• Revenue Growth: Organic currency-adjusted revenue growth of 9.8% for the first nine months of 2024.
• EBITDA Margin: Organic EBITDA margin of 30.2%, excluding Go Canvas effects.
• Annual Recurring Revenue (ARR): Increased by 33% to EUR 883 million, with organic growth of 25.2%.
• Subscription and SaaS Revenue Growth: Grew organically by almost 78%, reaching 94% including Go Canvas.
• Reported Revenue: Increased by 15.1% to EUR 253 million for Q3 2024.
• EPS Impact: Earnings per share fell by 12.8% in Q3 due to Go Canvas acquisition effects.
• Build Segment Growth: Organic growth of 15% in Q3, with expectations of over 30% growth in Q4.
• Design Segment Revenue: Increased by 8.1% on a reported basis for the first nine months.
• Cash Flow: Strong cash conversion over 100% in the first nine months.
• Net Debt: EUR 370 million with a net debt to EBITDA ratio of 1.8 times.

• Warning! GuruFocus has detected 4 Warning Sign with NEMTF.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Nemetschek SE (NEMTF) achieved robust growth with a 6.3% increase on an FX-adjusted basis in the design segment, despite a challenging market environment.
• The build segment experienced accelerated organic growth of 15% on an FX-adjusted basis, driven by strong demand, particularly in the US market.
• The transition of Bluebeam to a subscription model is progressing well, with expected growth of over 30% in the fourth quarter.
• Nemetschek SE (NEMTF) recorded an organic currency-adjusted revenue growth of 9.8% and an organic EBITDA margin of around 29.9%, aligning with internal plans.
• The acquisition of Go Canvas is on track, showing good underlying operating performance and expected to create significant value for the company.

Negative Points

• The design segment faced a temporary impact on revenue growth due to a high comparison base from the previous year.
• Earnings per share fell by 12.8% in the third quarter, impacted by the Go Canvas acquisition and higher interest expenses.
• The media segment experienced slower growth, particularly in the US market, due to weaker demand and industry challenges.
• The ongoing transition to a subscription model presents short-term accounting burdens on financial results.
• The German market remains weak, impacting overall growth, particularly in the design segment.

Q & A Highlights

Q: How do you expect the build segment's growth to continue into 2025, given the expected acceleration to over 30% in Q4 2024? A: Yves Padrines, CEO, explained that the Q4 growth is primarily due to accounting effects and a low comparison base from Q4 2023. For 2025, the build segment is expected to normalize to around 20% revenue growth, as previously indicated. The exceptional Q4 growth is not expected to continue at the same rate into 2025.

Q: Have you seen any impact from customers increasing their demand for perpetual licenses in the design segment, given the upcoming changes at Graphisoft? A: Yves Padrines noted that while there has been ongoing demand for perpetual licenses due to the announced changes, there hasn't been a significant increase in demand in Q3. The market is aware of the transition, but most new customers are opting for subscriptions, especially given the challenging European design market.

Q: Can you provide insights into the impact of new releases for 2025 on growth? A: Yves Padrines stated that new releases for brands like Graphisoft, Vectorworks, and Allplan are crucial for maintaining recurring business and customer subscriptions. These releases are part of the company's annual plan and are already factored into forecasts for Q4 2024 and 2025.

Q: How do you plan to manage debt repayment following the GoCanvas acquisition, and what are your expectations for organic growth in deferred revenue? A: Louise Oefverstroem, CFO, emphasized the priority of paying down debt to maintain financial flexibility for future M&A opportunities. The company aims to use its strong cash flow to repay debt, potentially around EUR100 million per year, depending on other investment opportunities. Deferred revenue increased by approximately 35-36% year-on-year, with around EUR30 million from the GoCanvas acquisition.

Q: What are the drivers behind the organic growth in the build segment in Q3, and how did GoCanvas perform relative to expectations? A: Yves Padrines highlighted that the build segment's growth was driven by strong demand for Bluebeam and a good performance from Nevaris. GoCanvas performed in line with expectations, contributing to the segment's growth without any exceptional deviations from the plan.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.