Nemetschek Se Unsp/Adr

Good afternoon, ladies and gentlemen, and welcome to the Nemetschek SE earnings call for the half-year financial report. At this time, all participants have been placed on listen-only mode. The floor will be open for questions following the presentation. Let me now turn you over to Stefanie Zimmermann.

Thank you, and hello, everyone, and a big welcome. Thanks for joining our earnings call today to discuss results for the second quarter and the first half of it. With me today are our CEO Yves Patrine and our CFO Louise Oeferström. 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 quarterly report, the presentation and press release on our investor relations website as well. But now let's get started. So I would like to turn over our CEO Yves.

Thank you, Stephanie. Welcome, everyone, to our Q2 NH1 2025 earnings call. You have probably all seen our pre-release last Thursday with the main headlines of our Q2 results and our increased revenue guidance for the financial year 2025. Therefore, I have prepared a short slide deck containing additional information that our Chief Financial Officer, Louise Overstrom, and I would like to briefly walk you through so that we have sufficient time for your questions afterwards. To begin with, on page number three, please find some highlights of the most important aspects of the second quarter, as well as the first half of 2025. Looking at our operational performance, I will summarize our second quarter as a continuation of the very successful start of the year we had in Q1, with an ongoing very high currency adjusted revenue growth of plus 30.5%. Main contributor, these very strong developments were our two largest segments, design and build. On the one side, I'm pleased to report that the super strong development seen at the beginning of the year in the build segment continued in the second quarter with very high organic and inorganic growth. There's been very strong overperformance in build in Q2 initially at Bluebeam. Similarly important, and despite the continued challenging environment, particularly the German-speaking markets, the design segment had another very good quarter. In addition to a strong underlying development, the segment's performance also benefited from a strong momentum in the subscription transition, including a stronger than anticipated demand for multi-year contracts. These contracts were strategically leveraged to accelerate the design segment transition to a subscription and SaaS-centric business model. As a result, we are very pleased to report that the share of recurring revenues increased to a new record high of 93% at the end of the second quarter. Together, the strong start to the year in Q1 We had a very successful first half of the year 2025. Main growth driver was once again the recurring part of our business, in particular the very strong increase in our subscription and SaaS revenues, which is also reflected in all of our major KPIs where we reach new record levels across the board. While the underlying profitability stayed on a continued high level, the reported group EBITDA margin reflects an extraordinary non-operating effect in the low teens million euro range this resulted in the unexpected insolvency of the service and payment provider which impacted our design and media segments during the first half and which therefore has nothing to do with our underlying strong operational development foundation of this strong operational performance is this continued progress we have made across our key strategic focus areas whether that's It is in products, innovation, AI, or the ongoing transition to subscription and SaaS. Investments are not only paying off already today, they are also making sure the Nemetsha Group is fully prepared for the next phase of growth. And lastly, as a result of the strong development in the first six months, we have raised our outlook for currency adjusted revenue growth in 2025, from the previously communicated range of 17% to 19% to now plus 20% to plus 22%. As usual, on page number four, an overview of our key Q2 KPIs. In line with our key strategic priority, transition to a subscription and SaaS-centric business model or annual recurring revenue, which includes the contribution for our Go Canvas acquisition, recorded a reported increase of plus 35.1% and plus 38.7% on an ethics-adjusted basis. However, if we script out the M&A contributions, the ARR growth remained at a high level at plus 29.4% at a constant currency basis. This continued strong increase in ARR is an important indicator for the group's revenue and cash performance flow growth potential in the coming months and quarters. And to this very strong growth in our recurring revenue base, reported revenue in Q2 increased significantly, plus 27.4% on the reported as well as plus 30.5% on an ethics-adjusted basis to 290 million euros. Organic revenue in QT substantially increased by plus 18.9% on a reported basis. If we adjust for the ethics headwind, mainly steamed from the weaker US dollar, our organic revenue increased by plus 21.6%. ABDA for the quarter increased clearly over proportionally by plus 44% to 88.5 million euros. This despite the negative effect from GoCanvas, ongoing investment into the future growth of our business, as well as a negative non-operating effect from the PSP provider. Corresponding EBITDA margin reached 30.5%. If we adjust for the extraordinary non-operating effect due to the insolvency of the service and payment