TeamViewer AG

Thank you, operator, and good morning, everybody. Welcome to TeamViewer's Q2 earnings call.

I am Bisera Grubesic, Head of IR, and I am joined today by our CEO, Oliver; CFO, Michael; and CCO, Mark. Oliver will run you through the quarterly business highlights.

Mark will talk about our new product launches in the DEX and digital workplace space and Michael will present the financials. The presentation will be concluded by a Q&A session.

Same as in Q1, we will present non-IFRS pro forma top line and adjusted EBITDA performance. And please note that you can find the important notice and the APM disclosure on Slides 2 and 3.

And with this, I hand it over to Oliver to kick off our presentation.

Thank you, Bisera. Good morning, everyone.

Also welcome from me. Thank you for joining our call today.

As always, let me begin with the highlights of the last quarter. I think in the second quarter, we made really good strategic progress with our enterprise business as an important driver of our performance with a strong double-digit increase of 15%.

It contributed a lot to our solid pro forma revenue growth of 6%, both numbers in constant currency and year-over-year. And as you know, the second quarter is rather not our strongest as we are really in pipeline build mode for the enterprise business for the second half of the year, we really believe that these are good results.

The pro forma ARR increased by 4% in constant currency. We would say that our performance in the last quarter was somewhat impacted by the difficult macro environment in the U.S.

market, which I will talk about a bit more in a few minutes. It's important to mention that we already see very promising pipeline for the second half of the year, as we would expect, obviously, for the Enterprise business.

Profitability continued to be very strong in Q2 with adjusted EBITDA up 17% year-over-year and a really strong margin of 44%. This is a significant increase of 4 percentage points year-over-year.

We also made very good progress with the integration of 1E technology into our product portfolio. During the last month, we delivered several platform enhancements as we announced first DEX Essentials and then TeamViewer ONE as the platform proposition.

Mark will go deeper into these product updates later. But I think I can already say that we are seeing promising early momentum in the digital workplace offering, so DEX Essentials and TeamViewer ONE, very pleased with this.

Obviously, we know that we continue to operate in a pretty volatile global economic environment. And we're trying to be prudent and cautious, but we do expect a clear growth acceleration in the second half of the year.

And based on our strategic progress, we are really confident to reach our targets. And therefore, we reiterate our pro forma full year 2025 guidance.

Let's now look at the regions and customer categories and how they developed in the quarter. Revenue grew across all regions in Q2, strong growth in EMEA and also really encouraging development in APAC.

I think both underscore the resilience and the adaptability of our business, while the headwinds in the U.S. impacted our performance in the Americas to some extent.

EMEA was our strongest region in Q2, delivering almost EUR 100 million in revenue, which is up 8% year-over-year. And that's despite the global macroeconomic uncertainties.

I think EMEA really proved to be a reliable growth engine. The region benefited from robust enterprise growth, underlying the value and the relevance of our offering.

In the Americas, second largest region, we generated EUR 72.7 million in revenue, which is a 3% reported growth and 5% in constant currency. Obviously, the political environment in the U.S.

resulted in overall uncertainty that affected customer decision-making. In addition, it really led to some budget cuts in the federal public sector and this impacted 1E as 1E is traditionally relatively strong in the government space with large customers there.

So that was a bit a worry going into Q2. But that said, we actually did retain the key federal clients, like, for example, the U.S.

Department of Veteran Affairs, which is a huge deal for us, which, in our view, really demonstrates the critical value of our solutions to such organizations. SMB sentiment was also a bit subdued, but we did see encouraging early traction with our new offering, which is targeted towards SMB, which is the DEX Essentials, which we launched a few weeks ago, which is going to have general availability actually starting today.

So so far, it was a limited go-to-market. If we come to APAC, APAC delivered EUR 18.2 million in revenue, which is up 3% reported and 4% in constant currency.

So clearly, we know there's ongoing macro challenges with China, not an easy market. But given that, the region showed pretty solid growth, particularly again in the Enterprise segment.

And interestingly, we also saw positive uptake of the DEX solutions in the region. So we did win 3 promising paid POVs in South Korea, which, from our perspective, really reinforces the strategic rationale.

DEX will be an important proposition for the Asian market for some key countries like South Korea, Japan and others. And we're really pleased to see that we leveraged our office and team infrastructure over there to already win customers.

So that's a very nice development, which gives us confidence for the cross-sell pipeline also towards the second half of the year. Across our customer categories, the enterprise business continued to demonstrate strength resilience.

Enterprise revenue grew 15% year-over-year in constant currency, reaching EUR 58.7 million in Q2. This performance reflects the consistent demand for our high- value solutions and their strategic relevance for large organizations.

Enterprise ARR grew double digit year-over-year, mainly driven by the continued strength of the TeamViewer Enterprise business. This was partially offset by softer performance from 1E, which, as I discussed before, faced a few headwinds due to the challenges in U.S.

and the recent budget cuts in U.S. federal customers.

