The largest problem in worth investing will not 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 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 $TMV.DE is buying and selling at 15x we have now to provide them a search for the alternatives and an opportunity to show Mr. Market improper.
Supply: YT RealWear Acquires Almer Applied sciences, backed by TeamViewer.
Key highlights
TeamViewer ($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 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 section of progress?
Enterprise Overview
Teamviewer was based in 2005 in Germany and was designed to scale 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, corresponding to DHL, Coca-cola, Volvo, and BOBST. With 640.000 subscribers worldwide with a formidable retention price of 100%. Thought of essentially the most salient model amongst IT professionals for distant connectivity options by 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.
By its partnership with RealWear, TeamViewer gives 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 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 searching for broaden. The FCF margin has been sustainable by 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 Staff 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 characteristic that mechanically summarizes distant assist periods and supplies 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 boost productiveness, which might enhance the Whole Addressable Market to €22 Billion in 2028 a 13.6% greater than at present quantity, and right here is the place we will see the rationale for the 1E acquisition, TeamViewer’s CEO even described it as “the quickest means of innovation” and this fashion use the momentum of the tech increase to change 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 companies, the primary competitor is Nexthink, in different companies we may point out Connectwise, however the principle distinction comes, within the capacity now for the corporate to supply a number of companies with only one supplier. Giant enterprises usually favor to consolidate service suppliers (even at a premium) reasonably than managing a number of distributors, which might result in operational inefficiencies
Funding evaluation
By 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 companies, the now ample number of companies provided with 1E, and the alternatives for growth in North America and APAC. Which makes a TAM growth to €22Bn a 13.6% enhance to 2028.
The enterprise is dedicated to creating shareholder worth by 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 power in pricing energy, offering Teamviewer with a powerful aggressive MOAT.
Supply: Teamviewer This autumn/24Y presentation
The value/earnings ratio for TMV.DE is 15x. We’ve created three totally different eventualities 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 internet revenue from now to the 12 months 2028, as they stated of their outcomes This autumn/2024. This may imply a internet 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 get hold of a lack of -11% given a internet revenue margin a bit excessive in contrast with their worst two years in 2021, and 2022 respectively 10% and 11%.
However the most definitely situation taking into account its sort 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 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’ll 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 contemplate that, due to these dangers, TMV.DE focuses extra on enterprise progress than business progress.
Technological competitors: Within the IT companies 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 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 just a little 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 brought on by the brand new acquisitions and so they’re dedicated to decreasing the debt within the coming years.
Market growth dangers: the brand new goal within the North America and Oceania growth may current challenges, with cheaper rivals (corresponding to Connectwise, and Anydesk with their growth plan) and excessive advertising and gross sales expenditure.
Failure within the execution of the plan: With any plan, corporations have the chance of the targets not being achieved, for this reason we have now to be very conservative when analyzing their estimations.
Conclusion
Know-how is the long run, advances in the way in which 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 stories, and using AR to enhance logistic procedures.
TeamViewer is usually missed as a result of its dimension and rising competitors, however its strong 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 gives of companies but in addition raises valuation considerations. The important thing query stays: Is TeamViewer’s imaginative and prescient of an end-to-end IT/OT ecosystem sufficient to keep up progress? I do consider so, that’s why TMV is a big a part of my portfolio.
What do you consider TeamViewer’s future with this information I gave at present? Let’s focus on this in my profile!
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