TeamViewer AG ((DE:TMV)) has held its Q3 earnings call. Read on for the main highlights of the call.
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TeamViewer AG’s recent earnings call painted a complex picture of the company’s current standing, highlighting a mix of strong profitability and enterprise growth, yet revealing significant challenges in other areas. The sentiment conveyed was one of cautious optimism, tempered by concerns over the 1E business and stagnant SMB ARR. While innovative product developments were noted, revised guidance and employee departures underscored areas needing attention.
Enterprise ARR Growth
TeamViewer’s Enterprise ARR saw a commendable 12% year-over-year growth in constant currency, reaching EUR 230.5 million. This growth was primarily fueled by strong performances in the EMEA and APAC regions, showcasing the company’s ability to expand its enterprise footprint despite broader market challenges.
Strong Profitability
The company reported a robust pro forma adjusted EBITDA margin of 46% for Q3, highlighting its strong profitability and resilience in a challenging economic environment. This performance underscores TeamViewer’s operational efficiency and ability to maintain profitability even as it navigates market headwinds.
Pro Forma Net Leverage Improvement
TeamViewer made significant strides in improving its financial health, with the pro forma net leverage ratio improving to 2.8x. This aligns with the company’s deleveraging targets, reflecting a disciplined approach to managing its financial obligations.
Innovative Product Developments
TeamViewer continued to innovate with new products such as DEX Essentials, TeamViewer One, and the Agentic AI roadmap. Notably, 9,000 customers have opted into AI features, indicating strong interest and potential growth in this area.
1E Stand-Alone Business Decline
The 1E stand-alone business faced challenges, with ARR decreasing by 2% year-over-year in constant currency. This decline was attributed to customer loss, pipeline conversion issues, and broader macroeconomic challenges, indicating areas where strategic adjustments may be necessary.
SMB ARR Flattening
The SMB segment experienced a flattening in ARR year-over-year in constant currency. Strategic shifts aimed at long-term growth impacted short-term billings and ARR growth, suggesting a need for careful management to balance immediate performance with future potential.
Revised 2025 Guidance
TeamViewer revised its 2025 ARR guidance downward by EUR 35 million to EUR 40 million, citing operational impacts and a EUR 20 million FX headwind. This adjustment reflects the company’s realistic assessment of current challenges and its strategic recalibration to address them.
Employee Departures Impact
The loss of key 1E sales employees resulted in disruptions to sales execution and pipeline conversion, highlighting the critical role of human resources in maintaining business momentum and the potential impact of workforce changes on performance.
Forward-Looking Guidance
Looking ahead, TeamViewer projected a 4% revenue growth year-over-year in constant currency, with a pro forma ARR of EUR 757 million. The Enterprise business remains a key growth driver, with an 18% increase in ARR. Despite challenges in the 1E business, the company maintained a strong adjusted EBITDA margin of 46%. Updated full-year guidance adjusted ARR expectations to EUR 780 million – EUR 800 million, while raising the adjusted EBITDA margin guidance to approximately 44%, reflecting cautious optimism amid slower pipeline conversions and FX headwinds.
In summary, TeamViewer AG’s earnings call revealed a company navigating a complex landscape with a mix of strong profitability and enterprise growth, yet facing significant challenges in the 1E business and SMB ARR. The sentiment was one of cautious optimism, with innovative product developments offering potential growth avenues. However, revised guidance and employee departures highlighted areas needing strategic focus. Investors and stakeholders will be keenly watching how TeamViewer addresses these challenges moving forward.