TeamViewer shares drop 10% as Q3 billings misses analyst estimates

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.