Nemetschek Se Unsp/Adr

to discuss the results for the third quarter and the first nine months 2025 with us. With me today are our CEO, Yves Padrin, and our CFO, Louis Sögerström. 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 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. So, go ahead.

Thank you, Stephanie. Good afternoon, everyone, and welcome to our Q3 and 9-month 2025 earnings call. As usual, we have prepared a short slide deck that our Chief Financial Officer, Louise Eferstrom, and I will briefly walk you through so that we have sufficient time for your questions afterwards. As usual, I would like to begin the presentation with our key messages on page number three. Q3 2025 was another very successful quarter for our company. Success, once again, highlights the resilience and strengths of our business model and strategy. Growth remained very strong, mainly driven by our two largest segments, design and build. The build segment continued with its extremely strong development in the third quarter, even despite the expected moderation of growth due to the fading temporary transition effect, the subscription transition of Bluebeam, and the higher associated comparison base. The design segment also delivered another very good quarter. In addition to a healthy underlying demand, the segment continued to benefit very strong momentum in its subscription transition, including an additional tailwind from multi-year contracts. As we communicated previously, these contracts are used strategically and only temporary to accelerate the transition of existing maintenance customer to a subscription-based model, mainly at our Graphisoft brand. The black thing in our performance over the first nine months of the year We are proud of what we have achieved. Main growth driver was once again the recurring portion of our business. In particular, the very strong increase in subscription and SaaS revenues, which is clearly reflected across all our key performance indicators. When looking at the development of our EBITDA margin, it's important to keep in mind that the profitability in the first half of the year is impacted by an extraordinary non-operating effect in the low teens million euro range, resulting from the unexpected insolvency of a service and payment provider. The foundation for this strong operational performance is the continued progress we have made across our key strategic focus areas, whether that is in agentic AI, the successful transition to subscription and SaaS, or the ongoing internationalization of our business. These investments are not only paying off already today, they are also making sure the Nemechek Group is able to show a high and profitable growth in the future. Lastly, as a result of the very strong development in the first nine months, we fully confirm our already increased guidance and outlook for the financial year 2025. On page number four, you see how this key message translates into the developments for most important key financial indicators. In a nutshell, we continued the great momentum from the first half of the year also into the third quarter. The results, and in line with our key strategic priority, the transition to a subscription and SaaS-centric business model, or reported annual recurring revenue, recorded an increase of plus 22%. If we adjust for the strong FX headwind we had in the third quarter, mainly steamed from the weaker U.S. dollar, or ARR, even increased by plus 26.4%. Thanks to this substantial growth in our recurring revenue base, we were able to strongly increase our revenue in Q3 by plus 15.8% on a reported basis, and even by plus 20% on an FX adjusted basis. We also delivered a compromised increase in profitability. It's plus 25% on a reported and plus 34% on an ethics-adjusted basis. The EBITDA growth clearly outpaced our revenue growth in the third quarter. The corresponding EBITDA margin reached a high 32.5% despite the ongoing transition to subscription and SaaS models in the design segment. As but not least, our earnings per share for the quarter increased by a very strong plus 40.7%, despite the acquisition-related effects. Go Canvas. Coming to page number five. Before I hand over to Louise, who will provide a deeper dive into our financial result, I would like to take a moment to address what is currently one of, if not the most important topic for us. I'm, of course, talking about the rapid evolution of artificial intelligence. Let me state this very clearly up front. At the Nemechak Group, we are deeply convinced that AI represents a tremendous opportunity for us as a vertical software company. It is deeply embedded in the processes and workflows of our customers. And we have, as you know, over 7 million users of our different portfolio of products across the globe. There's many data. Of course, artificial intelligence also plays a key role in optimizing our internal operations. For example, in software development, services and support. However, today I want to focus on the three main levers through which we are continuously enhancing and expanding our product portfolio with AI-driven functionality to capture this huge opportunity. Starting with our R&D and product development activities in-house, So Nemechek Group has been working with and developing AI technologies for several years already. However, over the past year, we have clearly doubled down and significantly increased our investments in AI to further accelerate our pace of innovation. Our deep domain expertise and close customer relationship enable us to develop cutting-edge AI products and features at the same time. It is equally important to us that all AI activities are grounded in ethical and trustworthy principles that place the human or customers or fans at the center. And we are here to help them to become an augmented architect, an augmented engineer, and augmented program managers. As a result, we have already introduced several truly value-adding AI features across all our segments over the past quarters. In our design segment, for example, we launched new features such as the AI visualizer and our groundbreaking Gentic Nemetschek AI assistance, one of the first of its kind in our industry. And also across all other segments, we are making strong progress. For example, in the build segment, we recently announced Bluebeam Max, Unbound, where we had over 1,200 Bluebeam fans in Washington, D.C., and Bluebeam Max is combining the AI developments from Bluebeam with the innovative technology of our latest acquisition, Firmus AI. Integration of Firmus Agentics' AI-based platform into Bluebeam's PDF workflows enables early risk detection during pre-construction design reviews, increasing efficiency and helping to minimize costly rework. In addition to our strong internal R&D capabilities, we are also accelerating our AI roadmap through targeted M&A and venture investments. The already mentioned Firmus AI acquisition, along with Manufacton, are strong examples of how we are using technology-driven M&A to further strengthen our position in AI-driven innovation and to complement our portfolio with leading-edge capabilities. For venture approach, we are also investing in highly innovative and potentially disruptive startups, for example, Handoff, Reconstruct, or Document Trench, and many more, as you know. These investments give us early access to emerging technologies and also help foster a broader innovation ecosystem around the Nemechek Group. Our ambitious AI roadmap is further strengthened with strategic partnerships, both on the commercial, and also the academic side. On the commercial side, for example, we are partnering with Google Cloud to further enhance Nemetschek's position as an AI-first industry leader and to create a strong platform for continued market expansion. On the academic side, we have already been collaborating for many years with the Georg Nemetschek Institute for Artificial Intelligence for the Big World, the Technical University of Munich, TUM. We are very pleased that we announced recently, in addition, we have signed strong partnership with prestigious universities such as Stanford University in the US and also with NTU in Singapore. The goal of these partnerships is to jointly advance R&D and innovation in the field of AI, and to strengthen knowledge transfer between research and practice, thereby also helping to define international standards for our industry. You see, a lot has already happened, and this is just the beginning. We will continue to use all available levers to position the Nemecher Group to benefit maximally from this major opportunity. And with that, I will now hand it over to Louise.

