Nemetschek Group Reports Strong Revenue Growth

News Summary

The Nemetschek Group has announced a remarkable 30.5% revenue growth in the second quarter, totaling €290 million. Their EBITDA margin improved to 30.5%, and they reported a significant rise in Annual Recurring Revenue (ARR) to €1.08 billion. Despite market skepticism regarding their high valuation, the company has updated its growth guidance to 20–22%. Key segments driving growth include the Build segment, boosted by the GoCanvas acquisition, and the Design segment, benefiting from increased demand for SaaS contracts. Challenges persist, including integration costs and potential short-term margin strains.

Nemetschek Group Sees Significant Revenue Growth Amid Market Skepticism

The Nemetschek Group, a key player in the construction software sector, has reported an impressive 30.5% revenue growth in the second quarter of 2025, totaling €290.0 million. This solid performance reflects the company’s strengthening position in a landscape characterized by market skepticism, particularly regarding its valuation multiples.

Strong Financial Performance

In addition to revenue growth, Nemetschek also showcased a robust EBITDA margin of 30.5% for Q2 2025, which is an improvement from 27.0% achieved in the same period last year. The company’s Annual Recurring Revenue (ARR) saw a substantial rise of 38.7%, reaching €1.08 billion. Following a strong performance in the second quarter, Nemetschek updated its full-year growth guidance from a conservative 17–19% to a more optimistic 20–22%.

Segments Driving Growth

The standout performer, the Build segment, benefited significantly from the recent acquisition of GoCanvas, leading to a remarkable 63% currency-adjusted revenue growth. Meanwhile, the Design segment also flourished, enjoying an 18.3% increase in revenue, primarily driven by heightened demand for multi-year Software as a Service (SaaS) contracts.

Consistency in Cash Flow

Maintaining a strong free cash flow of €55 million, consistent with levels observed in Q2 2024, reflects Nemetschek’s financial stability. The company has effectively transitioned to a 92% recurring revenue model, a significant increase from 83% in 2024, showcasing its shift towards reliable revenue sources. SaaS revenue growth surged by an impressive 72.5% in the latest quarter, emphasizing the attractiveness of these high-margin contracts.

Market Analysis and Investor Sentiment

Despite these positive results, market analysts remain cautious, noting that the company’s stock carries a trailing price-to-earnings (P/E) ratio of 78.48 and an enterprise value to EBITDA (EV/EBITDA) ratio of 49.09, which is considerably higher than the sector’s average of approximately 30x. Analysts have set a price target of €122 per share, reflecting a mix of optimism and caution as market dynamics evolve.

Challenges Ahead

Nemetschek is navigating several short-term challenges, including integration costs related to the GoCanvas acquisition and impacts arising from service provider insolvencies. Further risks include potential short-term margin strains during the integration process and broader macroeconomic pressures that could influence demand for construction software.

Global Expansion and Strategic Investments

The company’s aggressive global expansion strategy is already paying dividends, with international revenues notably increasing from markets like India and Saudi Arabia. Investments in innovative technologies, particularly in Agentic AI, are anticipated to bolster productivity and carve out new revenue streams in automation and analytics.

Future Outlook

Nemetschek’s vision involves creating an integrated platform for design, construction, and management workflows through strategic acquisitions and technology developments. Analysts believe the ongoing skepticism in the market may present a unique opportunity for investors, given Nemetschek’s strong positioning in an increasingly AI-driven architecture, engineering, and construction (AEC) sector. The company’s consistent execution and strategic initiatives signify its potential for long-term value appreciation in a competitive landscape.

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Additional Resources

• Ainvest: Nemetschek Conservative Earnings Reporting
• Wikipedia: Nemetschek
• Ainvest: Nemetschek Group Growth
• Google Search: Construction Software Industry
• Encyclopedia Britannica: Software