Following the extraordinary strong first quarter of 2019, the Nemetschek Group (ISIN DE 0006452907) recorded very dynamic development in the second quarter as well, and increased its revenue by more than 20%. The operating margin rose from 28.2% in the first quarter to a high 29.0% in the second quarter. At the same time, the top player for software solutions in the global AEC market continued to invest strategically in next-generation solutions and further internationalization in order to secure the high-level growth dynamics for the future.
“The first half year met our expectations utterly and completely,” sums up Patrik Heider, Spokesman of the Executive Board and CFOO of the Nemetschek Group. “We are recording ongoing fast growth and high demand on the part of our customers. We therefore remain the fastest-growing listed software company in Germany with global reach. In addition, in the first half year, we have been able to considerably and strategically develop our Manage segment further and expand it. We are, therefore, in an excellent position to achieve our targets for the year 2019 as a whole.”
Major indicators of the Group’s success in Q2 and the first half year of 2019
- In the second quarter, Group revenue rose to EUR 137.8 million. The dynamic organic growth of 14.9% and strong figures for the recently acquired Spacewell brand resulted in a growth of total 21.1% compared to the same quarter of the previous year. In the first half of the year, revenues even increased by 23.9% compared to the same period in the previous year, organically by 17.9%.
- With a plus of 36.6%, rising to EUR 73.2 million, recurring revenue from software service contracts and subscriptions remained a major growth driver in the second quarter. The half year showed similar growth dynamics with an increase of 35.3%. Revenue from subscriptions, in particular, which rose by 147.6% in Q2 and by 136.7% in the first half year, contributed to this strong development. The over proportional growth in subscriptions, whose revenue is recognized proportionately over a longer term, reflects the strong customer demand. License growth amounted to 8.6% in the first half year, with simultaneous, extremely strong growth in recurring revenue.
- Continued high levels of customer demand on the international markets were a further growth driver. Revenues generated abroad in Q2 rose by 28.0%, and in the first half year by 30.2%.
- Consolidated operating earnings before interest, taxes, depreciation and amortization (EBITDA) increased in Q2 by 28.6% to EUR 40.0 million. This is equivalent to an EBITDA margin of a high 29.0% (previous year: 27.3%). In the first half year, the margin improved to 28.6% (previous year’s period: 27.3%).
- The increase was positively influenced by the initial application of the new IFRS 16 standard concerning the accounting of leases. Adjusted for this effect, the EBITDA margin in Q2 was 26.3%, and in the first half year 25.9%, thus remaining entirely within the scope of the company’s expectations.
- The quarterly profit rose by 20.8% to EUR 21.9 million in Q2. As a result, the earnings per share amounted to EUR 0.19. From a half-year perspective, it was possible to increase the profit for the period by 20.3%, rising to EUR 41.4 million, which corresponds to earnings per share in the amount of EUR 0.36.
Segment highlights in Q2 and in the first half of the year 2019
In segment reporting, the Solibri brand, which was allocated to the Build segment until the end of 2018, was reclassified to the Design segment in 2019. The values from the previous year were adjusted accordingly and are thus comparable.
- The Build segment, backed by the strongly expanding US brand Bluebeam, remains a growth driver of the Nemetschek Group with an increase in revenue of 25.0% in Q2, and of 29.4% in the half year. The corresponding over proportional rise in EBITDA (Q2: +47.0%, H1: +41.8%) led to peak margins in this segment of 34.4% in Q2 and 33.2% in the first half year.
- The Design segment recorded growth of 9.1% in Q2, and 12.0% in the half year, and developed as expected. In Q2, the EBITDA margin rose to 26.9% (previous year’s quarter: 24.9%), and in the first half year to 27.7% (previous year’s period: 24.5%).
- The Manage segment, which comprises activities in connection with building management, was considerably strengthened as a result of the acquisition of the Spacewell brand. Revenues rose from EUR 2.1 million in the previous year to EUR 9.3 million in Q2 of this year. In the first half year, it was possible to increase revenue to EUR 17.5 million (previous year’s period: EUR 4.1 million). Spacewell, as a new umbrella brand for this segment, invested heavily in new solutions and further internationalization, which resulted in the EBITDA margin’s amounting to 15.3% in Q2 as planned. The half-year margin of 6.9% additionally included acquisition costs of EUR 1.5 million for the acquisition of the Axxerion brand from the first quarter. Adjusted for these acquisition costs, the EBITDA margin reached 15.4% in the half year.
- The Media & Entertainment segment accelerated its growth compared to the previous year. Revenues in Q2 climbed by 23.2% to EUR 8.5 million. The acquisition of Redshift had a positive effect at brand level in the second quarter. Purely organic growth reached a high 10% in the second quarter. It was possible to achieve strong growth amounting to 23.5% in the half year. The EBITDA margin in the half year amounted to 37.2% (previous year’s period: 44.1%) as a result of the acquisition and integration costs for Redshift.
Continued strong growth and high profitability confirmed for the year 2019 as a whole
Following the strong first half of the year, the executive board confirms the previously set corporate targets for the year 2019 as a whole. It anticipates Group revenue in the range of EUR 540 million to EUR 550 million, which corresponds to growth of 17% to 19% compared to the previous year.
The EBITDA margin is expected to be between 27% and 29%. The expectation considers the effects of the first-time adoption of the new leasing standard IFRS 16* with repeatedly future-oriented investment and the as yet below average EBITDA margin in the Manage segment.
Moreover, the net income for the year after taxes and the earnings per share for 2019, as announced on July 2, 2019, are positively affected, in addition to growth in ordinary operations, as a result of the sale of the non-strategic shares in the associated company DocuWare. From today’s perspective, the sale will lead to an one-off rise in the EPS of about 40% compared to the previous year’s figure and will take place in Q3.
