Nemetschek SE

Interim / Quarterly Report • Oct 27, 2022

2022 QUARTERLY STATEMENT AS OF SEPTEMBER 30

Key Figures

NEMETSCHEK GROUP

in EUR million	3rd quarter 2022	3rd quarter 2021	Change	9 months 2022	9 months 2021	Change
Operative figures
Revenues	202.8	169.3	19.8%	598.9	493.6	21.3%
– thereof software licenses	56.9	55.7	2.2%	187.1	169.0	10.7%
– thereof recurring revenues	137.7	106.5	29.2%	387.2	302.6	28.0%
– subscription and SaaS (as part of the recurring revenues)	54.4	34.5	57.5%	146.8	93.0	57.8%
Annual Recurring Revenue (ARR)	550.6	426.1	29.2%	550.6	426.1	29.2%
EBITDA	62.9	54.4	15.7%	201.3	160.3	25.6%
as % of revenue	31.0%	32.1%		33.6%	32.5%
EBIT	48.0	42.0	14.2%	157.6	123.0	28.1%
as % of revenue	23.7%	24.8%		26.3%	24.9%
Net income (group shares)	38.8	34.2	13.3%	127.9	96.8	32.1%
per share in €	0.34	0.30		1.11	0.84
Net income (group shares) before purchase price allocation	45.5	39.3	15.7%	147.5	111.8	32.0%
per share in €	0.39	0.34		1.28	0.97
Cash flow figures
Cash flow from operating activities	59.3	57.8	2.6%	173.9	163.6	6.3%
Cash flow from investing activities	–6.0	–5.5		–27.7	–19.7
Cash flow from financing activities	–67.9	–29.5		–124.3	–95.8
Free cash flow	53.3	52.3		146.2	143.9
Balance sheet figures
Cash and cash equivalents*				186.6	157.1	18.8%
Net liquidity/net debt*				120.5	28.4
Balance sheet total*				1,162.6	1,054.2	10.3%
Equity ratio in %*				57.4%	51.4%
Headcount as of balance sheet date				3,359	3,139	7.0%
Share figures
Closing price (Xetra) in €				49.23	90.70
Market Capitalization				5,686.07	10,475.85

* Presentation of previous year as of December 31, 2021.

Interim Group Management Report (Q3 2022)

Results of Operations, Financial Position, and Net Assets

Results of Operations

Successful first nine months of 2022: Revenue growth of 21.3% with further improvement in EBITDA margin to 33.6%

Group revenues increased by 21.3% to EUR 598.9 million in the first nine months of 2022 (same period of previous year: EUR 493.6 million). This was attributable to a strong revenue growth especially in the segments Build and Media. Adjusted for currency effects, i.e. on the basis of constant exchange rates, revenue growth would have amounted to 15.2%.

EBITDA increased by 25.6% to EUR 201.3 million (same period of previous year: EUR 160.3 million). This meant EBITDA margin rose from 32.5% in the first nine months of 2021 to 33.6% as of September 30, 2022. The further upturn in the margin is primarily attributable to the good operating business development and above-average revenue growth in the high-margin Build and Media segments.

Revenue development

Revenues by business type – Subscription and SaaS remain growth drivers

All in all, the first nine months of 2022 saw extremely encouraging revenue development as the Group made further progress toward its strategic objective of increasing the share of recurring revenues – especially subscription and SaaS – in total revenues. In total, recurring revenues rose to EUR 387.2 million (same period of previous year: EUR 302.6 million), corresponding to revenue growth of 28.0% (currency-adjusted: 21.6%). This above-average increase meant that the share of recurring revenues improved from 61.3% in the first nine months of 2021 to 64.6%. Subscription/SaaS revenues alone increased significantly by a further 57.8% (currency-adjusted: 49.5%), from EUR 93.0 million in the same period of the previous year to EUR 146.8 million.

In order to present the future growth dynamics and the success more transparently in the ongoing transition of the business to subscription and SaaS models and therefore in view of the total recurring revenues, the Nemetschek Group is introducing the key figure ARR (Annual Recurring Revenue). The ARR increased by 29.2% in Q3 (adjusted for currency effects: 21.7%) to EUR 550.6 million, which was significantly stronger than the total revenue growth. This new indicator is an important measure of the Group's future potential for revenue and cash flow growth.

