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Nemetschek SE shows favorable business development in the third quarter and raises outlook for the full year 2020

The Nemetschek Group, one of the world's leading software providers for the building industry, raises its outlook for the full year 2020 in terms of revenue and profitability levels following a favorable development in the third quarter. After a temporary, corona-related restraint, Nemetschek will now be investing more in order to secure future growth.

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  • Group revenue rises by +7.5% (currency-adjusted: +10.3%) to EUR 148.6 million in Q3
  • Quarterly growth driven by recurring revenue (+18.0%), especially as a result of growing demand for subscription models
  • Cost management and reluctance to invest lead to high Q3 EBITDA margin of 31.4%
  • Investments will continue to increase in Q4 2020 and in the upcoming year
  • Outlook for 2020 raised: Revenue growth anticipated in the mid-single-digit range with an EBITDA margin of 28% to 29% in an environment which continues to be uncertain

Munich, October 29, 2020 - The Nemetschek Group (ISIN DE 0006452907), one of the world's leading software providers for the building industry, raises its outlook for the full year 2020 in terms of revenue and profitability levels following a favorable development in the third quarter. Even though the impacts of the global corona crisis continue to be felt, and may well intensify again in several regions, the Nemetschek Group posted a slight increase in customer demand in the third quarter. As a result of business activities which exceeded original expectations and cost management which was implemented at an early stage, the executive board of the MDAX company now anticipates revenue growth in the mid-single-digit percentage range with an EBITDA margin of 28% to 29% for the full year 2020. After a temporary, corona-related restraint, Nemetschek will now be investing more in order to secure future growth.

Major indicators of the Group's success in the third quarter / 9-month period of 2020

- Compared to the previous year, Group revenue rose by 7.5% (currency-adjusted: +10.3%) to EUR 148.6 million in Q3. The increase in revenue is as a result of solid organic growth of 4.5% (currency-adjusted: 7.1%) as well as the revenue contributed for the first time by the Red Giant acquisition in the Media & Entertainment segment. In the first nine months of 2020, revenue rose by 7.6% (currency-adjusted: 7.8%) compared to the same period in the previous year, while organic growth amounted to 4.7% (currency-adjusted: 4.9%).

- Recurring revenues from software service contracts and subscriptions were up by 18% (currency-adjusted: 20.8%) and remained a major growth driver in Q3. In the first nine months, revenue even rose by 22.0% (currency-adjusted: 22.3%). Thus the proportion of recurring revenues in Group revenue rose to 60.8% in the first nine months (previous year's period: 53.6%).

- The license business recovered in Q3 and posted a considerably slighter decline in revenue compared to the previous quarter (Q2 2020). License revenues amounted to EUR 51.8 million, a decline of -5.7% compared to the same quarter in the previous year (currency-adjusted: -2.9%). In the first nine months, these were -9.2% (currency-adjusted: -9.0%) below those of the previous year, amounting to a total of EUR 152.0 million.

- As a result of the positive revenue development and high levels of discipline in terms of cost management, consolidated operating earnings before interest, taxes, depreciation and amortization (EBITDA) rose to EUR 46.7 million (+9.1%) in Q3. At 31.4%, the EBITDA margin was above the previous year's level (Q3 2019: 30.9%). In the first nine months, the margin thus improved slightly, rising to 29.6% (previous year's period: 29.4%). The above-average margin is mainly due to the reluctance to invest, such as new hires, and lower travel and marketing expenses since the beginning of the corona pandemic. However, Nemetschek is planning to increase investment again in the following quarters.

- Earnings per share in Q3 amounted to EUR 0.22 (previous year's quarter: EUR 0.21, adjusted for the positive one-off effect arising from the sale of DocuWare). In the first nine months, earnings per share rose to EUR 0.59, an increase of 2.7% compared to the adjusted value of the previous year (EUR 0.57).

The four segments of the Nemetschek Group were affected to varying degrees by the impacts of corona in the first nine months due to their regional focuses (see table). In the Design segment, with its focus on Europe, revenues stabilized in Q3 after a slight decline in the first half of the year. As expected, the Build segment, with its focus on the USA, felt the effects of the crisis with a time lag. In the Manage segment as well, the negative effects were only felt after a delay and are expected to continue due to cautious investments by the important customer group of facility managers. The Media & Entertainment segment was significantly strengthened by the acquisition of Red Giant. The integration of the US company, which has been consolidated since January 2020, into the Maxon brand continues to proceed according to plan.

"As a result of our close customer relationships, broad diversification with regard to target industries and regions and the growing proportion of recurring revenue, we have so far overcome the corona crisis better than initially expected," sums up Dr. Axel Kaufmann, Spokesman of the Executive Board and CFOO of the Nemetschek Group. "Even though we are currently seeing slight signs of recovery in the market, we must assume that the global Covid-19 pandemic with its strong resurgence in infection figures will continue to influence our business development in the short term. Caution therefore remains the top priority. In the medium and long term, however, we still see great potential in our end markets. We will therefore increase our investments in order to support our customers with our innovative solutions in the course of their digital transition."

