TeamViewer, the German software specialist, reported a strong start to 2025, showcasing significant growth in both revenue and earnings for the first quarter. The company announced that its revenues increased by 11 percent year-on-year, reaching €178.8 million. This growth was accompanied by an impressive 37 percent rise in operating profit (EBIT), which climbed to €53.2 million. Additionally, net profit soared to €29.6 million, marking a one-third increase compared to the previous year. Earnings per share also saw a rise from €0.14 to €0.19.
Despite these positive figures, TeamViewer faced challenges, particularly with a 23 percent decline in operating cash flow, which amounted to €38.2 million. Nonetheless, the company confirmed its full-year forecast, expecting a pro-forma annual recurring revenue (ARR) growth of 7.5 percent to 10.8 percent and pro-forma sales growth of 5.1 percent to 7.7 percent.
Analysts had mixed reactions to the quarterly results. RBC analysts viewed the figures positively, noting that revenues were around three percent above market consensus and operating profit exceeded expectations by four percent. They maintained a price target of €16 and an "Outperform" rating. However, Warburg Research offered a more cautious perspective, highlighting a subdued revenue growth outlook and concerns over the transparency of TeamViewer's financial adjustments, while still rating the stock as a "Buy" with a price target of €19.50.
On the trading floor, TeamViewer's stock experienced a sharp decline, falling by over 14 percent to €11.45 by the afternoon of May 6, 2025. This drop came as a surprise to some investors, given the solid quarterly results. The decline was attributed to profit-taking after a strong performance earlier in the year, where the stock had gained around 40 percent since January.
In a statement, CEO Oliver Steil expressed optimism about the company's future, citing sustained high demand for TeamViewer's solutions despite the volatile global market environment. He noted that the corporate customer segment was a significant growth driver, with sales in this area increasing by over 20 percent. Steil anticipates that the enterprise business will continue to gain momentum in the second half of the year.
TeamViewer's improved profitability can be partly attributed to a 28 percent reduction in marketing expenses, following a significant cut to its sponsorship deal with English football club Manchester United. The company reported a strong performance in its enterprise segment, which has been a key area of focus, especially after the acquisition of IT specialist 1E at the end of January 2025.
The integration of 1E is proceeding as planned, with the first joint products already on the market. This acquisition, valued at $720 million, is expected to enhance TeamViewer's offerings in remote maintenance and connected devices. The company aims to leverage 1E’s capabilities in automatic detection and resolution of IT issues to further strengthen its position in the market.
Despite the overall positive outlook, the quarterly figures were perceived as somewhat weaker than anticipated, which contributed to the stock's decline. Analysts pointed out that while TeamViewer exceeded expectations on the earnings front, the overall growth figures were not as strong as some had hoped, leading to concerns about the company's valuation amidst numerous balance sheet adjustments.
As the market reacted to the earnings report, TeamViewer's stock price fell sharply, reflecting investor sentiment that the company's growth might not be as robust as previously thought. The share price decline has led to speculation about the stock's future trajectory, particularly as it has retraced almost two-thirds of its gains from earlier in the year.
Looking ahead, TeamViewer remains committed to its annual targets, projecting sales to rise between €778 million and €797 million for the full year, with an EBITDA margin expected to maintain at 43 percent. This margin was achieved in the first quarter, aligning with the company's goals.
In conclusion, while TeamViewer's first-quarter results indicate a solid performance in revenue and profit, the stock's reaction underscores the challenges of meeting investor expectations in a competitive and volatile market. The company’s strategic focus on enterprise solutions and the integration of 1E may provide the necessary boost to regain investor confidence as the year progresses.
