Ladies and gentlemen, welcome to the TeamViewer SE Q3 2026 preliminary results and analyst call. I am Shari, the Chorus Call operator. I would like to remind you that all participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Bisera Grubesic, Vice President Investor Relations. Please go ahead.
Thank you, operator, and good morning, ladies and gentlemen. Welcome to TeamViewer's Q3 2026 earnings call. I am Bisera Grubesic, Head of IR here at TeamViewer, and today I am joined by our CEO, Oliver Steil, CFO Michael Wilkens, and CRO Mark Banfield. Oliver and Mark will run you through the quarterly business update, and Michael will present the financials. The presentation will be concluded by a Q&A session. Please note that you can find the important notice and the APM disclosure on slides 2 and 3. With this, I hand it over to Oliver to kick off our presentation.
Thank you, Bisera. Good morning, everyone. Welcome from my side as well. Thank you for joining our call today. For several quarters now, we've seen strong business momentum in TeamViewer ONE and DEX, meaningful ARR growth of our highest enterprise tiers, and also stabilizing trends in our SMB business. That's clearly going well and in the right direction. At the same time, I think it's clear that we're not everywhere we want to be.
Let me go into the details of this. First of all, TeamViewer ONE has become an increasingly important driver of enterprise growth. We have new and upsell business from TeamViewer ONE, which grew more than sixfold year-over-year, while ARR growth in our highest value enterprise segment accelerated further.
Within nine months, TeamViewer ONE has grown from no contribution to around 10% of enterprise ARR, supported by both upgrades from existing DEX and Tensor customers, as well as meaningful new business. This momentum was particularly visible among large customers, including a significant win with a leading U.S. aerospace and defense company that we'll also cover later. I think this really underlines our ability to build and expand strategic customer relationships.
In SMB, we also saw encouraging signs. Sequential ARR decline slowed now for the second consecutive quarter, which will pave the way for return to growth over the next quarters, as some of the more negative effects are washing out. The stabilization of churn, which we talked about, has become more and more visible in the last month.
This is due to some targeted retention initiatives and also improving sales execution, which we talked about, and they really continue to take effect, so that's also positive movement. On the other hand, we had some softer upsell and retention, especially in enterprise, together with some slower pipeline conversion in EMEA, and both of that held back total ARR growth. This resulted in a Q3 performance that was somewhat below our ambition, honestly.
Driving broader customer expansion and improving the deal conversions are therefore top priorities to translate the momentum behind our platform strategy into broader and more sustainable ARR and revenue growth in 2027 and beyond. As you know, revenue as a lagging indicator does not yet fully reflect the momentum increase or improvement that you see in the business, and that's obviously a negative.
Profitability, on the other hand, remains strong and really in line with our full year 2026 guidance, with an adjusted EBITDA margin of 43%, which I think demonstrates again the operational efficiency and disciplined cost management that we've seen in the past. At the same time, we do continue to invest in innovation, in AI, and go-to-market capabilities, which is reinforcing, I think, the ability to drive future growth while maintaining financial discipline.
We're going to talk about some of these investment areas, but again, all of this with margin in line with guidance. Talking about innovation, AI is important, clearly. We also see continued strong adoption of our AI capabilities. We have now more than 5.5 million AI sessions by beginning of November, more than 70,000 customers using it. Together with the expansion of our self-healing automation capabilities, it's a strong foundation for further TeamViewer ONE adoption.
Clearly, a key driver is AI being part of the platform, which makes that platform, TeamViewer ONE, a very interesting proposition for customers, and it's really resonating, and Mark will cover this more in his part. We also enhanced our financial position during the quarter. We completed some refinancing activities, and therefore strengthened our maturity profile. In addition, our equity ratio strongly improved to 18%. Michael Wilkens is going to go into this in much more detail.
If we look ahead, we see some delays in the conversion of larger enterprise deals, clearly based on the economic uncertainty in Europe, which is weighing on our Q4 outlook for enterprise. Therefore, we adjusted our full-year revenue guidance to between -2% and -1% in constant currency year-over-year, which was, as you remember previously, between 0% and 3% constant currency.
We do reaffirm our adjusted EBITDA margin guidance of around 43% for the full year despite this top-line softness. Platform momentum across enterprise and SMB gives us confidence that our strategic progress will translate into broader ARR and revenue growth, and our ambition remains clear. We want to establish TeamViewer as the trusted intelligence and action layer for automated and eventually also autonomous IT and OT operations.
In the following slide, we will zoom in on the most relevant results for this quarter. If you go to the next slide, one of the most important developments in Q3 was the growth in enterprise ARR. Looking at the chart on the left, we saw particularly strong momentum in the highest value segment, clearly outpacing overall enterprise growth. This reflects the momentum we discussed earlier and was supported by strategic customer wins, DEX and Tensor up and cross-sell.
