Nemetschek  - Jul 31, 2020 05:47 UTC

• Group revenue rises by 2.7% to EUR 141.6 million in Q2, +7.6% in the first half year
• Quarterly growth of +21.5% in recurring revenues, driven by subscriptions, growth in this half year amounts to 24.2%
• Q2 EBITDA margin at a high 28.8%, and thus close to reaching the previous year’s level
• Effects resulting from Covid-19 as well as foreign exchange in the important US market anticipated in the third quarter
• In view of the global Covid-19 pandemic, cautious outlook from March for 2020 as a whole seems to be feasible and is confirmed

Munich, July 31, 2020 – The Nemetschek Group (ISIN DE 0006452907), one of the world’s leading software providers for the construction industry, closed the second quarter of 2020 with slight increases in revenue and earnings despite the global corona crisis. Overall, business development exceeded the company’s own expectations.

After the corona crisis left its mark in the second quarter, especially in Europe, it is not yet possible to foresee the effects of the pandemic in the USA, where the crisis has spread much more strongly than in other parts of the world and at a later point in time. Nemetschek anticipates hurdles in this regard in the US market in the second half of the year.

The Nemetschek Group responded to the altered situation at an early stage and also maintained close customer contact during the corona crisis by means of virtual sales and support as well as online tutorials. In addition, executives worldwide were involved in intensifying cost management in the Group at an early stage.

Major indicators of the Group’s success in the second quarter / first half of 2020

• Group revenue rose by 2.7% to EUR 141.6 million in Q2 (currency-adjusted: 2.0%) compared to the previous year’s figure of EUR 137.8 million. The increase in revenue is as a result of stable organic development and the revenue contributed by the Red Giant acquisition in the Media & Entertainment segment. In the first half year, revenue rose by 7.6% (currency-adjusted: 6.6%) compared to the same period in the previous year; organic growth amounted to 4.8%.
• Recurring revenue from software service contracts and subscriptions continued to be a growth driver again in Q2, the revenues from which rose by 21.5% (currency-adjusted: 20.7%) to EUR 88.9 million compared to the same quarter of the previous year. The half year even showed slightly stronger growth dynamics with an increase of 24.2% (currency-adjusted: 23.0%). Thus the proportion of recurring earnings in Group revenue of 60.7% exceeded the 60% mark for the first time in the first six months (previous year’s period: 52.6%).
• As expected, license business declined compared to the previous year. In Q2, license revenues reached EUR 46.7 million, a decline of 18.5% compared to the same quarter of the previous year (currency-adjusted: -19.2%). License revenues in the first half of the year amounted to EUR 100.1 million and were thus 10.8% (currency-adjusted: -12.0%) below the previous year’s figure.
  • As a result of the stable revenue development and high levels of discipline in terms of cost management, even in Q2 a slight increase in consolidated operating earnings before interest, taxes, depreciation and amortization (EBITDA) to EUR 40.7 million (+1.9%) was achieved. The EBITDA margin came close to reaching the previous year’s level at 28.8% (Q2 2019: 29.0%). In the first half year, the margin improved, rising to 28.7% (previous year’s period: 28.6%).
• In Q2, net income for the quarter was only slightly below that of the previous year at EUR 21.1 million (previous year: EUR 21.9 million). The earnings per share amounted to EUR 0.18. In the half year, it was possible to increase the profit for the period by 2.6%, rising to EUR 42.5 million, which corresponds to earnings per share in the amount of EUR 0.37. Adjusted for the amortization from purchase price allocations, net income for the quarter amounting to EUR 26.1 million was 4.8% higher than the previous year. The adjusted earnings per share amounted to EUR 0.23.

Overall, the performance of the segments in the first half year was slightly above the levels expected, especially in view of the fact that the corona crisis spread to the US market with a time lag. In March, the Design segment was already feeling the effects of the Covid-19 pandemic, which led to reduced customer demand and a decline in revenues. The Build and Manage segments were able to achieve low growth rates. The Media & Entertainment segment was considerably strengthened by the acquisition of Red Giant. The integration of the company, consolidated since January 2020, in the Maxon brand continues to proceed according to plan.

“As a result of our broad solution portfolio, our high levels of diversification with regard to target industries and regions and the growing proportion of recurring revenue, we have weathered the corona crisis better than anticipated. The increase in service contracts and subscriptions in particular show the robustness of the Nemetschek business model, even and especially in today’s uncertain market environment,” concludes Dr. Axel Kaufmann, Spokesman of the Executive Board and CFOO of the Nemetschek Group. “At the same time, as a result of the fast deployment of countermeasures in relation to costs, we have been able to keep our profitability at a high level. However, we expect that the crisis will also have an impact on our business development in the second half of the year, especially in the USA. Thus, caution and vigilance remain our top priority. We continue to see great potential in our markets in the medium and long term. Nemetschek will keep on successfully driving the digital transformation in the construction industry forward,” continued Kaufmann.

The Nemetschek Group is always working on future-oriented solutions to further improve the workflow in the construction industry. Thus, for instance, in the Design segment with Integrated Design, a cross-brand workflow solution was presented for the first time which is revolutionizing collaboration between architects, structural engineers and civil engineers. With this integrated approach, it is possible for architects and engineers to work together on one model across disciplines for the first time, making unsynchronized work in silos and duplications a thing of the past.

Group outlook for 2020 confirmed

As a result of the very solid first half year, growth trends in the relevant markets that remain intact in the long-term, ongoing increases in the proportion of plannable revenues and broad regional and market-related diversification of risk, the executive board confirms the revenue targets for the full year 2020, despite a still uncertain environment, and is optimistic to comfortably reach the targeted profitability. It also assumes that a certain reluctance on the part of customers will continue in the third quarter before business development should gradually improve again.

For the year 2020 as a whole, the executive board is thus unchanged in its anticipation of development which is at least stable or a slight increase in Group revenue with an EBITDA margin of more than 26% of Group revenue.

Overview of quarterly key figures (Q2)

About the Nemetschek Group

The Nemetschek Group is a pioneer for the digital transformation in the AEC industry. With its software solutions, it covers the complete life cycle of building and infrastructure projects and guides its customers into the future of digitalization. As one of the world's leading corporate groups in this field, the Nemetschek Group increases quality in the construction process and improves the digital workflow of all those involved in the construction process. This revolves around the use of open standards (Open BIM). The innovative solutions of the 16 brands in the four customer-oriented divisions are used by approximately six million users worldwide. Founded by Prof. Georg Nemetschek in 1963, the Nemetschek Group today employs more than 3,000 experts.

Publicly listed since 1999 and quoted on the MDAX and TecDAX, the company achieved revenue in the amount of EUR 556.9 million and an EBITDA of EUR 165.7 million in 2019.

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About Nemetschek EN

The Nemetschek Group is a pioneer for the digital transformation in the AEC industry. With its software solutions, it covers the complete life cycle of building and infrastructure projects and guides its customers into the future of digitalization.

Contacts

Stefanie Zimmermann   szimmermann@nemetschek.com +49 89 540459 250