Afternoon, ladies and gentlemen, and welcome to the Nemetschek SE Earnings C all for the Half-year Financial Report. At this time, all participants have been placed on listen-only mode. The floor will be open for questions following the presentation. Let me now turn you over to Stefanie Zimmermann.
Thank you, and hello everyone and a big welcome. Thanks for joining our earnings call today to discuss results for the second quarter and the first half of the year. With me today are our CEO, Yves Padrines, and our CFO, Louise Öfverström. Today's conference call is being recorded. A replay of the call will be available at our website after the call. Additionally, you will find the quarterly report, the presentation, and the press release on our Investor Relations website as well. Now, let's get started. I would like to turn over to our CEO, Yves.
Thank you, Stefanie. Welcome everyone to our Q2 and H1 2025 earnings call. You have probably all seen our pre-release last Thursday with the main headlines of our Q2 results and our increased revenue guidance for the financial year 2025. Therefore, I have prepared a short slide deck containing additional information that our Chief Financial Officer, Louise Öfverström, and I would like to briefly walk you through so that we have sufficient time for your questions afterwards. To begin with, on page number three, please find some highlights of the most important aspects of the second quarter as well as the first half of 2025. Looking at our operational performance, I would summarize our second quarter as a continuation of the very successful start of the year we had in Q1, with an ongoing very high currency-adjusted revenue growth of +30.5%.
Main contributor is very strong development, where our two largest segments, design and build. On the one side, we are pleased to report that the super strong development seen at the beginning of the year in the build segment continued in the second quarter with very high organic and inorganic growth. There has been very strong overperformance in build in Q2, especially at Bluebeam. Similarly important, and despite the continued challenging environment, particularly in the German-speaking markets, the design segment had another very good quarter. In addition to a strong underlying development, the segment performance also benefited from a strong momentum in the subscription transition, including a stronger-than-anticipated demand for multi-year contracts. These contracts were strategically leveraged to accelerate the design segment transition to a subscription and SaaS-centric business model.
As a result, we are very pleased to report that the share of recurring revenues increased to a new record high of 93% at the end of the second quarter. Together with a strong start to the year in Q1, we had a very successful first half of the year 2025. The main growth driver was once again the recurring part of our business. In particular, the very strong increase in our subscription and SaaS revenues, which is also reflected in all of our major KPIs, where we reach new record levels across the board. While the underlying profitability stayed on a continued high level, the reported group EBITDA margin reflects an extraordinary non-operating effect in the low teens million euro range.
This resulted from the unexpected insolvency of the service and payment provider, which impacted our Design and Media segments during the first half, and which therefore has nothing to do with our underlying strong operational development. The foundation of this strong operational performance is this continued progress we have made across our key strategic focus areas. Whether that is in products, innovation, AI, or the ongoing transition to subscription and SaaS. Investments are not only paying off already today, they are also making sure the Nemetschek Group is fully prepared for the next phase of growth. Lastly, as a result of the strong development in the first six months, we have raised our outlook for currency-adjusted revenue growth in 2025 from the previously communicated range of 17%-1 9% to now + 20% to + 22%. As usual, on page number four, an overview of our key Q2 KPIs.
In line with our key strategic priority, the transition to a subscription and SaaS-centric business model, our annual recurring revenue, which includes the contribution from our GoCanvas acquisition, recorded a reported increase of + 35.1% and + 38.7% on an FX-adjusted basis. However, if we stripped out the M&A contribution, the ARR growth remained at a high level at + 29.4% at a constant currency basis. This continued strong increase in ARR is an important indicator for the group's revenue and cash flow growth potential in the coming months and quarters. Thanks to this very strong growth in our recurring revenue base, reported revenue in Q2 increased significantly by + 27.4% on a reported, as well as + 30.5% on an FX-adjusted basis to EUR 290 million. Our organic revenue in Q2 substantially increased by +1 8.9% on a reported basis.
If we adjust for the FX headwind, mainly stemming from the weaker U.S. dollar, our organic revenue increased by + 21.6%. Our EBITDA for the quarter increased clearly overproportionally by + 44% to EUR 88.5 million. This is despite the dilutive effect from GoCanvas, ongoing investment into the future growth of our business, as well as a negative non-operating effect from the PSP provider. Corresponding EBITDA margin reached 30.5%. If we adjust for the extraordinary non-operating effect due to the insolvency of the service and payment provider, EBITDA margin would have reached even 31.5%. Last but not least, our earnings per share for the quarter increased underproportionally by + 25%. Reflecting the effect from the GoCanvas acquisition, such as higher PPA adjustment and financing costs, as well as a negative effect due to the insolvency of our payment and service provider.
