Nemetschek Se Unsp/Adr

Thank you, operator, and hello, everyone, and a warm welcome. Thanks for joining our earnings call today to discuss the results for the first quarter of 2026 with us. With me today are our CEO, Yves Padrin, and our CFO, Louise Silberström. 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. Yves, go ahead.

Thank you, Stephanie. Welcome, everyone, to our earnings call for the first quarter of 2026. Last month, as part of our full year 2025 results, we shared a substantial amount of detail on our key strategic priorities, including our AI and M&A strategy. Today, we are taking a more streamlined approach again and have returned to our usual short but informative slide deck. our Chief Financial Officer, Louisa Verström and I will share, therefore, and give you a brief overview of the highlights of the first quarter of 2026 before leaving sufficient time for your questions. To begin with, please see the most important points of the first quarter of 2026 in a few key messages on page number three. Firstly, I would like to summarize our start to the year as very successful. We continued the remarkable momentum from 2025 into the first quarter of 2026, driven first by an excellent performance in our build segments, which once again showed an outstanding growth internationally and in North America. At the same time, the design segment continued to perform very well and re-accelerated its growth. After last quarter's exceptionally high comparison base, supported by positive subscription momentum from very strong new unit growth, as well as subscription migration effects, including multi-year contracts. Thirdly, in the first few months of the year, alongside our strong financial performance, we also made important progress across several of our key strategic focus areas. Let me highlight two strategic priorities in particular. First, artificial intelligence remains the key strategic focus for the Nemetschek Group. We are increasingly evolving from a leading vertical software player into an AI leader in our industries. by leveraging our deep domain expertise, unique data intelligence, as well as our trusted customer relationship and strong network effects to ultimately deliver tangible value to our customers in their day-to-day operations. A recent example for that is our new Bluebeam Max package, which was successfully launched as planned in Q1 and which further strengthens our AI-enabled product offerings. In addition, we were extremely pleased to announce that we have signed a definitive agreement to acquire Heavy Construction Systems Specialists, or short, HCSS, just two weeks ago. The closing of this deal is expected to be in the second half of this year. With the acquisition of HCSS, we are substantially increasing our market opportunity by 30% in the highly attractive infrastructure and heavy civil construction market and are creating the next global construction tech giant. By combining HCSS with our leading brands in the build segment, we are creating a unique combination of scale, growth, and profitability, forming a global construction AI and technology powerhouse covering the full range of end markets and customer segments. At the same time, and this top height is being by far the largest acquisition in the data group's history, The tailored transaction structure preserves our balance sheet flexibility and strength, while ensuring that the build segment will continue to be an integral part of the Nemechek Group and will continue to be managed, steered, controlled and fully consolidated by the Nemechek Group. The acquisition of HESS, therefore, marks a major milestone for the Nemetschek Group and represents an important step forward in our ambition to become the global leader in the AECO industry. Therefore, thanks to a very successful start to the year, we are well on track to achieve all of our financial targets for the financial year 2026. Combination over strong operational performance, targeted strategic acquisition, and AI-driven innovations creates a uniquely attractive growth and profitability profile in our growing industry. So in short, we are well on the way to deliver again on all our goals. On the next slide, number four, you can see these key messages translated into the development of our most important financial indicators in the first quarter of 2026. Starting with the revenue growth, for the period from January to March, we recorded a reported growth of 10.7% to €313.1 million. Adjusted for the continued FX headwinds in the first quarter, mainly stemmed from the weaker US dollar, we achieved a strong growth of plus 17%. In line with our key strategic priorities, the transition to a subscription and SaaS-based business model, the main contributor to our growth was once again recurring part of our business, reflecting in our annual recurring revenue. In Q1, ARR grew by 14.4% on a reported basis and plus 21% FX adjusted, reaching almost 1.2 billion euros. This continued strong increase in ARR is an important indicator of the group's revenue and cash flow growth potential over the next 12 months. Looking at the different components of our ARR growth, it is not surprising that, in line with our plans to migrate existing maintenance customers to subscription and SaaS, the related revenue category subscription and SaaS revenue was a main driver with a plus of 5%. 