stand in the post-merger integration process with 1E. Obviously, a lot is progressing as planned and as expected. I already mentioned our product launches. We had DEX Essentials and TeamViewerOne as our new digital workplace platform to the market, presented to the market. Marc will talk in a bit about our go-to-market approach around this, where we also clearly needed to adjust and harmonize our approach, as we had lost some momentum in the transition in the original sales motion of 1E, which is a very strong and dedicated enterprise motion. which we want to roll over across the company. We are making good progress from our perspective with the processes and infrastructure harmonization. For example, all former 1E colleagues are fully integrated into our organization and application landscape. And we're also progressing well with the role of Salesforce as our new joint CRM system. 1E was on Salesforce before, and we're going to roll this out across the whole company, which will also bring even more structure and rigor and processes in the enterprise motion. Unfortunately, we had a few former 1E people that left the company. This is natural, obviously, in an M&A process, but it was slightly more than expected, and that slowed down the progress, especially on the sales side a little bit. And with this, I'd like to hand over to Mark to explain what happened to the 1E business and how we are going to move this forward or turn this around. Mark.

Thank you, Oliver. Good morning, everyone. As Oliver already said, the standalone business for 1E was not good in the third quarter. It was significantly below expectations compared to the pre-acquisition growth trajectory, which I was proud of as 1E's CEO last year. Unfortunately, we lost a few key customers in Q3 and we were not successful in converting the pipeline and bringing in new DEX enterprise deals. We have to admit that the strong focus on the post-merger integration and the launch of the new joint products combined with the departure of some 1E employees impacted 1E's original sales motion, product prioritization and customer relationships. Moreover, the muted macroeconomic environment in Europe and the ongoing macro challenges in the US also impacted one of these sales by slower customer decision-making and reduced deal volumes. The US was traditionally one of the strongest market with a focus on public sector, as you know. It's obvious that discussions about the current government shutdown have been impacting buying behavior in the US way before the shutdown started. The good thing is we clearly identified these weaknesses and took immediate action. For example, I'm excited to have taken over leadership for all global sales teams and channels. And I'm currently in the process of harmonizing and unifying our go-to-market approach across all regions and product divisions to be able to scale. We have now enabled more than 200 sellers to sell the entire product portfolio, which is a massive potential for us. At the same time, Oliver has taken over responsibility for all marketing functions to support sales and go-to-market globally. Additionally, our new chief customer officer, Debbie Lolitas, is building up a global customer success and support organization with the clear goal to improve customer experience, satisfaction, and loyalty. In the next weeks and months, we will jointly focus on retaining the existing 1E customers, as well as converting pipeline for Q4, and of course, building new pipeline for next year and beyond. Of course, we will continue with our successful activity to cross-sell Dex Essentials into the TeamViewer SMB customer base, as well as develop TeamViewer One as the one-stop shop digital workplace platform. It's obviously very disappointing that the 1E business delivered in the third quarter, but this doesn't diminish the strategic value of combining TeamViewer and 1E technology to build something new and market leading to set us up for long-term sustainable growth. I'm proud of what we've accomplished since the acquisition. We've made significant progress integrating DEX technology into the TeamViewer portfolio and platform. The introduction of DEX capabilities to our existing customer base have delivered promising results. Within nine months, TeamViewer has doubled the number of customers using DEX solutions. Today, customers are using DEX Essentials on more than 100,000 endpoints. In short, we've positioned the company to deliver meaningful customer benefits and succeed long-term in the ever-changing market environment. In my new role as Chief Revenue Officer, I'm committed to driving pipeline and conversion for Q4 and beyond. Back to you, Oliver.