Before Louise will dive deeper into our Q2 financial results as well as the first half of the year, I would like to use this opportunity to also give you an overview of the various strategic highlights in the first six months of the year, in each of our five defined strategic focus areas on page number five. Starting on the left side, artificial intelligence plays a pivotal role for us, not only in optimizing our internal processes, but also in advancing our product development to deliver even greater value for customers. In doing so, it is essential to us that all AI activities are grounded in ethical and trustworthy principles that put the human, our customers, our users, our fans at the center. Over the past quarters, we have already introduced several truly value-adding AI features into our product portfolio, such as the AI visualizer.
We are especially proud of the launch of our new groundbreaking agentic Nemetschek AI Assistant, one of the first of its kind in our AEC industry. With the Nemetschek AI Assistant, we are building a strategic platform that fundamentally changes how users interact with our products and lays the foundation for a new generation of agent-based solutions. The assistant supports three core objectives: driving innovation, enabling a new user experience powered by conversational AI, for example, and connecting tools and brands through intelligent data interpretation. Initial use cases, such as product knowledge support and design compliance assistants, are already live. The next step will introduce active agents that automate workflows, provide smart recommendations, and offer fully customizable AI experiences for our users.
Our ambitious AI roadmap is further strengthened by our strategic partnership with Google Cloud, positioning Nemetschek as an AI-first industry leader and creating a strong platform for continued market expansion. As you all know, one of the absolute top priorities remains strengthening both our resilience and long-term growth potential by steadily increasing the share of recurring revenues, in particular through our transition to a subscription and SaaS-centric business model. I'm very pleased to say that this transition is progressing extremely well. We are seeing very strong momentum across the group, especially in the Design segment, where the pace of the shift has accelerated significantly. As a result, we reach a new record share of recurring revenue for the group, a direct result of the dynamic growth in our subscription and SaaS business.
Over the past six months, we have continued to bring our go-to-market approach to a new level, especially by expanding our international presence. Our goal is twofold. First, to make our business more resilient by reducing our dependency on the European market, and second, to unlock new growth opportunities for the Nemetschek Group in high-potential regions. This is why we're focusing on fast-growing markets like India and now Saudi Arabia, where we officially launched operations in May with the opening of Nemetschek Saudi Arabia in Riyadh. The Saudi construction sector is booming, with over $1 trillion in mega projects as part of the Vision 2030 initiative. By expanding in India and the Middle East, we want to be part of this enormous growth, not just in the coming years, but the next decades. Our cloud platform and infrastructure are another cornerstone of our corporate strategy.
Here, we are targeting a comprehensive ecosystem by eliminating information silos and by enabling end-to-end workflows. This also helps us to better meet ever-increasing demand for connected cloud features. As you know, M&A has always been an integral part of Nemetschek's DNA and a key driver of our long-term success story. We have a strong track record of highly successful and value-accretive acquisitions. The most recent example is GoCanvas, the largest acquisition in the Nemetschek Group's history. I'm very pleased to report that the integration is progressing as planned, and GoCanvas is delivering in line with our ambitious growth targets. This strong performance gives us the confidence and the capacity to continue pursuing value-accretive acquisitions. This may include smaller bolt-on deals like Manufacton, whose AI and data-driven solution enhance offsite construction and prefabrication.
We are also prepared to pursue larger opportunities comparable to GoCanvas or potentially even higher, and also smaller ones with focus on AI, for example. In parallel, we are also pursuing a dedicated venture investment strategy. Over the past year, we have made several minority investments in highly innovative, AI-driven startups that align perfectly with our long-term AI and technology strategy. A good example is our recent investment in Hamdorf, a startup whose platform uses artificial intelligence to automate administrative processes for construction companies. Last but not least, in the area of business enablement, we work on a further harmonization across the Nemetschek Group. This includes continuous efforts to further enhance our operational excellence in order to ensure that we will be able to continue to make the most of tremendous growth opportunities. With that, I hand it over to.