Licensing business also enjoyed growth, despite the ongoing transition to subscription and SaaS. Revenues from software licenses amounted to EUR 187.1 million in the first nine months of the financial year, an increase of 10.7% compared to the same period of the previous year (EUR 169.0 million). Adjusted for currency effects, the increase amounted to 4.3%. The share of total revenues attributable to revenues from software licenses declined slightly to 31.2% (same period of previous year: 34.2%). This development is in line with our strategic objective of expanding the proportion of recurring revenues.

Revenues by region – Internationalization

The increasingly global alignment of the Group is an important factor in its diversification. In the first nine months of 2022, domestic revenues increased by 5.5% to EUR 124.4 million (same period of previous year: EUR 117.9 million). In its foreign markets, the Nemetschek Group generated revenues of EUR 474.4 million, (same period of previous year: EUR 375.7 million), corresponding to an increase of 26.3% compared to the previous year period. Foreign markets accounted for 79.2% of total revenues in the first nine months of 2022 (same period of previous year: 76.1%). In particular, the Americas and Asia/ Pacific focus regions made an above-average contribution to the strong growth in the Group, while development in Europe was overshadowed by the challenging geopolitical situation.

Overview of segments

The Design segment, whose business activities are mainly focused on Europe, generated revenues of EUR 287.4 million in the first nine months of 2022 (same period of previous year: EUR 257.8 million). This corresponds to a growth of 11.5% (currency-adjusted: 7.7%) and was mainly driven by the overproportional increase in subscription revenues with 60.1%.

EBITDA grew by 12.8%, from EUR 84.0 million in the first nine months of 2021 to EUR 94.7 million in the first nine months of 2022. This led to a slight improvement in the margin to 33.0%, (same period of previous year: 32.6%).

The Build segment, which primarily targets construction companies in the USA and the German-speaking countries, continued to benefit greatly from what is currently still a very friendly environment in the construction sector. Customer demand therefore remained high at Bluebeam, which also began its business transition to subscription and cloud products during the third quarter as planned. Revenues increased by 32.8% in the first nine months of 2022 (currency-adjusted: 22.1%) to EUR 208.8 million (same period of previous year: EUR 157.2 million).

EBITDA increased by 31.4% to EUR 88.0 million in the first nine months of 2022 (same period of previous year: EUR 67.0 million). At 42.1%, the EBITDA margin in the first nine months of 2022 was almost at the previous year's level 42.6%.

In the Manage segment, which focuses on European commercial construction, the market situation stabilized slightly, even though the volume of investments by facility managers remains below pre-crisis levels. Revenues totaled EUR 33.9 million in the first nine months of 2022. This represents growth of 2.9% (currency-adjusted: 3.0%) compared with the first nine months of 2021, when revenues amounted to EUR 33.0 million. The slight growth in the segment was driven by recurring revenues as well as license business.

Segment EBITDA amounted to EUR 2.3 million in the first nine months of 2022 (same period of previous year: EUR 3.2 million), with the result that the margin declined from 9.7% in the first nine months of 2021 to 6.7% in the first nine months of 2022.

The Media segment continued its growth trajectory and benefited from acquisition-related growth effects – the acquisition of the business operations of Pixologic, Inc. at the end of the 2021 financial year – as well as the well-advanced conversion to subscription models. In the first nine months of 2022, revenues rose by 51.4% (currency-adjusted: 43.5%) to EUR 75.8 million (same period of previous year: EUR 50.1 million), with the proportion of revenues attributable to subscription models seeing a well above-average increase.

Profitability also continued to improve significantly. Segment EBITDA amounted to EUR 32.4 million in the first nine months of 2022 (same period of previous year: EUR 18.8 million). Accordingly, the EBITDA margin rose from 37.5% in the first nine months of 2021 to 42.8%, in the first nine months of 2022.

Earnings performance – Earnings per share at EUR 1.11

Operating expenses increased by 20.7% in the first nine months of 2022 from EUR 376.8 million to EUR 454.8 million. The cost of materials included in this item increased to EUR 22.4 million (same period of previous year: EUR 18.1 million). Personnel expenses rose by 16.9% from EUR 212.6 million in the first nine months of 2021 to EUR 248.5 million. Other expenses increased by 28.7% from EUR 108.9 million to EUR 140.2 million. Depreciation and amortization of fixed assets increased by 17.4% from EUR 37.2 million to EUR 43.7 million mainly driven by increased amortization from intangible assets acquired during the last twelve month.

