German software company TeamViewer (TMV.DE), which floated recently in Europe’s biggest initial public offering of 2019, on Monday reported a near-doubling in core profits and an expansion of margins, lifting its shares.
The Sept. 25 listing, which valued TeamViewer at 5.25 billion euros ($5.8 billion), added a rare technology growth stock to a Frankfurt market that is heavy with industrial and auto stocks.
Shares, which had traded below the IPO price of 26.25 euros despite a slew of ‘buy’ recommendations from analysts, were lifted 5% after TeamViewer’s strong third-quarter figures and confirmation of the full-year outlook.
“It’s very hard to find another business with this kind of growth and profitability,” CEO Oliver Steil said in an interview. “We feel very good.”
TeamViewer came to market at a time when investors were questioning valuations of software peers like U.S. collaboration tool Slack (WORK.N) that trade on high revenue multiples and have often yet to deliver bottom-line profits.That puts the onus on strategic execution, especially in the fourth quarter when a lot of new business is done, say analysts.
TeamViewer, backed by private equity house Permira, says it can connect “anyone, anything, anytime, anywhere” through uses ranging from remote IT support to video conferencing and managing connected devices in the so-called Internet of Things.
It offers a free service to individuals but is focusing on expanding its enterprise product, which it now runs as a subscription-based Software as a Service (Saas), serving a total of more than 430,000 paying customers.
TeamViewer had 590 customers paying more than 10,000 euros a year in the third quarter, up 60% from a year earlier.
Billings rose by 63% to 83 million euros while cash earnings before interest, taxation, depreciation and amortization (cash EBITDA) jumped by 95% to 46 million euros. That implied an expansion in cash EBITDA margins to 56% from 46% a year ago.
TeamViewer confirmed its guidance for growth in billings of 35%-39% this year and for its cash EBITDA margin to exceed 60%, up from 53% last year.