The most important problem in worth investing is just not discovering low-cost corporations, it’s discovering worth the place others don’t see it. With a 9% development in 2024, it’s price analyzing the info 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 $TMV.DE is buying and selling at 15x we have now to provide them a search for the alternatives and an opportunity to show Mr. Market incorrect.
Supply: YT RealWear Acquires Almer Applied sciences, backed by TeamViewer.
Key highlights
TeamViewer ($TMV) reported a 9% income development in 2024, demonstrating resilience within the distant entry market.
The acquisition of 1E, a pacesetter in Digital Worker Expertise (DEX) administration, for $720M may 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 development?
Enterprise Overview
Teamviewer was based in 2005 in Germany and was designed to cut back journey time and permit distant duties on any machine. Up to now, it’s put in in almost 2.5 billion gadgets, with multinational shoppers, comparable to DHL, Coca-cola, Volvo, and BOBST. With 640.000 subscribers worldwide with a powerful retention price of 100%. Thought-about probably 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 fall/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 giant organizations.
Digital Worker Expertise (DEX) – Enhancing digital office effectivity.
Frontline Productiveness Options – AR and blended actuality instruments for industries.
By means of its partnership with RealWear, TeamViewer gives augmented actuality (AR) and blended actuality (MR) options to optimize operations in manufacturing, logistics, and after-sales providers, enhancing productiveness and effectivity.
In 2024, TMV reported a income development 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 development of 24% highlighting the technique the place the corporate is searching for increase. The FCF margin has been sustainable by means of the years, with a 35% common.
Supply: Finchat
The latest acquisition of 1E the corporate chief in DEX administration instrument at an enterprise worth of USD 720 million, is seeking to place Crew Viewer as a broad IT/OT providers supplier. With the combination 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 characteristic that routinely summarizes distant assist periods and gives analytics. This characteristic is now built-in into Microsoft Groups and Copilot.
Trying 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 reinforce productiveness, which might enhance the Complete Addressable Market to €22 Billion in 2028 a 13.6% greater than in the present day quantity, and right here is the place we are able to see the rationale for the 1E acquisition, TeamViewer’s CEO even described it as “the quickest manner of innovation” and this manner use the momentum of the tech increase to turn into the IT/OT multi function platform.
The number of rivals may go from AnyDesk, LogMeIn, or Microsoft Distant Desktop in distant management, in DEX providers, the primary competitor is Nexthink, in different providers we may 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 typically want to consolidate service suppliers (even at a premium) reasonably than managing a number of distributors, which may result in operational inefficiencies
Funding evaluation
By means of the strategic plan and mid-term targets, the administration expects double-digit income development from 2027 onwards. Supported by the enlargement of augmented actuality, the revolution with AI in on-line providers, the now ample number of providers supplied 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 by means of share buybacks of €137.7m in 2024 and debt reimbursement 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 think about this as an element to long-term dedication from their shoppers and the flexibility in pricing energy, offering Teamviewer with a robust aggressive MOAT.
Supply: Teamviewer This fall/24Y presentation
The worth/earnings ratio for TMV.DE is 15x. We’ve created three completely 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% development of their web revenue from now to the yr 2028, as they mentioned of their outcomes This fall/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 may 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 most probably situation taking into account its kind of enterprise: is subscription-based. The place they’ve long-term contracts with blue chip corporations, and due to this we imagine their estimations are reliable and achievable. The difficulty right here is that if we belief within the functionality of the corporate to implement and execute accurately 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 worth of the share fall 75% in only one yr. I think about that, due to these dangers, TMV.DE focuses extra on enterprise development than business development.
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’ll’t preserve the income development, or it was a technique to create an ecosystem in IT providers sector to reinforce the client expertise.
Valuation of 1E acquisition: The valuation for the acquisition was $ 720M, with a $77M Annual recurring income, which suggests a little bit greater than 9x Gross sales. A quantity that appears aggressive for my part, however right here the query is, was the administration seeing hidden synergies that justify the worth?
Solvency dangers: with a debt/fairness ratio of 6.5 they’re above the utmost accepted, that is brought on by the brand new acquisitions they usually’re dedicated to lowering the debt within the coming years.
Market enlargement dangers: the brand new goal within the North America and Oceania enlargement may current challenges, with cheaper rivals (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, corporations have the danger of the targets not being achieved, that is why we have now to be very conservative when analyzing their estimations.
Conclusion
Expertise is the longer term, advances in the best way we work and talk, all the time trying the enhancements in our high quality of labor, effectivity in journey time, with digital entry to regulate any machine worldwide, with using AI throughout our conferences to create dwell experiences, and using AR to enhance logistic procedures.
TeamViewer is usually missed as a result of its measurement and growing competitors, however its strong income development, share buybacks, and enterprise focus counsel it’s removed from being an out of date firm. The acquisition of 1E provides new capabilities and gives 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 development? I do imagine 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 in the present day? Let’s talk about this in my profile!
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