Thank you, Yves. A warm welcome to our earnings call for the second quarter, as well as the first six months of the financial year 2025 from my side as well. As Yves has already touched on some of our key financial figures, I would now go a little deeper and have a deeper look in a bit more detail at the results and at the underlying drivers behind the most important financial aspects of our Q2 and the first half year 2025 results. Just like Yves, I see the first half of the financial year 2025 as a strong confirmation that the Nemetschek Group is on the right path. Very high and highly profitable growth, as well as good and consistent progress in all of our strategic focus areas. On page number seven, you can see a summary of the results of our strong progress in the first half of 2025.
Starting with our reported revenue, which, unlike the previous year, includes the contribution from GoCanvas for the period from January to June, it grew by 26.8% to EUR 572.8 million. Adjusted for the FX headwind that impacted us, especially in the second quarter due to the weaker U.S. dollar, we grew 27.8%. Even when excluding the contribution from GoCanvas in the first half, we achieved strong organic growth of 18.8% or even 19.5% on an FX-adjusted basis. As expected and fully in line with and confirming the good progress of the execution of our strategic roadmap, the main growth driver was once again the recurring part of our business. This is reflected in our annual recurring revenue, ARR, which increased by 31.5% to nearly EUR 1.1 billion. The key contributor to this dynamic, very strong development, was our subscription and SaaS revenues, which grew by an impressive 74.8% and reaching EUR 403.6 million.
Our reported EBITDA increased by 30.4% to EUR 169.1 million, corresponding to a reported EBITDA margin of 29.5%. On an organic basis, so excluding the dilutive effects from GoCanvas on the EBITDA margin, the EBITDA margin reached 30.1%. Let me emphasize here again our message in Q1, that when we adjust for the extraordinary non-operating effect due to the unexpected insolvency of a payment and service provider, the underlying profitability would have been at a very attractive high level of 31.5%. On the right-hand side of the slide, you can also see our continued high cash generation, with a strong cash conversion of 118%, as well as the very high quality of our balance sheet, despite natural and intended year-over-year increase in debt as a result of the GoCanvas acquisition. On page eight, let's have a look at the development of our four segments during the first half of 2025.
Let us start from the left side with our Design segment, which continues its strong growth trajectory in the second quarter as well. For the first six months of the year, revenues accumulated to EUR 260.1 million, a plus of 14.1% year-on-year. Growth in this segment was particularly driven by subscription and SaaS revenues, which recorded an exceptional growth of more than 100%, following the successful launch of the subscription transition at our Graphisoft brand at the start of this year. This is a strong testament to our strong progress in the transition to a subscription-based business model, also in our largest segment, Design. This strong growth also reflects a stronger-than-anticipated demand for multi-year contracts, which are being strategically leveraged to accelerate the segment's transition to a subscription-based business model. The reported EBITDA margin confirmed prior-year level at 27.2%.
Despite the associated short-term accounting-related dampening effects on profitability of the subscription transition on the EBITDA margin, and despite extraordinary non-operating effects from the insolvency of a service and payment provider in the first quarter, as I just mentioned, when adjusting for this extraordinary effect, the underlying EBITDA margin for the segment would be approximately 150 basis points higher, and therefore an underlying margin improvement year-on-year. Let us continue to the Build segment. Here, you can well see the outstanding momentum from the start of the year that also continued unchanged in the Build segment in the second quarter. Growth was supported by unchanged, very strong customer demand on top of the lasting tailwind from the successful completion of the Bluebeam subscription transition at the end of 2024. On an organic basis, revenues in the first half grew by a very strong 35.6%.
When including the contribution from GoCanvas, the overall growth reached EUR 229.2 million. That's an impressive plus of 61.2%, 63% at constant currency. The reported EBITDA margin came in at an impressive 34.6%. This is despite the dilutive effect of the GoCanvas margin and our continued investments to support the future growth of this highly dynamic segment. Excluding the GoCanvas impact, the organic EBITDA for the segment, the EBITDA margin in this segment reached a very high 37.1%. Our smaller segment, Manage, which accounts for less than 5% of the group's revenue, saw a slight increase of 1% in the first half of 2025. The segment's growth continued to be partially negatively impacted by the discontinuation of a low-margin advisory service unit in the second quarter of 2024.