Outlook 2020 for the Group adjusted upwards
As a result of development which was better than expected in the first nine months of 2020, ongoing increases in the proportion of plannable revenues and wide regional and market-related diversification of risk, the executive board raises the revenue and profitability targets for the full year 2020 despite an environment which continues to be uncertain. The executive board now anticipates an increase in Group revenue in the mid-single-digit range and an EBITDA margin of between 28% and 29%. The forecast in March was made in expectation of stable development or a slight increase in Group revenue with an EBITDA margin of more than 26% of Group revenue.

Overview of quarterly key figures (Q3)

In EUR million Q3 2020 Q3 2019 Δ in % Δ in % FX-adj
Revenues 148.6 138.3 +7.5% +10.3%
- thereof software licenses 51.8 55.0 -5.7% -2.9%
- thereof recurring revenues 90.4 76.6 +18.0% +20.8%
- Subscription (part of recurring revenues) 23.3 13.1 +78.4% 83.2%
EBITDA 46.7 42.8 +9.1% +12.4%
Margin 31.4% 30.9%
EBITA 41.1 37.2 +10.3%
Margin 27.6% 26.9%
EBIT 34.5 32.0 +7.6%
Margin 23.2% 23.2%
Net income (Group shares) 25.2 54.0 -53.3%
Earnings per share in EUR 0.22 0.47 -53.3%
Net income (Group shares) w/o one-time effect prior year* 25.2 24.5 +2.9%
Earnings per share in EUR w/o one-time effect prior year* 0.22 0.21 +2.9%
Net income (Group shares) before PPA and w/o one-time effect prior year* 29.6 27.9 +6.1%
Earnings per share in EUR before PPA and w/o one-time effect prior year* 0.26 0.24 +6.1%
*Prior year figure w/o positive one-time effect from DocuWare sale
Overview of quarterly key figures per segment (Q3)
In EUR million Q3 2020 Q3 2019 Δ in % Δ in % FX-adj.
Design
Revenue 79.5 77.7 +2.4% +4.2%
EBITDA 29.9 25.3 +18.2% +18.1%
EBITDA margin 37.6% 32.6%
Build
Revenue 47.4 44.6 +6.3% +10.7%
EBITDA 17.9 15.1 +18.9% +25.4%
EBITDA margin 37.8% 33.8%
Manage
Revenue 9.6 9.7 -0.6% -0.4%
EBITDA 1.4 2.5 -43.0% -40.8%
EBITDA margin 14.5% 25.3%
Media & Entertainment
Revenue 13.8 8.3 +66.9% +72.3%
Revenue organic 9.7 8.3 +17.1% +20.0%
EBITDA 4.5 2.4 +86.9%
EBITDA margin 32.7% 29.2%
Overview of nine months key figures
In EUR million 9M 2020 9M 2019 Δ in % Δ in % FX-adj
Revenues 436.8 406.0 +7.6% +7.8%
- thereof software licenses 152.0 167.3 -9.2% -9.0%
- thereof recurring revenues 265.4 217.5 +22.0% +22.3%
- Subscription (part of recurring revenues) 63.5 34.5 +84.2% +85.2%
EBITDA 129.3 119.4 +8.2% +8.0%
Margin 29.6% 29.4%
EBITA 112.1 103.4 +8.4%
Margin 25.7% 25.5%
EBIT 92.1 88.5 +4.1%
Margin 21.1% 21.8%
Net income (Group shares) 67.7 95.4 -29.0%
Earnings per share in EUR 0.59 0.83 -29.0%
Net income (Group shares) w/o one-time effect prior year* 67.7 66.0 +2.7%
Earnings per share in EUR w/o one-time effect prior year* 0.59 0.57 +2.7%
Net income (Group shares) before PPA and w/o one-time effect prior year* 82.0 75.7 +8.4%
Earnings per share in EUR before PPA and w/o one-time effect prior year* 0.71 0.66 +8.4%
*Prior year figure w/o positive one-time effect from DocuWare sale
Overview of nine months figures per segment
In EUR million 9M 2020 9M 2019 Δ in % Δ in % FX-adj.
Design
Revenue 229.3 229.9 -0.3% +0.0%
EBITDA 76.1 69.8 +9.1% +7.6%
EBITDA margin 33.2% 30.4%
Build
Revenue 144.3 129.9 +11.1% +11.2%
EBITDA 54.9 45.4 +21.0% +21.8%
EBITDA margin 38.0% 34.9%
Manage
Revenue 29.2 27.2 +7.2% +7.3%
EBITDA 4.1 4.0 +1.6% +2.9%
EBITDA margin 14.1% 14.8%
Media & Entertainment
Revenue 39.4 24.7 +59.1% +59.2%
Revenue organic 27.6 24.7 +11.5% +11.6%
EBITDA 11.4 8.6 +32.1% +35.9%
EBITDA margin 28.9% 34.8%