Thank you, Mark. And I'd like to say that we are really very happy to have Mark and his experience in our management board and really to see your commitment and his commitment for the joint company. And I think it's moving very well ahead on the harmonization on the go-to-market side. Very important topic besides DEX and DEX Essentials. Of course, we were also working on our AI capabilities. Clearly, very important proposition. We've successfully bundled them into what we call the TeamViewer Intelligence Suite and embedded AI at the core of our digital workplace offering. We have around 9,000 customers that have already opted into these new features as of now. So it's an opt-in, customers allowing us to inspect the data within sessions. So 9,000 opt-ins, which is a very meaningful number. And in September, last month of Q3, we had around 80,000 AI-generated session summaries that have been created by the TeamViewer intelligence users. Basically, they use them to optimize their IT service desk tasks with automated documentation. Early days, but this is a very promising, significant number, and I think it's a promising sign for our future success in GenTech operations, and it's growing from here. Based on the large customer base and user base, the data that we can derive from our solutions and integrations and millions of conducted remote support sessions, we have access to a unique and unmatched data pool and are really very well positioned to leverage this and create an intelligence layer that generates business value for our customers like faster problem resolution, less downtime, higher productivity of the service dev team. So clearly a stepping stone towards automation and autonomous endpoint management in the agentic world. And that's why we're pushing it so decisively. With Session Insights, Analytics and Copilot, which we already introduced into the market. We are driving this forward and we're working on launching more agentic offerings around this platform soon. To round up my presentation, I would like to show you a visualization of how we see our product offering positioned in the market, so-called house. I would like to underline again the strategic value of the 1E acquisition as it enabled us to successfully position us at the forefront of the emerging so-called digital workplace and autonomous endpoint management categories at the side of our leading frontline offering for the connected workforce. Through the unique combination of TeamViewer and 1E technology within the TeamViewer One platform, we were able to create an industry-leading one-stop shop for IT operations and autonomous endpoint management, which covers the full spectrum from proactive auto-remediation capabilities, the old DEX positioning, to the remote expert support, which is the TeamViewer side. And I think it's fair to say that customers across the globe do understand and embrace the value of DEX or AEM or automation and really buy into the strategic roadmap towards more automation and ultimately autonomous endpoint management. All of this is powered by AI, as I said before, as this is horizontally embedded across the entire portfolio and at the core of our offering. And with this, I hand it over to Michael for the financial updates.