And in addition, please don't forget 1E was affected by really a quite tough year-over-year comparison and then the general seasonal effects of larger deals in this category coming through mostly in the second half of the calendar year. If we come to SMB, revenue growth improved a bit compared to Q1 by 1 percentage point, representing 3% year-over-year increase in constant currency.

ARR growth was modest at 1%, which I think is reflecting also the broader macroeconomic pressure that smaller businesses face actually globally. And while sentiment in most markets remains cautious, we're actually happy to see the early traction of our DEX Essential offerings, as I mentioned before already, which I think is a very promising sign of that strategic expansion and that we will have a very interesting offering for the SMB space that we can use to cross-sell.

Let's now look at the ARR value ranges as usual in Enterprise and SMB. So looking at the development of our ARR value ranges, we see continued strength in Enterprise and a more mixed picture in SMB on this page.

In Enterprise, value ranges up to below EUR 100,000 delivered continued strong double digit year-over-year growth, highlighting the healthy demand for our solutions across a wide range of customer profiles. The largest Enterprise ARR value range above EUR 200,000 was up 8% year-over-year in constant currency.

That's reflecting the effect of tougher comps for 1E, the macro difficulties in the U.S. that I mentioned and their impact on larger Enterprise customers, particularly on 1E side.

We anticipate a recovery in this segment as we really see the macroeconomic conditions stabilizing now. And we see very good momentum in the pipeline development for the second half of the year with larger pipelines in 1E and TeamViewer and cross-sell, bigger deal sizes in January towards the second half of the year and also improved conversion rates.

In SMB, new customer inflow was more muted and ARR growth was primarily driven by the highest value range, as you can see here. This is always reflecting the very successful upselling into higher tiers as more customers adopt richer product packages.

This is also further supported by our continued net upsell to the Enterprise segment of EUR 16.8 million in this quarter. Let's now have a quick look at the progress of our integration with 1E o the next slide, please, before Mark then elaborates on the expanded DEX and digital workplace offerings.

So integration of 1E is progressing fully in line with our expectations, very positive, continues to unfold as planned. I think actually even a bit faster than we had originally thought on the product side.

We did achieve major milestones already with new products and also develop the corresponding go-to-market strategy. Again, all of this will be explained by Mark in a bit.

But we are all very proud of the team delivering such significant steps forward in a relatively short amount of time. Remember, we only closed the transaction end of January and we already have integrated product offerings out there in the market, which DEX Essentials being on GA actually today.

If we look at Process & Infrastructure, as you would expect, we've begun consolidating key systems, including R&D tools, CRM and other core infrastructure. This does not only support operational alignment, but it really opens up further opportunities for some efficiency gains as well.

As we move forward with our transition plan, we will continue to assess and capture synergy potential wherever possible in this post- merger integration as well. With this, let me hand it over to Mark, who will give you an update on our combined product offering.

Mark, please?

Thank you, Oliver, and a warm welcome from me also to everyone. I'm very excited to guide everyone through the enhanced DEX capabilities Oliver mentioned briefly several times today and explain the strategy behind them and what will drive significant growth acceleration in the second half this year.

Our second quarter saw significant progress regarding the ongoing integration of DEX technology into TeamViewer's portfolio and platform. In May, as you already know, we introduced DEX Essentials, a new offering designed to make DEX capabilities available to a much larger market, specifically the SMB businesses.

It is available as an add-on to our commercial remote connectivity solution. So a very easy way for customers to add this to their current products.

DEX Essentials is based on 1E technology, which was originally intended for very large enterprise organizations. We have adapted it to meet the needs of those smaller IT teams.

We already see good momentum, even though we introduced it into a curated sales motion through inside sales and to selected customer groups only, we will make it available to the entire customer base and through more sales channels from this week onwards. Strategically, DEX Essentials is laying a very important foundation for further development.

Firstly, we are significantly expanding the potential customer base for DEX products and we are looking at a substantial upselling potential with our existing TeamViewer client base of more than 600,000 customers. Secondly, this is a very -- this is very important.

With DEX Essentials, we are introducing a different pricing logic to TeamViewer customers, namely a per endpoint price. This brings me to TeamViewer ONE, the unified digital workplace management platform that we also announced in May.

With this, we are meeting the significant demand of IT buyers for tool consolidation with a complete IT management suite from a single vendor. TeamViewer ONE brings together endpoint management, remote connectivity, AI and DEX into a single platform.

This is where the market is heading and we are already delivering this to capture the latent demand for an integrated single platform. And clearly, with DEX Essentials, we are strategically paving the way for ultimately upselling DEX Essential customers to TeamViewer ONE.

On top of that, we are proud that the strength of the TeamViewer's DEX technology was confirmed by an independent source at the end of May. As you can see on the right-hand side, we were recognized as a leader in Gartner's Magic Quadrant for DEX management tools.

