The value of tomorrow is realized in partnership with Zonebourse.com
The German company has a solid reputation in the field of architecture and construction software. Originally, Nemetschek was a design office specializing in construction; he quickly understood the potential of IT and developed his own internal solutions. With specialties in architectural design and transmission from the drawing board to the site. The company celebrates its 50th anniversary this year with a leading position in the AEC (architecture, engineering and construction) software market, alongside big names such as Autodesk, Bentley Systems and Trimble.
The company, which bears the name of its founder, Georg Nemetschek, is still 52% controlled by the founder’s family. This is generally the guarantee of prudent asset management, which has not prevented external growth operations to expand the portfolio. The Bavarian currently derives around half of its income from the architectural design market with solutions such as Allplan, Solibri or Vectorworks. A third comes from the construction software market (Bluebeam, dRofus). The balance is split between property management software (6%) and modeling software for film and other artistic fields (13%). This last branch, under the Maxon brand, contrasts with the rest of the portfolio, which is focused on construction, but shares its essence: computer-aided design.
Precisely, the democratization of this mode of creation in the construction sector has enabled the company to regularly increase its activity. In Germany, but also internationally. Europe thus generates 51% of its revenues, the Americas 39% and Asia 10%. Revenue increased from €175 million in 2012 to €682 million in 2021, representing average annual growth of nearly 15%. At the same time, the operating margin increased from 16.6% to 25.2%. Management’s ambition is to maintain it in this zone. Cash generation is historically high, with a peak of 204 million euros hit last year. Be careful however, 2021 was an exceptional vintage. This does not prevent Nemetschek from being in a positive net cash position, that is to say without debt. An important point when it comes to launching external growth operations to strengthen its offer in the face of fierce competition.
A clear and unsurprising strategy
At the stock market level, Nemetschek largely benefited from the enthusiasm of investors for digital between the end of the financial crisis and the outbreak of the pandemic. Quite rightly in view of the aforementioned results. In the more recent period, the stock was caught up in the common post-Covid bullish frenzy, before being heavily sanctioned. It has thus fallen from 116.15 euros on November 9, 2021 to less than half currently, which makes it again popular. Expensive, but acceptable with regard to the quality of the economic model, which should remain virtuous.
Indeed, the strategy of the company, which recently renewed its senior management, remains clear and without great surprise. It intends to offer a more integrated solution (compared to its 13 current brands in four specialties), interoperable, and strengthen the share of recurring revenues via a subscription model, or SaaS, the holy grail of software publishers. This is what has been successfully undertaken for Bluebeam, the construction branch’s flagship solution, which has been driving growth for several quarters. This model has the merit of reducing the cyclicality of activity, in particular when the outlook for the real estate market is more uncertain. For the rest, the digitization of the construction sector shows a penetration rate still below 40%: in other words, Nemetschek’s playing field is still vast.