TeamViewer SE (TMV) Earnings Call Transcript

Ladies and gentlemen, thank you for standing by. Welcome, and thank you for joining the TeamViewer AG Q4 and Fiscal Year 2022 Results Call and Webcast. [Operator Instructions] I would now like to turn the conference over to Ursula Querette, Head of Investor Relations. Please go ahead.

Thank you, operator. Good morning, everyone, and welcome to TeamViewer's Q4 and Fiscal Year 2022 Earnings Call. My name is Ursula Querette, and I'm pleased to host today's earnings call. I am joined by our CEO, Oliver Steil; and our CFO, Michael Wilkens. Oliver will kick off the presentation by updating you on the specific business and financial highlights in the fourth quarter and the full year 2022. He will also give a quick update on our product offering and strategic direction. Michael will then go through our financials in detail, and we'll finish on our financial guidance and our capital allocation framework. As always, the presentation will be followed by a Q&A session. Before we start, I would like to draw your attention to our updated important notice and APM disclosure. As you already know, starting in 2023, TeamViewer's financial performance will be reflected in an updated KPI framework whereby billings changed from a primary into a secondary KPI, and revenue moves more into focus. This means that the definition of adjusted EBITDA will change from a billings to a revenue perspective, which will be particularly relevant for our full year 2023 guidance that we disclosed on IFRS revenue and the corresponding adjusted revenue EBITDA margin. All our KPI definitions are included in the APM glossary on Pages 2 and 3 of this presentation. And with that, I hand it over to our CEO, Oliver Steil.

