TeamViewer AG continues its high growth combined with high profitability
Quarterly Statement Q3 2019
TeamViewer AG continues its high growth combined with high profitability
- Q3: Billings up 63% and Cash EBITDA up 95%
- 9M: Billings up 45% to EUR 224 million
- 9M: Cash EBITDA up 54% to EUR 120 million
- Continued subscriber growth to more than 430,000
- Further deleveraging and lower net debt due to strong Cash EBITDA growth
- Full-year guidance confirmed
TeamViewer AG continued its profitable growth during the first nine months of fiscal year 2019. Billings increased by 45% year-over-year to EUR 224 million (9M 2018: EUR 155 million). In this period, Cash EBITDA grew by 54% to EUR 120 million (9M 2018: EUR 78 million) resulting in an improved Cash EBITDA margin of 53% (9M 2018: 50%). Growth was mainly driven by a strong increase in subscriptions resulting from key strategic initiatives, including the successful Enterprise product roll-out.
Oliver Steil, CEO of TeamViewer, said: "Our first results as a listed company underscore TeamViewer's strong financial profile combining high growth with high profitability. The traction of our strategic growth initiatives is reflected in our billings growth, and our subscription based Software as a Service business model results in very good earnings growth."
Stefan Gaiser, CFO of TeamViewer, said: "The strong billings and Cash EBITDA growth in the third quarter underpins our confidence in our 2019 targets. We are therefore well on track to deliver on our full-year guidance."
EUR m Q3 2019 Q3 2018 YoY Change 9M 2019 9M 2018 YoY Change Revenue 102 73 39% 283 175 62% EMEA 57 43 34% 160 103 55% AMS 32 22 46% 88 52 69% APAC 13 9 45% 35 20 74% Billings 83 51 63% 224 155 45% EMEA 36 23 54% 116 82 41% AMS 36 20 75% 77 48 60% APAC 11 7 55% 31 24 30% Cash EBITDA 46 24 95% 120 78 54% Margin (%) 56% 46% / 53% 50% Number of subscribers (LTM, in thousand) >430
Initial public offering of TeamViewer AG
On September 25, 2019, TeamViewer AG started its trading on the regulated market segment of the Frankfurt Stock Exchange (Prime Standard). In total, 75,000,000 ordinary bearer shares with no par value from the holdings of the Existing Shareholder Tiger LuxOne S.à r.l. have been placed with investors, consisting of 60,000,000 Base Shares and 15,000,000 Additional Base Shares in full exercise of the Upsize-Option. Shares have been sold at a price of EUR 26.25 per share.
During the first nine months of 2019, TeamViewer continued to drive tangible growth initiatives along three key strategic dimensions: strengthen customer segment coverage, increase the number of use cases, and expand the geographical footprint.
TeamViewer's new enterprise product showed significant traction. Subscribers with annual contract value (ACV) above EUR 10,000 per year grew strongly by 60% to 590 customers in the third quarter 2019 year-over-year.
An example for innovative new use cases is TeamViewer Pilot, an Augmented Reality (AR) product, that enables field professionals to receive live guidance from remote experts. With the recent release of version 2.0, TeamViewer Pilot now supports Android devices as well as headsets and smart glasses.
By now, TeamViewer has a truly global footprint with offices in major growth regions. During the first nine months the Company has substantially strengthened its activities in these regions to further drive geographic expansion. Furthermore, TeamViewer has initiated the setup of a new R&D hub in Greece to further accelerate its innovation roadmap.
Continued strong growth in billings
TeamViewer's billings in the third quarter 2019 grew by 63% year-over-year to EUR 83 million (Q3 2018: EUR 51 million). For the first nine months, billings were up 45% year-over-year to EUR 224 million (9M 2018: EUR 155 million). On a regional basis, AMS (North and South America) saw the highest growth in billings with 60%, followed by EMEA (Europe, Middle East and Africa) with a 41% and APAC (Asia and Pacific Countries) with a 30% increase for the first nine months. In the third quarter 2019, billings grew by 75% in AMS, by 55% in APAC and by 54% in EMEA.
The continuous growth in billings is driven by TeamViewer's 103% net retention rate combined with a strong expansion in new subscribers resulting in more than 430,000 paying subscribers at the end of the third quarter (30 Sept 2018: 215,424).
Significant Cash EBITDA and margin increase
TeamViewer invested substantially in its research and development as well as sales and marketing operations during the first nine months. Due to its efficient customer acquisition model, total costs as percentage of billings grew slower than billings, resulting in a 3 percentage point Cash EBITDA margin increase to 53% compared to the same period last year.
Cash EBITDA was up 54% to EUR 120 million (9M 2018: EUR 78 million) for the first nine months. It grew by 95% to EUR 46 million (3Q 2018: EUR 24 million) in the third quarter year-over-year.
