TeamViewer's Earnings Show Enterprise Strength Amid SMB Stumbles—Is This a Buy?
2min read The Q1 2025 earnings call for TeamViewer se (TMVWF) delivered a mixed bag of results that every investor should unpack. Let’s break it down: the company’s enterprise-focused strategy is paying off, with 21% revenue growth in that segment and 20% ARR expansion—but the SMB division is lagging, and macroeconomic headwinds are casting a shadow. Is this a stock to buy, hold, or sell? Let’s dig in.
The Enterprise Gold Mine
TeamViewer’s pivot to enterprise customers is its biggest win. The segment’s 21% revenue growth and 20% ARR rise (both in constant currency) are staggering. The integration of 1E, which closed in January 2025, is already bearing fruit. New products like the DEX Essentials module—positioned to boost license value—are a clear sign of strategic focus. Management emphasized that high-value enterprise deals are driving momentum, and with a 43% adjusted EBITDA margin, profitability is solid.
SMB Segment Slump: A Red Flag
Now, the bad news: the SMB division grew just 2% in both ARR and revenue. Worse, customer churn rose to 15.3%, which is a ticking time bomb. SMBs are price-sensitive and prone to churn during economic uncertainty. TeamViewer’s reliance on SMBs for scale means this segment’s stagnation could crimp growth. If this trend continues, investors should worry.
The 1E Integration: A Double-Edged Sword
The 1E acquisition is a double-edged sword. On the plus side, the integration is “progressing well,” with new products launched and a robust pipeline. But the deal’s non-recurring costs—along with a legal settlement—dragged down cash conversion to 54%, down from previous levels. While these are one-time hits, the 10% rise in levered free cash flow to EUR44.5 million shows the core business is generating cash.
The Numbers: Guidance and Risks
Full-year guidance targets EUR815 million to EUR840 million in ARR and EUR778 million to EUR797 million in revenue, with a 43% adjusted EBITDA margin. But here’s the catch: management warned of Q2 headwinds due to tough year-over-year comparisons and “extended sales cycles” caused by macroeconomic caution. The CFO also noted that marketing costs for new brand campaigns could pressure margins.
Why Investors Should Stay Cautiously Bullish
Despite the SMB struggles, there are reasons to stay optimistic. The pro forma adjusted EPS of EUR0.29—a 30% YoY jump—and the improved net leverage ratio to 3.1x show financial discipline. Plus, the H2 acceleration thesis is credible: historically, TeamViewer’s second half is stronger, and the pipeline is bulging. The DEX Essentials module’s pricing strategy could unlock higher license revenue, and the enterprise segment’s strength is undeniable.
The Bottom Line
TeamViewer’s Q1 results are a classic case of two steps forward, one step back. The enterprise segment’s stellar performance and strong free cash flow are positives, but the SMB slump and margin risks are genuine concerns. The stock is worth a look for investors willing to bet on the H2 acceleration and the DEX Essentials payoff.
Here’s the data to watch: if TeamViewer can hit the upper end of its EUR840 million ARR guidance and keep its adjusted EBITDA margin at 43%, this stock could soar. But if Q2’s ARR growth slows to single digits or churn rises further, this becomes a riskier bet.
In short, TeamViewer is a buy for believers in its enterprise pivot, but hold your breath until the SMB issues and macro risks are clearer.
Final Verdict: TeamViewer’s enterprise success and solid free cash flow make it a compelling play—but investors must monitor SMB performance and H2 execution closely. If the company can navigate these hurdles, the upside is real.
Ask Aime: Should I hold or sell my shares of TeamViewer based on their Q1 2025 earnings call?