Despite the ongoing investments into the segment's business expansion, as well as future strong growth opportunities, the EBITDA margin expanded by 190 basis points to 9.3%. Last but not least, our Media segment, which continued to be affected in the second quarter by the unexpected insolvency of a payment and service provider earlier in the year and impacting by a low single-digit million euro amount. While the market environment remained stable and our Maxon brand delivered a good underlying performance, the segment's reported revenue therefore increased only moderately by 2.1% to EUR 59.5 million. The extraordinary non-operating effect also weighed on profitability, reducing the reported EBITDA margin to 28.1%. However, when adjusting for this special one-off effect, revenue growth in the first six months would have been in the highest single-digit percentage range with the EBITDA margin at the prior-year level.
This again confirms that Maxon continues to outperform the broader market on an underlying basis also in the first half of 2025. As Yves outlined at the beginning of this call, the ongoing international expansion of our business remains one of our key strategic priorities. Slide number nine clearly shows that we have successfully continued to strengthen and to expand our international presence in the first six months of 2025 as well. Looking at our regional revenue development, our business outside of Europe, which includes the Americas region at 46% year-on-year growth, and the Asia-Pacific region at 37%, were the main growth drivers over the last six months. In the Americas region, the important U.S. market continued to benefit from a continued very good demand environment, in particular for our Bluebeam brand, which continued to be our main growth driver in the region.
Additionally, our growth in the region was further supported by the GoCanvas acquisition in July 2024. We currently only have 10% of our group revenues in Asia-Pacific, and that remains the key focus region for our future expansion. In H1 2025, this region continued to enjoy ongoing very good market conditions and offers a huge potential in the mid to long term in Southeast Asia and India in particular, and is supported by our recently installed new go-to-market offices in the region. While still at a strong absolute euro level, the relative share of Europe of our total revenues has steadily declined over the recent years and now accounts for 46% of our group revenue.
We continue to navigate the particularly challenging German-speaking markets in the design segment, but while we only recorded a flattish development in our domestic market, Germany, growth in Europe outside of Germany was very promising and significantly stronger at 18% year-on-year. This growth was supported by a strong performance in our build segment in Europe, particularly benefiting from the good progress of our regional expansion of Bluebeam. As you can see, we are starting to capitalize well on the success of our internationalization strategy and on the continued diversification of our global footprint. As we move forward, we remain focused on capturing new growth opportunities and simultaneously strengthening our leading positions in our key markets. Now turn to what is one of my favorite slides in our entire presentation on page number 10.
This is showcasing our highly successful transition to a subscription and SaaS-centric business model, which in turn, as you know, is one of our key strategic priorities for the group. No, it's not one of the key strategic priorities for the group; it's the key strategic priority for the group. The Nemetschek Group is quite unique in that we are not transitioning our entire portfolio to a subscription and SaaS-centric model all at once with a one-size-fits-all approach. Instead, we are taking it in a structured and stepwise approach to ensure full success and value creation, both for our customers and for the Nemetschek Group.
One of the advantages of our brand setup is clearly that it allows us to migrate in a phased approach, helping to ensure that we can offer our customers an even higher value with the new model and at the same time mitigate risks in making the short-term accounting-related effects on revenue and profitability on our performance easier digestible. Looking at the left-hand side of this chart, you can clearly see that the speed and the scale of our progress in building up our recurring revenue base through our move to subscription and SaaS models. Since H1 2021, we have seen an almost seven-fold increase in subscription and SaaS revenues, representing an impressive CAGR of over 60%. As a result, the recurring revenues now represent 92% of our total revenue base, a new record high for the Nemetschek Group.
As you can see on the right-hand side, this exceptional development continued also in the second quarter with an ARR growth of 35.1% and a subscription and SaaS growth of 67.3% on a reported basis. At the same time, and fully in line with our strategy, the license revenues declined by 44% year-over-year in Q2, reflecting the continued shift from perpetual licenses to subscription models. As expected, this more volatile and less predictable revenue stream now accounts for only 5% of our total group revenues. As usual, and to conclude our review of the first half of 2025, we provide a more detailed overview of key P&L and cash flow items on page 11. We've already covered the impact of our strong underlying performance, the GoCanvas acquisition, and the insolvency of a payment and service provider on headline figures like revenue and EBITDA margin.