On the right, it is encouraging really how quickly TeamViewer ONE is becoming a meaningful contributor to our enterprise business. We went from close to zero at the beginning of the year to now approximately 10% of total enterprise ARR. The TeamViewer ONE contribution to enterprise ARR increased 13 times between the first and the third quarter, which I think is a very strong development.
Importantly, this acceleration happened in our highest value segment, and the growth of TeamViewer ONE reinforce each other and demonstrate growing momentum behind our platform strategy. Let me now hand over to Mark, who will walk you through the TeamViewer ONE progress in much more detail.
Thank you, Oliver. This slide shows the progress we are making with TeamViewer ONE, but also the opportunity that is very much still ahead of us. New and upsell business from TeamViewer ONE and DEX grew sixfold year-over-year in Q3. By the end of the quarter, we had 208 TeamViewer ONE enterprise customers, representing around 4% of our enterprise customer base, but approximately 10% of our enterprise ARR.
This demonstrates that TeamViewer ONE is resonating particularly well with larger, higher-value customers. At the same time, penetration across the broader enterprise base is still relatively low. Increasing customer value realization, expanding adoption across our installed base, and converting our pipeline more effectively are therefore key priorities for us. This is how we intend to translate the traction we are seeing in TeamViewer ONE into the broader enterprise growth.
Let me now give you one example that illustrates the traction we are seeing with large strategic enterprise customers. One of the world's largest aerospace and defense groups has selected TeamViewer ONE across more than 200,000 endpoints in a three-year agreement with a total contract value of $6.6 million. The customer selected TeamViewer ONE following a very competitive proof of concept and will deploy DEX, Remote, content distribution, and self-service through a single integrated platform.
For us, this is an important validation of TeamViewer ONE in a large and very complex enterprise environment. More importantly, our focus is now on replicating this type of success across a broader part of our customer base. Beyond this win, we saw a number of other new business and expansion deals during the quarter across regions and industries.
The examples on this slide illustrate both new logo wins and expansions within our customer relationships. At the same time, we need to be clear that we need much more of such cases to reach the level of overall expansion we want to see across our enterprise base. Our commercial focus is therefore clear: building more pipeline, building it faster, converting that pipeline, deepening our relationships with existing customers, and strengthening retention and expansion across the enterprise base.
The U.S. enterprise business was a particular source of strength in Q3, and underlying demand remains healthy. At the same time, recent customer conversations have made it clear that the U.S. federal budget uncertainty will delay the conversion of large public sector deal volumes currently in our pipeline. While we remain confident in the underlying opportunity, some of that business will take longer to convert than had previously been expected.
I would like to end my part with a customer story that shows where the journey leads, AkzoNobel. Their CIO, Kurt De Ruwe, put it very simply: "The ideal world is no complaints, because then I know I have a stable environment." That is exactly what an autonomous IT platform is built to deliver. AkzoNobel has taken three steps. They first of all see their estate in real time, more than 25,000 devices across 995 locations.
They act on it. DEX is connected to ServiceNow and Xara, their employee chatbot, so endpoint insights and support requests turn into automated remediations. They then learn from it. With Tia-supported scripting, a fix is written once and then applied automatically the next time the same issue appears. The results are tangible.
Connecting Xara with DEX has cut tickets by more than 40%, over 52,000 minutes of IT support time saved in a single quarter. By automating a single configuration change across roughly 25,000 devices, work that would have taken an engineer at least 15 minutes per device, they saved around 253 days of field service time.
This is what our strategy looks like in practice on the customer side. AkzoNobel is not standing still. They are now building towards a workplace where issues are increasingly resolved before anyone has had to ask anything. AkzoNobel illustrates the customer value our platform can deliver at scale. Our task now is to bring these capabilities to a broader share of our installed base and translate that value into stronger retention and expansion. Back to you, Oliver.
Yeah, thank you, Mark. Let's turn to SMB, where we continue to see encouraging signs of stabilization. If we start on the chart on the left, the overall picture remains broadly consistent with what we showed you last quarter. SMB ARR was down year-over-year, reflecting the headwinds that we have discussed previously. More important is the sequential trend shown on the top right. The SMB ARR decline tapered off for the second consecutive quarter and continues to move in the right direction.
The chart below shows the development of churn since the beginning of the year. Following the stabilization we saw at the end of Q2, churn levels have again remained stable around 17% over the recent months, driven by targeted retention initiatives and improving sales execution. There is still further progress needed before SMB business returns to growth, but the sequential development is really encouraging now.
