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TeamViewer shares drop 10% as Q3 billings misses analyst estimates

by November 6, 2024
written by November 6, 2024

Investing.com — Shares of TeamViewer (ETR:TMV) dropped 10% after the company reported its third-quarter results, with billings growth coming in below analyst estimates. 

The software firm posted a 4% year-on-year increase in billings, excluding currency fluctuations, which fell short of consensus expectations. 

This underperformance in billings was primarily driven by a weaker-than-expected result from the small and medium-sized business segment, where billings declined by 2% year-on-year.

“We believe the company faced a tough backdrop in China, Japan and South Korea,” said analysts from RBC Capital Markets in a note. 

In contrast, TeamViewer’s revenue came in line with expectations, growing 8% year-on-year, excluding foreign exchange effects, which matched consensus estimates. 

However, the overall growth was muted by a slowdown in SMB billings, with subscriber growth in this segment rising by just 2.8% and a lower annual contract value (ACV) on last twelve months (LTM) billings.

While the SMB sector faced challenges, TeamViewer’s Enterprise segment performed well, with billings up 32% year-on-year, surpassing the 12.6% consensus estimate. 

The Enterprise sector benefited from strong subscriber growth and a higher ACV, with multi-year billings contributing €17.4 million—well above the consensus estimate of €11 million—largely driven by the Enterprise business.

The company also reported a better-than-expected adjusted EBITDA margin of 48%, surpassing consensus at 46%. 

Despite this, TeamViewer revised its full-year 2024 guidance, narrowing its revenue range to €662-668 million, slightly lower than the previous €660-685 million estimate. 

It also increased its adjusted EBITDA margin guidance to at least 44%, up from 43% previously.

“We note that the revised guidance implies a 4Q24 revenue growth rate of low-mid single digit,” said analysts at Goldman Sachs in a note

TeamViewer also reported a levered free cash flow of about  €41.3 million for the quarter, with a free cash flow conversion of 51%, much lower than the 90% achieved in the previous quarter. 

Despite this, the company maintained its full-year free cash flow growth guidance of 8%.

“We continue to view TeamViewer’s shares as attractively valued, considering the favourable positioning of its products, resilience of its subscription model and its cash flow outlook,” said analysts at RBC.

This post appeared first on investing.com
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