Thank you, Oliver, and good morning, everyone. Let's now turn to our key financials for the third quarter of 2025. Go to the next slide, please. In Q3, TeamViewer delivered revenue of around 192 million euros, up 4% year-over-year in constant currency, and all regions delivered, again, performer revenue growth in constant currency. Our profitability remains strong. Performer-adjusted EBITDA increased to nearly 88 million euros, resulting in a margin of 46%. Performer-adjusted EPS was up 15% year-over-year compared to TeamView standalone in the prior year, reaching 34 euro cents for the quarter. And performer net leverage ratio further improved to 2.8 times, down from 2.9 times in Q2 2025 and fully in line with our deleveraging targets. Now let's take a closer look at the details of our Q3 results. Next slide, please. Performer revenue in Q3 grew by 4% year-over-year in constant currency to around 192 million euros. TeamViewer standalone delivered revenue of 177 million euros in constant currency and grew 6% year-over-year. This was supported by strong enterprise momentum in EMEA and in APEC. One E standalone pro forma revenue was 50 million euros in pro forma revenue, reflecting an 8% decrease year-over-year in constant currency. This decline was primarily driven by transformation-related headwinds and persistent macroeconomic challenges in the US. The ARR grew by 4% year-over-year in constant currency and reached 757 million euros. As Oliver explained, enterprise ARR grew by a double-digit percentage year over year, driven by the continued strength of the TeamViewer enterprise business. This growth was partially offset by weak performance from 1E. Equentially, the ARR was broadly flat, primarily due to the challenging US market negative FX impact. Importantly, our profitability remained strong with an adjusted EBITDA margin of 46%. Let's continue with our enterprise business on slide 16, please. Enterprise continued its high single-digit growth path in revenue and double-digit ARR, highlighting the underlying strength of TeamView's core business. Enterprise ARR grew by 12% year-over-year in constant currency, reaching over 230 million euros by the end of the quarter. This performance was primarily driven by the EMEA and APEC regions, both of which demonstrated robust enterprise momentum with growth exceeding 20% year-over-year. This was driven by the continued strong performance of TeamViewer Enterprise on a standalone basis. As mentioned earlier, 1E standalone performance was impacted by transformation-related headwinds and ongoing macroeconomic pressures, leading to notably weaker results in the US market. On the right side of the slide, you can see that the number of enterprise customers continued to grow both sequentially and year over year, reaching 5,216 at the end of the third quarter. Performer enterprise ASP remained stable at 44,000 euros per customer. Enterprise net retention rate was 97% in Q3 on a constant currency basis. Adjusted for upsell from SMB customers during the period, The enterprise NIR reached 102% in constant currency. However, it's worth noting that the weak contribution from 1E slightly damped the overall sequential trend. Let's now move on to our SMB business on slide 17. SMB ARR was 526 million euros flat year over year in constant currency. This reflects TeamView's strategic decision to pause all short-term monetization initiatives. This approach is aimed at revitalizing product usage across the free user ecosystem and the broader SMB customer base. However, in the short term, this impacts ARR and the other related KPIs on the slide. We deliberately halted all short-term monetization measures to reduce churn going forward and to encourage deeper engagement while strengthening the long-term value of our SMB offering. Performa SMB revenue reached 134 million euros for the quarter, up 3% year-over-year in constant currency. The number of SMB customers was 640,000 at the end of the quarter. Our SMB ASP was up 3% year-over-year and reached 822 euros. Let us now take a look at our cost base on the next slide. Performa adjusted EBITDA margin was strong at 46% in the quarter and benefited from cost optimization. Cost of goods sold remained broadly stable year over year. Sales expenses increased by 5% year over year, primarily driven by investment in enterprise technology stack to drive transformation into a data-driven sales organization. Marketing costs increased by 3% year over year, aligned with planned phasing from the previous quarter, and also reflect investments in branding and in the launch of Team VR1 and AI-related products. R&D costs were flat year over year and represented 11% of revenue. GA expenses were 40% higher year over year, mainly due to phasing and regulatory related costs. Other expenses amounted to 1.7 million. The 700K increase in other expenses is mainly driven by bad debt increase, which is mostly phasing related. Let us move on to net income and EPS development on page 19. Performer adjusted earnings per share was 34 euro cents in Q3, which is an increase of 15% year over year compared to the prior year. The main driver behind the increase was our robust profitability and our continued focus on optimizing operating expenses supported overall performance. Total interest expenses for the quarter amounted to 10.4 million euros, which is an increase of 6.1 million euros year over year. This was driven by the financing of the 1E transaction. The FX result reflects negative translation effects related to an intercompany loan as required under IFRS. Compared to the prior year, income taxes were lower in Q3 2025, reflecting a catch-up effect from the German tax rate decrease. With this, let's move on to cash flows on slide 20. Adjusted for non-recurring items related to the 1E acquisition, the laboratory cash flow amounted to 21 million euros in Q3. This translated into a cash conversion of 24% for the quarter and 49% year-to-date. Other factors influencing cash flow in Q3 included higher working capital driven by seasonal patterns at 1E, higher operating costs and increased interest payments related to the 1E acquisition. This was partially offset by lower tax payments, which mainly result from changes in our tax scheme and phasing effects. For the full year, we continue to anticipate a cash conversion rate of around 60%, which includes FX headwinds in the cash flow. I will now give you a short update to our financing on slide 21. We continue to deleverage in line with our target following the 1E acquisition. Our performer leverage ratio improved further to 2.8 times, down from 2.9 times in Q2. Cash and cash equivalents amounted to around 28 million euros at the end of the quarter. Net financial liabilities totaled 970 million euros at the quarter end. We successfully refinanced 30 million euros of the 175 million bridge loan through a private placement. This was structured as a bilateral agreement with a bank already engaged in one of our promissory notes. Private placements offer us a flexible alternative to traditional bank loans and help diversify our funding sources. Despite ongoing macro challenges, we remain firmly committed to disciplined capital allocation. Combined with our strong cash profile and solid cash conversion, this positions us well to achieve our leverage target of around 2.6 times by year end of 2025 and below two times by the end of 2026. Let us continue. with our financial guidance on the next slide. Based on the Q3 results and following a comprehensive analysis of the Q4 2025 pipeline, we have decided to update our full year 2025 pro forma guidance. Slower than expected conversion of the 1E pipeline into ARR, which subsequently delays the conversion of ARR into revenue, contributed to the revision of the full year 2025 pro forma ARR and revenue guidance. At the same time, our adjusted EBITDA margin guidance has been raised, driven by rigorous cost management. The table on this slide outlines the changes with previous guidance on the left and updated guidance on the right. Under guided FX rates of four main categories, including the US dollar exchange rate of 105, we now expect a total ARR to range between 780 and 800 million euros. Despite this ARR shortfall, our full year revenue guidance is expected to remain within the original full year 2025 guidance between 778 and 797 million euros, albeit at the low end. Our adjusted EBITDA margin guidance has been raised to approximately 44% driven by the rigorous cost management. Let me explain the currency impact for the ARR and revenue guidance changes on the next slide. Let's start with the update to our ARR guidance on the left. As we saw on the previous slide, the ARR guidance for 2025 has been revised downward by 35 to 40 million euros due to operational impact, which is mainly 1E related and partially due to our deliberate decision to rebuild the SMB ecosystem. Oliver and Mark discussed in detail the 1E performance and the actions we have taken to return the 1E business to growth. In addition, updated FX assumptions for our four main currencies result in around €20 million FX headwinds in the ARR. For revenue, updated FX assumptions led to around €12 million FX headwinds, as you can see on the right-hand side. Let me now briefly discuss our preliminary view on the full-year revenue impact in 2026. Management remains highly committed to accelerating ARR growth in 2026 and beyond. The reduced full year 2025 ARR expectations have, however, a negative impact on the 2026 revenue. This slide presents our preliminary view for the full year 2026 revenue. Under the guided FX rates, we now expect a revenue growth of approximately 2 to 6% year over year, corresponding to 790 to 825 million euros. In addition, our updated FX assumptions for our four main currencies based on full year 2025 expectations result in around 25 million euro FX headwinds, as shown on the right. Please note, we will provide official full year 2026 guidance and the further outlook for 2027 to 2029, including currency updates with the publication of our Q4 and full year 2025 results. With this, I would like to hand back to the operator to open the Q&A.