This is the first time since the 1E acquisition that the TeamViewer brand shows up in this relevant industry analyst report. Important customer wins in the DEX space since the closing include one of the world's largest law firms, amongst many others.

As Oliver outlined, the U.S.-related political uncertainties impacted the 1E sales motion given that 1E has significant exposure in the U.S., particularly in the public sector, where efficiency programs and budget cuts are affecting IT spend. However, despite these setbacks, we have managed to retain key customers.

Equally importantly, we are in good conversations with potential new customers and the DEX cross-sell pipeline into TeamViewer's existing customer base is very promising. Almost all mid- to large enterprises today are looking to deploy DEX technology.

These cross-selling opportunities from a key -- form a key part of our go-to-market strategy and it is great to see that we are moving forward as anticipated. We expect a lot more traction and higher win rates now that sales enablement for the new integrated products has progressed significantly across all sales teams and in all regions.

Integrating 2 teams, systems and infrastructures has made significant progress so that we can expect focused execution in the second half of the year. In summary, we are receiving excellent feedback from the market regarding our new DEX and digital workplace offerings despite the challenging macro.

Everybody understands the beauty of combining on-demand remote support, proactive issue detection and remediation from DEX. We have a promising pipeline in place, including a very good proportion of larger deals and we expect a good conversion towards the end of the year as is typical in the Enterprise business.

That said, we anticipate to deliver growth acceleration in the second half of the year. Thank you very much.

Back to you, Oliver.

Yes. Thank you, Mark.

I think beyond the developments in the DEX and the digital workplace space, obviously, we're also not standing still on the original TeamViewer side. And TeamViewer, we also made very strong progress with our AI offering in the second quarter.

We have consistently expanded the AI features since their launch in the last year. And in addition to the session insights and the analytics capabilities that we had introduced already in October of last year, we've now added TeamViewer Copilot, which is an AI assistant, which is embedded inside our remote support product and works throughout the remote support sessions.

So how it works is then an IT service desk agent can then chat with the Copilot in real time, for example, to access device data, diagnose issues, generate resolution workflows or then even automate everyday tasks. Beginning of July, we bundled the AI capabilities into a single add-on for our customers, which is named TeamViewer Intelligence.

And with our enhanced AI offering and our leading DEX capabilities, we position TeamViewer now at the forefront of the digital workplace transformation and we are very confident to capitalize on the early successes that we have in this space already. So if I conclude this part of the presentation, I think we achieved very relevant milestones in the second quarter.

We are reiterating our full year guidance and we expect to deliver growth acceleration in the second half of this year. We made very good progress with our product integration and the launch of new products in the digital workplace space.

And now we have an enhanced offering for Enterprise and SMB customers. We have targeted go-to-market strategies in place for all our products and we are improving the customer journey and the sales channel specifically for SMB to reignite growth in that space as well.

And like this, we are unlocking new cross-sell opportunities in this segment. We've completed a good portion of the integration work in the first half of the year already, so we can fully concentrate on execution in H2.

And we see really good progress on pipeline development with larger pipeline for TeamViewer, for 1E DEX and also for cross- sell with higher value deals and we expect to materialize particularly in Q4 when Enterprise business typically sees a seasonal peak as you've seen in the previous years as well. And with this, I would like to hand over to Michael now for the financial overview.

Thank you.

Thank you, Oliver and Mark, and good morning, everyone. Let us now have a look at our key financials for the second quarter of 2025.

Next slide, please. TeamViewer delivered a solid second quarter.

Our revenue reached around EUR 191 million, up 6% year-over-year in constant currency. Strong growth in the EMEA region more than offset the softness in the U.S.

market and our profitability remains strong. Pro forma adjusted EBITDA increased by 17% year-over-year to EUR 84 million, resulting in a significant year-over-year margin expansion from 40% to 44%.

Profitability benefited from optimized marketing spend in the sponsorship area. Pro forma adjusted EPS was up 90% compared to TeamViewer stand-alone in the prior year, reaching EUR 0.28 for the quarter.

And I'm pleased to share that our pro forma net leverage ratio further improved to 2.9x, down from 3.1x in Q1 '25 and is fully in line with our deleveraging targets. Now let's dive into the details of our Q2 results.

Next slide, please. Pro forma revenue in Q2 grew by 6% year-over-year in constant currency to around EUR 191 million.

TeamViewer stand-alone contributed EUR 174 million, also growing 6% year-over-year. This was supported by a strong Enterprise momentum over the last 12 months in the EMEA region.

1E stand-alone generated EUR 70 million in pro forma revenue, reflecting a 7% increase year-over-year in constant currency. 1E's revenue growth was affected by tougher year-over-year comps due to its U.S.

Department of Veteran Affairs contract that was signed last year in Q2, seasonal effects and additional headwinds due to recent U.S. federal budget cuts.

