The most important problem in worth investing will not be discovering low-cost firms, it’s discovering worth the place others don’t see it. With a 9% progress in 2024, it’s price analyzing the information reported to see if is a great determination to have in our portfolios. On condition that the business is presently buying and selling at 30x instances, whereas $TMV.DE is buying and selling at 15x we have now to offer them a search for the alternatives and an opportunity to show Mr. Market improper.
Supply: YT RealWear Acquires Almer Applied sciences, backed by TeamViewer.
Key highlights
TeamViewer ($TMV) reported a 9% income progress in 2024, demonstrating resilience within the distant entry market.
The acquisition of 1E, a frontrunner in Digital Worker Expertise (DEX) administration, for $720M might strengthen TeamViewer’s enterprise choices.
TeamViewer is making daring strikes into North America and APAC. Will this be the important thing to unlocking its subsequent part of progress?
Enterprise Overview
Teamviewer was based in 2005 in Germany and was designed to cut back journey time and permit distant duties on any machine. So far, it’s put in in almost 2.5 billion units, with multinational purchasers, comparable to DHL, Coca-cola, Volvo, and BOBST. With 640.000 subscribers worldwide with a formidable retention charge of 100%. Thought of essentially the most salient model amongst IT professionals for distant connectivity options via a TMV model survey (2021-2024 n=4000-4400 throughout 5-6 key markets).
Supply: Teamviewer This autumn/24Y presentation
TeamViewer operates on a subscription-based mannequin throughout a number of product classes, together with:
Distant Help Options – Safe distant entry and troubleshooting.
Enterprise Connectivity Options – IT/OT integration for giant organizations.
Digital Worker Expertise (DEX) – Enhancing digital office effectivity.
Frontline Productiveness Options – AR and blended actuality instruments for industries.
Via its partnership with RealWear, TeamViewer affords augmented actuality (AR) and blended actuality (MR) options to optimize operations in manufacturing, logistics, and after-sales companies, enhancing productiveness and effectivity.
In 2024, TMV reported a income progress of 9% (in fixed forex), reaching €671.4 Million, being €520M from small and medium companies, and €151.4M from enterprises, this newest quantity had a progress of 24% highlighting the technique the place the corporate is in search of develop. The FCF margin has been sustainable via the years, with a 35% common.
Supply: Finchat
The current acquisition of 1E the corporate chief in DEX administration instrument at an enterprise worth of USD 720 million, is trying to place Crew Viewer as a broad IT/OT companies supplier. With the mixing of each applied sciences and groups, the mixed merchandise are anticipated to extend the entire addressable market and the all-in-one supplier.
Moreover, the corporate is dedicated to innovating with AI, this 12 months they launched “Session insights”, a function that routinely summarizes distant assist periods and gives analytics. This function is now built-in into Microsoft Groups and Copilot.
Trying forward, to 2030, the World Financial Discussion board estimated that world digital jobs are going to extend by 25% from 73 Billion to 92 Billion, together with this, firms are in search of extra to boost productiveness, which might enhance the Complete Addressable Market to €22 Billion in 2028 a 13.6% greater than at this time quantity, and right here is the place we are able to see the explanation for the 1E acquisition, TeamViewer’s CEO even described it as “the quickest approach of innovation” and this fashion use the momentum of the tech increase to turn into the IT/OT multi functional platform.
The number of opponents might go from AnyDesk, LogMeIn, or Microsoft Distant Desktop in distant management, in DEX companies, the primary competitor is Nexthink, in different companies we might point out Connectwise, however the principle distinction comes, within the potential now for the corporate to supply a number of companies with only one supplier. Massive enterprises usually want to consolidate service suppliers (even at a premium) fairly than managing a number of distributors, which might result in operational inefficiencies
Funding evaluation
Via the strategic plan and mid-term targets, the administration expects double-digit income progress from 2027 onwards. Supported by the enlargement of augmented actuality, the revolution with AI in on-line companies, the now ample number of companies provided with 1E, and the alternatives for enlargement in North America and APAC. Which makes a TAM enlargement to €22Bn a 13.6% enhance to 2028.