Now let's go to AI, where innovation really continues to drive adoption. More than 70,000 customers have now used TeamViewer AI, with more than 5.5 million cumulative AI sessions as of November 1st. This is almost twice the level which we reported at our Q2 call. Why is that important? Every session strengthens the data foundation behind our vision of Autonomous Endpoint Management.
During Q3, TeamViewer further advances AI-powered approach to IT support and endpoint management, expanding the capabilities that connect AI-driven insights with automated remediation. New functionalities such as Tia troubleshooting, Tia is our intelligent agent, automations, and the Resolution Center help IT teams to move from identifying and resolving issues to capturing those successful resolutions and turning them into repeatable actions.
These developments mark further progress towards TeamViewer's vision of a continuous learning and automation loop, where insights from support interactions and endpoint data can increasingly be translated into proactive and automated issue resolutions. That is what we call the Infinity Loop, which resonates very well with customers, which we hear back from all the events we are participating in.
AkzoNobel, which Mark just walked you through, is a blueprint for where enterprise IT is going, and for the role also that we intend to play with it. Our strategy is delivering tangible results, but we need to translate the progress more consistently into commercial performance. Sharpening our go-to-market execution globally is clearly an important priority. Against this backdrop, I am very pleased that Peter Ruchatz has joined us as Chief Marketing Officer. You see his profile here.
Peter brings more than 20 years in international B2B software marketing and really hands-on experience in both sales-led enterprise, but also product-led SMB marketing. That combination maps really directly onto how we go to market. With a background in strategy consulting at BCG and more than 5 years also working in the U.S., he knows our largest market very well across the different product segments.
He will translate our platform strategy into further commercial momentum on the back of a few clear priorities. Drive broader adoption of TeamViewer ONE across IT and OT in enterprise and mid-market, grow our SMB business from its large installed base, and build a modern AI-powered marketing organization. Pete is a very strong addition to the team, and he joins a go-to-market effort that is already showing very good results, as you have seen from also Mark's details.
Let me close by stepping back to the three priorities that we set at the start of the year. We have made very good progress against each of them, although, as this quarter also shows, there is still significant work ahead to translate that progress into stronger overall growth. Firstly, we want to revitalize SMB and 1E. This was our hardest task, and it is starting to work.
SMB churn has been stable now for five months, and the ARR decline is flattening for the second consecutive quarter. In DEX, we have secured most of the base after the one-off churn in January, and also major renewals are migrating to TeamViewer ONE at a strong ARR uplift. Secondly, we continue to invest in R&D and our sales organization, as Mark mentioned. We are already seeing the impact in our product.
TeamViewer ONE reached around 10% of enterprise ARR in under a year, and the AI adoption has more than doubled since Q2. With Tia, we have moved further from troubleshooting towards truly self-healing IT. Thirdly, we are accelerating our go-to-market initiatives. We have unified the global sales organization around one playbook, strengthened the Americas and the inside sales teams, and brought Peter as new CMO to sharpen our go-to-market approach and drive adoption of TeamViewer ONE across IT and OT.
Our ServiceNow partnership extends our reach here, while the FedRAMP status in process strengthens our position in the U.S. federal sector, where we have already seen public sector wins and upsells, including a major new defense win. All in all, we are seeing tangible progress against the priorities we set at the beginning of the year, but the task is also clear, to improve retention expansion, to strengthen the deal conversion, and to translate the proof points that we clearly see into broader sustainable ARR and revenue growth. There's work to do there. With that, over to you, Michael.
Thank you, Oliver and Mark, and good morning, everyone. Let's look at our key financials for the third quarter of 2026. Before I share the financial details, let me put these developments into perspective. Over the past two years, we have made significant changes to our business. We expanded our portfolio with the acquisition of 1E, we launched our TeamViewer ONE platform, have realigned parts of our go-to-market organization, and in Q4 last year, we took corrective actions in 1E and SMB to bring the performance to where we want it to be.
2026 has been about bringing these elements together and translating them into better operational performance. In Q1, we were working through the effects of the strategic actions we took. The one-off 1E churn weighed on our top line, as did the deliberate course correction and reset in SMB. At the same time, our enterprise fundamentals remained healthy, and the one-off effects of the 1E churn had largely worked themselves through.
In Q2, we saw the first tangible signs that our actions were taking effect. The DEX turnaround progressed, TeamViewer ONE adoption accelerated, enterprise momentum strengthened, and SMB churn started to stabilize. While our top line still reflected the headwinds from previous quarters, leading indicators were moving in the right direction. This brings us to Q3. As Oliver and Mark have outlined, we saw further encouraging progress across several key leading indicators.