ARR grew by 4% year-over-year in constant currency and reached EUR 759 million. As Oliver explained, the Enterprise ARR grew by double digit percentage year-over-year, driven by the continued strength of the TeamViewer Enterprise business.

This growth was partially offset by softer performance from 1E. Sequentially, ARR was broadly flat, primarily due to the challenging U.S.

market conditions during Q2 and also sequential negative [indiscernible] effects. Importantly, our profitability remained strong with an adjusted EBITDA margin of 44%.

Let us continue with our Enterprise business on Slide 14, please. Enterprise continued to deliver double digit growth in both revenue and ARR, underscoring the fundamental strength of TeamViewer's core business.

Pro forma revenue reached EUR 59 million in Q2, marking a 15% year-over-year increase in constant currency. ARR also grew by 13% year-over-year in constant currency, reaching EUR 227 million by the end of the first half year.

This performance was primarily driven by the EMEA and the APAC regions, both of which demonstrated a solid Enterprise momentum. Given the nearly all 1E's business falls within the Enterprise category, the macroeconomic uncertainties in the U.S.

had a notable impact on overall growth. Additionally, year-over-year growth in Enterprise ARR was tempered by the high-value deals 1E secured in Q2 of last year, which led to tough year-over-year comps as we discussed during our last call in May.

The Enterprise net retention rate, which had benefited from 1E's contribution in Q1 and the high-value deals 1E secured in Q2 of last year declined by 5 percentage points to 98% in Q2. Adjusted for the upsell from SMB customers during the period, Enterprise NRR reached 103%.

As shown on the top right of the slide, the number of Enterprise customers continued to grow, both sequentially and year-over-year, reaching now 5,143 customers at the end of the quarter. Pro forma Enterprise ASP remained steady at EUR 44,000 per customer.

Let's now move on to our SMB business on Slide 15. Naturally, the broader macroeconomic environment also influenced our SMB customer base.

Given the prevailing macro sentiment, our SMB business delivered a solid performance in Q2. The pro forma SMB revenue reached EUR 132 million for the quarter, up 3% year-over-year in constant currency.

This reflects a 0 percentage point improvement in growth trend over Q1. SMB ARR grew by 1% year-over-year in constant currency, totaling EUR 532 million now at quarter end.

This growth was supported by good traction in the EMEA region, partially offset by the slowdown in the Americas. SMB counted 651,000 customers at the end of the quarter.

Somewhat lower customer count was preliminary due to slightly higher churn and limited new customer inflow, both linked to the temporary macro challenges in the U.S. market in particular.

Our SMB ASP was up 3% year-over-year and reached EUR 817. This demonstrates our ability to expand the business with existing customers through effective cross and upselling initiatives.

As part of our ongoing efforts to increase customer value and drive monetization, we have recently embedded new webshop functionalities directly into our products. These enable personalized add-on offerings based on actual customer usage, creating a more tailored and seamless upselling experience.

We expect this to have a positive impact on our SMB business alongside the rollout of DEX Essentials and our AI-powered features, both of which open up additional upselling potential. Let us now take a look at our cost base on the next slide, please.

The pro forma adjusted EBITDA margin improved significantly by 4 percentage points year-over-year, reaching now 44% in the quarter. This was driven by our optimized sponsoring spend.

Most recurring cost items as percentage of revenue remained stable or slightly declined compared to the same quarter last year. As previously communicated, we saw a sequential increase in marketing expenses of around EUR 5 million, primarily due to the launch of our new Make Work with Better brand campaign at the end of April.

Despite this, total marketing costs were 12% lower than in Q2 2024. Our primary areas of investment were sales and research and development, which increased by 7% and 8% year-over-year, respectively.

These investments were focused on hiring new talent to support our sales efforts across all regions and to drive the development of innovative product features, some of which Oliver and Mark presented earlier. The gain recorded under other cost items reflect lower bad debt and proceeds from the derivatives during the quarter.

Overall, the recurring costs decreased by 2% year-over-year, whilst we continued to invest into strategic growth initiatives. Let us move on to net income and EPS development on Slide 17.

Pro forma adjusted earnings per share was EUR 0.28 in Q2, up 19% year-over-year compared to TeamViewer stand-alone. For further details, please refer to the pro forma adjusted net income bridge on Page 12 of the earnings press release.

Main driver for this strong result is the optimized sponsorship cost and the 1E contribution in the quarter, which led to an IFRS EBITDA of nearly EUR 83 million, up 38% year-over-year compared to TeamViewer stand-alone. Total interest expenses for the quarter amounted to EUR 10.4 million, an increase of EUR 5.7 million year-over-year, driven by the financing of the 1E transaction.

Financial FX result increased by EUR 21 million year-over-year. In addition to the EUR 5.7 million interest impact, the FX result reflects negative translation effects related to an intercompany loan, which is required under IFRS.