The enterprise is dedicated to creating shareholder worth via share buybacks of €137.7m in 2024 and debt compensation of €85m.
For enterprises switching prices are excessive and with 23% of the shoppers being high-value enterprises, a quantity that elevated in 2024 by 24%, we have now to contemplate this as an element to long-term dedication from their purchasers and the power in pricing energy, offering Teamviewer with a robust aggressive MOAT.
Supply: Teamviewer This autumn/24Y presentation
The worth/earnings ratio for TMV.DE is 15x. We’ve created three totally different situations giving the corporate a a number of of 15x (the common of the market), within the optimistic situation we used the estimation that the corporate expects a 70% progress of their web revenue from now to the 12 months 2028, as they stated of their outcomes This autumn/2024. This could imply a web revenue margin of 20%.
Within the low vary, within the pessimistic situation, we estimate the worst-case situation the place the corporate doesn’t obtain its targets and can also be harmed by competitors and macroeconomic elements. On this one, we might receive a lack of -11% given a web revenue margin a bit excessive in contrast with their worst two years in 2021, and 2022 respectively 10% and 11%.
However the more than likely situation considering its kind of enterprise: is subscription-based. The place they’ve long-term contracts with blue chip firms, and due to this we imagine their estimations are reliable and achievable. The problem right here is that if we belief within the functionality of the corporate to implement and execute accurately the plan, scale back prices, and create shareholder worth, on this case, we are going to obtain a return of +68%.
Dangers
Macroeconomic occasions: In 2021 after the pandemic, the retention in subscriptions fell from 100% to 88%, affecting the income of the enterprise and this made the value of the share fall 75% in only one 12 months. I take into account that, due to these dangers, TMV.DE focuses extra on enterprise progress than industrial progress.
Technological competitors: Within the IT companies business, there are fixed improvements that would make our firms lose their aggressive benefit. The priority with TMVW is that the acquisition of 1E was due to stagnation of their functionality to supply innovation by themselves, their product is now not related, or they will’t preserve the income progress, or it was a method to create an ecosystem in IT companies sector to boost the client expertise.
Valuation of 1E acquisition: The valuation for the acquisition was $ 720M, with a $77M Annual recurring income, which implies slightly greater than 9x Gross sales. A quantity that appears aggressive in my view, however right here the query is, was the administration seeing hidden synergies that justify the value?
Solvency dangers: with a debt/fairness ratio of 6.5 they’re above the utmost accepted, that is attributable to the brand new acquisitions they usually’re dedicated to decreasing the debt within the coming years.
Market enlargement dangers: the brand new goal within the North America and Oceania enlargement might current challenges, with cheaper opponents (comparable to Connectwise, and Anydesk with their enlargement plan) and excessive advertising and gross sales expenditure.
Failure within the execution of the plan: With any plan, firms have the danger of the targets not being achieved, this is the reason we have now to be very conservative when analyzing their estimations.
Conclusion
Expertise is the long run, advances in the best way we work and talk, at all times wanting the enhancements in our high quality of labor, effectivity in journey time, with digital entry to manage any machine worldwide, with the usage of AI throughout our conferences to create dwell studies, and the usage of AR to enhance logistic procedures.
TeamViewer is usually missed as a result of its measurement and rising competitors, however its stable income progress, share buybacks, and enterprise focus recommend it’s removed from being an out of date firm. The acquisition of 1E provides new capabilities and affords of companies but additionally raises valuation considerations. The important thing query stays: Is TeamViewer’s imaginative and prescient of an end-to-end IT/OT ecosystem sufficient to take care of progress? I do imagine so, that’s why TMV is a major a part of my portfolio.
What do you concentrate on TeamViewer’s future with this information I gave at this time? Let’s focus on this in my profile!
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