Looking further down the P&L, these effects are also visible in the development of our different OpEx categories. Starting with the personnel cost, the largest component of our cost base, as you know, we saw a reported year-over-year increase of 24.3% in H1 2025. This is clearly above our normal run rate. However, when excluding the impact of the more than 300 GoCanvas employees who we were happy to welcome to the group on July 1, 2024, the organic increase was already significantly lower in the mid-teens . Additionally. The personnel cost in the first six months of 2025 also included one-off effects of a revaluation of stock appreciation rights, which is part of the total compensation packages for key senior leaders of the Nemetschek Group.
The underlying run rate, therefore, well reflects the strong operational leverage we see in light of our strong revenue growth and is reflecting both our strong focus on operational excellence and our continued investment in strategic and operational resources and structures. Even stronger in the Build segment, where we delivered exceptional growth in the first half of the year and continue to see substantial opportunities ahead. In addition, the extraordinary non-operating effect from the insolvency of a service and payment provider explains the 29% increase in other operating expenses and will therefore also normalize during the course of the year, as we have now seen an end to this effect. These items, combined with higher amortization and interest charges year-on-year, solely due to the GoCanvas acquisition, led to a more modest non-adjusted EPS increase of 15.2% in the first half of the year.
Our free cash flow generation was again very strong despite several extraordinary effects in the Q2 cash flow. Let us go through a few, such as the U.S. tax prepayment that we had in Q2 this year that has shifted year-over-year in the second quarter versus the first quarter last year. We had personnel bonus payments with effective payoff now in Q2, whereas partially we had that in Q1 in the previous year. The impact of the multi-year contracts in the Design segment, where we see in the short term a higher positive impact on EBITDA due to revenue recognition and on our cash flow due to the yearly payment structure of the multi-year contracts. Nevertheless, and in sum, the free cash flow before M&A reached nearly EUR 194 million in H1, a plus of 42.7%, and clearly underpinning our high quality of earnings.
Finally, and thanks to our very strong operating performance, Nemetschek maintains a strong balance sheet with an equity ratio of 42.2% and a net debt- to- EBITDA ratio below one time. This gives us the flexibility to both continue to deliver quickly and to retain significant financial headroom for future M&A and continued investment in innovative startups. With that, I'll hand it back to you.
Thank you, Louise, for that detailed overview of our financial results. To wrap up our presentation, let's turn to page number 13 and take a look at our updated outlook for the financial year 2025. To summarize today's presentation, we had a highly successful first half of 2025, driven by strong development in our Design and Build segments, fueled by the very strong growth in recurring revenues across both segments.
Investments we are making, along with the continued progress in our strategic focus areas in go-to-market, internationalization, and AI, are paying off and will position the Nemetschek Group to fully capitalize on the tremendous growth opportunities in our end market for years to come. Based on these strong fundamentals of our business, as well as a very good start to the year, we therefore increase our revenue guidance for the financial year 2025. In particular, that means that from today's perspective, the Executive Board expects a currency-adjusted revenue growth for the Nemetschek Group, including GoCanvas, in a range between +20% and +22% for the year 2025 versus 17% - 19% previously. It includes an M&A-related revenue contribution from the acquisition of GoCanvas of around 450 basis points.
EBITDA margin, including the dilution effect from GoCanvas, is still expected to be around 31%, reflecting, among other things, extraordinary non-operating effects on the unexpected insolvency of a service and payment provider. Based on our strong fundamentals, we expect to continue our growth path with very attractive strong growth at a high profitability level in 2025 as well, despite this year's high comparison base, the ongoing subscription SaaS transition of our business model, as well as the continued challenging market conditions. With that said, I would like to thank you for your attention, and we are now ready to take your questions. Operator, please back to you.
Thank you. Ladies and gentlemen, if you would like to ask a question, please press nine and star on your telephone keypad. In case you wish to withdraw your question, press three and star on your telephone keypad.
The first question comes from Alice Jennings, Barclays. Please go ahead with your question.
Hi, good afternoon, and thank you for taking my questions. I just had a couple on the multi-year deals in Design. I understand that that was a strategic move to support the move to a subscription model, but I'd be interested to know how you think about the use of these deals going forward, especially considering the complexity that can arise on the accounting side with revenue mismatches and a little bit more volatility. Do you expect to see the proportion of revenues coming from these deals to increase in future, or do you kind of see Q2 as a bit more of an extraordinary effect? I guess, thinking a bit more short-term on the multi-year deals, can we expect higher growth from these multi-year deals in the rest of this year?
