Schnitger Corporation

Nemetschek: Web, international key to growth

Not to be left out of the good news bubble in the engineering software world, Nemetschek today reports that revenue grew 11% in the first half of 2011, to €79 million on double-digit increases in license and maintenance revenues. Based on this performance, the company stuck to its objective of 10% overall revenue growth for 2011.

The details:
• Second quarter revenue was €40 million, an increase of 12% from a year ago
• Software revenue was €20 million, up 13%
• Maintenance revenue was €18 million, an increase of 12%
• Services and hardware revenue was €2 million, up 4%

• For the first six months, revenues from license sales increased by 10% to €39 million while maintenance revenue was up 13% to €37 million

• By geography, revenue from Germany grew 10% in the first six months of 2011, to €31 million while foreign revenue was up 12% to €48 million. The company reports that it “made progress particularly in Germany, the rest of Western europe and the US. the Japanese market also proved to be pleasingly stable over this period.”
• Nemetschek sees its international operations as critical for long-term success. CEO Ernst Homolka writes in the company’s half-year report that “over 60 percent of the group’s revenues now originate from outside Germany – and non-domestic markets will also be a significant source of growth in the future. This is particularly true for developing nations in Latin America, Asia, and the Middle east, but we can also see potential for our products in developed countries such as the US.”
• Mr. Homolka also laid out Nemetschek’s expansion plans: “We are looking to grow in all relevant foreign markets. This will take time, but we must lay the foundations for that growth now. The opening of a Nemetschek branch in Brazil at the beginning of May represented an initial step in this direction – the response from our potential customers in the area is extremely promising and validates our approach of ensuring that we are physically on-hand with a bundled product range.

• By business unit, revenue from the Design business unit rose by 8% in the first six months to €63 million
• The Multimedia segment was, according to the company, “once again the front runner in terms of revenue and increased profit”, even though it is still a fraction of the size of the Design segment. Revenue was up 56% to €7 million.
• Build segment revenues increased by 8% to €7 million.
• Manage business unit continues to struggle, with revenue down 3% to €1.8 million. The company says this unit is currently being restructured.

The company also talked a bit more about its plans for Web-based offerings: “We are counting on Web technologies to help us achieve our growth objectives. Some of our product companies have already developed attractive solutions that are combined with an Internet connection – thereby starting to familiarize customers with this working mode. In future, the group also intends to apply its competence in the design, construction, and management of buildings to its entry in the cloud computing market. We are working hard at this and we have also made a high-level expert appointment within the group and will bring in further expertise, where required.”

Citing general market trends that are stable to upwards in the construction in its target markets, Nemetschek reiterated its forecast of 10% growth in 2011 — most of that coming from outside Germany.

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