The Nemetschek Group finished 2023 with strong financial results, posting overall revenues of EUR 851.6 million (USD 921.7 million as of this writing). The Nemetschek Group has yet to join the US billion-dollar company club, but it is very close.
Preliminary Figures
These preliminary figures for the annual 2023 financial performance show that the Nemetschek Group’s revenue growth rate slowed down considerably compared to the two previous years (2022 and 2021). A year ago, the company posted a 17.7 percent revenue growth rate.
- 2023 Annual Revenue: EUR 851.6 million
- 2022 Annual Revenue: EUR 801.8 million
- 2021 Annual Revenue: EUR 681.5 million
In these preliminary figures, we can see a revenue growth slow-down driven likely by macroeconomic impacts (e.g., high interest rates in the US markets) and the continued negative economic impacts on the EU region due to the war in Ukraine. In 2022, for instance, the Americas market percentage of business grew to 39 percent, up from 34 percent in the previous year. This offset declining conditions in the EU markets.
Some preliminary fiscal 2023 figures shown here.
The graphic above emphasizes the annual recurring revenue (ARR) growth rate of 26.7 percent and a solid EBITDA margin of 30.3 percent. The share of recurring revenues now reaches 76.6 percent of all revenues as the company and its daughter companies migrate to subscription licensing models.
“The financial year 2023 clearly shows that the Nemetschek Group remains on its successful growth path, despite a partly challenging market environment and economic climate”, says Yves Padrines, CEO of the Nemetschek Group. “The ongoing successful transition of our business model from license sales to subscription and SaaS models is reflected in the continued very strong development of our annual recurring revenues (ARR). The now very high share of this revenue category strengthens our visibility and ability to plan for the future. At the same time, our profitability also remained at a high and attractive level despite the temporary accounting-related impacts of the transition to a subscription and SaaS model. ”
Architosh Analysis and Commentary
The US construction market has been largely much more robust than in Europe, and while Asia regions also play a role in the Group’s overall revenue picture, they account for roughly 10 percent of all revenues, which is not enough to offset macroeconomic trends in Europe. If the Group’s share of the United States AEC market was higher, the Group could obviously have benefitted more strongly from a resilient US construction sector. The United States, in general, has economically faired far better than any other advanced economies in the post-pandemic context. As a result, those global corporations with higher percentages of their business revenues tied to the US market have done better.
Architosh is curious to see the final annual report to see segment revenues and segment margins. A few years ago, the Build segment was doing exceptionally well due to Bluebeam’s performance. Meanwhile, the Media (Maxon) segment has been a star contributor to the Group’s financial picture.
Looking forward, the Group, while active in the investment space, has yet to make a significant move in the AI arena for the AEC/O products it focuses on. In looking at the market of available new startups, we see multiple opportunities in companies from TestFit, Digital Blue Foam, Hypar, Snaptrude, and several others. By making brand consolidation moves at Nemetschek, the German holding company is actually making room for more daughter companies to join without causing brand and product confusion and duplication.