Thank you. And a warm welcome to our earnings call for the third quarter, as well as for the first nine months of the financial year 2025 from my side as well. Yves has already briefly touched on some of our key financial figures. I would therefore now like to look in more detail at the most important financial aspects of our Q3 and nine-month results, as well as at the underlying drivers. As usual, we will begin with an overview of the key financial highlights, the first nine months of our financial year 2025 on page number seven. And I would really like to underline its assessment that we had a very successful first three quarters of this year with continued strong and profitable growth. And this is especially encouraging and mentionable, giving our ongoing transition to a subscription and staff-centric business model in the design segment and the associated short-term accounting burden on our financial results of this during this transition. So let me start with our accumulated revenue for the period from January to September, which grew by 22.9% on reported and even 25% on an ethics-adjusted basis to €866 million. And apart from the inorganic contribution from our GoCanvas acquisition in the first half of the year, the recurring part of our business once again proved to be the main growth driver. And this clearly demonstrates the strong progress we are making in executing our strategic roadmap towards a subscription and SaaS-based business model. And consequently, the revenues in this category increased by an impressive 61.3% to 614.7 million euros. And our reported EBTA increased by 28.4% to €264.3 million, and that is corresponding to a reported EBTA margin of 30.5%. And please allow me to emphasise here that if we adjust for the extraordinary non-operating effect due to the unexpected insolvency of a payment and service provider from the first half of the year, the underlying profitability would have been at a high 31.8%. On the right-hand side of this slide, you can also see our strong cash generation, with a high cash generation of 111%, as well as the continued very high quality of our balance sheet. If we turn to the next slide, page number eight, you'll find an overview of the development of our four segments in the first nine months of 2025. We start with our design segment, which primarily serves architectural and engineering customers throughout the globe. In Q3, the segment continues its strong growth momentum from the first half of the year. This is driven by a very strong increase in the segment subscription and SaaS revenues due to the continued successful ramp-up of the subscription transition at our Graphisoft brand. And in addition to this, growth was also partly supported by three-year contracts, though at a slightly lower level compared to recent quarters. And these contracts are being used strategically and only temporary to accelerate the migration of existing maintenance customer to a subscription-based model, mainly at a Graphisoft brand. For the first nine months of the year, revenues accumulated to €389.3 million, a plus of 13.1% year-on-year. And the reported EBITDA margin of 27.5% remained stable year over year, despite the associated short-term accounting-related dampening effects of the subscription transition and the extraordinary non-operating effect of the insolvency of the service and payment provider in the first quarter. When adjusting for the external service and payment provider effect only, the underlying EBITDA margin would have been above the prior year level, despite the ongoing transition to subscription. So let's continue with the development of our build segment, which once again delivered a stellar performance in the third quarter. This was driven by sustained, strong customer demand, particularly at Bluebeam. And in addition to this, Canvas, which has now been fully consolidated into our build segment since Q3 2024, continued to deliver as planned. And as expected, we saw slight moderation in growth, reflecting the fading temporary elevated effect after Bluebeam's successful subscription transition and the resulting higher comparison base. So after the first nine months of the year, reported growth stands at 47.2%. And adjusting for the quite strong FX headwind in the third quarter that stems from the weaker US dollar, wealth even reached 51.1% on a constant currency basis. Their EBITDA margin on a reported level came in at a strong 35.7%. This is an increase of around 350 basis points year on year. And despite the dilutive effect of the GoCanvas acquisition, as well as our continued investments to support the future growth of this highly dynamic segment, amongst other, as Yves said, the acquisition of the firm's AI. Let's move on to our managed segment, which recorded only a modest growth in the first half of the year. Now we saw a clear re-acceleration of growth momentum in the third quarter with a plus of 7.3%. Growth in Q3 was driven by a positive momentum in new large customer orders and is clearly an effect of the measures taken to refocus and re-strengthen the segment. Year-to-date, the cumulative growth now stands at 3%, And importantly, and despite continued investments into this segment's product portfolio and future growth opportunities, the margin expanded significantly to 10.5% up from just 7.3% in the prior year. So last but not least, our media segment, which continued to be impacted by mixed market dynamics, particularly in the important U.S. market, including somewhat cautious customer spending in some areas. The segment is also still feeling the effects of the missing subscription sales in the first half of the year, following the insolvency of a