In the first nine months of 2022 the net income (group shares) increased strongly by 32.1% to EUR 127.9 million (same period of previous year EUR 96.8 million). The corresponding earnings per share amounted to EUR 1.11 (same period of previous year: EUR 0.84). Adjusted for amortization from the purchase price allocation after tax, net income rose by 32.0% to EUR 147.5 million (same period of previous year: EUR 111.8 million), resulting in earnings per share of EUR 1.28 (same period of previous year: EUR 0.97).

The Group's tax rate amounted to 20.0% in the first nine months of 2022 (same period of previous year: 19.4%).

Financial position

Development of cash flow – Operating cash flow at EUR 173.9 million – Cash and cash eqivalents at EUR 186.6 million

Cash flow from operating activities was mainly used for investments in fixed assets and intangible assets, dividend payments, repayments of loans and repayments of lease liabilities.

The Nemetschek Group generated a cash flow from operating activities of EUR 173.9 million in the first nine months of 2022 (same period of previous year: EUR 163.6 million). This further increase, which was due in particular to the improvement in operating performance, also more than offset the significant yearon-year rise in income tax payments to EUR 50.6 million which include significant prepayments for income taxes which will be recovered in subsequent years (same period of previous year: EUR 23.2 million).

Cash flow from investing activities amounted to EUR –27.7 million in the first nine months of 2022 (same period of previous year: EUR –19.7 million) and includes payments for contingent purchase price obligations in the amount of EUR 7.5 million (same period of previous year: EUR 1.6 million), payments for investments in start-ups in the amount of EUR 3.9 million (same period of previous year: EUR 7.2 million) and capital expenditures of EUR 11.4 million (same period of previous year: EUR 5.6 million).

The cash flow from financing activities amounted to EUR –124.3 million (same period of previous year: EUR –95.8 million) and primarily consisted of dividend payments of EUR 45.0 million (same period of previous year: EUR 34.7 million), repayments of bank loans of EUR 91.4 million (same period of previous year EUR 65.6 million) and payments of lease liabilities in the amount of EUR 12.6 million (same period of previous year EUR 11.2 million). These payments were offset by cash inflows from bank loans in the amount of EUR 27.8 million (same period of previous year: EUR 18.0 million).

As at September 30, 2022, the Nemetschek Group held cash and cash equivalents of EUR 186.6 million (December 31, 2021: EUR 157.1 million). Mid of July the Nemetschek Group has prolonged and increased the credit lines for upcoming business acquisitions to EUR 275.0 million.

Net assets

Total assets increased from EUR 1,054.2 million as at December 31, 2021 to EUR 1,162.6 million as at September 30, 2022. With equity amounting to EUR 666.8 million (December 31, 2021: EUR 541.7 million), the equity ratio was 57.4% compared to 51.4% as at December 31, 2021. Net income for the first nine months of the year (EUR 130.1 million) and the EUR 40.9 million increase in the carrying amount of Group assets due to foreign currency effects served to increase equity, while dividend payments (EUR 45.0 million) had an opposing effect. The dividend increased by 30% from EUR 0.30 per share to EUR 0.39 per share.

Significant events after the interim reporting period

There were no significant events after the end of the interim reporting period.

Employees

The Nemetschek Group had 3,359 employees as at September 30, 2022 (September 30, 2021: 3,139), representing an increase of 7.0% compared to the prior-year period. The Nemetschek Group is planning to recruit additional employees over the next few quarters in order to ensure its future growth.

Report on opportunities and risks

The Group management report for the year ended December 31, 2021, describes the opportunities and risks that could have a significant impact on the net assets, financial position, and results of operations of the Nemetschek Group. It also describes the features of the risk management system. During the first nine months of 2022, the overall risk situation for the company did not change significantly compared with December 31, 2021, with the exception of the war in Ukraine.

The war in Ukraine is giving rise to economic and industry-specific developments that could also have an indirect impact on the Nemetschek Group. For example, interruptions to supply chains and the energy supply and a further rise in inflation could substantially disrupt the world economy and the capital markets, which could have negative consequences for the Nemetschek Group. The management is continuously observing developments, discussing potential measures, and ensuring that assessments of the situation are taken into account in current business decisions.

Overall, Nemetschek is satisfied that the risks identified do not pose a threat to the continued existence of the Group, either individually nor as a whole. This assessment is supported by the balance sheet structure, liquidity resources and financing structure.

Report on forecasts and other statements on expected development

Based on the excellent developments in the first nine months of 2022, the continued long-term growth trends in relevant markets, the ever-increasing proportion of recurring revenues, and the broad diversification of regional and market risks, the Executive Board is very confident that it will achieve the targets for 2022. The Executive Board therefore continues to expect a revenue growth at constant exchange rates in the range of 12% to 14% for the Group. The EBITDA margin is expected to be between 32% and 33%.

