Nemetschek Q3 Earnings Call Highlights

Key Points

• Q3 revenue rose 26.6% to €371 million, including HCSS for the first time; organic revenue growth was 12.5% at constant currency. EBITDA increased 21.8% to €115.9 million, while reported EPS fell due to acquisition-related costs.
• Nemetschek reaffirmed its 2026 outlook for 14%–15% organic constant-currency revenue growth and a 32%–33% organic EBITDA margin. A slower Design customer shift to subscriptions weighed on Q3 growth, but management said underlying demand for new seats was unchanged.
• HCSS integration is proceeding as planned, with underlying growth in the high teens, though acquisition effects are expected to dilute the 2026 EBITDA margin by about 150 basis points. Build was the strongest segment, with nine-month organic revenue growth of 25.6%.

Nemetschek ETR: NEM reported a 26.6% increase in third-quarter revenue and reaffirmed its 2026 outlook, as growth in its Build segment and the addition of HCSS offset a slower transition to subscriptions in its Design business.

Revenue for the three months ended September rose to €371 million, including the first contribution from HCSS following the acquisition’s July 1 closing. Organic revenue growth was 13.7% on a reported basis and 12.5% at constant currency. Annual recurring revenue increased 35.8%, or 18% excluding acquisitions.

Third-quarter EBITDA rose 21.8% to €115.9 million, producing a 31.2% margin. The organic EBITDA margin was 34.8%, excluding HCSS-related effects and acquisition-related one-off costs.

Reported earnings per share fell 15.7% in the quarter, reflecting acquisition-related amortization, non-controlling interests and financing costs. Adjusted for purchase price allocation effects, including an acquisition-related deferred revenue haircut, underlying EPS rose 20%, Chief Executive Officer Yves Padrines said.

Design Transition Slows, but Full-Year Forecast Holds

Management attributed the slower pace of organic growth partly to fewer existing Design customers moving from service and maintenance contracts to subscriptions during the third quarter. The transition was stronger than expected in the first half, Padrines said, adding that underlying demand for new seats remained unchanged.

Chief Financial Officer Louise Öfverström said the timing of customer migrations can affect reported revenue because subscriptions carry a higher upfront revenue recognition effect than maintenance contracts. She said the third-quarter slowdown was not caused by pricing or a change in the mix of contract lengths.

“It’s really this pace of how quickly the customers that are customers and will remain customers” move to subscription contracts, Öfverström said.

Padrines said the company continues to expect high-single-digit organic, constant-currency growth in Design for the full year. About 65% of the segment’s revenue year to date came from subscription and software-as-a-service offerings, he said. Management expects 2027 to be another major year for the transition, with a small portion potentially continuing into 2028.

For the group, Nemetschek reaffirmed its forecast for organic constant-currency revenue growth of 14% to 15% and an organic EBITDA margin of 32% to 33% in 2026. Management also maintained its expectation that HCSS will add about 600 basis points to currency-adjusted revenue growth after the deferred revenue haircut.

HCSS Integration and Acquisition Costs

Padrines said HCSS, which serves infrastructure and heavy civil construction customers, delivered underlying growth in the high teens and that its integration was proceeding according to plan. Nemetschek is training sales teams across its construction brands and testing sales of HCSS products through selected Bluebeam channel partners.

The company is initially focusing on selling the products in their existing form, rather than waiting for deeper technical integrations. Padrines said early international tests included the U.K., Australia, New Zealand and Latin America.

Öfverström said the acquisition reduced third-quarter revenue by approximately €15 million through a purchase price allocation-related deferred revenue haircut. For the second half, the company expects the haircut to be in the mid-to-high €20 million range.

Including that effect, integration spending and share-based compensation expenses, Nemetschek expects HCSS to dilute its 2026 EBITDA margin by approximately 150 basis points from the midpoint of its organic guidance. The company continues to expect slight reported EPS dilution in 2026, a broadly neutral effect in 2027 and accretion from 2028, although Öfverström cautioned that the accounting estimates remain preliminary.

Nine-Month Results and Segment Performance

For the first nine months of 2026, revenue increased 16.8% to slightly more than €1 billion. EBITDA rose 18.4% to €312.9 million, while reported EPS increased 13.4% to €1.50. Subscription and SaaS revenue climbed 36.1% to €836.5 million.

Build was the group’s strongest growth driver. Nine-month revenue rose 33.4% as reported, including HCSS, and 25.6% organically. Design revenue increased 7.3% to €417.6 million, while Manage revenue grew 3.9%.

Media revenue fell 1.4% to €88.5 million, although it rose 1.2% at constant currency. Padrines said media and entertainment customers were renewing with fewer users amid cost reductions, consolidation and longer sales cycles. He did not expect a major change in the segment’s performance in the fourth quarter.

Nemetschek is seeking to diversify its Maxon business into architectural visualization and digital twins. Padrines said meaningful revenue from the architectural offering would likely become more visible in the second half of 2027.

AI Products Begin to Generate Revenue

Nemetschek is also rolling out AI-enabled products across its portfolio, including Bluebeam Max, Archicad Max and ALLPLAN Max. Padrines said Bluebeam Max adoption had exceeded the company’s expectations, though he did not provide customer numbers.

For some ALLPLAN features, the company plans a hybrid model combining subscriptions with additional AI packages and usage credits. Padrines said Nemetschek was beginning to monetize its AI products, while noting that the wider architecture, engineering and construction industry remains at an early stage of AI monetization.

About Nemetschek (ETR:NEM)

Nemetschek SE provides software solutions for architecture, engineering, construction, media, and entertainment markets in Germany, rest of Europe, the Americas, the Asia Pacific, and internationally. It operates through four segments: Design, Build, Manage, and Media. The Design segment offers software solutions primarily under the Allplan, Graphisoft, Solibri, Precast, Vectorworks, SCIA, dRofus, Frilo, and RISA brands for architects, designers, engineers, structural engineers, specialist planners, and landscape designers, as well as developers and general contractors.

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