Thank you for the introduction, Ursula. Good morning, everyone. Thank you for joining our Q4 and fiscal year 2022 earnings call. Let me start with a look at our fourth quarter 2022 on the next slide. Overall, we achieved a very successful year and finished with a strong momentum in Q4. Of course, the overall macroeconomic environment remains challenging, but TeamViewer once again displayed strong resilience amidst these circumstances, and our entire team was really leaning in. I would like to point out a few highlights of the fourth quarter. Firstly, strong development of our billings. Total billings came in at EUR 191 million in Q4, which is a plus of 24% reported and 20% plus on a constant currency basis compared to last year's fourth quarter. And in addition, our profitability was again very convincing. For Q4 2022, we reported an adjusted EBITDA margin based on billings of 51% compared to previous year's Q4 with an improvement of 7 percentage points, and Michael will give you a few more details on this later. Thirdly, we continue to focus on targeted sales campaigns. We created additional value by upselling customers into significantly higher value tiers, but also by attracting new customers, and thus actually enlarging our global customer base. In addition, TeamViewer once again proved the stickiness of our business model as we were also able to successfully implement type adjustments which we had announced in Q3. And fourth, if we look at our regional split, in the fourth quarter, billings growth was particularly driven by the strong performances of our EMEA and APAC region. Our largest region, EMEA, grew by 28% year-over-year. And with an increase of 32%, we also saw clear acceleration in Asia Pacific, clearly driven by the new management and our team. I think this quarter proved once again that our regional diversification is clearly paying off. If you look at our customers, our Enterprise business retained its growth momentum, showing 47% billings growth year-over-year. And the other growing ticket sizes prove our continued shift from SMB to Enterprise, and the relevance and value add of our products for large businesses. And last but not least, also, our large original core business is growing. In the fourth quarter, SMB billings were up 18% year-over-year. The increase stems not only from larger ticket sizes and higher pricings with existing subscribers. Actually, our SMB subscriber base also grew slightly again by 8,000 in the last 3 months of the year to a total of 622,000. If we sum it up, we are actually very satisfied with our year-end finish. I think our solutions are highly relevant for our customers. Even in those times, we help them to securely manage remote operations, increase efficiency and sustainability to overcome also labor shortage. This is particularly visible in our steadily-growing ticket sizes, and I would like to take a closer look at this on the next page. Let us look at SMB and Enterprise billings split. I think with an overall shift towards higher ACV buckets, we again successfully increased the quality of our customer base. When we look at SMB on the left, the LTM billings in 2022 increased by 11% on a year-on-year basis and amounted to EUR 503 million. This was driven by our very successful cross and upselling efforts, resulting in the higher buckets actually growing stronger. In 2022, our highest SMB bucket between EUR 1,500 and EUR 10,000 significantly increased by 27% and amounted to a strong EUR 225 million. In addition, we saw again a net upsell from SMB to Enterprise, this time of EUR 20.5 million. This was largely driven by shifting larger SMB clients to our Tensor license for Enterprise connectivity, and this clearly shows the continuity in Tensor success for larger customers who are looking for more efficient and highly secured solutions as the right answer actually in these challenging times. Total 2022 LTM billings in our Enterprise segment increased by 42% year-over-year, which is then EUR 132 million. This growth originated across all ACV buckets, as you can see on the chart on the right. Go to the next slide, please. I just mentioned the growth among all the LTV buckets of our Enterprise business. And as usual, let me give you 2 examples of recent large Enterprise deals with Tensor, our Enterprise connectivity, perhaps just to give you an idea on what's happening on the Enterprise side. First, let us look at German multinational corporation, Henkel. Their IT team uses TeamViewer to streamline their global IT support for around 60,000 IT devices running on different operating systems with Tensor. And our solution, in that case, replaced several others that they were using before, making their workflow simpler and faster. Goes without saying that Tensor meets all the strict security and compliance tenets that are mandatory for Henkel. It's also worth mentioning that Tensor seamlessly integrated in Henkel's IT infrastructure consisting of, obviously, many other software products from vendors like ServiceNow or Microsoft, and this flexibility of our solution is highly appreciated by IT decision-makers in global corporation. Another example, very different of last Tensor deal that we closed in 2022 was the German global broadcast station, Deutsche Welle. They managed all devices of their correspondents in 140 countries with TeamViewer and shows our solution, because they need to secure and stable connection to work reliably in breaking new situations. And I think what's interesting, notably that we won this contract via a European-wide public tender as the Deutsche Welle is a public state or broadcast station bound to the EU's public tender regulation. Next slide, please. I want to touch upon the financial highlights on a full year perspective. So to begin with, we continued our top line growth. Billings and revenue increased by 16% and 13%, respectively. With total billings of EUR 635 million and revenues of EUR 566 million, we fully achieved our guidance for the full year 2022, and the share of Enterprise business increased by 4 percentage points year-on-year. Our products are highly attractive for wide range of customers from various verticals or industries. We continue to establish TeamViewer as the go-to partner for high-impact strategic investments in digital transformation across various industries. And at the same time, we help our customers to increase short-term automation and