Cash EBITDA means EBITDA adjusted for specific non-recurring items, and profit and loss effective change in deferred revenue. It is a useful metric for evaluating TeamViewer's performance as it facilitates comparisons of core operating results from period to period by removing the impact of changes in deferred revenue, its capital structure, asset base, tax consequences and specific non-recurring costs and others.
Net income was EUR 59 million for the first nine months, compared to EUR 0 million in the prior year period. In the third quarter net income was EUR 14 million (3Q 2018: EUR 10 million)following the switch to a subscription model.
TeamViewer's net financial debt decreased following a debt-equity-swap which was implemented prior to its initial public offering. The leverage ratio improved from 4.9x as of year-end 2018 to 3.7x by the end of the third quarter, driven by substantial Cash EBITDA growth in last twelve months (LTM) resulting in strong cash flows and the decrease in debt. TeamViewer continues to expect a further improvement of the leverage ratio to about 3x by year-end 2019.
Revenues higher than billings due to deferral effects
Revenues for the first nine months (EUR 283 million) are higher than billings (EUR 224 million) due to the significant release of deferred perpetual license revenues. As the transition to subscription was fully completed in 2018 and the vast majority of perpetual revenues is recognized by year-end 2020, the effect will reverse, and billings will exceed revenues in the medium term.
Considering TeamViewer's performance in the third quarter and the positive outlook towards the last quarter of the year, the company confirms its targets for fiscal year 2019. Given the strong historic net retention rate above 100% and expected new billings contribution in the fourth quarter, the company is targeting the upper end of the billings guidance. At the same time, TeamViewer continues to invest in its future growth potential through additional investments into Sales & Marketing and Research & Development. Therefore, TeamViewer is targeting the mid-range of Cash EBITDA guidance.
FY 2019 APM Guidance Fully Confirmed
FY 2018 FY 2019 Billings Billings EUR 230m EUR 310 - 320m % Y-o-y Growth +25% 35 - 39% growth Renewal (Net Retention) >100% Marginally above 100% Revenue EUR 258m EUR 386 - 391m Cash EBITDA EUR 121m EUR 177 - 183m Cash EBITDA margin 53% >60%
###About TeamViewer As a leading global remote connectivity platform, TeamViewer empowers users to connect anyone, anything, anywhere, anytime. The company offers secure remote access, support, control and collaboration capabilities for online endpoints of any kind and supports businesses of all sizes to tap into their full digital potential. TeamViewer has been activated on more than 2 billion devices; up to 45 million devices are online concurrently. Founded in 2005 in Göppingen, Germany, the company employs around 800 people in offices across Europe, the US, and Asia Pacific. For more information, go to www.teamviewer.com?and?follow us on social media.
Göppingen, November 11th, 2019
IR calendar TeamViewer
Frankfurt - Roadshow Tuesday, Nov. 12th Barcelona - Technology, Media & Telecom Conference Wednesday, Nov. 13 - 14th New York - Roadshow Monday, Nov. 18 - 19th London - Roadshow Wednesday, Nov. 20th
Certain statements in this communication may constitute forward looking statements. These statements are based on assumptions that are believed to be reasonable at the time they are made, and are subject to significant risks and uncertainties, including, but not limited to, those risks and uncertainties described in TeamViewer's disclosures. You should not rely on these forward-looking statements as predictions of future events and we undertake no obligation to update or revise these statements. Our actual results may differ materially and adversely from any forward-looking statements discussed in these statements due to several factors, including without limitation, risks from macroeconomic developments, external fraud, lack of innovation capabilities, inadequate data security and changes in competition levels.
Alternative performance measures (APM) This document contains certain alternative performance measures (collectively, APMs) including billings, Cash EBITDA and Cash EBITDA margin that are not required by, or presented in accordance with, IFRS, German GAAP or any other generally accepted accounting principles. TeamViewer presents APMs because they are used by management in monitoring, evaluating and managing its business and management believes these measures provide an enhanced understanding of TeamViewer's underlying results and related trends. The definitions of the APMs may not be comparable to other similarly titled measures of other companies and have limitations as analytical tools and should, therefore, not be considered in isolation or as a substitute for analysis of TeamViewer's operating results as reported under IFRS or German GAAP. APMs such as billings, EBITDA, Cash EBITDA and Cash EBITDA margin are not measurements of TeamViewer's performance or liquidity under IFRS or German GAAP and should not be considered as alternatives to results for the period or any other performance measures derived in accordance with IFRS, German GAAP or any other generally accepted accounting principles or as alternatives to cash flow from operating, investing or financing activities.
