Nemetschek Se Unsp/Adr

The conference is now being recorded. Good afternoon, ladies and gentlemen, and welcome to the Publication Q1 Financial Statement of Nemechek SE. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions following the presentation. Let me now turn the floor over to your host, Stefanie Zimmermann.

Thank you, operator. Hello everyone and a big welcome. Thanks for joining our earnings call today to discuss the results for the first quarter 2024 with us. With me today are our CEO Yves Padrin and our CFO Louise Wilberström. Today's conference call is being recorded. A replay of the call will be available at our website after the call. Additionally, you will find the report, the presentation and the press release on our investor relations website as well. But now let's get started. So I would like to turn over to our CEO Yves. Go ahead.

Thank you, Stephanie. Welcome everyone to our first earnings call related to the financial year 2024. After the substantial amount of detail we provided on our subscription strategy and our strategic focus areas in the course of our full year reporting last month, we have now returned to our usual short but informative slide deck. or Chief Financial Officer, Louis Overstrom, and I will therefore give you a brief presentation of the highlights of the first quarter of 2024 so that we have sufficient time to address any questions you may have during the Q&A session. To begin on page number three, I will summarize our Q1 as a successful start of the year with double-digit currency adjusted growth and combined with a high profitability. Main growth driver was once again the recurring part of our business, in particular, the very strong increase in our subscription and SaaS revenue, which is also reflected in all our major KPIs where we reach new record levels across the board. Looking at the underlying demand situation in Q1, we had the expected continuation of the trends we already saw over the last 12 to 18 months. an ongoing challenging demand environment in our European design markets, as well as a continued resilient customer demand in the US. If we look at one of our main strategic priorities, our journey to a subscription and SaaS-centric business model, we continue to execute as planned and the different transition of our brands in the build and design segments are progressing very successfully. Our segments also developed in line with our internal plans. While media showed the expected re-acceleration in growth, the growth in the managed segment continued to stay at a good level. Despite the mentioned ongoing challenging environment, also our design segment had a very strong start of the year. The design segment benefited slightly from small pull-forward effects in connection with the announced price increases for perpetual licenses by one of our design brands. Therefore, together with the introduction of new features, which are cloud-based, this price increase of perpetual license makes the subscription offerings of our design brands once again commercially more attractive for our customers. With the consequently forecasted acceleration in subscription SaaS sales and its short-term accounting-related dampening effects on growth, we therefore expect that Q1 likely marked the upper bound of the growth range for design in 2024. Our build segment continued to see a very resilient demand, especially in the US, and is fully on track to achieve its targeted mid-teens growth for the full year 2024. We have now already migrated more than 65% of Bluebeam's business to subscription SaaS models. The highly successful transition of Bluebeam is therefore progressing according to plan. The planned low double-digit growth in Q1 is consequently forecasted to more than triple towards the end of the year in Q4. What is massive acceleration in growth, we do not expect any kind of additional recovery in market demand or any other special effects. It is rather the result of the pure mechanics of Bluebeam's ongoing subscription transition combined with a substantially easier comparison base, which no longer include license sales for the first time in Q4. Therefore, thanks to our successful start of the year, We are well on track to achieve all of our financial targets for the fiscal year 2024. The continued progress in our different strategic focus areas combined with our already very resilient business model today provide us a strong foundation to achieve an above market growth and shareholder returns in the mid to long term by capitalizing on our leading position in our structurally growing industries. So in short, we are well underway to deliver on all of our goals. Let's move to page number four. As we already presented last month, one of our strategic focus areas is the ongoing internationalization of our business as part of our go-to-market strategy. Our goal is not only to further increase our resilience, for instance, by further reducing the dependency on the open market, but to also benefit even stronger from the higher expected growth in regions, such as North America and Asia Pacific, and in particular in India. The Indian construction market has an extremely low degree of digitalization and is the third largest construction industry in the world. There are tremendous growth opportunities in India for us, strong urbanization trends, favorable demographics, high growth rates, etc. This is why we are proud to announce that we successfully launched Nemetschek India by opening a go-to-market office with a dedicated local sales team in Mumbai. It will be our second location in the country following our Shared Services Development and Research Center in Hyderabad. India is also the first country where our solution will be sold by our direct sales force under the name and check group umbrella and not via buy one of our individual brands standalone. We will therefore offer the different products and packages ranging from our design brands such as Allplan, Graphisoft, Vectorworks, Risa, Solibri to Bluebeam and also Dtwin, all in the form of subscription only by the way. jointly under the Nemechek Group brand. We are convinced that by increasing our presence in India, we will be better able to participate in the enormous growth potential of the Indian construction market in the coming years and decades. Let's move on to page number five. During the first quarter of the year, we also announced two major partnerships. one with Autodesk and another one with Hexagon. As you probably know, especially in the construction industry, one of the major pain points is the fact that the different participants involved in a project still work in their separate data silos instead of sharing the data in a continuous workflow. The result is that approximately 90% of all construction projects are delayed and or over budget. In addition, roughly 20% of the material used during the construction process are wasted. As you know, that is the reason why Nemetschek has been a strong driver of Open BIM, interoperability and open industry standards from the beginning. It's part of our Nemetschek Group's DNA and the reason why we have pushed the industry to enable seamless collaboration along the entire building life cycles for decades. With the announced two partnerships, we have now made the next step on this journey. First, we have agreed with Nemetschek to improve our open collaboration efficiencies for the ACO and media industries. The agreement will enhance the existing interoperability between the solution of the Nemetschek Group and Autodesk and improve the fluent exchange on information success across the products of both companies. Our goal is to ensure that all, as well as Autodesk customers, no longer have to deal with inefficient workflows due to data loss or file incompatibilities. The agreements will therefore enable Nemetschek Group and our brands and Autodesk to improve existing data exchanges, for example, via open APIs and open new data-centric workflows that span discipline and industries. In addition, we also announced a strategic partnership with Hexagon and its Geosystems division with the goal of to accelerate the adoption of digital twins in the operational phase. We are both convinced that digital twins are key in transforming the industry and overcoming the challenges that building owners and operators are facing today. With our new horizontal, open and cloud-based digital twin platform DTwin, as well as Hexagon's end-to-end reality capture solutions, we will help customers to efficiently manage their facilities and optimize building operations based on real-time information. We believe that this is not only an important milestone for us, but more importantly for customers and the industry. I will now hand over to Louise, who will dive deeper into the most important aspects of our first quarter financial results.