efficiency. Clearly, this is key in the current economic environment. All these factors made us achieve a strong net retention of 107% from group level. And compared to 2021, we improved net retention rate by 9 percentage points. In addition, TeamViewer is again growing very profitably. Our adjusted billings EBITDA grew by 16% to almost EUR 300 million, and our adjusted billings EBITDA margin was stable at 47%, and that's actually the upper end of our guided range from 45% to 47%. This is also a result of our effectiveness and execution, and in turn, we raised our basic earnings per share to EUR 0.37, which represents a 46% growth year-on-year. This was driven by the strong increase in our net income obviously, as well as our accretive share buyback program of last year. Michael will elaborate more on the drivers of our net profit in his part of the presentation. In total, we are well positioned to continue our strong performance in the current economic environment as well in 2023 and beyond, and we believe the fundamental demand for TeamViewer solutions remains strong. And with that, let's have a closer look at our regional performance on the next slide. You can see that in 2022, EMEA has proven to be very robust as it delivered the strongest growth of all regions, followed by an accelerating APAC performance. With a billings growth of 28% to EUR 109 million in the fourth quarter, EMEA significantly improved its already-strong performance, which we've seen in Q3. And on a full year basis, EMEA billings grew by 15% to EUR 340 million. We actually accelerated our sales momentum and further penetrated our well-developed base of satisfied customers. Our business in the Americas achieved billings of 16% in Q4 to EUR 64 million and 18% to EUR 223 million in the full year. Clearly, if you look at performance at a constant currency, it was weaker than we had hoped for, but we remain quite confident in our resilient product offering and the further growing IT spend for digitalization in the Americas. So looking at our current market share in the U.S., we believe there is still significant room to grow. APAC further accelerated its growth with a new organizational structure settling in, and achieved a 32% billings increase in the fourth quarter. On a full year basis, APAC billings were up 14%. This growth reflects 2 very different half years and resulted in APAC billings of EUR 72 million for the entire year. So not so strong first half, but very strong second half of the year and good acceleration there. And also the easing, COVID restrictions towards the year-end, they also allow for more customer interactions, translating into strong pipeline build and Enterprise momentum. I think as you can see from the slide, TeamViewer is well positioned for the future. Our global footprint is growing, our products are highly relevant for our strong and loyal customer base, and we address major customer needs. Next slide, please. Let me now explain our strategic focus areas to reach our business goals and growth targets in 2023 and beyond. As you can see from the slide, we're focused on 4 main segments. First 1 is our objective to defend our leading position in the remote access and support markets. We are currently preparing a major upgrade of our core connectivity products. The new release will come with a new modern user interface to improve usability and overall experience, and we will introduce new security and also many other features. We are confident that this will further increase the attractiveness of our product for our core target audiences across SME and also private users. Second, within remote access and support, we will offer additional features like remote monitoring and management of devices or ticketing functionalities. And with these features, we can add significant value to larger SMB customers and also manage service providers. When it comes to Enterprise connectivity, the third area, we will focus on remote access and control of operation technologies, in short, OT devices such as industrial equipment, machines and other smart and IoT devices. Good example of this are the, for example, coffee machines of the Italian vendor, La Cimbali. I think we've talked about that use case already in one of our previous calls. This is exactly the type of remote connectivity, so-called embedded devices, that becomes more relevant as companies aim to streamline and digitalize support and maintenance processes. And once rolled out to hundreds or thousands of those devices, this becomes very sticky and attractive for us. The fourth area is then our frontline platform for digital workflows, step-by-step instructions and frontline working systems. And with those, we have established ourselves as a key player in the so-called industrial matter work, this means the digital transformation of frontline work processes, for example, logistics, manufacturing or aftersales, using augmented reality on glasses or handheld devices. And going forward, our augmented reality offering should be further supported by mega trends like shortage of skilled labor and the need for digital onboarding, training and more efficient online processes. And as you can see, we are targeting IT and OT use cases in companies of all sizes to leverage the full potential of our solutions. Next slide, please. Just as a reminder, you can see our product portfolio that matches the strategic focus areas that I just explained. We offer 3 main product lines. TeamViewer Remote with our core connectivity product for SMB customers and private users, with different license tiers and add-on features, we target different use cases and different company sizes. Then in the middle, for larger companies and critical infrastructure, we offer our Enterprise connectivity platform, Tensor, that provides relevant security features and can be deployed at various scale. It also includes capabilities to connect to the OT, operations technology, and embedded devices that I just talked about on the previous slide. And the third product line is Frontline, our AI-based enterprise productivity platform that enables digital workflows and assistance for smart frontline operations. The platform includes partnering edge capabilities based on mixed reality but also artificial intelligence to run frontline operations even smarter. And with this summing on the product, I'd like to hand over to Michael for the financial highlights.