Our share count was around 3% lower year-over-year due to our continued buybacks during 2024 and this further supported the EPS growth in the quarter. With this, let's move on to cash flows on Slide 18.

Adjusted for the nonrecurring items related to the 1E acquisition, levered free cash flow amounted to EUR 59.6 million in Q2. This translated into a strong cash conversion of 71% for the quarter.

For the full year, we continue to anticipate a cash conversion rate of around 70% at guided FX. Other factors influencing cash flow in Q2 included higher working capital, driven by phasing effects from high-value contracts and increased interest payments related to the 1E acquisition.

This was partially offset by lower tax payments, which mainly result from changes in our tax scheme and phasing effects. I will now give you a short update to our financing on Slide 19.

We continue to deleverage in line with our targets following the 1E acquisition. During the quarter, our pro forma leverage ratio improved further to 2.9x, down from 3.1x in Q1 '25.

Cash and cash equivalents amounted to around EUR 41 million at the end of the first half of the year, down around EUR 50 million compared to year-end 2024. CapEx and acquisition costs for 1E of EUR 686 million were balanced by our operating free cash flow of EUR 110 million and borrowings of EUR 590 million.

As of 30th of June, financial liabilities amounted to roughly EUR 1 billion, an improvement of around EUR 130 million compared to the end of Q1. Net financial liabilities totaled EUR 992 million at the half year mark.

Despite ongoing macro challenges, we remain firmly committed to disciplined capital allocation. Combined with our strong cash profile and solid cash conversion, this positions us well to achieve our leverage target of around 2.6x by year-end 2025 and below 2x by the end of 2026.

Let us continue with our financial guidance on the next slide. We delivered a solid performance in the second quarter.

These results are particularly noteworthy given the difficult conditions in the U.S. market, in particular, the uncertainty and delayed customer decision-making affected the overall environment.

Looking ahead, we reiterate our full year guidance. For full year 2025, we anticipate continued top line growth on a pro forma and like-for-like basis as outlined in the table.

We expect the ARR growth to range between EUR 815 million to EUR 840 million, which reflects between 7.5% and 10.8% year- over-year. We expect full year pro forma revenue between EUR 778 million and EUR 797 million.

This translates to between 5.1% and 7.7% year-over-year growth. Let me remind you that our full year guidance is based on a euro-dollar exchange rate of EUR 1.05.

At an assumed yearly average rate of $1.14, the ARR range would be reduced by around EUR 24 million and the revenue range would be reduced by a low-teens million-euro amount, EUR 10 million to EUR 12 million. Our guidance implies a growth acceleration in the second half of this year.

Let me outline why we expect this acceleration. First, I have been with the company now for 3 years and our expected growth acceleration aligns with seasonality patterns observed in the previous years.

And this trend is once again evident in the strength of our pipeline. As Oliver and Mark explained, we are already seeing a larger pipeline and higher conversion rates.

Strength in the sales execution in recent months is expected to drive improved win rates. Additionally, we anticipate larger deal volumes, particularly in Q4 when Enterprise typically experiences a seasonal peak.

Second, we are starting to see ARR synergies from the 1E acquisition. Although our new DEX offerings have only just launched, we've already secured promising leads from our existing TeamViewer customer base.

And third, we are improving the customer journey and sales channels, especially for SMB to reignite that space and unlock new cross- sell opportunities for our AI and DEX offerings. For example, with our new in marketplace and a broader adaptation -- adoption, sorry, of the new UI.

Fourth, in that context, we will continue to run targeted go-to-market campaigns to strengthen performance across all of the regions. And finally, with the team integration progressing very well, we are now shifting our focus from organizational alignment to operational execution, which enables us to drive growth more effectively.

We will continue to monitor macroeconomic developments closely and remain disciplined in our approach. That said, we are confident that the measures we have outlined position us well to achieve our targets for the full year.

With this, I would like to hand back to the operator to open the Q&A.

I had 2 questions. Firstly, can you talk about sort of the delta between sort of ARR and the kind of slight acceleration in revenue growth you need to hit the midpoint of your guidance?

And what are the kind of factors that underpin your visibility? I know that the Enterprise business and probably 1E is going to be a bit more back-end loaded in Q4 given the larger deals.

But specifically on the SMB side, what is the sort of pipeline that you have around the new sort of next product? And the second question is on the SMB side, we saw some pickup in the churn now.

Any sort of particular reasons for that? And as we think about your marketing spend, do you need to step up sort of campaigns to sort of stimulate this growth in the second half as well?

So yes, as you say, ARR acceleration on the Enterprise side, I think it's pretty clear. I read your question as that pipeline coverage is well understood.

And it's just -- it's not a little bit seasonal. It's really significantly back-end loaded as we've seen in other years if you look at Q4.