We saw strong new business momentum in TeamViewer ONE and our largest enterprise accounts as DEX turnaround progresses on the back of TeamViewer ONE platform wins, while SMB showed further signs of stabilization. There's an important distinction between the trajectory of the business and the lagging indicators.
Nine months into this year, ARR and revenue trends still reflect the one-off DEX churn and SMB headwinds of previous quarters, while the improvement we see in our leading indicators will take time to translate fully into our financials. We continue to invest in sales and R&D to support the growth opportunities ahead. So where are we today? Q3 marks an important step forward in our transformation.
Our focus is to translate these improving underlying indicators into broader sustainable ARR and revenue growth. With that context, let me now go through our key financials in more detail on the next slide. The third quarter continued to demonstrate disciplined financial management despite a softer top line. At the same time, we made good progress on cash generation and further strengthened our financial position through the refinancing measures completed during the quarter.
ARR was broadly stable year-over-year in constant currency and reached EUR 737 million, and this was unfortunately below our ambition. Year-over-year ARR growth continued to be impacted by the previously discussed DEX and SMB effects, slower pipeline conversion, and softer retention, especially in EMEA. In the Americas, however, we saw that the underlying demand remained healthy, supported by solid new business generation and upsell activity.
Revenue as a lagging indicator was EUR 184 million, down 2.2% year-over-year in constant currency. But we still delivered an adjusted EBITDA of EUR 79 million and maintained a strong margin of 42.8%, in line with our full-year 2026 guidance and demonstrating continued financial discipline. Net income increased by 26% year-over-year, and adjusted EPS was EUR 0.27 this quarter. Net leverage ratio was 2.5 times, and we remain on track for our around 2.3 times year-end target.
The current trading momentum does influence our view on the full-year outlook, which I am going to cover later. Let's take a closer look at the P&L. As mentioned earlier, revenue as a lagging indicator does not yet fully reflect the improving business momentum we are seeing across the business. Reported revenue was also negatively impacted by foreign exchange movements, resulting in a 1.7 percentage point headwind compared to last year, primarily driven by the US dollar.
The actual average FX rates in Q3 are provided on slide 26. SMB revenue decreased by 5% year-over-year in constant currency to EUR 124 million, and this reflects the continued impact of the SMB strategic measures as mentioned in the previous quarters. Enterprise revenue, however, increased by 5% year-over-year, reaching EUR 60 million. Gross profit was EUR 168 million, with a gross margin of 91%, reflecting the high quality of our subscription revenue base.
COGS increased slightly by 10% year-over-year. The increase primarily reflects investments in the customer platform, including FedRAMP readiness and the expansion of TeamViewer ONE and DEX offerings, as well as partner integration initiatives. Total OPEX remained stable with EUR 89 million, which shows our disciplined cost management, even with a softer top-line development. Sales costs increased 8% year-over-year, driven by continued investments to strengthen customer acquisition capabilities and support long-term customer retention.
Marketing costs decreased 18% year-over-year to EUR 20 million. The decrease primarily reflects lower sponsorship-related expenses following the final phase-out of the legacy sponsorship commitments. R&D costs were up 14% year-over-year and reflect continued investments in product innovation, AI capabilities, and the expansion of the combined platform. R&D expenses represented 14% of revenue and are an indicator of our strong focus on driving product development.
G&A expenses decreased by 90% year-over-year as a result of cost control measures of management and post-merger integration synergies. Other expenses amounted EUR 2.3 million compared to EUR 1.7 million in Q3 2025 and reflect lower positive impacts from derivatives. You see that we balance overhead cost reductions with future-oriented go-to-market and R&D investments.
As a result, EBITDA was EUR 79 million, down 10% year-over-year. This decline mainly reflects lower revenue in the quarter. Adjusted EBITDA margin was strong at 42.8%. Net income was up 26% year-over-year, and the total interest expenses were EUR 10 million in Q3, down EUR 0.4 million, as we have further reduced our net debt position. Adjusted EPS was EUR 0.27 this quarter. Moving on to leverage.
Net debt was EUR 819 million at the end of the quarter, which is an improvement of EUR 40 million quarter-over-quarter. Net leverage ratio remains stable at 2.5 times, and as mentioned, we have a clear path to reach our year-end net debt leverage target of around 2.3 times. The details of the free cash flow will follow on the next slide.
Levered free cash flow conversion in the quarter improved to 35%. Let me give you a clear picture of cash flow drivers of this quarter. Pre-tax cash from operating activities was EUR 57 million, up 23% year-over-year, primarily due to lower sponsorship payments compared to last year. This was partly offset by higher income tax payments and higher CapEx in the quarter.