Thank you very much, ladies and gentlemen. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and then one on their telephone. you will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. Anyone with a question may press star and one at this time. And we have the first question coming from the line from George Webb from Morgan Stanley. Please go ahead.

Yeah, hi, Oliver, Michael, and Mark. I've got a few questions, please, and maybe I'll keep them to the core business. Well, actually not true. Let's go into 1E first. If we talk about the reasons why 1E saw weakness in Q3, I guess you gave a range of potential reasons, macro, impacting deal closures, some sales employees leaving, several churned customers. On the customer churn side, what information have you collected around why perhaps 1E lost those customers? That would be interesting to know. Secondly, on the SMB side of the business, you flagged that kind of change in strategy around free-to-pay monetization to aim to reduce the churn. That churn ticked up slightly in Q3. Why have you felt the need to make that pivot there at this stage? Is anything in that SMB market changing? And maybe one for you, Michael, on free cash flow generation for the year. I think the prior messaging was around 70% conversion before 1E, one-offs. To me, that starts to look a bit tougher after that Q3 free cash flow number. Was there anything in there we should be aware of? And I guess when you think about the full year free cash flow, could you provide any updated view that would be helpful? Thank you.

Yeah, maybe I can actually start with the last one. George, good morning, by the way. Fully right. Q3 is, by the way, what's more or less expected. That is a normal seasonal effect that is mainly due to the seasonality of the 1E business. So that's more or less not a surprise. However, you're spot on. Originally, beginning of the year, we expected rough cut cash conversion of around 70%. But with this situation now, we think we will still deliver a very strong but still muted 60% cash conversion, which is the result. when you put a relation out of a cash number ARR, which is the basis for the change, and there's still very strong EBITDA, which you see in the margin. That's the reason.

Mark, do you want to cover the 1E reasons for churn and what's going on there?

Yeah, absolutely. Hi, George. Yeah, look, if you look at it, there's basically sort of three or four sort of fairly large churn items. and the rest are fairly small. Not to sort of name them and go through one by one by detail, but the sort of trends are, yeah, one was really around a partnership type of arrangement where various reasons with the acquisition, it was unlikely it would continue with that. So that's one explanation. As you know, our federal government business is pretty significant and there was some compression there with the sort of doge effects earlier this year had some compression impact on that. Um, and then, yeah, there's, there's like, I think one example where, you know, we'd had an issue in some delivery of the product, um, some chat challenges integrating. Um, so, so there's good reasons for it there, you know, um, it's not as a sort of systemic problem there. It's more a couple of sort of like, you know, high, high value items that impacted us.

