SRH AlsterResearch AG Initiation: TeamViewer AG - Long-term profiteer of the crisis

SRH AlsterResearch AG Initiation: TeamViewer AG - Long-term profiteer of the crisis

Nachrichtenquelle: AlsterResearch AG
11.02.2021, 14:00  |  170   |   |   

We initiate our coverage with a Buy rating and price target of EUR 55.00.

 

Please note that AlsterResearch publishes MiFID II compliant research only. For a detailed discussion on MiFID II, please visit www.research-hub.de

Long term profiteer of the crisis – Initiate with BUY Remote access and digitalisation induced growth TeamViewer’s 2020 results saw benefits from remote access and digitalisation due to the COVID-19-induced work-from-home (WFH) trend, although H2 was softer than the initial wave of pandemics in the spring. The development of key account business with more than EUR 10,000 of annual contract volumes was yet again convincing: the number of large accounts increased to 1,885 (+170% yoy). The 2021 outlook appears promising, with Ubimax and the recently bought Xaleon offering additional strength. Revenue growth across regions persisted In Q4, TeamViewer recorded a revenue increase of 13% yoy to EUR 121.0m, which was 3% below analysts’ consensus of EUR 124.6m. Revenues rose across regions, with the Americas (+18% yoy) and Asia-Pacific (APAC +17% yoy) delivering growth in the high teens. Meanwhile, Europe, the Middle East and Africa (EMEA), the groups’ top selling region, witnessed 9% yoy growth. Full-year revenues of EUR 455.6m were ahead of the ‘at least’ EUR 450m target. In total, the group added 17,000 new paying customers in Q4, ending 2020 with a total client base of 584,000, registering 26% yoy growth. TeamViewer continued to convert its remaining perpetual customers, signalling strong product stickiness. High-value new subscribers and loyal customer base supported billing growth The net retention ratio inched up 1ppt yoy to 103% (-1ppt qoq) on customer loyalty and successful up-/cross-selling activities. These, along with the widening of total subscribers with higher deal values, resulted in 27% yoy growth in Q4 billings to EUR_128.1m (up 32% yoy in constant exchange rates). Consequently, the company ended 2020 with record billings of EUR 460.3m (+42% yoy and +44% in constant exchange rates). Q4 billing growth was led by the Americas (+36% yoy) gaining from converting private users into paying ones as well as strong traction across all customer segments. EMEA (+27% yoy) benefitted from balanced growth across the regions, particularly in Germany, the UK, Italy and France. However, APAC (+3% yoy) was relatively soft.

Margin weakened while leverage improved Adjusted EBITDA increased 15% yoy to EUR 72.1m in Q4, and was above the analysts’ consensus estimate, but the margin disappointed with a sharp deterioration of 5.9ppt yoy to 56.3%, reflecting investments in platform infrastructure and in research and development. Strong cash generation from operations and a substantial reduction in debt costs resulted in a 78% yoy surge in levered FCF to EUR 56.1m, notwithstanding higher taxes. TeamViewer further improved its net leverage to 1.7x (2.0x at end-9M 2020), repaying a part of its term loan. Xaleon acquisition augments co-browsing offering The integration of TeamViewer’s Internet of Things and Augmented Realty with Ubimax’s Frontline Suite is progressing well and offers cross-selling opportunities. In January 2021, TeamViewer acquired Austria-based customer engagement software provider Xaleon for an undisclosed sum and strengthened its co-browsing technology. Conclusion TeamViewer reported a decent Q4, with a solid rise in new subscriber additions and billings, while persistent strength in remote access and enterprise solutions was a highlight of the quarter. For 2021, the group provided a target for billings of EUR_585m - EUR 605m (+29% yoy growth at the midpoint) with a 20% - 40% yoy quarterly growth rate, sales of EUR 525m - EUR 540m (+17% yoy) and an adjusted EBITDA margin of 55% - 57%. Management believes it will benefit from the global megatrends relating to digitalization and sustainability going forward, which, along with its strong business model and tuck-in acquisition strategy, would fuel growth. We initiate our coverage with a Buy rating and price target of EUR 55.00.

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SRH AlsterResearch AG Initiation: TeamViewer AG - Long-term profiteer of the crisis We initiate our coverage with a Buy rating and price target of EUR 55.00.

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