Nemetschek’s Q2 up 34%, boosted by Bluebeam

Earnings season continues to roll, with many IT and industrial companies reporting this week. So far, foreign exchange seems the dominant factor for many: fluctuations can cause companies to miss their targets purely because of the math and it can make goods and services too expensive to buy in some regions. Today’s report, from Nemetschek, shows that companies operating internationally have complicated currency effects –VectorWorks, Bluebeam and other brands are in the US, Nemetschek is in Germany– but that the BIMification of the AEC industry continues to roll ahead. The details:

• Q2 revenue was €69 million, up 34% as reported and up 28% in constant currency (cc). Bluebeam Software, acquired in October of 2014, contributed €11 million, so Nemetschek organic growth was 12% (9% cc)
• For the first half of the fiscal year, revenue rose 32% to €135 million (26% cc). Bluebeam contributed €21 million in H1, so Nemetschek’s organic growth was 12%, ahead of the company’s target of 6% to 9%
• By revenue category, Q2 software license revenue was up 50% to €36 million while revenue from software service contracts (aka maintenance) rose 20% to €30 million
• By business, revenue from the Design segment was up 12% €48 million
• The Build segment benefitted greatly from the Bluebeam acquisition, which drove revenue up nearly 5x to €15 million. For H1, organic Build segment revenue was up 6% to €7.6 million. This segment’s growth rate appears to be accelerating — Nemetschek’s material said that organic revenue was up 14% in Q2
• Revenue from the Manage segment was up 11% in Q2 but is still tiny at €1 million
• Finally, the Media & Entertainment segment returned to growth after six months in the doldrums,with revenue up 14% to €5 million in Q2
• One reason for the success in Q2 is the focus on growing revenue outside Europe, more specifically, Germany. In H1, Nemetschek grew revenue outside Germany by 47% to €90.0 million while revenue in Germany was up 10%. Bluebeam is mainly selling in the US at this point; the addition of the brand enabled Nemetschek to triple revenue in the US. Nemetschek said on its earnings call that Bluebeam gets only 6% of revenue from Europe today, so there is significant room to grow.

You may recall that Nemetschek Group is, in essence, a holding company, with the various brands operating under the supervision of a managing board. Patrik Heider, Spokesman for the board and CFOO of the Nemetschek Group said in prepared remarks that “the growth drivers [in Q2] were our existing brands as well as the Bluebeam brand acquired last year, whose development we are very satisfied with.” Mr. Heider reiterated the company’s guidance for 2015: revenue is still expected to be in the target range of €262 million to €269 million, which is an increase of around 22%. Of that, the company expects organic growth to be 6% to 9%. This is a bit lower than might be expected, given H1, but the company want to be conservative with respect to currency — Mr. Heider expects to see revenue for the year near the top end of guidance but hesitates to raise it at this point. Even with this upbeat report, investors sent the stock down 6% by 8AM ET. As far as I can tell, investors are unhappy with the bottom line where net income remained at €7 million despite the double-digit revenue growth. Mr. Heider said that the company continues to invest in internationalization and in increased sales and marketing (including rebranding all of the brands as “A Nemetschek Company”), and in its BIM and 5D offerings to enable the company to grow in the future.