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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good morning, ladies and gentlemen. Thank you all for joining TeamViewer's Earnings Call for the Full Year 2019 Preliminary Results. With me, our CEO, Oliver Steil; and our CFO, Stefan Gaiser. They will guide you through our results. Following the presentation, we are happy to take your questions. Before we start, let me remind you of the cautionary note regarding forward-looking statements that you can find on Page 2 of the presentation. Let me now hand over to Oliver.
Thank you, Carsten. Good morning to all of you. Before Stefan is going to present the figures in detail, let me provide you with an overview of the business. As you can imagine, 2019 was a very important year for our company. We did the IPO in September. And then just 3 months after the listing, we became part of the MDAX and TecDAX indices, which established us pretty firmly in the capital markets. So that was very important from a capital markets perspective. But at the same time, it was a very important year also to execute on our growth strategy. As you remember, our initiatives for the 3 buckets: one is expanding use cases growing into all customer segments, especially enterprise segment and then increasing our global reach to more local operations in strategic markets. And so all of that, from our perspective, worked out very well. We continue to see strong growth. We keep our profitability. And we also see that through all the initiatives that we're pursuing, there is quite some upside that we've seen to come through. Our market is huge -- addressable market is huge, so we continue to see a lot of underpenetrated areas. Our customers are investing more and more into digitalization, and that is a clear tailwind for our business. So we like our market environment. And within this market environment, we're expanding our connectivity platform. So we're adding functionalities and use cases, and that's actually providing even more of the solutions that customer needs. And I think our successes in 2019, they underpin our strategy, our growth initiatives and show that we are pursuing the right initiatives there. So if I go to Page 4, just highlighting a few key points of our business in 2019. So first of all, of course, the growth continued. Growth momentum in the fourth quarter continued. That resulted in overall billings growth of 41% year-over-year to EUR 325 million. That was slightly exceeding our guidance. What is very important for us is that our new product initiatives are starting to bear fruit. So we had a billings contribution in 2019 of EUR 16 million, which is, in absolute terms, of course, still small relative to the EUR 325 million. But as part of the new billings, this is important and, of course, it's showing very significant growth, which is very good from our perspective. At the same time, apart from new products, subscriber growth was very strong, 71% year-over-year, got to a level of 464,000 subscribers at year-end. The net retention rate remained on our operational target level, and we see continuing low growth trend that Stefan is going to go through in more details. So healthy growth, as expected. At the same time, we delivered on our envisioned profitability, clear economies of scale. And you remember our very efficient go-to-market model, where we use the free users to convert them to monetize and addressing all the other segments. So with that, we achieved an adjusted EBITDA growth of 51% year-over-year, landing at EUR 182 million, upper end of the guidance as well. The margin came up to 56%. That's 3.5 percentage points above 2018 level. Remember, we told you that in 2018 was an investment year into, for example, enterprise sales force. And we were saying that some of that will reverse, and it actually did. And we kept our very high cash conversion at 94%, which provides high financial flexibility to delever the business and also pursue our internal or external growth opportunities. Talking about top line, 3 buckets of initiatives. As I mentioned before, first of all, strengthening our customer segment coverage. That's actually 2 elements: one is moving up the segment into enterprise; the other is moving to the SoHo segment. So for enterprise, we have been -- we continue to invest more and more solutions and use cases driven for enterprises. And this leads to 2 effects. One is that we see more deals above EUR 10,000, so what we call larger deals across the organizations. And on the other hand, we also see, at the top end of the deals, larger contribution. I'm going to talk about that. So that's very successful. Of course, in order to be able to do so, we move more into operations technology. We move more into IoT use cases, which is needed by the enterprise. At the same time, we also developed our remote access product, which is fundamentally geared for SoHos, so