The guidance incorporates the currently increasing uncertainty in the global economic environment caused by Russia's invasion of Ukraine and the ongoing Covid-19 pandemic, which is being accompanied by supply shortages in all industries, increased inflation, and rising costs of procurement, financing, and energy. The guidance does not reflect potential negative effects due to any escalation of this war or severe macroeconomic distortions.

Consolidated statement of comprehensive income

for the period from January 1 to September 30, 2022 and 2021

STATEMENT OF COMPREHENSIVE INCOME

Thousands of €	3rd quarter 2022	3rd quarter 2021	9 months 2022	9 months 2021
Revenues	202,782	169,321	598,851	493,619
Other income	6,391	2,022	13,537	6,194
Operating income	209,173	171,343	612,388	499,813
Cost of goods and services	–7,853	–5,806	–22,411	–18,075
Personnel expenses	–85,008	–72,382	–248,517	–212,621
Depreciation of property, plant and equipment and amortization of intangible assets	–14,940	–12,340	–43,709	–37,231
thereof amortization of intangible assets due to purchase price allocation	–8,182	–6,370	–23,721	–19,134
Other expenses	–53,409	–38,803	–140,152	–108,863
Operating expenses	–161,209	–129,331	–454,790	–376,791
Operating result (EBIT)	47,964	42,012	157,598	123,022
Interest income	107	25	179	50
Interest expenses	–560	–577	–1,797	–2,076
Other financial expenses/income	2,980	1,590	6,883	862
Net finance costs	2,527	1,037	5,265	–1,165
Share of net profit of associates	–263	0	–263	83
Earnings before taxes (EBT)	50,228	43,049	162,600	121,940
Income taxes	–10,939	–8,120	–32,477	–23,642
Net income for the year	39,289	34,929	130,123	98,298
Other comprehensive income:
Difference from currency translation	18,563	5,785	40,900	17,273
Items of other comprehensive income that are reclassified subsequently to profit or loss	18,563	5,785	40,900	17,273
Gains/losses from the revaluation of defined benefit pension plans	–51	–76	722	159
Tax effect	15	22	–211	–45
Items of other comprehensive income that will not be reclassified to profit or loss	–36	–55	510	114
Subtotal other comprehensive income	18,527	5,730	41,411	17,387
Total comprehensive income for the year	57,816	40,659	171,534	115,685
Net profit or loss for the period attributable to:
Equity holders of the parent	38,778	34,223	127,884	96,797
Non-controlling interests	511	706	2,239	1,500
Net income for the year	39,289	34,929	130,123	98,298
Total comprehensive income for the year attributable to:
Equity holders of the parent	55,705	39,406	165,677	113,281
Non-controlling interests	2,111	1,253	5,857	2,404
Total comprehensive income for the year	57,816	40,659	171,534	115,685
Earnings per share (undiluted) in euros	0.34	0.30	1.11	0.84
Earnings per share (diluted) in euros	0.34	0.30	1.11	0.84
Average number of shares outstanding (undiluted)	115,500,000	115,500,000	115,500,000	115,500,000
Average number of shares outstanding (diluted)	115,500,000	115,500,000	115,500,000	115,500,000

Consolidated statement of financial position

as of September 30, 2022 and December 31, 2021

STATEMENT OF FINANCIAL POSITION

Assets Thousands of €	September 30, 2022	December 31, 2021
Current assets
Cash and cash equivalents	186,614	157,095
Trade receivables	80,225	70,108
Inventories	918	949
Income tax receivables	17,661	4,766
Other financial assets	3,061	1,220
Other non-financial assets	29,879	28,990
Current assets, total	318,358	263,128
Non-current assets
Property, plant and equipment	23,986	20,736
Intangible assets	147,015	158,884
Goodwill	577,396	523,967
Right-of-use assets	60,507	59,233
Investments in associates	3,665	4,063
Deferred tax assets	9,899	8,208
Other financial assets	18,298	13,816
Other non-financial assets	3,486	2,158
Non-current assets, total	844,252	791,064