provider, EBITDA margin will have reached even 31.5%. at but not least, or earnings per share for the quarter increased under proportionally by plus 25%, reflecting the effect from the GoCanvas acquisition, such as higher PPA adjustment and financing costs, as well as a negative effect due to the insolvency of a payment and service provider. Before Louise will deeper into our Q2 financial results as well as the first half of the year, I would like to use this opportunity to also give you an overview of the various strategic highlights in the first six months of the year in each of our five defined strategic focus areas on page number five. Starting on the left side, artificial intelligence plays a pivotal role for us. not only in optimizing our internal processes, but also in advancing our product development to deliver even greater value for customers. In doing so, it is essential to us that all AI activities are grounded in ethical and trustworthy principles that puts the human, our customers, our users, our fans at the center. Over the past quarters, we have already introduced several truly value-adding AI features into our product portfolio, such as the AI Visualizer. But we are especially proud of the launch of our new groundbreaking agentic Nemetschek AI Assistant, one of the first of its kind in our ADCO industry. With Nemetschek AI Assistant, we are building a strategic platform that fundamentally changes how users interact with our products and lays the foundation for a new generation of agent-based solutions. The assistance supports three core objectives. Driving innovation, enabling a new user experience powered by conversional AI, for example, and connecting tools and brands through intelligent data interpretation. Initial use cases, just product knowledge support and design compliance assistance, are already live. The next step will introduce active agents, automate workflows, provide smart recommendations, and offer fully customizable AI experience for users. So stay tuned. Our ambitious AI roadmap further strengthens our strategic partnership with Google Cloud. positioning Nemechek as an AI-first industry leader and creating a strong platform for continued market expansion. As you all know, one of the absolute priorities remains transcending both of the resilience and long-term growth potential by steadily increasing the share of recurring revenues. In particular, through our transition to a subscription and SaaS-centric business model. I'm very pleased to say that this transition is progressing extremely well. We are seeing very strong momentum across the group, especially in the design segments where the pace of the shift has accelerated significantly. As a result, we reach a new record share of recurring revenue for the group, a direct result of the dynamic growth in our subscription and SaaS business. Over the past six months, we have continued to bring our go-to-market approach to a new level, especially by expanding our international presence. Our goal is twofold. First, to make our business more resilient by reducing our dependency on the European market. And second, to unlock new growth opportunities for the Nemetschek Group in high potential regions. This is why we're focusing on fast-growing markets like India and now Saudi Arabia, where we officially launched operation in May, the opening of Nemetschek Saudi Arabia in Riyadh. The Saudi construction sector is booming, with over $1 trillion in megaprojects as part of the Vision 2030 initiative. By expanding in India and the Middle East, we want to be part of this enormous growth, not just in the coming years, but the next decades. Our cloud platform and infrastructure are another cornerstone of our corporate strategy. Here, we are targeting a comprehensive ecosystem by eliminating information silos and by enabling end-to-end workflows. This also helps us to better meet ever increasing demand for connected cloud features. As you know, M&A has always been an integral part of Nemechek's DNA and a key driver of our long-term success story. We have a strong track report of highly successful and value-accretive acquisitions. The most recent example is GoCanvas, largest acquisition in the Nemechek Group's history. I'm very pleased to report that the integration is progressing as planned and GoCanvas is delivering in line with our vicious growth targets. Strong performance gives us the confidence and the capacity to continue pursuing value-accretive acquisitions. It may include smaller bolt-on deals like Manufacton, whose AI and data-driven solutions enhance off-site construction and prefabrication. And we are also prepared We pursue larger opportunities comparable to GoKansas or potentially even higher, and also smaller ones that focus on AI, for example. In parallel, we are also pursuing a dedicated venture investment strategy. Over the past year, we have made several minority investments in highly innovative AI-driven startups that align perfectly with our long-term AI and technology strategies. A good example is a recent investment in Handoff, a startup whose platform used artificial intelligence to automate administrative processes for construction companies. Last but not least, in the area of business enablement, we work on a further harmonization across Nemetsche Group. This includes continuous effort to further enhance our operational excellence in order to ensure that we will be able to continue to make the most of tremendous growth opportunities.