individual people connecting to their office space. And we have progressed the rollout there in line with our new ERP rollout. So very pleased with the segment coverage. Successes. Secondly, geographic expansion, I'd highlight 2 things: one is a year -- a region where we invested a lot in previous years is the Americas. So we ramped up the office staff and also the sales force there, and that has been bearing fruit in 2019, a substantial step-up, EUR 110 million billings, 59% up year-over-year. So very successful. We continue to invest into this market, especially also in the enterprise segment. And then secondly, our move into more strategic countries, specifically APAC. You remember that we opened offices in China, India, Japan. Clearly, 2019 was a foundational year for that, but we're also seeing progress in these regions. Last but not least, constant use case innovation. We continue and will continue to invest into R&D to make our product usable in more areas. Important to call out for 2019, I would say, is the progress in IoT solutions for very innovative applications and also our Augmented Reality product called TeamViewer Pilot, which gained some traction already in the first 12 months, which is something which the company never really had before that there is significant traction already in early years. And that shows our ability to cross-sell now that we are done with the subscription migration. We also prepare for faster growth in R&D. We just opened an office in Greece. A new R&D have to be able to tap into the talent pool in more areas, in addition to, of course, our locations in Germany and EMEA. I'd like to turn page -- to turn Page 5 to our growth. Important to note that the 2019 billings of EUR 325 million were substantially driven by our subscriber growth as well, which now got to 464,000 at year-end. We do see low churn. And based on the new products, which I mentioned before, we have more opportunity to cross- and upsell into our existing customers. And that creates stability in our billings, while our growth initiatives and effective conversion [ measure ] have attracted and added 174,000 new subscribers, which translate into EUR 98 million of new billings for the last year, very important. What is also important for us, if we go to Page 6 ,is specifically the enterprise segment. I think you all are very well aware of our kind of high-velocity subscriber growth model, the funnels from free users to monetization. What is newer to all of us is the enterprise segment. I think you remember that we only had a full Tensor version available at the beginning of last year. So effectively, we see the development over the last 12 months here. And 2 statistics we'd like to call out. Number one, which we also mentioned before, is the deals with an annual contract value above EUR 10,000. If we look at this number on an LTM basis, and we compare December '18 year-end and December '19 year-end, we see a 67% growth, so 698 deals. Why is that important? It shows that our largest sales channel, which is enterprise -- sorry, inside sales, it shows that these people, the sales reps are getting more and more used to selling larger ticket items. You remember that a lot of the activities of those people in the past was around EUR 3,000 to EUR 5,000. Now more of them are comfortably selling tickets of EUR 15,000, and that is reflected in this statistics. So we like the development there because it shows that the enterprise traction is pretty broad across our organization. A second KPI, which we're showing here, which is the top end of our deal pipeline because we got many questions around the top end deals, how big they are and the topics and so forth. So we put together a KPI, which is the top 50 deals accumulated in annual contract value. Same timing here comparing end of December to -- '18 to end of December '19. You see also 60% growth fourth quarter, so EUR 3.4 million. Looking backwards 12 months is the contribution of the top 50 deals. And we're also very pleased to see that this development continues, actually accelerate in 2020. So we intend to give you regular updates on these statistics to show you the traction of the enterprise activities. And then lastly, Page 7, just to summarize our performance. Q4 billings, '18 to '19, plus 34%, EUR 100.6 million in billings. That was a strong contribution to the overall billings number, 41%, slightly above guidance for the billings number. And then adjusted cash EBITDA, one note, this adjusted cash EBITDA is defined exactly as -- is the cash EBITDA we're talking about in the past. So consistent set of KPIs here. Q4 step-up of 46%, up to EUR 62.6 million with the Q4 adjusted EBITDA margin of 62.2%. And for the full year, that's a 51% step-up, and the margin landed at 56%, nicely above previous year. And with this -- those snapshots, I'd like to hand over to Stefan, who is going to do the detailed discussion of the financial.