How much of a headwind will that be to growth in 2026?
Thank you for your question. If you look at the three-year contracts, these are only in two brands, Graphisoft mainly and a little bit at Allplan. It's really, really a way to push and accelerate the move to subscription for existing customers who are currently on maintenance, so SSA. Our goal is to decrease the level of three-year contracts over time. We are just doing that as a specific campaign, sometimes either in time, per region, etc. If you look, for example, at the Q2 design performance, we have been at 18.5% growth on the revenue FX-adjusted, as Louise just described. Without these multi-year contracts, it would be in low teens.
If you look at H1, instead of 14.5% FX-adjusted, which is our current revenue growth in design for H1, we would be excluding any three-year contract around 10%. Clearly, in Q3 and H2, there will be a reducing speed of the three-year contract. Therefore, if you look at the overall full year 2025, we should be in low teens, around 10% revenue growth. Obviously, in Q4, we had a very, very high comparison, so design growth will be much lower in Q4 2025 than in Q3 2025. Overall, H2 revenue growth for design will be also lower than in H1 2025 due to the fact that there will be lower three-year contracts. Therefore, going forward, the goal is really to make sure that we are continuing to decrease the level of shares of these three-year contracts. It's really mainly at Graphisoft, much lower at Allplan.
It will be still there until we completely move to subscription in this brand.
Okay, thank you. Just a quick clarification. On the full year, you said low teens or around 10%. Is that excluding or including the multi-year deals?
That's excluding the multi-year deals.
Okay. Perfect. Cool. Thank you very much.
The next question comes from George Webb from Morgan Stanley. Please go ahead with your question.
Yeah, hi. Afternoon. Congrats on the good first half. A couple of questions, please. Firstly, just on the margin, you're not guiding us to drop through the better top line into the margin. Is that because the initial around 31% target was stretching at the start of the year, or is there any conservatism around that as we think through the back half?
Secondly, just on the guidance phrase, specifically around GoCanvas, at the start of the year, you were talking to that 350 basis points of impact inorganically. If I look at the first half, it looks like it was maybe slightly higher, maybe 370 basis points in constant currency terms. Yves, I think you also said that GoCanvas was delivering in line with your growth ambitions. I'm kind of just guessing that through the rest of this year, GoCanvas is inorganic from Q3 onwards. Curious, where's that raised inorganic expectation to 450 basis points coming from? Is there anything to do with how you may be treating the deferred revenue haircut phasing out in the second half? Thank you.
Thanks a lot, George. First of all, on GoCanvas, it is true that we were probably a little more conservative on the pace of the synergy when we did our business plan for 2025 with GoCanvas and Bluebeam. Clearly, here we had very good underlying strong performance, especially as we say that we had large Bluebeam resellers committed now also to sell GoCanvas, which was much better than our earlier expectation. Also, the level of synergy, we can also see some nice boom effect on the Bluebeam side, thanks to this GoCanvas acquisition. We see also the synergy level in the Bluebeam numbers. The PPA impact was low and clearly in the single-digit level. Overall, that's why we are somehow increasing now this impact of GoCanvas for the full year to 450 basis points instead of the 350, which we previously guided. Clearly, overall, we are very, very pleased with GoCanvas.
It is slightly better, again, than we anticipated. We were probably slightly more conservative, but we are strongly on plan now. It is, as we expected, also for 2026. For the moment when we look at the current performance of the business, we are very pleased and as planned.
Yeah, maybe let me take your first question in general on the margin, if I understood you correctly. To say the operating leverage, if we were conservative at that at the beginning, I would say that's not the reason. We do see a very, very strong operating leverage coming from the stronger revenue growth coming down.
As you also saw, we have some extraordinary effects from this insolvency of the payment and service provider that we foresee a bit in our guidance for the full year, but we also had a little bit more effect than we could foresee in the first half of the year. We have concluded that effect now with the first half of the year, so it will not continue in the second half. We also had, as I mentioned, some one-offs in the second quarter, first half, like the reevaluation of our SaaS program, which is the compensation. It's a one-off as well, but it's better to hit that quarter. You should also see that Q2 is normally our weakest contract, EBITDA margin-wise, due to the investments, etc. That was, you could see, slightly more positive.