27.3% on a reported basis, and plus 35.4% on an ethics-adjusted basis. EBDA increased even more strongly than revenue, growing by plus 22% reported and almost plus 30% ethics-adjusted to 98.4 million euros. This over-proportional increase resulted in an EBDA margin of 31.4%. driven by our ability to scale, healthy operating leverage, continued focus on our cost base, and continuous improvement in internal efficiency. And despite continued investment into the future growth of our business, including AI, ongoing subscription transition, and to a smaller extent, transaction-related costs associated with the SGSS acquisition. In addition, supported by our strong earnings and a cash conversion of more than 140%, we once again further strengthened our balance sheet, which Louise will elaborate in more detail. As I mentioned at the beginning, the acquisition of HESS, one of the world's largest providers of infrastructure and heavy civil construction technology, marks several steps forward to further strengthen our global leadership in the AECO industry. Let me now briefly walk you through the key elements of our strategic rationale and why we are so confident that this transaction will create substantial value for the Nemetsche Group as well as for our customers and shareholders. First, transaction is about creating a global leader in construction technology. It significantly scales and strengthens our position in the highly attractive infrastructure and heavy civil construction market. HSS is one of the most attractive assets in the HCO software space and combines strong and profitable growth with very close customer relationships and an extremely low churn, below 2%. By bringing together HCSS, which is the number one leader in heavy construction and infrastructure software in North America, with Nemetschek Group in general, and with our existing leading build and construct portfolio, Bluebeam, GoCanvas, including, of course, SideDocs and Nevaris, we are combining highly complementary capabilities across infrastructure and buildings. covering the entire construction lifecycle and all end markets. Second, we are significantly expanding our addressable market and further strengthening and scaling our position in infrastructure, thereby making the overall Nemetschek portfolio even more balanced and ultimately even more resilient and excellently positioned for further growth. Infrastructure and heavy civil construction is a highly attractive segment, supported by very strong structural growth drivers, which has aging infrastructure, large-scale government investment, and the ongoing urbanization. With HCSS, we gain direct access to this growing segment and significantly expand our opportunity in building and construction by more than 30%. The market expected to grow at a cargo of around 11% and reaching approximately $12 billion by 2028. Third, transaction creates competing synergies. Complementary technology creates a comprehensive end-to-end construction technology portfolio, strong cross-selling opportunities, access to new customer groups, and the opportunity to further leverage our global presence. In addition, and very similar to the Nemetschek group, HCSS, as a vertical software provider in infrastructure and heavy civil, is ideally positioned to win in AI due to its deep domain expertise, trusted customer relationship and network effect, as well as 40 years of proprietary industry-specific data. Combining that with Nemetschek's advanced AI capabilities will enable us to benefit from the huge workforce-related time opportunity in the construction industry, also now in infrastructure and heavy civil. And finally, we are doing all of this by having an impact of only €450 million on the group's net debt position. We preserve our balance sheet strength our strategic flexibility, as well as our group structure and the successful way we operate our business, all enabled by this tailored transactional structure. As I highlighted earlier, the build and construct segment, including HCSS, will continue to be fully steered, consolidated, and managed by the Nemetsha Group, who will own around 72% of the segment. In addition, Bravo, the world's largest software-focused investment firm, has become a minority shareholder and partner with a share of around 28% in the build and construct segment. Together, combining their strong technology and software expertise with our deep industry knowledge and operational capabilities, we are very well positioned to capture the significant growth opportunities in the build and construction market. Looking at the financial side of this deal, which is also highly compelling, HCSS, with over 4,000 customers, combined strong growth with a very attractive profitability profile, comparable to our standalone build and construct segment. In 2025, HCSS generated around $250 million in mainly recurring subscription-based revenues. Over the last years, the company has built an impressive track record, combining sustainable strong top line with an ARR increase of plus 21% in 2025, combined with a very high profitability