Great. Thank you very much, Oliver. Good morning from my side as well. I'm pleased to provide you with the details on our strong financials, which Oliver just raised, for the past year, which are pretty much in line with the pre-announcement from early January. Billings increased by 41% to close to EUR 325 million now. Q4 billings amount to just slightly above EUR 100 million, which corresponds to a 34% increase compared to Q4 prior year. We clearly saw a very strong growth across all regions with the Americas continuing to grow at the fastest pace in 2019, showing a very healthy 59% growth for the full year and 55% growth in the fourth quarter. So as Oliver mentioned, we clearly see the benefits of the investments into local sales and marketing. And if you combine it with the strong execution from the local team, this led to this overall very strong billings growth in the Americas. Also very good performance in EMEA. We experienced continued growth across all major territories in 2019, including our large home markets, like Germany, Austria and Switzerland but also U.K. and Southern Europe. We significantly added additional salespeople across EMEA, especially in the enterprise segment. And now we basically have sales employees on the ground in all major markets across EMEA. That clearly wasn't the case 2 years ago. And then coming to APAC. APAC's billings growth is mainly driven by the increased penetration of our local markets, with the opening of the offices, which are mentioned now a few times, in China, Japan and India. Maybe worthwhile to point out that during Q4, we had a particularly strong quarter in Japan, accelerating growth there. And that count nearly doubled its billings quarter-over-quarter. So very good start there. Overall contribution from APAC still relatively small. But if you take the current growth rates, we clearly see that we are getting increased traction in those markets, and the rest of the APAC countries continue to grow nicely as well. Now if we move on to the next slide, the slide showing the billings split between perpetual and subscribers, retained subscribers and new subscribers. You can clearly see that the seasonality of our billing is starting to face now. 2019 was clearly marked by a lot of volatility in our quarterly billings growth. Now that we have concluded our transition from the perpetual license to subscription model, that will be more evenly spread going forward. Billings in the fourth quarter of 2019 are now largely driven by retained customers who contributed EUR 72.9 million in the fourth quarter. Given the large renewal rate in Q4, I'm particularly pleased -- or we were particularly focused on strong customer retention, and it's been a great success that our gross churn remained stable at high single digit in the fourth quarter. So in addition to our strong contribution from the renewal base, almost 1/4 of the billings was contributed by new subscribers or new business. So overall, a very strong performance in the fourth quarter. We turn to the next slide, cash EBITDA or adjusted EBITDA as we now call it. If you take a look at our profitability, the strong growth in billings, covered with very strong scale effect across all functions, and combined with our efficient go-to-market model, led to this very strong growth in adjusted EBITDA, as you can see on that Slide 11. For the full year, adjusted EBITDA is now recorded at EUR 182.1 million, at the upper end of the guidance, compared to EUR 120 million in 2018. GP margins increased nicely to 92.5%. And as Oliver already mentioned, we invested substantially across all functions, predominantly in 2019, into sales and marketing, but also research and development now with the latest office opening in Greece. Our sales and marketing employees grew by nearly 50% in 2019 driven clearly by the enterprise expansion, but also inside sales and channel sales across EMEA and APAC. We also significantly increased, especially during the end of the year, our engineering resources. But however, due to the efficient customer acquisition model, total cost grew overall slower than billings and hence resulting in an adjusted EBITDA margin improvement now at 56% compared to 52% in 2018. Also within G&A, we continue to invest into our infrastructure, into our new ERP systems. And we also ramped up investments needed now as a public listed company. Let's turn to cash conversion on the next slide. Very strong quarter, I would say, in cash -- in terms of cash collection. Clearly, a very asset-light business model and very low working capital requirements. And as a result of that, most of our adjusted EBITDA converts nicely into cash flow. We had a particularly strong quarter in terms of cash generation driven by the adjusted EBITDA growth as well as good working capital management. Our pretax free cash flow amounts to EUR 61.9 million for the fourth quarter and EUR 171.5 million overall for 2019. CapEx in the fourth quarter, EUR 8.5 million, and for the full year, slightly above our guidance with EUR 16.6 million. This is primarily driven by our new headquarters, as we mentioned, and the implementation of the new e-commerce and accounting system. Conversion rates remained particularly strong with 99% conversion rate in the fourth quarter and 94% for the full year. So overall, I believe, a very good benchmark for the -- within the industry. I think the next slide wraps us up nicely with the updated financial model. If you take a look at the -- our free cash flow conversion, for every dollar we generate in billings, we basically generated EUR 0.53 in pretax free cash flow. So very strong pretax free cash flow generation in the -- in 2019. And as a result of that, our leverage also decreased nicely. We mentioned during the year that we should be at around the 3.0 mark. We've achieved exactly that. Leverage decreased to 3.0x in 2019, exactly in line with our expectations. The interest-bearing financial liabilities are now at EUR 616 million at the end of 2019, which basically consists of EUR 559 million (sic) [ EUR 595.7 million ] of bank loan and EUR 21 million of capitalized operating lease obligation. And if you take a step back and take a look at our free cash flow generation and adjusted EBITDA growth, we expect that our leverage will be significantly below 2x at the end of December 2020. Now let's move to the year ahead of us. With 2019 in the bank, let's take a look at our outlook for 2020. Given the continued net retention rate north of 100% and our expected new subscriber growth driven by the underlying market growth and dynamics, as Oliver mentioned, and our very tangible growth levels, we are targeting our billings to be in a range of EUR 430 million to EUR 440 million. With the transition from perpetual licensing to subscription-based model pretty much completed, revenues will now no longer outpace billings, as we have rolled off a material amount of the remaining perpetual deferred revenues on the balance sheet now. We have a remaining amount of roughly EUR 50 million of perpetual deferred revenue on the balance sheet. So as a result of that, revenue is expected to be broadly in line with billings and in a range of EUR 420 million to EUR 430 million. Now in terms of adjusted EBITDA, clearly, we continue to invest with a similar capital allocation as in 2019. We invest into our growth initiatives, into sales and marketing, the new use cases, geographic expansion and new products. And therefore, adjusted EBITDA is expected to grow in line with our billings growth and should reach EUR 240 million to EUR 250 million in 2020. And then lastly, let me point out CapEx for 2020. We expect CapEx to be around EUR 25 million. This increased level continues to be attributable to the construction of our new headquarter in Göppingen, where we're going to move in 2 quarters' time and the introduction of this new ERP system, which will be completed by summer 2020. Beyond 2020, I then expect CapEx to be significantly lower again around the levels of 2018, 2019. And I think with that, I conclude our presentation, and now we're happy to take your questions.
