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Toward a Billion Euro Company—Patrik Heider Discusses Nemetschek’s New Formulation

It looks like 2019 will be a pivotal year for the Nemetschek Group as it begins its march toward becoming a one billion euro a year company.

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The Future Direction Theme

(Anthony Frausto-Robledo)  So what I understand in terms of your growth path moving forward—and you said it earlier when you said “moving from a 500 million euro company to a 1 billion euro company”— what do you see as your likely paths forward to get to that billion euro mark? What can you talk about now in terms of the company’s future?

In terms of percentage growth trends—and we now report segment level reporting to the financial community—for the Design segment, I would say the goal is to take them over their average growth rate of between 11-13 percent. And this is what we see as sustainable for the next two or three years.

The Build segment, as you know, is the fastest growing, and we had rates over 30 percent in 2018 and the years before. It was obviously Bluebeam. We guide the Build segment around the high teens or low 20 percent range and see that as sustainable. The Manage segment—and this is where we see a lot of the future growth, is guided around 13-15 percent this year, but definitely in the future, we see them like the Build segment, in terms of growth, going over the 20 percent mark.

 

 

AEC rendering is over-proportionally growing within the larger rendering market. And then there are industries like gaming, film, broadcast—all exciting markets.

 

 

And then in the Media & Entertainment (M&E) segment, which is a nice growing part of our business as well, we definitely want to move them to the 13-15 percent mark to align with the organic growth corridor for the average of the Nemetschek Group.

We have already been talking over the last several quarters about the segments, and now we have leaders to drive each one. Viktor for the Design segment, Jon for the Build, and Koen for the Manage and Operate segment. And then myself as the CFOO. Lastly, we have a great CEO for Maxon in David McGavran, coming from Adobe in the Media & Entertainment segment. So those are the messages I communicated to the capital market a few weeks ago as well.

Do you envision in the future having the fourth segment in Media & Entertainment (M&E)?

Yes. Absolutely. And this is why we brought in David, and he is doing a fantastic job and has the potential to increase the segment substantially. That’s why I believe that the Supervisory Board will consider moving David to a corporate structure as well if he does very well over time.

There have always been questions about Maxon within the Group if it would expand or would it be sold off. Can you speak to this?

Yes, there were always rumors in the market saying “Nemetschek, what are you doing with that asset, you could sell it?” Yes, but we decided not to sell. We are fully standing behind Maxon and to make it bigger is our target.

I think you read about it that we bought the remaining 30 percent of Maxon from the former founders and they have now retired after more than 32 years of service. We are now 100-percent owners and want to take Maxon further. And we believe Maxon belongs in the Nemetschek Group. Firstly, its technology is very important to rendering in AEC, and as you know, they are doing about 15-17 percent business in AEC.  AEC rendering is over-proportionally growing within the larger rendering market. And then there are industries like gaming, film, broadcast—all exciting markets.

MORE: MAXON Reconfigures Leadership for Worldwide Growth of Cinema 4D

And in those markets Cinema 4D goes up against Maya, The Foundry and all the other players. But Cinema 4D is a beloved product. I mean the community—when you go to the community events you see this—the community just loves Maxon. It is a very nice success story.

Thank you for talking to Architosh.

You are very welcome.

 

Final Comments — M&E Division Futures: The Foundry or Adobe Model? 

Just so readers are aware, David McGavran came to Maxon from Adobe in Germany where he oversaw the entire German markets. He was already living in Germany, and Nemetschek believes its CEOs should sit next door to the headquarters of the companies they run. This is why Huw Roberts, who is now taking over GRAPHISOFT as CEO has moved to Budapest, Hungary. Another comment made during our call about McGavran is that he is an experienced CTO (chief technology officer) and that every successful CEO in the Group tends to come from the technical side of the business.

There is another layer of analysis to add to this last segment. If the Media & Entertainment (M&E) segment is a legitimate fourth segment, Nemetschek may choose one of two paths. One path is that segment develops around discreet separate companies like the other segments or Maxon itself becomes more like Adobe or The Foundry, this latter being the more direct example. With McGavran coming from Adobe it is tempting to see the latter develop and the recent Redshift Rendering acquisition conforms to that pattern.

This is the most detailed information Nemetschek has seemingly shared with the press about their inner workings. We learn a lot about their strategic thinking, key facts behind that thinking, and where this company is largely hunting for growth. This provides some road-mapping for their users and their investors without revealing their exact targets to their competitors. It will be interesting to see where things unfold in 2019.

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