Thank you, Oliver, and good morning, and a warm welcome to all of you. I am very happy to guide you through our financials for the full year 2022 and in Q4, in particular. Q4 was my first quarter as the CFO of this exciting company. You heard Oliver's remark on our operational focus areas for 2023. Later in my presentation, I will explain to you how we think about 2023 from a financial point of view, and I will dive deeper into the different elements of our guidance, which you already read about in our press release this morning. Next slide, please. I presented this group overview for the first time in Q3. Back then, I already mentioned the growing relevance of revenue for our business. From Q1 onwards, you will see quarterly revenue and the adjusted revenue EBITDA on top of the slide. Today, I start with billings and the excellent billings growth rate of 24% in Q4 2022. With this strong year-end finish, we delivered on our guidance, and this despite the discontinuation of our Russia Belarus business and despite the difficult market environment. So on a full year basis, billings increased by 16% or 11% on a constant currency basis to EUR 635 million. At this point, let me say thank you to a great and highly-motivated sales team here in Germany and all over the world. The strong billings performance in Q4 led to a high adjusted billings EBITDA margin of 51% in Q4 and 47% for the full year, which was at the upper end of our guidance. Let's move to the revenue perspective. On the lower left-hand side, you can see that revenue follows billings development in a delayed way, with more balanced growth rates. So revenue grew by 14% in Q4 and 13% for the full year. With the full year amount of EUR 566 million, we also met our revenue guidance for 2022. Given the numerator-denominator effect and applying the exact same operating cost base to revenue, the adjusted revenue EBITDA margin amounted to 41% for the full year compared with the adjusted billings EBITDA margin of 47%. This adjusted revenue EBITDA margin is best in class compared to our wider software peers. It is from now on the profitability reference for our guidance. With this, let's move to the next slide, please, where I will focus on SMB, which accounted in Q4 for around 79% of our total billings. Q4 saw a very strong SMB billings improvement, a proof point of our pricing power. Why is that? Part of the growth rate of 18% is the result of the targeted sales campaigns, including upsell and our pricing campaign, free to paid played a minor role in Q4. In addition, U.S. dollar exchange rate tailwinds made up 4 percentage points of the Q4 growth. With this strong fourth quarter, full year SMB billings were 11% higher at EUR 503 million. On a constant currency basis, the growth rate was 6%. On the top right-hand side of this slide, you see our pricing power translating into constantly-increasing average selling prices. In Q4, 1 SMB customer paid EUR 804 on average per year. Talking about subscribers. At a stable subscriber churn rate, we were able to increase our customer base by 8,000 subscribers year-on-year. At the end of Q4 2022, we counted 622,000 subscribers in our SMB business without customers from Russia and Belarus. This large subscriber base still holds significant upgrade potential, as Oliver outlined before. Next slide, please. Now, let's take a more detailed look into our Enterprise segment, which in Q4 accounted for around 21% of TeamViewer's total billings. Despite the uncertain macro environment, Enterprise billings growth remained at a high growth level of 47% in Q4. This development was particularly driven by the EMEA region and improved pipeline conversion and customers committing to growing ticket sizes. This is also reflected in the high enterprise net retention rate, which increased to 116% in Q4 2022. As there has been an ongoing debate around multiyear deals since our Q3 call, let me tell you, yes, part of these growing ticket sizes are due to multiyear deals. The fact that customers accept or rather ask for this type of contracts proves how much they like our products, and that they are happy to commit themselves for more than a year. By the way, our multi-year deals are paid upfront and will convert to revenue over time. The full year 2022 Enterprise billings amounted to EUR 132 million, corresponding to an increase of 42% or 35% on a constant currency basis. The average selling price increased from EUR 34,000 in Q4 2021 to EUR 36,000 in Q4 2022 while fueling the Enterprise bucket with strong SMB upsell. This also had a positive impact on the number of Enterprise customers. Compared to the end of 2021, the Enterprise customer base increased by almost 1,000, amounting to roughly 3,700 customers at the end of 2022. Combined with the large SMB customer base, this brings us to a total of around 626,000 subscribers at the end of last year. Next slide, please. As mentioned before, this large and loyal customer base is in need of high-class remote connectivity and frontline workflow solutions. Our products in this category offers simplification and efficiency in times of increasing complexity and labor shortage. Our increasing net retention rate is proof of this increasing demand and high customer satisfaction. As per year-end 2022, our net retention rate was at 107%, 4 percentage points higher than in Q3 and 9 percentage points higher than the year before. This was driven by successful net upselling of our retained customer base, including the increased migration from SMB to Enterprise. Oliver mentioned already the Q4 LTM net upsell from SMB to Enterprise in the amount of EUR 20.5 million, a further increase over the already very strong EUR 18.4 million in Q3. Additional building blocks of the growing NR were the favorable U.S. dollar-euro development, our targeted sales campaigns and upfront paid multiyear deals. Let's turn to the next slide now, where I want to introduce you to our new KPI, ARR. The annual recurring revenue stands between billings and revenue, and give a realistic impression of the annual subscription value of our customer base at a given point in time. Multiyear deals do not distort this metric as they are only accounted for with the annual value. Since we have seen an increasing demand for multiyear deals in 2022, it is now a good time for TeamViewer to implement the ARR as a new metric. In total, we built multiyear deals with full upfront payment of EUR 45.6 million in 2022. So while billings increased by 16% in 2022, the ARR increased by 13%. Revenue also increased by 13%, with a revenue to billings ratio of 89% in 2022. Next slide, please. Let's now start to move from the top line to the bottom line and take a look at our recurring cost base. On a full year basis, recurring costs consisting of cost of sales and total OpEx, increased by 16%. This was in line with billings growth and higher than revenue growth, hence, the adjusted billings EBITDA margin remained stable at 47% and the adjusted revenue EBITDA margin resulted in 41%. Let's have a look at some of the 2022 operating cost items in more detail. Main reason for the increase in sales costs were the expansion of the Enterprise sales force, higher bonus payments and currency effects. The growth in marketing costs was due to the first-time full consideration of sports partnerships in 2022. As you know, this cost item will be significantly reduced once Manchester United exercises the option to buy back the rights to the club's shirt front sponsorship. The increase in marketing costs was partly compensated by scaling effects in G&A costs. The full year R&D costs increased in line with billings. The main R&D focus was enriching our digital workflow offering and enhancing our core technology platform to be able to launch the major remote connectivity upgrade that Oliver mentioned within the next month. Lastly, the strong decrease of other operating costs was mainly driven by lower bad debt expenses due to a higher share of the enterprise business with better payment behavior. Next slide, please. The table on Slide 19 dives deeper into our different profitability metrics. On the top of the table, you can see the difference between our old adjusted billings EBITDA definition and our new adjusted revenue EBITDA definition that consists of the change in deferred revenue. In 2022, the deferred revenue increased driven by strong billings development, especially in Q4, deducting the non-recurring items from the adjusted revenue EBITDA brings us then to the unadjusted EBITDA, which was 17% higher