Income tax payments were higher year-over-year, as in 2025, we benefited from tax loss carryforwards related to the German fiscal unity tax scheme change. CapEx was slightly up this quarter, mainly because of the opening of new offices in Porto, Tampa, and in Adelaide. Underlying interest expense reduced by around 12% year-over-year, reflecting the lower average debt levels.
However, in terms of cash outflows, this benefit was offset by fees related to our refinancing activities during the quarter, resulting in broadly stable interest cash outflows overall. This was partially offset by lower lease payments due to timing effects. Let me now move to the next slide. Beyond the operational progress, we also continued to strengthen our financial position and executed a series of refinancing transactions in Q3 to secure and diversify funding for the coming year.
With this, we improved the average debt tenor from 2.5 years to 3.4 years and enhanced our financial flexibility. First, we restructured our revolving credit facilities. We extended the maturity of the EUR 75 million RCF from January 2027 to January 2031. Additionally, we transferred EUR 150 million of commitments from the RCF from 2022 to the RCF from 2024.
This reduced our refinancing exposure in 2029 from EUR 650 million down to EUR 500 million, while strengthening our liquidity buffer and providing additional flexibility. Second, we issued a new Schuldschein of EUR 125 million. The transaction was completed in early August, with the proceeds used to repay the DCM bridge facility and other short-term maturities. Third, we secured EUR 40 million of bilateral loans, including an IKB facility backed by the European Investment Bank.
These facilities were completed in two steps at the end of June and at the end of July, and also support the repayment of the DCM bridge facility. All of the above measures combined further strengthen our financial flexibility, diversify our funding sources, and extend our maturity profile. Importantly, we have achieved this while maintaining an attractive average interest rate of around 4%.
With those measures, we now have a more balanced maturity profile and considerably greater financial flexibility going forward, as shown in this graph. With that picture of Q3 in full, let me close with the guidance on the next slide. For full year 2026, we now expect revenue growth in a range of -2% to -1% year-over-year in constant currencies. Previously, we guided between 0% to 3% year-over-year in constant currencies.
The expected total FX impact is provided on slide 26, as mentioned before. This revised growth outlook reflects the delayed conversion of large enterprise deal volumes and renewed economic uncertainty in Europe, which are expected to weigh on revenue growth in Q4 2026. At the same time, positive impact of scaling the enterprise sales organization in EMEA, improving U.S. enterprise momentum, and general new business pipeline will accelerate ARR growth in 2027.
We continue to demonstrate disciplined financial management, and thus we reiterate our guidance for adjusted EBITDA margin of around 43% for the full year. Looking ahead, our focus remains clear: strengthening retention, investing in our strategic growth priorities, and further deleveraging. With this, I would like to hand back to the operator to open the Q&A.
We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. You will hear a tone to confirm this event in the queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only handset while asking a question. Anyone who has a question may press star and one at this time. The first question is from Mohammed Moawalla, Goldman Sachs. Please go ahead.
Yes, good morning, Oliver, Michael, and Mark. A couple from me. First of all, could you walk us through the assumptions around that sort of Q4 outlook, given the comments you made around the situation in the U.S. public sector, and what does that imply in terms of kind of an exit rate into Q4, and what drives your confidence around that kind of re-acceleration into FY 2027? Secondly, you talked about EMEA being kind of an area where conversion has been weaker.
What is kind of driving the challenges, maybe between the macro and the micro, if you can sort of break that out? Then lastly, maybe for Michael, you talked about AI efficiencies. It also requires investments. When do we reach a point where perhaps some of those efficiencies outweigh the rate of investment, as we think about the kind of margin evolution medium term? Thank you.
Yeah, let me start first with the first one. So the assumptions for the Q4 outlook, as discussed a little bit earlier, from the overall ARR perspective, let me split that first into the enterprise ARR. Q1 was 8, Q2 8, Q3 now 7 or 6.7. With what we explained from the major deal, which will clearly move into the first half of next year, the enterprise ARR will be a little bit under pressure for the Q4 outlook, something between 2% and 3% maybe, depending a little bit on pipe conversion, maybe have also some other lucky shots. Too early to say here, and we don't guide on ARR, but to give you a little bit of an impression.
That means, despite the improving factors also for SMB, which we clearly expect, especially for November and even more so for December, the total ARR exit something between -2% to 0% for the full year then in Q4. This is a little bit for the outlook. The positivity, what we see clearly, entering then into 2027, of course, guidance will come with the full year results in February, but the positivity is de facto everything which you have heard also in the presentation.
We are doing the right things. We are here on the right track. We see the pipe, and also from the SMB part, which is a major part of our total business, is leveling off from the pressure of the previous year. Especially in December, it was last year the last month of price increases.