And then also with 1E, this is even more the case because the deal size is larger and it's more strategic purchase or procurement decisions, which are typically taken more towards the end of the year with budgets being available and so forth. So I think that's pretty clear.

SMB, ARR acceleration on SMB, yes, we need a notch up in terms of growth when we go through the year. Clearly, there has been a lot of focus on Enterprise recently and then the 1E acquisition and the integration work.

In parallel, we have reworked our campaign structure for SMB. We've also reworked the in-product presentation of cross-sell opportunities.

We are also rolling out our newer remote product with a new UI. If you are on the new product as a customer, then it's much easier to access and purchase cross-sell products in remote management, patching, DEX Essentials then also and so forth.

So there's a shift going on in the customer base to move the customers to the new UI and by that, have more opportunities to do in- product promotions and direct on-the-web purchases. So there's a significant shift in how we speak to our customers and address cross-sell.

And then thirdly, new products and new own products. So DEX Essentials and TeamViewer ONE are our own products with our own functionalities fully integrated with the TeamViewer core proposition.

So this is a significant shift. As you know, the cross-sell products in the SMB space, notably endpoint protection, patching are third-party products, which are OEMs and then integrated into our flow.

That's good, but it's obviously much, much better to have the latest and greatest functionality in IT automation, which we have with TeamViewer ONE and Dex Essentials. And that's why we have been pushing a lot to bring this to market quickly.

As I said before, general availability is only today, actually really today at noon. And from there, we will drive the cross-sell initiatives.

So these things are important on the kind of marketing, product positioning and sales side for SMB. And then they will have -- we will have a washout of like-for-like price increases that we did in the past.

So we will have less tough comps on the pricing side. And we also would see the churn initiatives that we've put in place last year coming to fruition more and being effective.

We see early indications there in the Americas and significant improvement on the churn in SMB in APAC over the last quarters and we believe that this will continue to be the case. So this is ARR, SMB.

I don't -- I think I almost covered the second question as well.

No, that was on the campaigning and whether we have to step up on the spend in marketing, especially with what Oliver outlined, we did accelerate the spend in Q2 for all the purposes we explained. So that should come rather down with all the new initiatives which are in product.

So rather less spend. That's the idea.

Maybe the last one on the SMB trends that was really driven by the U.S. So it's really -- we believe and see and hope that this is to the macroeconomic situation, which should really cool down now.

My question is, again, on the SMB space, but more related to DEX Essentials. I mean, you mentioned the general availability starting today.

Can you give us some feedback on the last couple of weeks or let's call it, testing the market period? What is the feedback from clients?

What do you believe is the realistic ASP assumption here? I mean, it's probably just out today.

So maybe give us some color on the pricing strategy here and what you believe can be, let's say, the add-on growth for SMB overall in coming quarters?

Yes, happy to. So I'm going to disclose all the details on pricing and positioning here in a call like this, but because also there's a competition out there, we are ahead and we want to stay ahead.

So what are we doing? So DEX Essentials is a reduced version of the DEX proposition.

So it's a set of key automations to remediate common widespread IT issues on customer endpoints. We target customers that in the SMB space that are managing a couple of hundred endpoints up to a few thousand maybe.

So that's obviously important that you have an amount of endpoints that you're managing. So then naturally, if you think about our SMB segmentation, that fits nicely into the customers that buy premium and corporate licenses, so say, customers that are sitting in license count above euro amounts of EUR 1,500 -- between EUR 1,500 and EUR 10,000.

So that's the sweet spot. Heavy users of our product, managing a good set of IT endpoints and we position the product to this.

Through inside sales, so this is an assisted sale with a person. And what is most important in these things is the feedback you get from your sellers early on when they touch the product and talk to customers.

And this is very positive feedback. So we've closed a very good number of deals already with customers.

Customers understand the proposition. It is an obvious add-on to what we do because it is allowing for some self-healing or self-remediation of issues on the IT side.

Pricing-wise, interesting. This is endpoint-based pricing.

So as you know, TeamViewer in general is channel-based pricing or mostly seat-based pricing. Here, we move to endpoint-based pricing, which is where the market will go.

Also, if you think about a proposition like TeamViewer ONE, this will also -- or is also going to be endpoint-based. So this is a step into endpoint.

So the customer has a license with us, which is technician-based and then tells us how many managed devices they would move to the DEX Essentials platform and that's then priced per device per year in a nice single-digit euro amount. And if you put that all together, then you see that it's a meaningful upsell if you take a EUR 2,000 license or so and then take a EUR 1,000 endpoint situation and you take the pricing I just mentioned, you find that it's easily a 40 -- 30%, 40%, 50%, 60% upsell if customers decide to add DEX Essentials.

So that's how we're playing around with it. So early days, as I said and as you said, general availability today and then we will take it from there, but promising early results.

I hope that answers your question.

I just had a couple thinking about the ARR acceleration for H2. So firstly, you spoke on the call about an improvement in conversion ratios in H2.