Total assets	1,162,610	1,054,193

Equity and liabilities	Thousands of €	September 30, 2022	December 31, 2021
Current liabilities
Short-term borrowings and current portion of long-term loans		52,230	93,766
Trade payables		10,413	11,260
Provisions and accrued liabilities		69,583	71,744
Deferred revenue		209,967	157,975
Income tax liabilities		14,455	11,496
Other financial liabilities		1,216	7,355
Lease liabilities		14,569	14,060
Other non-financial liabilities		18,696	16,870
Current liabilities, total		391,130	384,526
Non-current liabilities
Long-term borrowings without current portion		13,867	34,935
Deferred tax liabilities		18,180	20,590
Pensions and related obligations		3,010	3,601
Provisions		4,379	4,530
Deferred revenue		2,483	2,966
Income tax liabilities		5,021	4,787
Other financial liabilities		406	1,241
Lease liabilities		53,964	51,977
Other non-financial liabilities		3,364	3,379
Non-current liabilities, total		104,674	128,005
Equity
Subscribed capital		115,500	115,500
Capital reserve		12,485	12,485
Retained earnings		498,677	415,410
Other reserves		19,833	–17,533
Equity (group shares)		646,496	525,862
Non-controlling interests		20,311	15,799
Equity, total		666,806	541,662
Total equity and liabilities		1,162,610	1,054,193

Consolidated cash flow statement

for the period from January 1 to September 30, 2022 and 2021

CONSOLIDATED STATEMENT OF CASH FLOWS

Thousands of €	9 months 2022	9 months 2021
Profit (before tax)	162,600	121,940
Depreciation and amortization of fixed assets	43,709	37,231
Net finance costs	–5,265	1,165
Share of net profit of associates	263	–83
EBITDA	201,307	160,253
Other non-cash transactions	1,321	308
Cash flow for the period	202,628	160,562
Change in trade working capital	28,990	20,636
Change in other working capital	–9,498	4,391
Dividends received from associates	134	97
Interests received	182	50
Tax cash flow	–48,545	–22,141
Cash flow from operating activities	173,892	163,594
Capital expenditure	–11,378	–5,596
Changes in liabilities from acquisitions	–7,465	–1,583
Cash received from disposal of fixed assets	52	154
Cash paid for acquisition of subsidiaries, net of cash acquired	–5,033	–5,420
Cash paid for acquisition of other investments	–3,911	–7,232
Cash flow from investing activities	–27,735	–19,678
Dividend payments	–45,045	–34,650
Dividend payments to non-controlling interests	–1,346	–564
Cash received from bank loans	27,800	18,000
Repayment of borrowings	–91,389	–65,575
Principal elements of lease payments	–12,646	–11,196
Interests paid	–1,701	–1,833
Cash flow from financing activities	–124,326	–95,818
Changes in cash and cash equivalents	21,831	48,098
Effect of exchange rate differences on cash and cash equivalents	7,687	4,477
Cash and cash equivalents at the beginning of the period	157,095	139,320
Cash and cash equivalents at the end of the period	186,614	191,895

Consolidated statement of changes in equity

for the period from January 1 to September 30, 2022 and 2021

		Equity attributable to the parent company's shareholders
Thousands of €	Subscribed capital	Capital reserve	Retained earnings	Translation reserve	Total	Non-controlling interests	Total equity
As of January 1, 2021	115,500	12,485	315,341	–39,408	403,919	13,373	417,292
Other comprehensive income	–	–	99	16,386	16,485	903	17,388
Net income for the year	–	–	96,797	–	96,797	1,500	98,297
Total comprehensive income for the year	0	0	96,896	16,386	113,282	2,403	115,685
Dividend payments to non-controlling interests	–	–	–	–	0	–564	–564
Dividend payment	–	–	–34,650	–	–34,650	–	–34,650
As of September 30, 2021	115,500	12,485	377,587	–23,022	482,550	15,212	497,762
As of January 1, 2022	115,500	12,485	415,410	–17,533	525,862	15,799	541,662
Other comprehensive income	–	–	426	37,366	37,793	3,618	41,411
Net income for the year	–	–	127,884	–	127,884	2,239	130,123
Total comprehensive income for the year	0	0	128,311	37,366	165,677	5,857	171,534
Dividend payments to non-controlling interests	–	–	–	–	0	–1,346	–1,346
Dividend payment	–	–	–45,045	–	–45,045	–	–45,045
As of September 30, 2022	115,500	12,485	498,677	19,833	646,495	20,310	666,806

NEMETSCHEK SE Konrad-Zuse-Platz 1 81829 Munich Tel.: +49 89 540459-0 Fax: +49 89 540459-414 investorrelations@nemetschek.com www.nemetschek.com