This will be washed out by end of the year. This should have positive impact already as a start into 2027. A very big another outlook into Q1 2027 is, remember, we had the big one-off churn last year, which we clearly don't see and don't expect to repeat in 2027. This should help to accelerate growth, as we explained. Of course, if we continue to do the right things, we will finally also be successful in executing our strategy. Maybe I can take the third one as well, and then the second one is maybe Mark or Oliver.
The third one for the AI investments to level off, or for the AI savings within the P&L to weigh off the AI investments, I think this is more further out. Remember, the G&A part is not that big, and we keep on investing, especially on the R&D side. So I would not expect something major from an outweigh here in 2027 already, but rather in the future years when the cost is stabilizing, which we need to do on the investment.
Second, maybe to add on the investment, and clearly on the R&D side, we are investing into development capacity to drive AI innovation and other product development across TeamViewer ONE and the platform and so forth and so on. I don't want to suggest, or we don't want to suggest, that the R&D increase is AI token-based.
Our AI token spend is very much under control, also within our product. Because we are not using the most expensive frontier models for Session Insights, for example, or Tia. This is very much a, I would say, cost-efficient way, data analysis on telemetry data. That is not a huge spend. So there's no underlying cost issue there by any means. I think second question was EMEA conversion. Maybe I go first and then Mark and Ed. You asked macro versus micro. I think there's a bit of both, honestly.
Across Europe, there's certainly certain markets and verticals that perform very well or well. There is a market that, you know, like Germany and others and certain industries or verticals like industry and others where spending is muted. Clearly, companies are focusing on other measures at the moment. That's not an easy place to be.
We did see a lack of conversion of deals in Europe. That's the macro part. I think it's also fair to say on the micro, so the company ourselves, we do need to scale the enterprise organization more in Europe. We need to improve the quality and the leadership there to cover different markets and different verticals. This has been an area of focus. Maybe Mark, you can touch on this a little bit.
Yeah. I mean, it also talks to a little bit confidence in 2027. As you know, we made quite a number of changes across the go-to-market organization earlier this year. One of those significant changes was in Americas. We brought in Tim Koubek, who's a very accomplished, seasoned, world-class leader, really. You see immediately the impact of that organization, where we have real momentum in the U.S.,
I would say, even though, you know, we have some challenges in Q4 with the deal conversion, particularly around some of the government deals. Q2, Q3, really good deal conversion on TeamViewer ONE. EMEA, we're sort of going through a similar transition now, making some changes, creating more focus on particular verticals, particular geographies we're focusing on. So we do expect to see an improvement as we go into 2027.
The last thing I'd say is that if you look at TeamViewer ONE progress so far this year, given that we only launched the platform in January, and we've got to 10% of our enterprise ARR onto TeamViewer ONE three quarters in, nine months in, I think that actually shows pretty good momentum and pretty good progress.
Of course, as we know, enterprise sales cycles are relatively long, depending on the size of enterprise. So we have good visibility into the pipeline because obviously we work these deals for a considerable amount of time. So actually nine months in, I think we feel pretty good about it. It's not enough to get us to where we want to for the year, but I do think we're seeing that progression into 2027.
The last thing to say is that, you know, some of these wins we're talking about, like the one we just mentioned there on the call with the defense contractor, I mean, these are, you know, sort of flagship accounts really, very highly competitive.
What that demonstrates, I think, is that we really have great product market fit with TeamViewer ONE, and people are buying into our vision of Autonomous Endpoint Management. They are seeing the improvements in our DEX product, where we've made considerable enhancements to the product over the last year, doubled down our investment in R&D. So I think all the signs are the right signs, but deal execution and conversion into 2027 is key.
Great. Thank you.
The next question is from Victor Cheng, Bank of America. Please go ahead.
Hi. Good morning. Thanks for taking my questions. Maybe two questions, a bit higher level, if I may. First of all, are you seeing any changes to competitive landscape, especially where TeamViewer ONE is, you know, addressing? Just thinking about, you know, agentic AI capabilities evolving quickly. Are customers, you know, having some level of decision paralysis on what service to sign up for and from which providers?
Are you seeing more maybe adjacent players trying to address the space and have overlapping features? Then second question is regarding value capture. As you have stated, you've demonstrated that TeamViewer ONE can drive material employee time savings. But I think, you know, this will increasingly become the baseline expectation in the age of agentic AI software.
How has discussions with customers evolved on this in the last few months in terms of endpoint pricing, or some other form of value capture? If I think about the SMB space, are you seeing some level of seat compression just because of how capable these, you know, of, you know, the features that you're providing? Thank you.
You want to speak competitive landscape?
Yeah, sure. I can talk about I'll take one, Victor, competitive landscape. It's fairly the typical sort of competitors that we're seeing in the enterprise. So it's the DEX competitors, the traditional ones we've always competed with, and some of the other sort of endpoint players. That tends to be where we compete in mainly.