year-on-year at EUR 197.5 million in 2022. Non-recurring items decreased in 2022 mainly due to the positive valuation of U.S. dollar hedges, which partly offset charges for the legal case I already mentioned in Q3. With only slightly-increased G&A expenses of 6%, our EBIT increased even by 22% to EUR 143.7 million in 2022. The net income increased by 35% year-over-year to EUR 67.6 million, mainly due to our strong operating performance and an improved financial result. Our earnings per share increased even stronger by 46% year-on-year from EUR 0.25 to EUR 0.37, which reflects the accretive effect of our EUR 300 million share buyback in 2022. For the first time, we also displayed the adjusted EPS, which increased by 25% in a full year comparison. We are adjusting here for share-based compensation, PPA amortization and other non-recurring and related tax effects. With this KPI, we give you a less volatile perspective on the EPS growth going forward. Next slide, please. On this slide, you can see that the IFRS pretax operating cash flow was up by 6% in 2022 despite the first-time full year sponsorship payments. Let's go through the items which result in the 2022 free cash flow. First, cash tax, which increased by 7% to EUR 46.4 million. Second, CapEx. As most of TeamViewer's investments in innovation and partnerships so far are directly expensed in the operating expenses, capital expenditures were relatively low in 2022 and went further down by 42% to EUR 8.8 million due to the finalization of a new application landscape in 2021. The lease payments were driven by additional office space and IT infrastructure amounting to EUR 9.5 million in 2022, up 37% year-on-year. This results in an unlevered free cash flow of EUR 186 million and the high cash conversion in relation to the adjusted revenue EBITDA of 81%. The levered free cash flow, which also takes into account the interest paid, amounted to EUR 171.8 million in 2022. The respective cash conversion rate was 75%, and therefore, stable year-on-year. Worth mentioning that we managed to keep the interest paid stable at around EUR 40 million despite a more challenging debt and interest environment. Next slide, please. As the waterfall on this slide shows, cash and cash equivalents at the end of '22 amounted to EUR 161 million. The reduction compared to end of '21 was mainly due to our EUR 300 million share buyback program and net debt repayment of EUR 286 million, offset by net cash inflows. On the back of these measures, our net financial liabilities amounted to EUR 472 million as of December 31, resulting in a net leverage ratio of 1.6 on adjusting billings EBITDA and 2.1% on adjusted revenue EBITDA. With this, we delivered on our capital allocation target of around 1.5 leverage. At the same time, we significantly strengthened our financial profile through the repayment of debt and by balancing out our debt maturities, and we created value for our shareholders by returning cash for share buybacks. I will come to the new share buyback, which we announced yesterday later in the outlook section. If you want to take a closer look at the development of our share count, you can find the respective slide in the appendix. Before I come to the outlook, let me conclude my financial overview section with a summary of the most important takeaways. First, we delivered a strong 13% growth on our new primary revenue KPI. This reflects the strong billings performance in earlier periods. With the continued mix shift towards higher-value customers in SMB and Enterprise as well as higher demand for multiyear deals, we increase the predictability of our business and high customer retention rate prove the stickiness of our customer base. Third, despite the inflationary environment, continued investment into our business and the first full year consideration of the sports sponsorships, we recorded a sustainable high margin, and fourth, paired with a continued strong cash flow generation. Fifth, we see significant margin upside following a potential early exit by Manchester United from the shirt fronts partnership, despite some reinvestments into our marketing efforts. Lastly, let me conclude this chapter also with a personal note. I think it is remarkable how well we performed in '22 despite the current environment. Our business demonstrated strong resilience with the right product portfolio and the right market position. Next slide, please. Let's now focus what is in front of us. What you see here is a confident view of our '23 business development. We are operating in an exciting growth market, and our performance is underpinned by a highly-recurring and resilient business model. On the back office, like in '22, we see double-digit revenue growth in '23. In absolute terms, this means that we guide for IFRS revenues in the range between EUR 620 million and EUR 645 million. We also aim for stable profitability reflected in the adjusted revenue EBITDA margin, which is expected at around 40% for the full year 2023. This margins forecast takes into account continued investments into our future. I will come to that in more detail on the next slide. The revenue guidance you see on this slide translates into an expected billings growth of 6% to 11% in our old guidance KPI growth. This growth is based on last year's average U.S. dollar fixed rate of EUR 1.05. Let me remind you that we achieved a constant currency billings growth of 11% also in 2022. This corresponds to the upper end of the billings growth rate we expect also for 2023. However, we have to see how the macro environment works out, hence, the broader growth range between 6% to 11% resulting in absolute billings range between EUR 675 million and EUR 705 million. The guided adjusted revenue EBITDA margin translates into an adjusted billings EBITDA margin of around 45%, which also takes into account short-term cost effects. We think these are best-in-class margins, which carry significant upside beyond 2023 following a potential early exit by Manchester United from the shirt front partnership. Before I turn to the next slide, let me remind you that our official guidance relates on our new KPIs, revenue and adjusted revenue EBITDA margin. Next slide, please. The guidance I just outlined and the ambition to achieve stable, high margins come with a diligent cost management across all dimensions. We already told you on several occasions that we want to strengthen our high-quality product offerings through additional R&D investments. More specifically, we want to reinforce TeamViewer's leading position in remote access and support with the major upgrade of our connectivity platform. At the same time, we want to underline our status as the key player in the industrial metaverse by expanding the Frontline platform. This will also require respective infrastructure upgrades, and hence, additional invest. Despite these investments into our future growth, certain macroeconomic impacts like currency effects on our sponsorships and more general inflationary cost pressures will increase our recurring cost base. In order to compensate for these impacts on sales costs, we have taken several actions. For example, we work with our suppliers in partnership to minimize inflationary cost increases. With our attractive RSU program, we not only increase employee loyalty and strengthen their shareholder perspective, but we can also partly compensate for cash salary increases. Last but not least, we will apply a cautious hiring approach and an efficient people management. With the combination of these investments and savings, we are very confident to reach our margin guidance. And this brings me to my last slide. On the back of the outlook I just presented, TeamViewer will remain highly cash generative and deliver a continued strong cash flow conversion. This allows us to reiterate our existing capital allocation strategy and confirm our target leverage ratio of around 1.5x net debt to adjusted billings EBITDA. This leverage target provides the company with sufficient flexibility to support organic growth and to pursue tuck-in M&A to expand competencies if needed. And with our high confidence in the 2023 outlook, we will return excess cash to our shareholders by way of a new share buyback program, and thus, we remain committed to our capital allocation framework. This program has a volume of up to EUR 150 million and will be executed in 2 tranches. We plan to start with the first tranche of up to EUR 75 million by latest mid of February. I now hand over to Oliver [indiscernible].