And then, um, George, if you come to SMB, strategy change, market change, I mean, the picture I would see is, or what we're seeing is, I mean, we have been seeing slight increase on churn quarter by quarter, so to say, and I think we discussed multiple times that we're going against it and try to have better onboarding for customers, which we have, customer health checks, implemented to understand the sentiment of our customers when they come, when they join, when they activate throughout the lifecycle, but then also when it gets closer to the renewal date. So this is in place. And one of the effects we were seeing by looking at this health analysis and the feedback we were getting more consistently now is that we have a slight deviation compared to the past with our price-value positioning. So, customers have been quite vocal about the repeated like-for-like price increases upon renewal and frankly didn't like it. It's not a market change in that sense. Certainly, as we know, entry-level, more price competitive, slight price pressure at the level below €500, compared to the upper part of the segment. So that has always been the same, so to say. So I wouldn't say the market has changed, but we have changed over the last year's quarters in how we treat our customers. And I think we came to the conclusion by looking at the health check that we need to correct this, so we need to put customer friendliness and happiness front and center again, and that does mean that we need to suspend some of these price increases. Now, we had now three years of price increase rounds, so I think it's probably more natural than not to suspend this and focus on customer health more. So that's one element where we needed to correct. The other element is As you know, historically, we have a vibrant free user ecosystem. We have cut off free users some years ago by starting in some markets where we felt monetization of these users in the long run is not helpful. That will not work. That was clearly something which made sense to have kind of proper usage on the platform and avoid misuse and scamming. But I think we have gone too far in strict monetization too early when users come to the platform. That does impact virality and it does impact the development of the free user ecosystem. And there's always a part of the free user ecosystem serving as a funnel for usage, for paid customers, for paid subscribers and for the proliferation of the product into companies and thereby bringing us new business leads. So that's an important dynamic, which obviously we know of, that's nothing new. But from our analysis, we have been too tight on monetization and thereby we have dampened the virality effect, which is an important thing. So that's also something which we're correcting. And the third element is We've always positioned additional products to the SMB customer base, so i.e. cross-sell with endpoint protection, backup, remote monitoring and the likes. This needs much stronger focus and we're implementing much more of this and have implemented over the last quarter and two quarters almost. Because now we have many more cross-sell products. We have, as Mark discussed, the DEX Essentials product for SMB. We have the TeamViewer One proposition early, but obviously something we want to position. We have the AI product. So there's much more to cross-sell and that requires additional focus. So our SMB strategy going forward and the go-to-market initiatives there is really strengthen for you the ecosystem again, avoid like-for-like price increases, rather sell richer products and position this new cross-sell product. And that is a shift in focus which is needed and which we have started to implement. Obviously, it will take some time, and there is a short-term negative effect on billings, which Michael pointed out. But even with this, we were able to keep the SMB ARR flat.

Thank you. I appreciate the detail.

The next question comes from Victor Cheng from Bank of America.

Please go ahead. Hi. Thanks for taking my questions. Good morning, all of them. Michael Mark. A couple of questions from my side. I guess first on margins. Obviously, you're not guiding the 26 now, but I think previously you've talked about aspirations for 27, 28 margins. Should we, you know, given the margin progression already this year, should we expect that to continue into 26 or you need more reinvestments on a lot of the kind of, you know, products that they're building out? And then second question is on the maybe, you know, focusing on the new products like Descentials, TeamViewer Intelligence, and... The customers you mentioned, I believe a lot of them will likely be on a free trial of 30 days. So how has they responded after the trial? And have you baked in any of these upside on the guidance for Q4? And then maybe last question, maybe a bigger picture, stepping back and thinking about the impact of AI as well. Are you seeing maybe less you know, demand and use case for remote support, because maybe AI is helping a lot of users, self-helping themselves, and a lot of these smaller businesses might not necessarily be taking on the DEX essentials and TVA intelligence yet. And how, you know, might you be addressing that? Thank you.

Yeah, thanks, Victor, and good morning. Let me take your first question on the margins. Maybe the most important message up front, the future outlook to 2028, slow margin improvements to 44% and 45% is in full swing and full impact. That's very important to us. There's no change, and we clearly see this. With the updated or raise of the margin for 2025 to 44%, we should not continue from here or believe that we are already there. Because 2026 is number one, because of the slower revenue growth, which we explained, there's obviously a little bit of margin pressure, but even more important, so as you rightfully say, we may also need a little bit of funds, which are very important to invest into the expected and clear growth pattern from 2027 onwards. We should not continue for 2026, but for the outer years, full in spring, 44, 45.