[Operator Instructions] And our first question comes from the line of Adam Wood from Morgan Stanley.
I've got 2, please. Maybe just, first of all, on the enterprise side of the business, clearly, that's performing very well. You're having a lot of success here. Could you maybe talk a little bit about what the pipeline looks like at the start of 2020, a little bit about the hiring plans you have on the direct side, geographies, numbers and then maybe just digging a little bit onto the use cases that you see gaining the most traction where you see that enterprise business resonating the best to your customers? So that's the enterprise section. And then maybe just secondly on the margin guidance. You're obviously investing at the same pace of billings growth. When you have such strong billings growth, it implies a pretty significant rate of investment. Could you talk a little bit about your ability to invest at that pace given it's going to be ahead of what you were doing in 2019? Where is that investment going in? And if there was to be upside on billings, would you allow that to fall to margin? Or would you actually increase the pace of investments that you're making in the business?
Okay. Thank you. I'll start with the enterprise question. So yes, as you say, good traction. We're very happy with the pipeline for the first quarter and second quarter that we see, so that would be -- mean significant growth for the year. And I think we're going to disclose more once Q1 is done. But as you see from the stats that we've provided that, already, January is providing a nice uplift on this one. In terms of use cases, this is really very broad. There is -- if I kind of think through the pipeline discussions that we have on a weekly basis, there is still, here and there, just broad IT support across the organization. But there's also significant discussion around remote management of IT and OT equipment connecting into some kind of devices, which are non-office devices. And then it depends on the sector then, whether it's kind of equipment, medical equipment or retail IT equipment or other machineries. So it's very broad, I would say. But this kind of case of remote IT/OT management is where it's centered around, I would say. Hiring pace, we have actually pulled forward hiring direct enterprise reps for EMEA last year. I think we're now at total...
EMEA?
Yes.
25.
25 in EMEA. We've also hired the first few people for the Americas towards the end of last year, and we're ramping that up. We have enterprise people in China, a few. We have a couple of people in Australia. We have a small team in Japan. So that's all very much centered around enterprise with new offices across -- around enterprise and reseller. We're continuing with that pace. I think we said as a case of a guidance that by the end of this year, easily, 70 people globally and then continuing from that base. So overall, very brief, very broad development. What we do see is, I should say, in EMEA, we are ahead in deal sizes. So the larger deal sizes, 6-digit deal sizes, more regular happening in Europe. Not yet in the Americas. Americas is still focusing more on what we call mid-market. Typical deal size is EUR 30,000 to EUR 60,000, but that's also moving up. And it's kind of lagging the development EMEA -- in EMEA because in EMEA, we have -- we hired those people a few quarters earlier. And therefore, the pipeline is converting -- starting to convert now versus Americas, where we'll need a few quarters to get that going.
And then maybe, Adam, let me take the question regarding margin expansion and strategic investment areas for 2020. Clearly, 2019 was very much focused on sales and marketing expansion, especially around the enterprise segment. That will be slightly more biased towards R&D in 2020. I think, from a customer engagement level, we are significantly advanced now in terms of our engagement, especially around the enterprise customers. And therefore, we will accelerate our R&D investments. It's also one of the reasons why we opened up this office in Greece, where we are pretty excited about. So you can expect significantly higher headcount in R&D -- or higher headcount growth in R&D compared to 2019. Clearly, EBITDA margin will continue to grow, as Oliver just mentioned. And if we see that we see that we get additional traction around any of those additional use cases or geographic expansion plans, any additional upside on billings will certainly be reinvested into additional growth levers, if we find them. That's almost -- also the case in 2019, as we pointed out a few times.