reflected in an EBITDA margin of around 40% under US GAAP. The mission-critical nature of this solution, deeply embedded in its customer daily workflows, drives a very high customer loyalty and strong retention, as reflected in KPI, such again as a very low churn rate below 2%. The transaction translates into a very attractive and significantly strengthened financial profile for our build and construct segment, and therefore for the Nemetschek Group as a whole. The addition of HESS we are maintaining in part even enhancing our strong growth and profitability while significantly increasing the scale of the business. To give you a sense of this, by 2028, we expect the combined build and construct segment on a standalone basis to generate clearly more than 1 billion euros in revenue. This is a milestone that we have only just achieved at the entire group level for the first time in our history last year. At the same time, business will be characterized by a highly recurring revenue base of around 95%, exceptionally strong customer retention, and an EPDA margin of at least 40%, a level clearly above the group average. All of these means that we are building not only a rule of 40 business, but a segment close to a rule of 60 profile. Just as a reminder, the acquisition is expected to close in the second half of 2026 and is, of course, subject to customary regulatory approval and closing conditions. More details regarding the transactions, potential synergies, as well as the expected impact on Nemechek Group's financials and the outlook for the current financial year will be disclosed after closing. And with that, I will now hand it over to Louise.

Thank you, Yves, and a warm welcome to our first quarter 2026 earnings call also from my side. Yves has already touched on some of our key financial indicators, and I would therefore now like to look in a bit more detail at the most important financial aspects of our results in the first quarter, as well as also at the underlying service thereof. On slide number eight, we have, as usual, an overview of the development of our four segments in the first quarter of 2026. Let's start with our design segment from the left. In the first quarter, the segment recorded a growth of 5.7% and even 9.5% on a constant currency basis, 136.2 million euros. The continued good performance includes a strong growth in new units. And at the same time, the transition to a subscription and SaaS based business model continued to progress successfully and according to plan. And that is also reflected in the strong growth of this revenue category that amounted to 54.7% on an FX adjusted basis. In addition to this, growth was impacted by FX or revenue recognition impacts multi-contracts. And these contracts are, as you know, being used to support the migration of existing maintenance customers to a subscription-based model after Graphisoft and Alplan brands. Reported EVTA margin of the segment improved to 25.2% from 23.8% in the same quarter previous year. Moving on, our build segment once again delivered a stellar performance in the first quarter, predominantly driven by high underlying growth in new users, both in the US as well as also internationally. And just as a reminder, in 2025, this segment benefited from the inorganic contribution of GoCanvas, as well as by temporary positive effects following the successful completion of Bluebeam subscription transition. Consequently, as expected, growth moderated somewhat in Q1 26, yet at a still outstanding high level. In Q1, reported growth of the segment reached 19.8%. When adjusting for the strong FX headwind that is stemming from the weaker US dollar, growth reached an impressive 29.8%. In addition, Bluebeam also successfully launched its agentic AI-based product suite, Bluebeam Max, as planned in the quarter, marking an important further step towards our AI-powered solutions to further enhance the efficiency, effectiveness, and the collaboration across construction workflows. The reported EBITDA margin in the quarter in this segment reached a very strong 39.5%, an increase of around 440 basis points year on year, and despite the continued investments to support the future growth of this very strong segment. Moving on to our smallest segment, Manage, which recorded a growth of 3.2% for the first quarter of 2021. Whilst the development in Q1 might seem modest, the strong growth in demand and sales performance with existing and new customers, particularly in the public and financial sectors, provide a strong foundation for dynamic acceleration in the growth in the coming quarters in line with our business acceleration plans. The EBITDA margin in this segment remained broadly stable at 10.4%. Concluding with the media segment, here revenue increased by 0.8% on a reported and a 6.6% on a constant currency basis to 29.6 million euros. And the segment's business performance continues to be influenced by, we still see a mixed market environment with ongoing longer customer investment decision cycles and therefore still longer sales cycles. Nevertheless, during the quarter, the media segment has laid important foundations for higher future growth. including the launch of its ArchVis rendering solution to further