Then maybe to the next question. So your second question about DEX Essentials, TeamViewer Intelligence, TeamViewer One, all these new products, what are we seeing? It's not only free trials. As you point out, yes, we have. If you go to the website, there is business trials. And there is good conversion from the trials. So this is obviously self-set up, self-serving of customers. And we do see good conversion there, varying by the product, but that works. What is more important, though, on DEX Essentials, TBO1 is using our inside sales force. I mean, very strong inside sales footprint globally, as you know. And DEX Essentials and also TBO1 needs a little bit of hand-holding because it's a shift of many customers to move from unmanaged devices, so ad hoc connections to devices, to a managed device fleet, which makes it much stickier for us, but also for them. If you think about the service provider serving its customers, if that service provider can convince their customers, his customers, to move devices under constant management, that stabilizes revenue streams, makes it more sticky and also more interesting for our customers or the service provider. And that's why we hand-hold there with our inside sales to help them manage devices, move devices to the management base. And then we change the pricing structure, which is an endpoint-based pricing and the likes and the likes. So that's early days. We only launched these products recently. But as Mark pointed out, we have been able to win a good number of new logos already on DEX Essentials. It's a smaller ticket, clearly. It's made for SMB. But we see the inflow coming. TeamViewer won very early. So this is in restricted access, trial and testing, also trying the pricing. And TeamViewer Intelligence Session Insights, as I mentioned, 80,000 sessions. Every licensed customer has a free... session volume. And then when that customer has used up the volume, then there's a pricing mechanism and we see the first customers converting. So it's in the range between half a million and a million on any of these products. So starting to be visible, but obviously in the large SMB ARR base, it will take a while until this contributes meaningful growth. Therefore, we haven't baked any upside from these products into this full year guidance. And we have a very good visibility on how this SMB base is moving currently. We've been cautious in the outlook for this year. And we really see this as an early phase and the land grab driving market penetration with these new products. And then that links into the third question. What is AI doing to us? Clearly, everybody speaks about AI. We have a good first proposition with Session Insights, which we're using to improve the product proposition. As I said, every license has a free volume. Customers need to opt in and then they can use the Session Insights in every license. So that's happening. Are we seeing compression, less remote support needs from AI because of self-service as users? Not really yet. I think there's still a significant difference between what you can fix yourself when you are an educated IT user which I know you are and many of us are, but the overall situation is still that service providers are growing and having more devices to manage and more complex application landscape. So there will be a shift coming more and more over time. There will be more automation coming and there will ultimately also be autonomous endpoint management coming. That's why we believe the acquisition of OneE is so strategic to us. And that's why it's so strategic to put these propositions together into a platform proposition for digital workplace management and TeamViewerOne. So more relevant than ever. I think, if anything, also coming back from Dreamforce conference last week, there's so much talk and chatter about AI that What it does maybe is introducing a little bit of hesitation also on the enterprise side, because people really assess and evaluate the different solutions out there at this point in time.

Very clear.

Thank you.

The next question comes from the line of Alice Jennings from Barclays. Please go ahead.

Hi. Good morning, and thank you for taking my question. I've just got a couple. Firstly, on the weakness in 1E's ARR growth, would you be able to break that down into churn versus new customers and maybe quantify those elements for us? And then the second question is, just on the churn for 1E, do you expect any additional headwinds from churn in the fourth quarter? And when can we expect 1E to return to ARR growth?

Mark, do you want to take those?

Sure, yeah. Not to go into immense detail on the numbers, but it's sort of twofold, Alice. One, on the churn side, yes, as I mentioned, there was some churn events that impacted us, but also it's coupled with weaker bookings than we would have expected. We have a very good pipeline. Some of that pipeline that we would have expected to close through the year has been It hasn't gone away, but it's been slowed down. And there's a couple of sort of things that have impacted us. As I've sort of mentioned, we did lose quite some important members of the 1E team. It's been disruptive as we've integrated the companies very quickly. So that's caused some disruption to the sort of normal cadence and flow of how we ran the business. The benefit, of course, is that this huge focus on integrating one into team viewer and then enabling all of the team viewer go to market to be accomplished to be able to go out and sell decks and sell this automation story was key that was the major strategic reason for the acquisition as oliver mentioned and and we have worked really really hard and sort of really enabling the entire organization so we definitely believe we'll see a return to growth in Q4 on the DEX side as we start to see some of that pipeline that has been elongated start to close. And as we start to see some of the early signs of those cross-sell opportunities start to close as well. Other churn items coming up, we obviously monitor very, very carefully every single customer, every interaction. nothing substantial in q4 on the deck side um really focused on on deal execution really now in q4 just to to get to get back to some growth on the on the pure deck side okay great thank you very much next question comes from ben castillo bernard from exam bmp peribus please go ahead morning thanks for having me on a couple for me really on the one e business please