But I was wondering if you could quantify how much of an improvement you need compared to historical conversion ratios in order to achieve the midpoint of that ARR guidance? And then also from a phasing perspective, so you've spoken to a back-end loaded acceleration in ARR growth, especially in Q4.

But how much can we reasonably expect to see already in the third quarter?

So I think the -- your first question, 100% right. So obviously, we track pipeline and we have a historic view on conversion rates if we go into Tinder Enterprise and also 1E because we're both tracking -- we were both tracking pipeline in the past, different systems, but we have merged the 2 systems now.

And so we have a view on this. What we're assuming when we go into the second half of the year and how we look at the pipeline is actually the historical conversion rates that we were seeing in previous years.

I think the -- what is fair to say is that Q1 and Q2 -- especially Q2 conversion was low because of the macro uncertainty. So we don't need any conversion uptake in the second half, which goes above and beyond what we've seen last year or the year before or the year before, just normal course of business with good conversion of the deals.

I think the problem of the business so far and I think for many companies is that the conversions actually have been lower than historical comps. And that we believe will normalize and ease out.

To get to midpoint of guidance, we have obviously -- when we did the guidance and the guidance range, which still stands, we have assumed a normal conversion rate, but with some conservatism baked in because when we did the guidance, we already saw that the market is not in super good space. And then phasing Q3 versus Q4, Q4 is the big quarter.

If you go back last few years, Q4 was significantly bigger in terms of deal conversion, especially also in December was for the bigger deals. It's very normal course of action.

So a little bit will be visible in mostly September, now it's kind of summer break. A little bit will be visible in September already, but mostly we're looking at Q4 here.

And also when you look at the cross-sell pipeline between 1E and TeamViewer, very natural, we only started in the first quarter and these are 9- to 12-month sales cycle. So a lot is actually also for Q1, Q2 next year.

But in Q4, we have a good shot with a good number of deals.

Two for me, please. Obviously, plenty of new product innovation announced now.

So I guess, how are you thinking about the penetration of your installed base here as you look forward 12 months from now, what would be a good achievement in your view in terms of how much of that installed base you can sell this to? And then second question is on the 1E outlook.

I recall you were guiding for 17% to 23% growth here for 1E stand-alone. Is that unchanged?

Obviously, the group guidance is unchanged. I'm just wondering if there's any moving parts there with 1E versus TeamViewer stand-alone.

Yes. Let me do the second one first.

So the breakdown of 1E and TeamViewer is not a guidance. This is further information.

We give a group guidance. All of the details is further [ detailation ].

So how we manage the guidance is in the end not relevant as long as we manage it and we are in full swing factor here and especially what Oliver mentioned with a big pipe here on increasing also big deals, size deals. We are super confident on both ends.

But in the end, what matters is the group that maybe...

Yes, maybe adding to this, I think the difference is just also the type of deals in 1E, I mean, they are -- they can be very sizable, sizable customer situations, very strategic deals. And depending on the outturn of this, that changes the pivot towards 1E or towards TeamViewer.

So I think this is quite a range of outcomes here on the 1E side. And therefore, I think it's hard to predict at the moment how this will play out.

And then there is the cross-sell between the 1E and the TeamViewer and the TeamViewer ONE proposition. We do want platform consolidation and integration.

So we need to see how this shapes out. We focus a lot on the platform play, the TeamViewer ONE and the large deals on the DEX side and that's clearly driving factors.

On the first question, Ben, penetration DEX Essentials. So it's too early, I would say, to give you a number for a 12 months out what does success look like.

We are very positive on how quickly we've been able to sell it and how quickly our inside salespeople, first just a few and now most of them are touching it. So that's good.

Significant number of quotes out to customers. Now GA starting today.

With GA, we're changing the pricing a little bit as well because we were testing with it in different markets and see what the right price points would be. So there's a little bit of testing ongoing.

And in parallel to this, we're rolling out the new UI faster, which makes it much easier to also then add cross-sell products. So with this, I think we will probably need to be in the next earnings call after Q3 with 3 months of GA under our belt to then talk more about numbers and trends and from there, give you a number of where we could be 12 months from now.

I have a quick one on 1E and the VA contract. Could you remind me there, is this contract renewed on an annual basis?

You talked about renewing it now. So should we expect a renewal for next year same quarter as well?

And then a question in a similar vein. As you change the pricing structure a little bit, are you thinking about changing contract durations as well to kind of enhance visibility in the business?

Or are you sticking with what you're running at the moment?

So answer is VA is a multiyear deal, but that is formally being reconfirmed, renewed on an annual basis, so again in Q2 next year. So that's an easy one.

And then on the contract side, no, no change on contract. Length we have for the SMB, I think annual contracts upfront pay is the standard.

