Zoom boom doom
From the perspective of TeamViewer shareholders, the pandemic might as well have never happened. The German remote-software group floated in September 2019, doubled in value amid the 2020 home-working rush and is now back where it started. For Chief Executive Oliver Steil, the entire episode has been a one big distraction from his real goal: connecting machines, rather than people.
Like U.S. video-conferencing specialist Zoom Video Communications, TeamViewer’s user-base soared during early coronavirus lockdowns. Last summer, Steil reported 181% year-on-year growth in the number of large corporate customers using his software for everything from virtual meetings to remotely accessing each other’s computers. Since then, it has been mostly bad news for shareholders including former private equity owner Permira, which still holds 20%.
TeamViewer signed a pricey shirt-sponsorship deal in March with soccer club Manchester United, which saw Steil cut his EBITDA margin targets. On Thursday, it released an unscheduled second-quarter trading update that showed humdrum year-on-year billings growth of 18% excluding currency fluctuations, compared with a full year-target of around 30%. Customers who panic-bought last year are now renegotiating contracts to pay less. TeamViewer shares fell 13%, leaving it with a diminished market value of 5.7 billion euros, roughly half its July 2020 peak.
Yet hooking up housebound workers was never Steil and TeamViewer’s primary objective. The company’s main product has always been software that lets people control colleagues’ computers remotely. IT boffins can thus fix buggy laptops faster and cheaper. The same technology is useful in the so-called Internet of Things, where everyday gadgets and factory machines talk to each other through cyberspace. Engineers, for example, could repair faulty plant equipment from another site, or write code that allows a computer to do it automatically.
UBS analysts reckon TeamViewer’s compound annual billings growth rate will be 29% up to 2025, helped in large part by signing up more industrial customers. They should be more reliable and willing to pay than the company’s current Covid-19 cohort. TeamViewer’s pandemic roller coaster may turn out to be a sideshow.