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 Strong Revenue Growth in Q2 2025

The Nemetschek Group has reported a significant 30.5% increase in revenue for the second quarter of 2025, bringing in €290.0 million. This robust performance reflects a solid demand in the architectural, engineering, and construction (AEC) sectors, despite prevailing market skepticism.

Improved Profit Margins and Recurring Revenue

In addition to strong revenue growth, Nemetschek’s EBITDA margin increased to 30.5% in Q2 2025, an improvement from 27.0% in the same period last year. Notably, the firm’s Annual Recurring Revenue (ARR) has surged by 38.7%, reaching €1.08 billion. This transition to a more stable revenue model has also been highlighted by a jump in recurring revenue, now accounting for 92% of total income, up from 83% in 2024.

Revised Growth Predictions

Following the strong performance in Q2, Nemetschek has revised its annual growth guidance from 17–19% to 20–22%. This optimism is driven by increased demand for long-term Software as a Service (SaaS) contracts, particularly in the company’s Design segment, which experienced an 18.3% growth. The Build segment has made even more notable strides, with a 63% growth in currency-adjusted revenue, spurred by the recent acquisition of GoCanvas.

Consistent Cash Flow and Margin Performance

Nemetschek maintained stable free cash flow at €55 million, matching levels seen in Q2 2024. For the first half of 2025, the consolidated EBITDA reached €169.1 million, translating to a margin of 29.5%. If not for insolvency-related impacts, the adjusted EBITDA margin could have hit 31.5%, underscoring the company’s operational strength.

Stock Performance and Market Outlook

The company’s stock is trading with a trailing price-to-earnings (P/E) ratio of 78.48 and an enterprise value to EBITDA (EV/EBITDA) ratio of 49.09, both significantly above the sector average of approximately 30x. Analysts maintain a cautious price target of €122 per share, expressing tempered optimism regarding the company’s future performance. This skepticism primarily arises from its high valuation multiples and conservative guidance strategies in a volatile market.

Challenges and Strategic Initiatives

Despite the positive outlook, Nemetschek faces some short-term challenges, including integration costs from the GoCanvas acquisition and impacts from service provider insolvencies. However, the firm is also benefiting from expanding into international markets, particularly in India and Saudi Arabia, contributing to growth in its revenue streams.

Moreover, investments in Agentic AI are expected to enhance productivity and open new avenues for revenue generation through automation and analytics. Current strategic acquisitions and a focus on innovative technologies are being geared towards establishing an integrated platform for design, construction, and management workflows.

Long-Term Value Potential

Analysts posit that the market’s current skepticism might present a mispricing opportunity for investors. Despite potential short-term margin strains from GoCanvas integration and macroeconomic pressures likely affecting demand for construction software, Nemetschek’s strategic growth initiatives position it as a promising player in a high-growth, high-margin SaaS space.

In summary, the Nemetschek Group’s strong revenue growth and improving profit margins in Q2 2025 reflect its robust operational model. With significant investments in AI and a clear focus on expansion, the company appears well-equipped to navigate the current market landscape while capitalizing on new growth opportunities.

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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