When we move to additional products, we changed the pricing or we add a pricing parameter, which is endpoint-based pricing, but we still keep the annual logic for the vast majority of our customers, that's 100% the right thing. You can argue that at the very entry level, consumption-based postpaid monthly or so could be something that you could think of, but we don't believe we should go that way.

And then on the upper end, which is probably more what you're referring to, we have multiyear deals. The bigger the deals, the more strategic the deals on TeamViewer attempts or upper end and even more so on 1E DEX.

Clearly, customers typically want to commit for a longer time with annual payment or upfront payment. So this will be more and more the case.

And yes, that does increase visibility. But I think it's more a normal development.

The more we go into Enterprise, the more this is part of our business, longer-term customer contracts with increased visibility.

Two, if I may. I guess, first of all, on retaining the Fed customers or maybe more generally as well.

Are there any concessions maybe in terms of pricing or anything else for that to go through? Do you see any pressures on that end going forward as well?

And then secondly, on margins and Q2 margins at 44% already. Generally, H2 margins, I guess, specifically for Q4 should be a bit higher.

You haven't changed your full year guidance on margins. So how should we think about H2 margins as well?

Yes. Let me take the first one.

Yes, I think especially in Q2 with federal customers or customers that are affected by federal buying behavior, this has been a little bit of a wrestle. Of course, there is -- you need to do something in most cases.

And I think you heard from other software companies, I'm sure, that they had to do something. Some actually got kicked out.

We know from quite a few software vendors that just kicked out completely. So I think question #1 is, do you have a strategic proposition with these customers such that they keep the offering, which was the case, which is good.

And then it's a give and take to reduce the scope of licensing or give some price concessions here and there. In our particular case, I think it was a little bit of a rescoping to kind of create some savings, a little bit of repricing to create some savings and postponing some of the upsell opportunities that we originally had seen and had baked into our plan.

So a little bit of everything there. From our perspective, early days, but since a few weeks, it seems to -- the regime seems to have changed a little bit.

Obviously, everybody is cost-conscious, but I think seems the worst is over in this respect with the discussions we were having. And obviously, also changes in the personnel setup in the U.S.

and then with the big bill that has been pushed through now, I think the backdrop has changed quite materially from our perspective and we think that the worst is over on that one. But obviously, we stay alert and we look at all our customers.

But none of the customer by far has that profile and size that we had in the Q2. So it's much more normalized comps now quarter-over-quarter if we go into the second half of the year.

With this, maybe, Mike, on the margin.

Yes. On margin, so Q1 43%, Q2 now 44%.

You could take indeed a look. We are rather looking at this from a prudent perspective.

For the second half, we expect again something between 43% and 44%. We thought it's too early to call it victory here.

It's still a half year, the macro overall situation. We think the sentiment improves, but we stay on alert mode.

And let's see how this works out. But for us, today, it would have been too early.

But in general, Victor, you're absolutely spot on. We are on a very good road here.

Perhaps just on 1E, again, just on the slower decision-making and the postponed upsell opportunities that you mentioned there as kind of part of the pieces. Have you closed out any of those postponements yet so far in July?

And do you expect to close out these postponements in the second half? And then again, just kind of coming back to that sort of steady-state growth outlook for 1E given the pressured budget outlook.

Any kind of changes to your thinking around what the outlook for 1E sort of looks like kind of steady state given those changing budget dynamics?

Yes. So no, we haven't closed any of these postponements and I wouldn't see us doing so in the next few months or maybe even until the end of the year.

I mean, I think we all, all means many software companies, I think we're quite happy and satisfied that we've gone through this phase, secured the customers at a meaningful price point. And I think -- I don't think you want to go back just a few months later and open that box, probably let it sit there.

But what is important and what we do very actively is focus on the sectors which are actually -- which do spend and have not been affected by this so much. And if you go through 1E, this is clearly banking, financial services.

This is also more and more industrial customers, retail customers, health care customers because the DEX topic per se is really gaining attention around the world. So I think in -- 2, 3 years ago, DEX wasn't very much known.

Now it's really second year Magic Quadrant. So it's front of mind, digital workplace management and there is other sectors that really are looking into this and we focus on those more.

So in that sense, we're also trying to go where the spending is and where there's less pressure. But in Q2, we wouldn't because; a), Q2 is not a big quarter; and b), we had those few deals and this especially big deal that we need to deal with.

So I think medium-term steady-state outlook on 1E hasn't changed since we had discussed it in the acquisition.

Yes. Thank you once again for your time and engagement today, as always, good to have those questions and the discussion.

We will continue to execute on the strategy. We really believe that strategically, this is a really big win, the acquisition of 1E and the proposition of a platform play with the different parts of it from reactive remote, but all the way to fully upfront automated and autonomous endpoint management.

So we get good interest from our partners, customers, continue to work on this and look forward to keep you updated also, obviously, on things like DEX Essentials. As I just said, next earnings call, we should have more visibility.

And looking forward to speaking with you soon, thank you very much.