Nemetschek’s Build offerings contribute to strong Q3

Nemetschek Group, the holding company for brands like Allplan, Graphisoft, VectorWorks and Bluebeam, announced results this week that show continued progress in digitizing the AEC world.

The details:

• Group revenue for Q3 was €115 million, up 20% as reported and up 20% in constant currencies (cc). Organic revenue was up 17%
• Software revenue was €52 million, up 14%
• Recurring revenue (which includes maintenance and subscriptions) was €58 million, up 26%
• Service revenue was €4 million, up 12%
• Subscription revenue is grouped into the maintenance/recurring revenue line. It was €6 million, up 64% from a year ago as Nemetschek has been offering this as an alternative to perpetuals — but not forcing anyone to one mechanism or another
• By segment, Design remains the largest as it reported revenue of €68 million, up 11%
• Build reported the strongest revenue growth, with its Q3 total of €37 million up 35% from last year. Build includes Solibri and Bluebeam — see below
• Manage reported revenue of €3.6 million, boosted by MCS Solutions, which Nemetschek acquired during the quarter. MCS makes property, facility and workplace management solutions and contributed €1.4 million in Q3. As a result, total reported growth in the Manage segment was 75%, while organic growth was 8%
• Finally, Media & Entertainment reported revenue of €6 million, up 19%

Patrik Heider, CFOO of the Group, said of the results, “Our sustained fast pace of growth shows that our strategic priorities are the right ones. The acquisition of MCS Solutions represents a strategically important investment in the Manage segment. We have also maintained the growth dynamic in licenses and recurring revenues from subscriptions and service contracts. And even with our investments in growth, our profitability is still at a very high level. All of this provides an extremely solid basis for the final quarter of the year and beyond.”

Nemetschek also reiterated its 2018 guidance, with revenue of €447 million to €457 million. The company will host a capital markets day on November 13, and we should get further insight into its plans for 2019.

What’s interesting about Nemetschek is its drive to move outwards from BIM into construction and building operations. In general, design is done by an architect or engineering firm; construction by a build specialist — and the asset is then managed by someone completely different. Three sets of stakeholders and potential client sets. Nemetschek has been acquiring brands like Bluebeam and Solibri that bridge these islands. Bluebeam is a set of markup and collaboration solution that connects design with construction with owners. Solibri is called a BIM model checker, but is really a set of validation, compliance control, design process coordination, review, analysis and code checking tools. Both help make sure that what is being built matches the plan and that all stakeholders understand both intent and execution. Nemetschek stands to grow simply by marketing these tools outside their native geographies (North America for Bluebeam and Northern Europe for Solibri).

But it’s more than that. Every study that’s published says that we cannot build homes, hospitals and schools fast enough to meet the demands created by population growth and urbanization. Tying together design and construction and using digital means as much as possible is the only way we have a hope of coping. There’s serious underlying demand for its tools, in addition to whatever Nemetschek fulfills by taking current products to new markets.

We’ll check in again after the CMD next month.