TeamViewer has defined each of the following APMs as follows: "Billings" represent revenue adjusted for change in deferred revenue p/l effective; "EBITDA" means operating (loss)/profit before depreciation and amortisation; "Cash EBITDA" means EBITDA adjusted for specific non-recurring items, change in deferred revenue p/l effective; "Cash EBITDA margin" means Cash EBITDA expressed as a percentage of billings.
Operational metrics This document also includes certain operational metrics, including net retention rate, used by management in monitoring, evaluating and managing its business. The definitions of these operational metrics may not be comparable to other similarly titled measures of other companies and have limitations as analytical tools and should, therefore, not be considered in isolation. TeamViewer has defined net retention rate as follows: "Net retention rate" means annual recurring billings in the period considered less gross value churn plus billings from upselling and cross-selling, including foreign exchange effects and expiring discounts, as a percentage of annual recurring billings in the previous the period considered.
Consolidated Profit and Loss Statement (EUR m)
Q3 2019 Q3 2018 % YOY 9M 2019 9M 2018 % YOY Revenue 102 73 39% 283 175 62% Cost of sales (13) (12) 5% (36) (35) 5% Gross profit / (loss) 89 61 46% 247 140 76% Other income 8 0 >100% 16 1 >100% Research and development (10) (6) 70% (27) (17) 60% Sales (14) (8) 81% (35) (21) 64% Marketing (6) (4) 48% (17) (12) 40% General and administrative (44) (6) >100% (64) (18) >100% Other expenses (0) (0) >100% (1) (0) >100% Bad debt expense (5) (1) >100% (11) (4) >100% Operating profit / (loss) 18 36 -49% 108 69 58% Unrealized foreign exchange gains / (losses) 3 (3) - (1) (16) -91% Realized foreign exchange gains / (losses) (21) (0) >100% (20) (0) >100% Finance income 17 8 >100% 39 12 >100% Finance costs (37) (17) >100% (77) (54) 42% Profit / (Loss) before taxation (21) 23 - 49 10 >100% Tax income / (expense) 34 (13) - 10 (10) - Profit / (Loss) for the period 14 10 >100% 59 0 >100%
Consolidated Balance Sheet (EUR m)
September 30, 2019 December 31, 2018 Non-current assets: Property, plant and equipment 12 2 Goodwill 591 584 Intangible assets 239 253 Deferred tax assets 2 0 Other non-current assets 5 1 Total non-current assets 850 840 Current assets: Trade receivables 9 15 Cost to obtain a contract current 0 1 Other current assets 10 3 Current tax assets 7 0 Financial assets 0 10 Cash and cash equivalents 27 80 Total current assets 54 108 Total assets 903 948
September 30, 2019 December 31, 2018 Equity: Issued capital 200 0 Capital reserve 310 116 (Accumulated losses)/retained earnings (474) (333) Foreign currency translation reserve 1 0 Total equity 37 (217) Non-current liabilities: Interest-bearing loans and borrowings 610 679 Deferred revenue 7 47 Deferred tax liabilities 0 19 Financial liabilities 0 3 Total non-current liabilities 617 748 Current liabilities: Interest-bearing loans and borrowings 3 155 Trade payables 8 7 Deferred revenue 213 233 Accrued expenses and other payables 22 14 Current tax liabilities 0 0 Provisions 2 1 Financial liabilities 0 7 Total current liabilities 249 417 Total equity and liabilities 903 948
Consolidated Statement of Cash Flow (EUR m)
For the nine months ended September 30, 2019 2018 Cash flows from operating activities: Profit for the period (net income/net loss) 59 0 Amortization and depreciation 27 22 (Gain)/ loss on sale of fixed assets (0) 0 (Increase)/decrease of provisions 1 0 Unrealized foreign exchange (gains)/losses 20 16 Non-cash share-based compensation expenses 27 1 Financial result effect 38 42 Changes in working capital (63) (16) Tax expense/(income) (10) 10 Taxation paid (15) (1) Interest paid (other than borrowings) (0) 0 Net cash from operating activities 84 75
For the nine months ended September 30, 2019 2018 Cash flows from investing activities: Investments 0 0 Capital expenditure (8) (8) Finance effects 0 0 Net cash used in investing activities (8) (8) Cash flows from financing activities: Loans & borrowings (136) (41) Repayments of borrowings (179) (4) Proceeds from bank borrowings 74 0 Payments of lease 0 (4) Interest paid on borrowings (27) (37) Proceeds / payments from the settlement of derivatives 0 0 Proceeds / payments of capital contribution 0 0 Proceeds / repayments of intercompany loans 0 0 Proceeds / payments of intercompany interest 0 0 Net cash from financing activities (136) (41) Net change in cash funds (60) 25 Other cash effects for balance sheet reconciliation1 6 (1)
1. Including net foreign exchange difference, net change from cash risk provisioning, internal mergers and transfers
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