Thank you, Michael. So let me summarize today's earnings call. The bottom line is, we are very satisfied with our performance in 2022. We achieved our goals and delivered on our targets. We see prominent customer wins across industries and geographies, and we have successfully implemented pricing measures and also campaigns on cross-sell and upsell over the last year, and this shows that we are able to see our business actively and in a very targeted manner. As Michael just explained, in 2022, our financial profile remained very attractive. Our strong profitability and high cash generation are important levers for shareholder value creation, which we are able to deliver with our 46% earnings per share increase. And creating value for shareholders will also remain a top priority for us in 2023, and this is why we announced the new share buyback program. Beyond that, we are also looking at 2023 with confidence. We want to further capitalize on global mega trends in the modern workplace. Our solutions are more relevant than ever for our customers in the current challenging macroeconomic environment. And in light of this, we are confident of generating double-digit revenue growth as outlined by Michael. With that, we would like to end the presentation. Thank you all very much for your attention, and we look now forward to your questions. Operator, over to you, please.

[Operator Instructions] The first question is from the line of George Webb with Morgan Stanley.

Oliver and Michael. I'll kick off with 3. Firstly, just on the margin outlook. You flagged some of the elements, including careful controlled cost base, cautious approach to hiring. Can you give us a sense of how you're set up now with respect to sales and support of the enterprise business segment? How much room is there to increase utilization of those sales staff, and how much incremental investment is going to go into that area in 2023? Secondly, on the guidance on growth. You're expecting billings to grow at a more moderate rate this year compared to revenues. Can you talk through what you're expecting in terms of multiyear deals growth in 2023? And then just lastly, on the Enterprise business, 35% constant currency year-over-year growth in 2022. If you were to clean that figure up for the multiyear deals impact or to look at it through more of an ARR lens, what was the rate of growth you saw there?