In terms of sort of, you know, more agentic approaches, I mean, actually what we're really seeing is that the current landscape really creates a quite critical need for a product like TeamViewer's, because one of the things that's really important for these enterprise organizations is to have a level of control and governance across the endpoint. And that's really the endpoint execution layer that we provide.
Actually provides a huge amount of control and governance and guarantee, if you like, the deterministic approach to how you can ensure that these devices are remediated and automated and running properly. So, less of a concern there from the traditional sort of AI approach. But certainly, it's the traditional competitors that we're seeing.
I think what is also important when you look at the ServiceNow partnership and how this whole ecosystem is unfolding, everybody speaks about the need for more governance and the need for more compliance and the ability to manage, to understand endpoints and understand what's going on on the endpoint and then take measures and act on the endpoint.
And we bring this critical path, understanding the endpoint, acting on the endpoint to the ServiceNow partnership, but also in general, if you think about also the discussions we have with other players. Because it's very hard to manage the agentic layer or to make sure that the agents are used in the proper way if you cannot fully understand what's happening on the endpoint and then also can take action on the endpoint in near real time or real time. So, that's, I think, fundamentally a good position to be.
That is also why this Infinity Loop of learning from what we do on the endpoint and then taking this into automations resonates so well with customers. Then, as Mark said, it is these high-profile wins in very critical industries and company setups which give us strong comfort that we are on the right track and actually leading in our proposition compared to others.
So, in that sense, we feel very good about. It is a competitive place, for sure, and there is a lot going on. Yet, you are right, innovation speed is very high. But we do believe we bring something incredibly relevant to the table, and that leads to these high-profile customer wins and also the example that Mark gave on AkzoNobel. I think it captured this very well. Then your second question on value capture, seat compression. Not really.
I think when we position TeamViewer ONE to our SMB, also to enterprise, but you were specifically also touching on SMB, we position it as an endpoint management platform. When we do so, we move or change the pricing logic or add an additional pricing element per endpoint. We have, as you know, in the Remote business in SMB, most of it is concurrent channel-based, so not even seat-based.
Then we add to this the notion of managed endpoints, and that is the pricing play that we are seeing. So, when we move a customer from our traditional licenses on Remote to TeamViewer ONE, we do see a significant ARR uptick. We have that statistic now available across the different license types, both existing license, so Business, Premium, Corporate, and then also Tensor, and the new licenses, TeamViewer Standard and Advanced.
All the analysis show that if we move to this endpoint-based pricing, we are able to create an ARR premium. So, as you have seen, TeamViewer ONE is a small part of SMB, but it is gaining traction. There is a good number of deals now in, and over time, this will then clearly contribute to the SMB returning to growth.
Got it. Thank you.
The next question is from Ben Castillo-Bernaus, BNP Paribas. Please go ahead.
Hi. Good morning, folks. Thanks for having my question. Two if I can. First was on the enterprise net retention rate just ticking down sequentially and down a bit more than that year-over-year. Could you just help unpack that? How much was, if any, an uptick in gross churn or just less upsell? Some color here would be helpful.
I am trying to piece together the strong DEX momentum and AI traction with a downtick in NRR. Then the second question, which is coming back on the SMB business with churn stabilizing after your course correction measures at the start of this year. Question really is, as you look out ahead of us, where would you expect or like that churn level to be? Is the aim to just stabilize it or to improve it? If so, what sort of levels would you look for? Thank you.
I can start on the first one if you like. On the enterprise NRR, you are right, Ben. I mean, that is somewhat disappointing because we do have great momentum, as you said, on DEX and TeamViewer ONE. So, there is a couple of things. One is obviously, what would have helped that trend is even more deal conversion.
As we mentioned, EMEA is slower than we would have liked. America is quite strong. So that is one thing impacting that NRR number. The other thing is churn. I mean, we obviously talked about we had the one-off churn earlier in the year, of course, which was on DEX. But actually in Q3, we still actually much better on churn on DEX, actually, so quite a good turnaround.
But in our core sort of Remote business, there is some churn there, and there was a sort of an uptick, a little bit of an uptick of churn in EMEA. Clearly some challenges in EMEA as we rebuild that organization there. But that is really the two things that have impacted it.
Yeah, SMB churn stabilizing, so you see the 70%. We clearly expect that this will improve. It should improve already in December. But for Q1 or from Q1 onwards, we think we have a chance to see also churn rates in the range of 15%, maybe lower, better, I mean. Too early to call victory here, but at least because of the washing out of the price ups from last year, and especially also the negative part of the commercial blocker, which we used heavily in the years before, should have positive trends in that area.
