The largest problem in worth investing shouldn’t be discovering low-cost corporations, it’s discovering worth the place others don’t see it. With a 9% progress in 2024, it’s value analyzing the information reported to see if is a brilliant determination to have in our portfolios. Provided that the business is at present buying and selling at 30x instances, whereas $TMV.DE is buying and selling at 15x we now have to provide them a search for the alternatives and an opportunity to show Mr. Market fallacious.
Supply: YT RealWear Acquires Almer Applied sciences, backed by TeamViewer.
Key highlights
TeamViewer ($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 section 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 gadget. Up to now, it’s put in in practically 2.5 billion units, with multinational purchasers, similar to DHL, Coca-cola, Volvo, and BOBST. With 640.000 subscribers worldwide with a formidable retention price of 100%. Thought-about essentially the most salient model amongst IT professionals for distant connectivity options by means of 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 Assist Options – Safe distant entry and troubleshooting.
Enterprise Connectivity Options – IT/OT integration for big organizations.
Digital Worker Expertise (DEX) – Enhancing digital office effectivity.
Frontline Productiveness Options – AR and combined actuality instruments for industries.
By way of its partnership with RealWear, TeamViewer presents augmented actuality (AR) and combined actuality (MR) options to optimize operations in manufacturing, logistics, and after-sales providers, enhancing productiveness and effectivity.
In 2024, TMV reported a income progress of 9% (in fixed foreign money), 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 on the lookout for increase. The FCF margin has been sustainable by means of 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 Workforce Viewer as a broad IT/OT providers 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 yr they launched “Session insights”, a function that routinely summarizes distant help classes and gives analytics. This function is now built-in into Microsoft Groups and Copilot.
Wanting forward, to 2030, the World Financial Discussion board estimated that international digital jobs are going to extend by 25% from 73 Billion to 92 Billion, together with this, corporations are looking for extra to boost productiveness, which might improve the Complete Addressable Market to €22 Billion in 2028 a 13.6% greater than at the moment quantity, and right here is the place we will see the explanation for the 1E acquisition, TeamViewer’s CEO even described it as “the quickest method of innovation” and this fashion use the momentum of the tech growth to develop into the IT/OT multi function platform.
The number of opponents might go from AnyDesk, LogMeIn, or Microsoft Distant Desktop in distant management, in DEX providers, the primary competitor is Nexthink, in different providers we might point out Connectwise, however the principle distinction comes, within the potential now for the corporate to supply a number of providers with only one supplier. Giant enterprises usually desire to consolidate service suppliers (even at a premium) relatively than managing a number of distributors, which might result in operational inefficiencies
Funding evaluation
By way of the strategic plan and mid-term targets, the administration expects double-digit income progress from 2027 onwards. Supported by the growth of augmented actuality, the revolution with AI in on-line providers, the now ample number of providers supplied with 1E, and the alternatives for growth in North America and APAC. Which makes a TAM growth to €22Bn a 13.6% improve to 2028.
The enterprise is dedicated to creating shareholder worth by means of share buybacks of €137.7m in 2024 and debt compensation of €85m.
For enterprises switching prices are excessive and with 23% of the purchasers being high-value enterprises, a quantity that elevated in 2024 by 24%, we now have to think about 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 value/earnings ratio for TMV.DE is 15x. We’ve created three completely different eventualities giving the corporate a a number of of 15x (the typical 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 yr 2028, as they stated of their outcomes This autumn/2024. This may 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 objectives and can also be harmed by competitors and macroeconomic components. 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 probably situation bearing in mind its kind of enterprise: is subscription-based. The place they’ve long-term contracts with blue chip corporations, and due to this we consider 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 appropriately the plan, cut 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 yr. I contemplate that, due to these dangers, TMV.DE focuses extra on enterprise progress than industrial progress.
Technological competitors: Within the IT providers business, there are fixed improvements that might make our corporations 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 not related, or they will’t preserve the income progress, or it was a method to create an ecosystem in IT providers sector to boost the shopper expertise.
Valuation of 1E acquisition: The valuation for the acquisition was $ 720M, with a $77M Annual recurring income, which implies a little bit 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 lowering the debt within the coming years.
Market growth dangers: the brand new goal within the North America and Oceania growth might current challenges, with cheaper opponents (similar to Connectwise, and Anydesk with their growth plan) and excessive advertising and marketing and gross sales expenditure.
Failure within the execution of the plan: With any plan, corporations have the chance of the objectives not being achieved, for this reason we now have to be very conservative when analyzing their estimations.
Conclusion
Expertise is the longer term, 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 gadget worldwide, with using AI throughout our conferences to create dwell studies, and using AR to enhance logistic procedures.
TeamViewer is commonly missed because of its measurement and growing competitors, however its stable income progress, share buybacks, and enterprise focus counsel it’s removed from being an out of date firm. The acquisition of 1E provides new capabilities and presents of providers but in addition raises valuation issues. 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 consider so, that’s why TMV is a big a part of my portfolio.
What do you concentrate on TeamViewer’s future with this information I gave at the moment? Let’s talk about this in my profile!
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