The largest 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 information reported to see if is a great choice to have in our portfolios. On condition that the business is presently buying and selling at 30x occasions, whereas $TMV.DE is buying and selling at 15x we have now to offer them a search for the alternatives and an opportunity to show Mr. Market fallacious.
Supply: YT RealWear Acquires Almer Applied sciences, backed by TeamViewer.
Key highlights
TeamViewer ($TMV) reported a 9% income development in 2024, demonstrating resilience within the distant entry market.
The acquisition of 1E, a pacesetter 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 development?
Enterprise Overview
Teamviewer was based in 2005 in Germany and was designed to scale back journey time and permit distant duties on any gadget. So far, it’s put in in almost 2.5 billion units, with multinational shoppers, reminiscent of DHL, Coca-cola, Volvo, and BOBST. With 640.000 subscribers worldwide with a powerful retention fee of 100%. Thought of probably the most salient model amongst IT professionals for distant connectivity options via 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.
Via its partnership with RealWear, TeamViewer affords 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 develop. The FCF margin has been sustainable via the years, with a 35% common.
Supply: Finchat
The latest acquisition of 1E the corporate chief in DEX administration device at an enterprise worth of USD 720 million, is trying to place Crew 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 12 months they launched “Session insights”, a characteristic that robotically summarizes distant help periods and gives analytics. This characteristic 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 in the present day quantity, and right here is the place we are able to 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 turn into the IT/OT multi function platform.
The number of rivals 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 primary distinction comes, within the capability 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) moderately than managing a number of distributors, which might result in operational inefficiencies
Funding evaluation
Via 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 provided with 1E, and the alternatives for enlargement in North America and APAC. Which makes a TAM enlargement to €22Bn a 13.6% improve to 2028.
The enterprise is dedicated to creating shareholder worth via share buybacks of €137.7m in 2024 and debt reimbursement 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 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 powerful aggressive MOAT.
Supply: Teamviewer This fall/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 common of the market), within the constructive situation we used the estimation that the corporate expects a 70% development of their internet revenue from now to the 12 months 2028, as they stated of their outcomes This fall/2024. This is able to 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 objectives and can be harmed by competitors and macroeconomic components. On this one, we might acquire 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 more than likely 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 imagine 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, scale 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 worth of the share fall 75% in only one 12 months. I think about that, due to these dangers, TMV.DE focuses extra on enterprise development than industrial development.
Technological competitors: Within the IT providers business, there are fixed improvements that would 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 provide innovation by themselves, their product is not related, or they’ll’t keep the income development, or it was a method to create an ecosystem in IT providers sector to boost the client expertise.
Valuation of 1E acquisition: The valuation for the acquisition was $ 720M, with a $77M Annual recurring income, which suggests somewhat 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 and so they’re dedicated to lowering the debt within the coming years.
Market enlargement dangers: the brand new goal within the North America and Oceania enlargement might current challenges, with cheaper rivals (reminiscent of Connectwise, and Anydesk with their enlargement 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, this is the reason we have now to be very conservative when analyzing their estimations.
Conclusion
Expertise is the long run, advances in the way in which we work and talk, at all times wanting the enhancements in our high quality of labor, effectivity in journey time, with digital entry to regulate any gadget worldwide, with using AI throughout our conferences to create reside stories, and using AR to enhance logistic procedures.
TeamViewer is commonly ignored because of its dimension and rising 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 affords of providers 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 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 data I gave in the present day? Let’s talk about this in my profile!
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