Yeah, I think Q4 last year was really the last quarter with some of these measures washing out, especially October, November, and that should see then some improvement. Yes, we would not give out a target churn rate, but we were lower in the past, clearly. And I think we do know these initiatives that have hampered churn quite a bit, and this is washing out.
And also, we have quite some internal process improvements also under the leadership of Finn Faldi. We have revitalized the retention teams, renewal teams, also changed some account coverage in SMB, or customer coverage, I should say. So there will be more positive results coming from also these operational initiatives.
All right. Thank you.
The next question is from Gustav Froberg, Berenberg. Please go ahead.
Good morning. Thank you for taking mine also. I have two, if I may. First, on ARR growth and the comments about the outlook into 2027. I am trying to get a sense for the magnitude that you are thinking of as of right now. My question is, would you say that ARR growth for 2027 is more driven by the assumption of extrapolating the trends and some of the underlying drivers you have seen in Q3, and that eventually flushing through, if you will?
Or is there anything else that we need to assume, or that you have in your back pocket for ARR growth into next year? On the call, you have talked a lot about sharpening go-to-market, making some changes in EMEA, et cetera. Do you see this translating into more investments into sales and marketing? Do you feel like you need more capacity here, or is there anything else you can do on the go-to-market side in terms of reshuffling or reorganizing that means you can drive a bit of extra growth there?
Gustav, let me start with the second one, initiatives and support for 2027, without giving a concrete number. I start with one very important element for us, which is the partnership with ServiceNow. That is, of course, still early days, and product integration, platform integration, lead management, et cetera, et cetera. This is happening all right now.
Maybe, and then we clearly expect also to have some really first good nice shots in that space. That is one, let us call it, driver category. The second driver category is for sure the public space in America. With all of what we explained now with regard to Q4, despite this very big deal being a very good deal from the, let us call it, conversion progression, POV done successful, customer extremely happy with everything, what has been tested, et cetera, et cetera.
With the situation around the midterms, the budget, et cetera, et cetera, we clearly think that we have a big shot in H1 next year. We will push for that one, of course. Everything which we saw and explained around the SMB part already is a very important driver for us, and believe us, we have all eyes here on the ball to drive the SMB health recovery further.
Oliver mentioned already a couple of elements, Mark on that, Finn Faldi is on that. That is very important for us. The last one, still for 2027, with everything what Mark right now doing to rebuild the EMEA organization, which was a little bit under pressure, so to say, that should also help. That is hopefully answering a lot of the 2027 part.
Yeah, maybe just to add one thing, because you are right, it is about, we are making greater investments, Gustav, but it is also about narrowing the focus in our go-to-market. There is a couple of things to mention. One is sort of ruthless prioritization on which markets we focus on, what type of customers we focus on.
We have very good understanding of where we have a greater right to win, particular verticals where we are strong, particular characteristics of customers that we go after where we know we have a greater chance to win. We mentioned government, financial services, retail, healthcare, but certainly in Europe, manufacturing is a very strong place for us. Prioritizing where our sales resources spend their time is one important aspect.
Changing our go-to-market setup is another thing we have been doing, where we have not only expanded, but we have created different roles to focus on different segments of the market. So, certain types of account management roles to protect and expand our base, new logos, sort of hunting roles really to focus on capturing new logo acquisition.
Also just fine-tuning our whole playbook. We mentioned a few times now that we create this very sophisticated go-to-market or sales playbook, but the enablement and training around that, we see it every week and every month now as more and more sellers become more accomplished at being able to follow that playbook and have the right kind of messaging and positioning. Peter coming in as CMO will really help with that as we start to improve even further in that area as well.
One more, I mentioned that earlier, Gustav, but let me repeat that 1E churn, which we had in the beginning of 2026, Q1, will be clearly washed out. That is also a structural driver for improvement, which we expect. That should summarize it. From the exit situation, I mean, of course, we gave now the revenue guidance, and that is then the logic because of what we saw from the, or what we see or what we expect on the ARR exit rate without guiding it.
Clearly, 887 now in Q3, ARR growth, with this big one now missing on the ARR side and on the revenue side, we expect enterprise around 2% to 3%, Q4 full year then. That means that the total ARR for the company will be in a range of 0% to -2%, maybe something around that. But again, this is the exit, and with that, we expect to accelerate in 2027.
Great. Thank you.
Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Oliver Steil, CEO, for any closing remarks.
Thank you. Thank you for your time. Thank you for your questions. Clearly, strategy is working, as we said, but work to do, also clear. We'll go back to work and drive growth of the company on the back of a, I would say, very sound and very clear strategy for now. Thank you very much. Talk soon. Bye-bye.