Let me take the first 1 and second 1. For margin outlook, I think on the Enterprise side, as we've said over the last years, we have significantly invested into support structure and sales structure, so we have Enterprise account managers across the world. We opened a few more offices to be closer to regional markets, particularly in APAC, so I would say that the sales force there is very well invested. Obviously, there's always churn in some markets and then replacements. We also have a solution delivery force, which is globally distributed across all offices. So I would say that for the Enterprise business, we are very well invested at the moment. And clearly, especially given the environment at the moment, we are not at full utilization of the current sales force. So I think you're absolutely right in pointing towards additional scaling potential, because we do have people which joined relatively newly throughout the year and not at the full quarter. They are still ramping, but the costs are already on board. So pretty fully invested sales and service force but not fully utilized, as you say. Secondly, billings growth. I think the whole question on multiyear and also how that relates to ARR. Quite maybe, I think, it's a bit too early to project anything very concrete there for this year. Obviously, the more we go into Enterprise, the more [indiscernible]. Obviously, customers want to secure pricing, so it will continue to be a factor. But I think Michael can elaborate a little bit more on the split there and the growth composition going forward.

Yes. So in the multiyear deals, it's -- we see it in the vicinity between EUR 50 million and EUR 60 million. So the multiyear deal has become more and more a part of our normal business. This was, I think, 1 topic. The other one, when you said ARR. We disclosed the ARR in total, which is the 30% growth, but we don't disclose this now in the second phase or even on an NRR basis. We are very happy with our definition of NRR. We are happy to take currency discussions on ARR, and I think we have to always disclose currencies versus the NRR and also on ARR.

That's clear. And maybe just 1 follow-up. When you went to customers in Q4 knowing they had these price increases, to what extent were they coming to you and saying, can you give us a discount, and we'll sign up for a multiyear deal to kind of counteract some of that price increase? Was that a phenomenon that you saw at all?

You weren't that clear to hear, but I think the question is around the buying and purchasing behavior in the fourth quarter. Yes. I mean, obviously, it's -- this is the thing on Enterprise, right? Customers want to commit for a longer period of time in order to secure a certain price level. In Enterprise, this is 1-by-1 discussions. And I think we have all cases, we have customers that even bought a year ago and we haven't increased prices, but also customers that have been with us for longer. And we extend the license count, the number of technicians, the number of seats. It's a new deal, and then we commit to certain prices. It's not necessarily a discounting game. I think in the current environment, it's more a price stability and visibility for them. And obviously, we have the same when we talk to our suppliers. It's pretty clear that it's not a great time to talk discounts, but what you can achieve is have price stability, and that's more the motion that with what's going on.

The next question is from the line of Ben Castillo-Bernaus with BNB Paribas.

A couple for me, please. Just on the 2023 outlook. How should we think about seasonality or phasing, particularly, I guess, on the top line through H1 and then into H2? What are you baking into your guidance? Secondly, just looking back at the last quarter, could you give us an indication on how much impacted your price increases have in Q4 of 2022? So what contribution of that out of growth, that would be helpful. And then lastly, just on the new guidance framework, you're shifting away from billings to revenues. Will all KPIs shift to revenue? And billings have actually been phased out, so your detail on things like Enterprise versus SMB billings or billings by the ACV bucket, will they become revenue-based? And if so, will you restate that for us and help us look at that on a more continued basis?