Just trying to assess with regards to the customer churn, you know, how much is just single customer concentration risk versus a broader trend? Is this the trend you just saw in Q3? Did that start sooner? You know, why did it accelerate so much in Q3? And then I guess following on from Alice's question, but if you look at your customer base here, you know, we're approaching the year end, the important enterprise renewal cycle. what are you assuming for 1E's retention rates into Q4? Should we be thinking that is stabilizing from here or further downside to come? And then again, sorry to label the point here, but on the employee departures at 1E, could you maybe give us a sense of, you know, were these important employees sales focused or product focused? And if you look at your sales force today, you know, how much of that is kind of new

new bodies in there versus the existing sales force you had 12 months ago thanks uh yeah maybe i i start first um and then mark please chime in so i think one e customer concentration so yes as you know 300 300 enterprise customers so i think clearly single customer events do make a difference um uh I wouldn't say from what we see, this is a broad trend across the customer base, as Mark has already pointed out. I mean, there was a larger deal here, which started as a partnership deal, which we then converted into a customer relationship, but then felt strategically doesn't make much sense. Another big deal that had the downsell, which we were discussing in Q2 already. few customers, a couple of customers not happy with the roadmap development because of the kind of shifted focus to integration and new product development. So in hindsight, it's probably a little bit too much overexcitement maybe on resource allocation to the new offerings versus the old roadmap delivery. I think that's fair to say. And that has then also led to customers walking. And then some price pressure overall or lack of upside. So not a major trend, but yes, here and there a customer. Also not an acceleration in any way in Q3. I think it's more the opposite that in a quarter like Q3, you obviously normally would see more deal inflow, which then compensates for the churn. And therefore you would normally see the nose lifting. in performance, that didn't come on the new side, on the deal conversion, because we had lots of split deals. And that then creates this overall more negative picture than it is in Q2 and Q1. And that's hence also the reason why we said, okay, what is the outlook for the year? And so therefore, that's the dynamic there. That leads to your second question. What are the assumptions on 1E retention? um no major change go forward so when we look at the remainder of the year obviously we assume again to my point new deal conversion there's pipeline deals um good pipeline deals and we we would want to convert a few nice ones of them towards the end which we which we always said um but there is no significant change on the churn side. As Mark pointed out, it's relatively calm now towards year end. We know the deals one by one. We're very close to the deals. And I don't think we have any visibility of any major deal not renewing at this point in time. So I think that the assumption towards year end, until year end, I think it's pretty deal by deal, deal by deal discussion. Organization, who did we lose? A few senior sellers, especially the senior seller leading the Americas. There was a loss. The senior seller leading Europe is with us and is fully integrated into the sales organization now. We have enabled the TeamViewer sellers to position the product. which is starting to work. We have a very significant pipeline and POV starting, as Mark said. So they're not totally new, untrained. They have been out there in the market positioning and it's great to see the pipeline build, especially in EMEA, but also already first POV started in Asia. So that's going in the right direction. But it was a discontinuity from 20-odd trained or 15, 50 to 20 well-trained sellers down and distributing the knowledge across the TeamViewer Salesforce. But that is largely done. And now it needs rigor, cadence, systems, and pipeline, additional pipeline builds, which Mark is working on together with the president. I don't know, Mark, whether you want to chime in.

Yeah, no, absolutely. Obviously, it's always disappointing when you lose people. And Yeah, that was a shame because it does disrupt the way that we ran the business. I think we have retained really key individuals. I mean, as with all these things, I mean, we can hire new sellers, we can train the team viewers and we have done, we can wrap people quickly and, you know, me now taking over sales and putting in the same rigor and discipline we had on the one of your side last year. into the wider entire TeamViewer enterprise motion, I think will be beneficial because we really drive that kind of deal execution across the board. But we have retained a lot of really key product people, which is really important because there's a lot of deep domain expertise and knowledge around end-user computing, automation, DEX. And a lot of those people remain within the business and committed. And we've even elevated some of those people. So not all doom and gloom, really. I think there's actually, we've retained a lot of good people. But yeah, obviously disappointing. And it has impacted our performance this year by losing some key personnel.

