Dusseldorf Teamviewer boss Oliver Steil didn’t bother with glossing over things that are common in the business world. The results of the third quarter were “obviously very bad” and “disappointing”, he said on Wednesday, audibly contrite, when he tried to explain the preliminary figures to investors, which the software manufacturer had recently published in an ad hoc announcement.
This was not so easy. Teamviewer once again undercut the analysts’ expectations and also significantly lowered the forecast for the current year and beyond. It was a shock for the shareholders. After the announcement on Wednesday, the price rushed by up to 25 percent, Thursday morning it continued to give way. Since the beginning of the year, the decline has been more than 60 percent – in the MDax share index, only Bechtle is worse off.
The problems are manifold: The corona boom was not as sustainable as hoped, business with corporate customers still takes time, and expansion to China and Japan is stalling, while high investments weigh on profitability. Nevertheless, the management sought trust. The skepticism is understandable, said CFO Stefan Gaiser, but the company is “to a certain extent in a better position than a few years ago”.
Teamviewer develops solutions for the remote maintenance and control of computers of all kinds. The program with which IT staff can connect to PCs is particularly widespread, but the software is also suitable for use in industry. If, for example, service technicians are maintaining a machine, they can connect experts in the headquarters via a video connection. Solutions for digital customer service are now also in the portfolio.
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The corona crisis had given the MDax member a boom. The business is still growing, but much more slowly than expected. The key figure “Billings” rose by only 18 percent to 126 million euros. These are the invoices that the company issues and receives in the respective accounting period. Given the lower revenue and high costs, the adjusted margin (Ebitda) fell 21 percentage points to 34 percent.
Why the fourth quarter will be particularly important
Teamviewer’s growth story contains some disappointments. Example corporate business: The software manufacturer wants to make it easier for companies to manage, integrate and secure the software with the Tensor product. However, sales are tedious and the sales cycles are longer, said CFO Gaiser.
The fourth quarter is now particularly important, emphasized the management, because many customers would have to decide whether to extend their subscriptions. The first developments are positive, but there is no certainty how many major customers will stay.
The Teamviewer management also expects a lot from international expansion, and there are problems here too – especially in the Asia-Pacific region with China and Japan. Despite high investments, business stagnated in the third quarter. For comparison: In Europe, the company recorded an increase of 25 percent. CEO Oliver Steil announced that he wanted to hire “better management staff” for the region.
In addition, the management admitted problems with the customer acquisition strategy: Teamviewer initially offers many applications free of charge and thus tries to win users over to the paid offer. However, that did not work well recently – also because of numerous new competing offers that are also available free of charge.
Most analysts continue to recommend the share
All in all, the management was clearly too optimistic. But it absolutely wants to avoid further disappointments: “We understand that we should take a conservative approach to the forecast,” emphasized CEO Steil. In the future there will be a certain margin of error. The message: there shouldn’t be any more negative news.
The Teamviewer CEO had to revise his forecast for the current year downwards and wants to be more cautious in the future.
(Photo: dpa)
Most analysts continue to recommend the share, although a downward adjustment of the price targets is to be expected. The reduced medium-term outlook shows that Teamviewer can no longer be classified as a software manufacturer with disproportionately high growth for the time being, says Holger Schmidt, an analyst at Bankhaus Metzler. He recommends buying the paper, but reduces the fair value to 23 euros.
“Correcting the over-ambitious goals and expectations also opens up opportunities,” emphasizes Schmidt. Adjustments to the rapidly growing structure, better alignment of sales, and growing awareness through sponsorship partnerships with Manchester United and motorsport teams from Mercedes – all of this should strengthen growth in the mid-ten range.
But the share will probably only recover gradually, wrote analyst Andreas Wolf from Warburg Research in an assessment: Confidence must first be restored.
More: Teamviewer CEO in the podcast: Why is a German MDax company becoming the main sponsor of Manchester United?