Let me start with the first 2. I have not heard or understood the third, maybe we can follow up on that 1 separately. On the seasonality of the 2023. So first, from a billings perspective, the structure of the seasonality should be more or less the same like it was in the previous years. From a cost perspective, and we don't guide quarterly, so please take this with a massive grain of salt, what we see is that the first quarter will be in from a cost perspective in the vicinity of Q4. And the second quarter, more or less also in the same vicinity like Q1 and Q4, but then it will -- then we expect to see a rising cost base. This is this. On the pricing perspective, this was the second question, we were actually seeing exactly in Q4 what we expected with the Q3 call. So more or less a high single-digit million number, and this played very well into our overall equation. The third one, I actually...

The third question is, now that we're guiding with revenue and sort of billings, whether we will change all KPIs that we're disclosing, Enterprise, SMB splits and everything else, on revenue numbers versus income.

That's the intent. Yes.

That will shift to revenues, okay. And will you help us with -- restate it from prior years, just so we can look at it on a look-through basis?

Yes, yes.

The next question is from the line of Toby Ogg with JPMorgan.

A couple for me. Just firstly, just on the new billings development in 4Q. Looked like it was a little bit lower than the Q3 number. So could you just help us understand some of the drivers there around the new billings, and also just how we should think about the mix between existing and new billings into 2023? And then also just how much of a pricing contribution you would expect to billings growth in '23? And then just on the cost savings side of the bridge. Could you just give us a little bit more detail on the size of the RSU program that you've highlighted as a source of cost savings?

Yes. I think new billings Q4 versus Q3, I mean, clearly, the main sales motion that you have in Enterprise software towards the end of the year, the pipeline conversion with your largest opportunity. And one of the, I think, big advantages of us is that we have this large number of existing customers with, I don't know, 622,000 subscribers or so. And there is many companies in this subscriber base that actually qualify for larger deals, larger solutions, wider rollout of Tensor or rollout to embedded devices. So as you can imagine, towards the end of the year, the sales force is fully focused on these larger opportunities. And it happens that most of the larger deals that we've done towards the end of the year actually with existing customers. While in Q3, this motion is, I would say, less pronounced. And therefore, there was new billings, more new billings, new billings in the third quarter. I mean -- on that discussion, because we had that before as well, I think it's important to understand that new billings, in our definition, means a company is not having a single TeamViewer license anywhere in the world. So not even a EUR 350 business license, only then we qualify as new. Whereas if a customer and that's quite likely or company quite likely has a license somewhere in the world, it's called under-retained. And as you can imagine, when you do Enterprise moves and you move customers from EUR 2,000 to EUR 3,000 license count or euro to EUR 20,000, EUR 30,000, EUR 100,000, EUR 150,000, this is a massive sales motion and a massive achievement, even though it's falling under retained bucket, and that's 1 of our key motions that we're having. I think, very different from other much smaller enterprise offer companies that need to actually always win new logos to be able to grow. So I think that's important. I mean, for the pricing contribution and the RSU program impact, I hand over to Michael.

Yes. So for -- let me start with the RSU program and how we think about it. So first, by making the employees into shareholders, we are all sitting in one boat, which is creating shareholder value. This is so important for us. We launched this program, therefore, last year. While we've mentioned it here as an element of contribution to cost savings, there's a following. We do the same program also in '22 and '23, so we continue the program. And we have a little bit of a shift between leaders to employees. So now, everybody gets the same share of RSUs. But what is important is that we explained to the employees that, hey, we're in the same boat, and we win together and we lose together. And it's not inflationary rises, and there need to have more salary increases. So we were able -- or we think we will be able to balance out expected salary increases with the RSU program. So it's a win-win, and therefore, it will also contribute to the overall success. Price increases was -- with regard to 2023, or can you repeat the question quickly?

Yes, it was just how much are you expecting the contribution to be from pricing in 2023?

So -- Yes. So it will be moderate. We start as we did, by the way, in Q4. We started policy into the year. We did that already obviously in Q4, so the first cohort for the first quarter are already executed, and we will continue very cautiously in our base through the cohort Q1, Q2. And Q2, and then we check it.

Total -- in total, a little bit less for the first quarter's than in the Q4. It has to do also with the cohort side.

Can we go ahead with the next question?

I guess so, yes.

The next question is from the line of Victor Cheng with BofA.