Maybe one mini add-on from my end, Ellis, to end also on a high. What is important next to the loss on some of the sellers? What we did not lose, is the CSMs, the former 1E CSMs. They're with us, and they're obviously super key and vital, and this is what is important for Mark now, ramping the overall seller's team of 250 into full DEX capability, sales capabilities. The CSMs play obviously a wider role, so that is obviously maybe a little bit on a high end.

Thank you. I appreciate the detail. Thanks.

Last question comes from Mohamed Morwana from Goldman Sachs. Please go ahead.

Great. Good morning, everyone. Thanks for taking my question. I had two. The first one was just on 1E. I remember at the time of the acquisition, you sort of anticipated standalone growth in the sort of mid-teens, and I think post-synergy in excess of 20%. How feasible does this sort of target look, at least in the next 12 months, given some of the issues that you need to work through? And then secondly, I noticed sort of R&D was flattish. Was this just a sort of quarterly blip, or do you feel that R&D will start to kind of grow again? Thank you very much.

I can start in just a second, Mo, with Monique. So it's a positive mix of seasonality and insourced, which was formerly outsourced, and hiring in, let's call it, less cost-intensive areas like India and Porto. This is the mix of the three.

Yeah, first question maybe. Yes, you're right in how you described the targets. I think the targets are the right targets. Obviously, we're working through sales methodology, building pipeline, significant building pipeline, converting the deals. I think if we look at the comp base, comparable base of 1E, clearly this year, not a strong year, as we now discuss multiple times. And significant headwinds we had this year was a downsell in some quarters of some customers and loss of some customers. So if we take that picture and look at kind of 2025, it is a difficult picture, difficult performance. I think when you go back in history, 1E didn't have that for a long while and never for this. And then if you look at the pipeline, it doesn't need a significant deal conversion or it needs some deal conversion, but not miracles to get back to double digit growth and then towards mid-teens. So when we will be there, we don't know. That's why we're cautious also for 2026 revenue. Clearly, this is enterprise and enterprise is always back and loaded. So the way we think about it is this year we gave clear guidance on ARR outcome. This will translate into revenue effect. We will work hard to convert the pipeline in Q1, Q2, Q3, and then also Q4 next year. But because we don't know when exactly this will kind of really accelerate, we have been taking a very cautious approach to revenue development next year. I think it's fair to say that we really kind of put in the floor there and the bottom to make sure that we're in a great position towards next year. But Wani needs to accelerate. And that's what Mark is working on. And the pipeline is developing very nicely for that. Mark, I don't know if you want to give you a... Yeah, absolutely.

I mean, I think one thing I would say is that Obviously through this year, as we know, we've been talking about 1E standalone performance hasn't been great. However, we now have more than 200 sellers enabled on selling the 1E solutions, the DEX and automation. It's a very high profile topic in enterprises. I mean, you know, effectively what we're taking to market with DEX is a way to take an agentic approach to how we think about IT support. And that is a very relevant topic for every enterprise today. And every enterprise is looking at how do we automate more? How do we use AI in order to improve the way that we do IT support and cut down costs, et cetera. This is a really hot topic. And now we have way more sellers out there talking about this and talking to customers. So we're seeing pipeline go up significantly. it was a short-term pain to go through that process of integrating their businesses very quickly, train everyone, disrupt the 1E way of working. But I do believe that we're now set up for success. And as we go into next year, now we can really focus on deal conversion. And I think we'll start to see a better performance. But as Oliver said, we're cautiously taking a cautious approach there. But we're very, very focused now on how we run the business, the deal flow, the discipline around the sales organization, the number of POVs coming in, et cetera, et cetera. So, you know, all hands on deck really to drive that performance.

Great. Thank you all.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Oliver Stahl for any closing remarks.

Yes. Thank you very much. Thank you once again. Thank you for the questions and your time. Also early and on short notice. Actually, honestly, thank you, Mark. It's 2 a.m. or was 2 a.m. based out of Florida. Thank you for joining. And we look forward to keeping you updated on our progress. All hands on deck, as Mark said, working through the quarter. I think we now have a guidance out there for Q4 and also for next year, which is kind of kitchen thinking. And from here, I think we can work towards performing against this new baseline. And we feel we have all the instruments and pipeline in our hands to move this in the right direction. So looking forward to speaking soon again, keep you updated. And obviously, we will engage with investors quite a bit also during the course of the day and the next few days to answer all relevant questions. Again, thanks for the time. I appreciate your questions. Bye bye.