Nemetschek Se Unsp/Adr

Good afternoon, ladies and gentlemen, and welcome to the earnings call, half-year financial report of Nemetschek 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 Stefanie Zimmermann.

Thank you, operator, and hello, everyone, and a big welcome. Thanks for joining our earnings call today to discuss the results for the second quarter in the first half of 2024 with us. With me today are our CEO Yves Padrin and our CFO Louise Oeberstern. 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.

Thank you, Stephanie. Welcome everyone to our H1 2024 earnings call. You have probably all seen our pre-release last Wednesday with the main headlines of our Q2 2024 results, our fully confirmed organic guidance for 2024, as well as our expanded outlook following the completion of the Blue Canvas acquisition. As usual, I've prepared a short and informative presentation containing additional information with regards to our second quarter, as well as first half year results that our CFO, Louise Oeferström, and I will talk you through briefly. But we have enough time to address any questions you may have in the end. To begin with, Let me summarize the key messages for the second quarter as well as the entire first half of 2024 on page number two. We are delighted to announce that we were able to officially close the acquisition of GoCanvas on July 1st and welcome all GoCanvas employees. This transaction, which marks the largest acquisition in MNCHEC more than 60 years history, is progressing in line with our plans. We continue to see big potential in the acquisition of GoCanvas and believe it will create substantial value for our customers and our shareholders. Looking at the operational performance, I will summarize our second quarter as a continuation of the successful start of the year we had in Q1 with an ongoing high growth of almost 10%. Main growth driver was once again the recurring part of our business, in particular, the very strong increase of around plus 83% in our subscription and SaaS revenues. It is also reflected in all our major KPIs where we reach new record levels across the board. While our reported profitability was only at last year's level, it was heavily impacted by one-off costs in connection with our M&A activities. If we exclude these non-operational one-off costs would have recorded a substantial margin expansion year over year. Despite the continued challenging environment and our ongoing subscription transition, design segment had a strong second quarter. In addition, the segment benefited slightly from pull-forward effects in connection with the announced price increase for perpetual license by one of our design brands. Together, With the introduction of new features, price increase makes the subscription offering of our design brands once again commercially more attractive for customers. With the consequently forecasted acceleration in subscription sales and its short-term accounting-related dampening effects on growth, together with a substantially tougher comparison base, expect that the growth in Q3 will likely be below the levels we had seen in the first half of the year for the design segment. Build segments continue to see a very resilient demand, especially in the US. Highly successful subscription transition of Bluebeam is progressing as planned, and we continue to be very confident that the 10% growth that we achieve in H1 will consequently more than triple toward the end of the year in Q4. With our H1 results, we are therefore exactly where we wanted to be after the first six months of the year. Also, looking at our journey to a subscription and SaaS-centric business model, we have made substantial progress in the first six months of 2024. As mentioned, not only in case of Bluebeam, but also with our various brands in the design segment. Based on our successful start of the year, the expected acceleration in growth in the second half, as well as the continued progress on our strategic initiatives, we are well on track to once again reach all of our goals for the first fiscal year and therefore fully reiterate our organic outlook for 2024. In addition, we also expand our outlook during the acquisition of GoCanvas. More details on that later in our presentation. On page number four, you can see an overview of the corresponding figures, the Q2 development that we just discussed. Our annual recurring revenue, driven by a very strong growth of around 83% in subscription and SaaS revenue, remained at a high level with an ARR growth of over 26%. The continued strong increase in ARR is an important indicator for the group revenue and cash flow growth potential in the coming 12 months. Our revenue, as already discussed, increased on a reported as well as ethics-adjusted basis by plus 9.7% to €228 million. Our EBITDA in the second quarter increased by 9.5% to €61.4 million, which corresponds to an EBITDA margin of 27%, at the same level as last year. However, please let me highlight here again that our profitability in the second quarter was impacted not only by our subscription and SaaS transition, but also by M&A-related one-off expenses in the mid-single-digit million-euro range. If we adjust for these extraordinary non-operating M&A costs, EBDA margin would have expanded significantly by more than 240 basis points, 29.4% in QT, which is in line with our internal expectation. The net income for the quarter, also driven by lower amortization charges and a strongly improved financial results, grew over proportionally by 27.7% to 40.5 million euros, resulting in earnings per share of 36 cents. Before we go deeper now into our financial results of Q2 as well as the first half of the year, I would like to use this opportunity to also give you an overview on page number five of the various strategic highlights in the first six months of the year in each of our five defined strategic focus areas. Starting with our clear number one priority, our journey to a subscription and SaaS-centric business model. After we have already accelerated our approach with the transition of Bluebeam, we now have also accelerated the subscription transition of our design segment. The results of this strategy are evident when you look at our figures. Recurring parts of our revenues, and in particular our subscription and SaaS offering, are the clear growth driver of our business. The over-proportional growth translates into an ever-increasing share of our recurring revenue of no more than 85%. We'll talk more about that topic in a few minutes. As we consistently highlighted over the last years, the fact that we did not make any large-scale acquisitions in recent years was by no means a sign that value-accretive M&A was no longer on top of our agenda. We are therefore excited that with GoCanvas, we were able to acquire the leading provider of SaaS solutions for the paperless collection, porting and integration of field data in construction and other adjacent verticals. GoCanvas is a perfect complement in terms of technology, customer base, and geographic presence to our existing portfolio of solutions in the build segment, and therefore also provides us with access to the rapidly growing market for field workers in construction and other adjacent industries. Combining Bluebeam with its massive base of office workers with GoCanvas customers in the field will create a truly unique ecosystem for the construction industry. Resulting synergy potential by addressing the already large and diversified customer base of GoCanvas with our solution in the build segment, and more importantly, addressing the millions of users of Bluebeam, the solutions from Go Canvas. As you know, innovation and technological leadership have always been an integral part of our company's DNA. This is why, of course, the field of artificial intelligence also plays a major role in our R&D activities. As part of our strategy to become a leader in the field of artificial intelligence in the SEO and media industries, we launched the Mecheck Group AI Innovation Hub. The main focus of our AI Hub is to drive and streamline AI initiatives across the brand portfolio with partners, alliances, and customers. In this context, we are convinced that ethics, trust, and sustainability are essential dimensions to develop and deploy AI responsibly. And while we have already introduced various new features, such as the AI Visualizer, new features in ArchiCAD, Alplan, and Vectorworks, or 3D drawings, part of Bluebeam Cloud, or also in our Dtwin platform, and also SpaceWell Energy, we'll continue to add additional AI features to our solution in the future. So stay tuned. The go-to-market side, our strategic focus in the ongoing internationalization of our business, our goal is not only to further increase our resilience, for instance, by further reducing the dependency on the European market, to also benefit even more the higher expected growth in regions such as North America and Asia Pacific. In particular, India. As well as the Indian construction market with its extremely low degree of digitalization, strong urbanization trends, favorable demographics, and high growth rates offer a tremendous growth opportunity in our view. India will become next year the third largest construction market in the world and is already the top five global economy. This is why we opened a new go-to-market office in Mumbai. This is our second location the country following our Shared Service Development and Research Excellence Center in Hyderabad. We are convinced that by increasing our presence in India, we are better able to participate in the enormous growth potential of the Indian construction market in the coming years and decades. And last, but certainly not least, the area of business enablement. We continue to make progress on the harmonization as well as the ongoing buildup of our organization, which is important to ensure that we will be able to make the most of our tremendous growth opportunities going forward as well. A key initiative in his area is therefore our continuous effort to further enhance operational excellence. And with that said, I will hand it over to you, Louise.