Our next question comes from the line of James Goodman at Barclays.
Firstly, just following up on the margin questions. So if you could just comment a little bit on the phasing of margin through next year because this year we saw, if I remember correctly, even much more margin expansion in the first half -- in the second half. And then just in terms of the 60% medium-term guidance that you have for margin, does that still stand as is? And this is just a question of the shape of margin progression between '18 and that. And then just secondly on the CapEx, I may have missed this slightly here, but just in terms of the additional EUR 10 million to EUR 15 million in CapEx versus what we have talked about previously. Is that mainly the ERP system that's incremental there? Or is it a sort of expansion of spend around the HQ? And if you could just reiterate what you're saying around that coming down the year after. This is just a one-off spend around an ERP system, is it?
Thanks for your question, James. So first of all, around the margin expansion, clearly, 2019 was much more volatile in terms of margin expansion. But also remember that we are here comparing perpetual prior year quarters with subscription quarter, so that makes a bit more critical. The margin expansion will be pretty much -- or will be more stable -- or in fully balanced throughout the year. Clearly, Q4 will continue to be the biggest one in terms of EBITDA contribution because that's where we have a significant amount of our customers renew their contract. So that will remain the biggest one for us in terms of overall margin. Then beyond 2020, I don't see any need for a change in the guidance. Clearly, if we see continued growth opportunities, we will accelerate our investments. But it's very much in line with our financial envelope, which we developed together with you during the IPO. And then maybe in terms of CapEx, the EUR 25 million, the biggest deviation comes from the new headquarter. So if you break this down, the EUR 25 million, EUR 8 million of that relates to the headquarters and EUR 7 million to EUR 8 million relates to the ERP system. Both of those topics will largely disappear in 2020. And therefore, the normalized CapEx is in the EUR 10 million to EUR 50 million range.
That's great. And just to sort of phrase the question a little bit more straightforwardly. You're effectively saying on the margin next year, effectively, the year-on-year progression in adjusted EBITDA will be quite evenly balanced between the quarters [ developed at year-end ]. Yes. Great. Okay, that's it.
Exactly right. I just want to point out that Q4 remains the biggest quarter in terms of -- or the most important one in terms of overall EBITDA contribution.
Our next question comes from the line of John King at Bank of America.
A couple of questions, please. Firstly, on the sales productivity that you've seen, obviously. In the last 12 months, there's been a big step-up, I guess, given the subscription transition and the fact that allows you to focus as a team much more on new sales rather than renewals. I just wonder, as we kind of lap that transition, is there a risk that's a onetime gain in productivity that you've annualized? And I guess, question is, what are the further sources of upside to sales productivity you can drive? Or do you think that, ultimately, it was a big step forward that, to some extent, unrepeatable?And then the second question was on the enterprise. Thanks for the details you provided on Slide 6. Can I just confirm -- well, check one thing, the customer ACV above EUR 10,000. Presumably not all of those deals are Tensor since you had over 400 of these a year ago when Tensor was launched. So how much should the incremental comes from Tensor deals?
Okay. So on sales productivity, I think there's 2 things to look into here. One is the migration of customers from perpetual to subscription licenses, which is now largely done. So in that sense, the productivity improvement, if you want to allocate any of this, that's done. What is only starting really is that the inside sales -- and especially, this is driven by incentive, of course. What is only starting is the significant cross-sell and upsell activity, especially across of these inside sales people. So I think as we said last year, '19, the contribution of new product initiatives was EUR 16 million. And while that is gaining traction -- nicely gaining traction, it's still low in absolute terms. And if you look at the different products, the different separate licenses that we have, Tensor remote management pilot, so each of them is a few million contribution, which is great. But by no means that this productivity gain is already factored into our go-forward number. So there will be much more coming. The whole compensation system, goaling system will now be transferred into something, which is very much geared to these new products and the Tensor product also for inside sales. So we feel very good about what is yet to come there. And we're adding products, which allow for cross-sell opportunities. So that's how I would see it. Enterprise, you're absolutely right. Some of the deals that are around EUR 15,000, EUR 20,000 are actually not Tensor deals but corporate licenses with add-on channels, but also at a higher price point because the fact that Tensor is out there often yields discussions around additional functionalities for customers and then a discussion around Tensor. And often, that then results in a Tensor sale, which is significantly higher in terms of ACV than the old deal. But sometimes, customers also say, "Well, okay, I understand the Tensor functionality. I still don't fully need it. So can I get another in between here for a corporate license with unlimited end points because I'd like to continue to do that?" But that also comes at a higher price point. So there's a positive halo effect from the Tensor product, which we have there. I think, overall, Tensor contribution last year in terms of billing was around EUR 7 million, so that gives you an idea that it's the largest contributor among the 16 from new projects in these product initiatives, but it has a broader, increasing ACV effect as well.
