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Investing.com -- The Nemetschek Group on Thursday closed 2024 with record financial performance, surpassing the €1 billion mark in annual recurring revenue (ARR) for the first time and delivering strong double-digit growth across key metrics.
The company, a global provider of software solutions for the construction and media industries, achieved a 16.9% rise in total revenue to €995.6 million, with organic growth (excluding acquisitions) reaching 14%.
Despite economic headwinds and the complexities of transitioning to a subscription-based model, the firm maintained a robust EBITDA margin of 31.1% on an organic basis.
Nemetschek’s shift toward subscription and SaaS-based offerings continued to accelerate.
Revenue from these models surged by 88.1%, with recurring revenue now accounting for 86.5% of total revenue, up from 76.6% in the prior year.
While this transition strengthens long-term revenue stability, it is causing short-term accounting-related dampening, particularly in the Design segment.
The company’s largest acquisition to date, U.S.-based GoCanvas, contributed approximately 300 basis points to total revenue growth.
The company expects an even greater impact in 2025, with GoCanvas projected to add around 350 basis points.
The acquisition had a temporary dilutive effect on profitability, but Nemetschek’s organic EBITDA margin remained strong at 31.1%.
Segment-wise, the Design division saw revenue rise 13.1% to €488.8 million, supported by a strong year-end push. The EBITDA margin in the segment improved to 29.6%.
The Build segment, including GoCanvas, posted a 28.4% revenue increase to €340.7 million, with organic growth at 18.0%.
Manage segment revenue declined slightly to €49.9 million, affected by the discontinuation of a lower-margin consulting unit, though the EBITDA margin improved to 10.2%.
The Media segment grew 7.8% to €120.1 million, though weaker U.S. demand limited margin expansion, with EBITDA at 35.7%.
Free cash flow came in stronger than expected, driven by working capital efficiencies. However, adjusted EPS missed estimates due to a higher tax rate of 21.7%, up from 19.8% in 2023, attributed to Pillar 2 tax regulations.
Looking ahead, Nemetschek has provided a 2025 revenue growth forecast of 17% to 19% (currency-adjusted), with GoCanvas expected to contribute 350 basis points. Organic growth is projected at around 15.5%.
Morgan Stanley (NYSE:MS) analysts noted that ’the 2025 outlook endorses consensus across both revenue growth and margins; within the mix, the company is flagging a c. 350bps contribution y/y from GoCanvas, implying 15.5% organic growth, in line with prior mid-teens messaging.”
While European design markets remain challenging, Nemetschek’s management noted stable conditions in the U.S. and continued demand growth in APAC.
With a strong subscription base, ongoing international expansion, and AI-driven innovation, the company expects to maintain its profitable growth trajectory.
Despite its solid fundamentals, analysts note that Nemetschek’s stock trades at a high valuation, around 42x estimated FY26 adjusted P/E. However, with another year of strong growth projected, the company remains well-positioned for continued success.