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.