drive expansion in the ACO industry, the introduction of a digital twin solution for real products, important for AI, and the partnership with Tencent Cloud to enable artists to accelerate early-stage 3D concepting using Tencent's 3D global AI engine. The EBITDA margin in this segment increased to 32% in the quarter. Prior year quarter included a non-operating effect resulting from the insolvency of a service and payment provider. However, prior year quarter also included strong and consistent cost measures to mitigate the negative extraordinary effects. Let us move on to slide number nine, which summarizes well the progress and impacts of one of our key strategic priorities, which is also a regular topic here in our earnings course. And that is our transition to a subscription and sales centric business model. On the right hand of this slide, you can see why we are so pleased with the development of our transition. In line with prior quarters, the recurring part of our business, which recorded an FX-adjusted increase of 21% in the quarter, was once again the key driver of our strong growth in the first quarter. With a new record high share of recurring revenues of 95%, it is also the logical and also the expected consequence that the gap that we now see between ARR and revenue growth continues to narrow. Looking at the different moving parts within the recurring revenue category, it becomes clear what has been driving the strong increase of this revenue category. And that is our systematic and highly successful transition to a subscription and SaaS-centric business model, which is reflected in an FX-adjusted growth of 35.4%. while revenues from maintenance contracts continue to decline, perfectly in line with our plans, by more than 20% year on year. At the same time, and fully in line with our strategy, license revenues declined strongly, 53.7% year-over-year in Q1, reflecting the continued shift from perpetual licenses to a fully subscription-based model. As expected, this more volatile and less predictable revenue stream now accounts for only 2% of topical growth revenues. The left hand side of the slide also provides a longer term view of the development of our subscription and SaaS revenues. While we started with a subscription base of just 45 million euros in the quarter in 2022, we have increased these more resilient and predictable revenues to almost 250 million euros over the past four years. Let us conclude our financial review of the first quarter by looking at a few highlights and developments beyond our revenue and EBITDA. As usual, you will find a more comprehensive overview of our income statement, as well as the most important cash flow and balance sheet KPIs on slide number 10. Starting with the largest component of our overall cost base here, the personnel cost, here we saw only a very modest increase of 4.4% year over year to 123 million euros. This is in line with the growth we already saw in the second half of 2025, and it reflects our strong ability to scale and leverage efficiently, and also the continuous enhancement of our operational excellence and of the underlying resource efficiency. The increase in operating income and expenses of 9.7%, as you can see here, is showing a business volume growth related increase and to a lesser extent is also impacted by M&A related costs in the quarter. Let us move further down the PML. Here you will notice that our healthy operating leverage is also evident in the over-proportional growth in profitability below the EBITDA line, resulting in an increase in our earnings per share of 34.5% year over year. Turning to our cash flow development, the seasonally very high cash conversion in the first quarter. You know that our cash conversion is defined as operating cash flow in relation to EBITDA. Here we saw 143%. And this, along with our strong fee cash flow generation in Q1, underlines the high quality of our earnings. Going forward, we remain very confident in our cash generating capabilities, with a cash conversion rate expected to remain above 100%. Finally, driven by our strong earnings and cash flow development, we further improve the quality of our strong balance sheet, reaching an equity ratio of 47.3% and a net debt position of just 7.8 million euros. And here you can see that since the closing of the GoCanvas acquisition on July 1st, 2024, and the associated increase in the net debt to 370 million euros at the time, we have now deleveraged in full in less than two years, despite continuing to successfully execute smaller value acquisitions such as Firmus.ai in the meantime. This strength of our balance sheet and our strong underlining earnings and cash flow generation enables us to comfortably absorb the approximately 450 million euro impact on the group's net debt position following the expected closing of the HTSS acquisition in the second half of the year. And this without losing our strong financial flexibility for further growth, and enabling us to act should M&A or venture investment opportunities emerge. So all in all, I believe it's very fair to say that the financials of the first quarter of fiscal 2026 are mirroring a very successful start to the year. And with that, I'll hand it back to you.