And our next question comes from the line of Stephan Klepp at Commerzbank.
I only have one question and I was wondering if you could give us some granularity about your billings growth. I mean, you are guiding for 32% to 35%. How do you think about that in terms of verticals, regions, client clusters?
So in terms of the regional billings growth, I'd expect all regions to be much more similar in that growth compared to 2019. Now we also compare really subscription year with a full subscription year and not with a perpetual year anymore. Clearly, I would expect APAC to grow the fastest in terms of -- in percentage growth, then probably followed by EMEA or Americas. They should be pretty much at the same pace, give or take. And so that's a regional growth perspective. I would say, within the use case, it's clear the enterprise segment and especially the IoT and OT applications should drive significant growth as we have seen also in 2019. That should be one of the key growth levers there as well. And then also the new products, which we released, the virtual reality, the pilot product and remote access and remote management should be additional growth drivers in 2020, which are clearly outpacing the other growth levers we are having.
How do you think about enterprise growth and in comparison to, let's say, the usual growth? So I mean, last year, I think it was more than 20 percentage points higher growth in enterprise or, let's say, your deals above EUR 10,000 per annum. So do you still believe that you can keep on that pace? And I wouldn't be surprised if you say EMEA and U.S. should be probably at the same percentage because in the U.S., there must be probably a lower base in those larger deals, and you're just starting to employ those sales execs or basically starting higher in those sales executives there.
Yes, that's the reason. So especially in the enterprise segment, we clearly see a continuous acceleration of growth, so that should be actually accelerating in 2020. Remember that most of the enterprise investments were done early '19 and mid-'19. So now we have a fully fledged state operation, especially in EMEA. So if they've already built their pipeline and that will now result in accelerated billings growth in the enterprise segment in EMEA, as we have already seen in Q4, frankly. As we mentioned, Americas is slightly behind. We only had that mid-marketing basically. So they've ramped up their enterprise sales team during Q3 and Q4. But they're now still building their pipeline and start converting in, basically, early 2020. So that's one of the reasons that you see faster enterprise growth in EMEA compared to Americas, and that might result overall faster growth in EMEA. But it remains to be seen. So they should be pretty similar growth regions for us.
Our next question comes from the line of Mohammed Moawalla of Goldman Sachs.
First of all, on enterprise, can you perhaps talk about augmenting the inside sales and the direct sales with potentially partnerships with other vendors in the kind of IoT space to further accelerate growth? And then secondly, Stefan, I just missed what you said on gross renewals. I know the net renewal rate has kind of dipped a little bit towards the end of the year, but can you just confirm where the kind of gross renewal rate is tracking?
And so I take your first one on partnerships. So fair point. I think what we will see over time is that we will work more with partners for larger deals and more use cases across the whole business. So that can be systems integrators -- or our systems integrators for some part of the enterprise pipeline, larger distributors IoT partner. So there is more coming there. And I think it's clearly based on the fact that now, since one year, we have the Tensor product and we have much more available in -- for more use cases, so that's starting. I think -- remember the discussion that we had that we work with partners for quite some time. Sometimes, these partners are focusing -- or have been focusing in the past on reselling of kind of lower-level licenses, business and premium licenses, which strategically is not what is valuable for us. So we're actively steering that away to corporate licenses. And then, of course, we engage on discussions around Tensor and IoT. So there will be more to come, but there hasn't been anything substantial in the figures of 2019. And I think it will take some time to ramp up.
And then maybe just on gross renewal, gross renewal remained stable at 8%, in particular strong cycle in the last renewal base in Q4. So we've been able to keep that at a high single digit of 8%.
[Operator Instructions] Okay. There seems to be no further questions. So ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.