Construction software solutions provider The Nemetschek Group has continued strong business growth in revenue and profitability in Q2 2022, with ‘record high’ recurring revenues
Commenting on business growth, Yves Padrines, CEO of the Nemetschek Group said: “Customers along the entire lifecycle of buildings rely on our innovative and collaborative solutions as well as our expertise to support them in their digitization strategy. At the same time, we are currently seeing an extremely high demand for the solutions of our Media segment.
“Due to the increase of the share of recurring revenues, which will further accelerate in the second half of the year based on the start of the transition of our US brand Bluebeam, the quality of our business has improved.
“It is substantially more resilient and better plannable compared to the past. Based on our strong business performance in the first two quarters of the year, we confirm our outlook for the year 2022.”
Key group figures for Q2 2022
Consolidated revenue grew by 22.9% in Q2 to EUR 203.8m. In the first six months of the year 2022, group revenue increased to EUR 396.1m, corresponding to a growth of 22.1%.
Growth driver continued to be the revenues from Subscription and SaaS models. With a plus of 56.5% in Q2, these revenues reached a record high of EUR 47.3m and were the main contributor to the increase in recurring revenues.
Consequently, the share of recurring revenues which includes Subscription and SaaS as well as service contracts further increased to 63.2% of group revenues in Q2 .In the first half of the year revenues from Subscription and SaaS models grew by 58.1% compared to last year.
Consolidated operating earnings before interest, taxes, depreciation and amortization (EBITDA) grew by 21.7% to EUR 68.6m. The corresponding EBITDA margin was at the prior year’s level with 33.6%. In the first six months of the year, the EBITDA margin expanded to 34.9%.
Net income increased strongly by 40.4% to EUR 46.5m. Accordingly, earnings per share grew to EUR 0.40. In H1 2022, net income also increased significantly by 42.4% to EUR 89.1m, resulting in earnings per share of EUR 0.77.
The Group’s strategic focus was the internalisation of its business
In addition to this, Nemetschek’s strategic focus continued to be on the ongoing internationalisation of its business. The success of this strategy is reflected in the over-proportional growth in revenues abroad in the first half of the year, with North America and Asia/Pacific in particular contributing to this strong growth.
Nemetschek’s increasing diversification in terms of end-markets and regions along with the rising share of recurring revenues further improve the plannability and resilience of its business model, which is particularly important in the face of the currently increasing uncertainties in the economic environment.
Driving developments in innovation technology
In the first half of the year, the Group continued with its integration and harmonisation initiatives across its brand portfolio while simultaneously driving the developments in its innovation focus areas of artificial intelligence, cloud-solutions, and digital twins.
The integration of the acquired US company Pixologic in the Media segment continued as planned. Additionally, with strategic acquisition of DC-Software the technology portfolio of the Design segment was once again expanded.
Nemetschek also continued with its strategy to invest in young and innovative companies in the AEC/O industry with the investment in the start-up SymTerra, a UK-based provider of a construction site communications platform.
The Group adjusted its governance structures for future growth, by expanding the Supervisory Board from four to six members.
Overview of segment performances
Design segment
In the Design segment, the Group recorded revenues of EUR 97.3m in Q2 2022, corresponding to a growth of 12.6%.
In the first half of 2022, revenues grew by 11.5% to EUR 190.5m. The strong increase in subscription revenues confirms the success of the segment’s hybrid strategy to offer both, subscription and licenses to its customers. The EBITDA margin of 33.0% in Q2 2022 was above the previous year’s margin of 31.9%.
Furthermore, the margin in the first six months of the year was higher compared to H1 2022 as well.
Build segment
The Build segment recorded a very strong growth, increased revenues in Q2 by 36.5% to EUR 73.1m.
Bluebeam once again recorded a record quarter and was the main driver of the growth. In the first half of the year, the revenue of the segment grew by 33.5% to EUR 137.8m. The EBITDA margin in Q2 2022 reached 42.9%. The H1 2022 margin of 44.3% was slightly above the already very high previous year’s level of 44.0%.
Media segment
Revenues in the Media segment in Q2 2022 increased significantly by 48.4% to EUR 24.4m. In the first six months of the year, revenues grew by 60.3% to EUR 50.0m.
In addition to the strong organic growth dynamics, the Media segment benefitted from the acquisition of the business operations of Pixologic, Inc. The EBITDA margin increased to 39.2% in Q2 2022.
In the first half of 2022, the EBITDA margin expanded significantly to 43.3% compared to last year’s level.
Manage segment
In the Manage segment, revenues in Q2 2022 grew by 4.7% to EUR 11.6m. In the first half of 2022, revenue growth accumulated to 2.9%.
The EBITDA margin of 8.6% in Q2 2022 was slightly below the previous year’s level of 10.0%. For H1, the EBITDA margin was at 7.6%.
What is the outlook for 2022 financial year?
Based on the strong development in business growth in the first two quarters of the year as well as the high share of recurring revenues, the Executive Board confirmed that the financial targets for the year 2022 and therefore continues to expect a revenue growth at constant exchange rates in the range of 12% to 14% for the Group.
The EBITDA margin is targeted to be between 32% and 33%.
The outlook reflects the increasing deterioration in the global economic environment caused by Russia’s war against the Ukraine as well as the ongoing Covid-19 pandemic with the accompanied cross sector increase in procurement and financing costs.
The outlook does not reflect potential negative effects due to an escalation of this conflict as well as severe distortions in the global economic environment.