payment-to-service provider, as we alluded to earlier in this year as well. In total, revenue in the media segment therefore increased only moderately by 1.3% to 89.8 million euros during the first nine months of the year. However, when adjusting for the special one-off effect of the service and payment provider, the revenue growth in the first nine months would have been in the mid to higher small-digit percentage range. And thanks to very good cost control in addition, the margin in the third quarter remained at a very high level of 37% and in line with last year. However, due to the extraordinary non-operating effect in the first half, the reported EBTA margin after nine months remains below the prior year level at 31.1%. And without this extraordinary non-operating effect in the first half, the EBTA margin would have been at the prior year level. Let's turn to slide nine that comprehensively summarizes the financial results of one of our key strategic priorities, which is, of course, the transition to a subscription and SaaS-centric business model. already alluded to the fact that our recurring revenues were once again the main growth driver in the first nine months of 2025. That is really confirming the good progress of the transition we see from a license-based model to a fully recurring and therefore subscription-based model. As you can see on the right-hand side, this exceptional development continued also in the third quarter, with an ARR growth of 26.4%, and a subscription and SaaS growth of 46.4% on a currency-adjusted basis. Therefore, and fully in line with our strategy, license revenues declined by 38% year-over-year in Q3, and that is reflecting the continued shift from perpetual licenses to subscription models, As expected, this more volatile and less predictable revenue stream now accounts only for approximately 5% of our group revenues. But looking at the longer-term picture at the left-hand slide of the slide here, you can clearly see the speed and the scale of our progress in building up our recurring revenue base. Over the last four years, we have seen an almost seven-fold increase in subscription and SaaS revenues, representing an impressive CAGR of over 60%. And as a result, the recurring revenues now represent 92% of total revenues. And this is a new record high for the Dimitri Group after the first nine months of the year. To conclude our review of the results, the first nine months of 2025, we provide a more comprehensive overview, as you're used to, of our key P&L and cash flow items on page number 10. And as we have already discussed in the H1 call, the effects from the GoCanvas acquisition and the insolvency of a payment and service provider were clearly visible in our reported results for the first half of this year, not only in our key KPIs such as revenue growth and the EBITDA margin, but also, of course, across the main OPEX categories. In the third quarter, there is no longer any bad debt impact from the service and payments provided insolvency. And the effect from the GoCanvas acquisition is now starting to normalize as we have fully consolidated the GoCanvas business for a year. And that is, of course, resulting in a more comparable base. As a result, we are now seeing a clear normalization across our main OPEX categories in Q3. Let me start with the largest components of our overall cost base, which is the personnel cost. We saw a reported year-on-year increase of 24% in this category in the first half of the year, and that was mainly driven by the GoCanvas addition and, of course, smaller effects, as we alluded to also in the H1 call, such as re-evaluation of stock appreciation, rise, et cetera. And as announced already in our last earnings call, we began to see a normalization in the growth rate of personnel cost in the third quarter with an increase of only around 10%. So this underlying run rate, despite our continued high top-line growth, reflects our healthy operational leverage and our consistent focus on operational excellence. even as we continue to invest strongly in strategic and organizational resources for our future strong growth. The non-operating effect was also the main reason behind the strong increase in other operating expenses in the first half of the year, which is clearly well above a normal level of our business. And with the growth in the mid-teens only in Q3, the growth rate came down maturely versus the first half. So without the aforementioned negative payment and service provider effect, and on a more comparable base in terms of additional amortization charges related to the GoCanvas acquisition, as well as reduced inquest costs due to our very strong deliverage after the acquisition, our earnings per share grew clearly over proportionally in the third quarter by almost 41%. Our underlying cash flow generation in the third quarter was again very strong and additionally supported by global tax cash flows, resulting from changes in the U.S. tax regime that eliminated the mandatory capitalization of development expenses for tax purposes. So looking at the development over the first nine months of the year, the very strong increase of 44.5% in our free cash flow before M&A once again underlines the very high quality of our earnings. Finally, and thanks to our very strong operating performance, Nemetech maintains a strong balance sheet with an equity ratio of 44.1% and a net debt to EVDA ratio again below one time. This gives us the flexibility to both continue to deliver quickly but also to retain significant financial headroom for future M&A and continued investments in our business and into innovative startups, etc. And with that, I'll hand it back to you, Yves.