Otherwise, we see the strong operating leverage, as I said, but we continue to invest heavily and strongly in our business. That goes in line with what we have said. We will never sacrifice the revenue potential that we have at the expense, to say, by only optimizing the margin. We will not optimize margin at the expense of our revenue growth, and this is what you can see. We continue to invest strongly, and as I mentioned as well, especially in our Build segment, where we see a very, very strong and very positive contribution. We have, of course, also there invested into further structures as we see this as a long-term development. Of course, you have some variable pieces linked to that, like bonus programs and sales commissions, etc., due to the higher performance.
To conclude on that, George, you can really see that we see the very, very strong operating leverage and strong investment into further revenue growth, and then a few one-offs in the first half year that, of course, subdued that a little bit in the absolute number.
That's great. Thank you. Can I just double-check then? Is the inorganic for GoCanvas that was entirely in the first half? There's nothing further inorganic for the second half for GoCanvas?
Yeah, starting from July 1st, it's all organic now.
Great. Makes sense. Thank you.
The next question is from Balajee Tirupati, Citi. Please go ahead with your question.
Hi. Thank you. Thanks for letting me on. Two questions from my side, if I may. Firstly, could you kindly update on where the design segment is in terms of subscription transition? As in, in design segment subscription formed what percentage of revenues?
Within the segment, while Graphisoft is particularly accelerated on parts of subscription, could you also share for both Graphisoft and Allplan where we are? I have a follow-up question.
What's your last point of the question, sorry? Can you please repeat?
I was asking that within design segment for both Graphisoft and Allplan, where they are in their respective subscription journey, if you can also share any color on that.
Clearly, if you look at the overall design division, we are in well good progress on the move to subscription. As I said, some brands like Riza are fully on subscription, so to ask more brands. If you look at Vectorworks, which is our third largest brand, since the beginning of last year, so since January 1st, 2024, we have close to everything is now on subscription for new seats.
Only Japan is still selling a little bit of perpetual license. Graphisoft, since the beginning of this year, they are only selling subscription for new customers, and only some existing customers are also buying perpetual license. The thing is that reality is that we don't have our expectation when we did the business plan on the level of perpetual license, reality is much lower. We are selling less perpetual license than we anticipated, which is more good, definitely with our move to subscription. Overall, if you look at our subscription revenue, we are now, for the design division, we are on the way to be at almost half of the revenue on subscription. We are on a good way to reach that quite soon. That's really thanks to the acceleration of the move to existing customer, now moving also to subscription from Graphisoft, but also Allplan.
Vectorworks will only start the move of subscription for existing maintenance customer by the end of Q3 this year. This is clearly on plan.
If you just say Graphisoft is a little bit ahead of, or just your question, Graphisoft is a little bit ahead of Allplan, so to say, in the total share that has been converted. All in all, approximately a third of the SSA units will have been converted for Graphisoft and Allplan in 2025. As Yves said, for the division as such, we're approximately 50% share of revenue coming from subscription.
We should be at 50% by the end of the year with one-third of the existing customers of Graphisoft and Allplan who should have moved to subscription. We still have two-thirds to go.
Very clear and useful.
Maybe if I can ask a question on AI, could you share the feedback that you have received on the introduced AI features? How are you looking to monetize AI and agents? Would you be able to characterize if your overall pricing model is also going to evolve to better capture exchange of value?
For the moment, when we launched these AI features, it's also to test these AI features. It's also to put these AI features in a package, which is obviously only available via subscription, also pushing customers to buy subscription instead of perpetual license. It is a way to help on the migration from maintenance to subscription, saying that some of these AI features will not be available in an upgrade package of SSA and maintenance. You need really now to move to subscription to get, for example, this AI visualizer at Vectorworks, Allplan, or Graphisoft.
If you look at some new upcoming AI features, also at Bluebeam and other design brands, etc., clearly the idea is to put these AI features in a higher-tier package, which will help also to increase average revenue per user. Obviously, in the future, we are planning to have really wow-effect AI agents or AI features which are going to really show very, very high ROI to our customers. We also plan potentially to have a dedicated package just for these AI features that we will price separately. For the moment, most of the AI features that we are launching now short-term are part of an existing package, either to help us in the transition on the move to subscription and SaaS, or to potentially increase our average revenue per user slightly by having these features only available in higher-tier packages.
Again, only in the future when we have really ROI-based AI, which could come, of course, for a lot of internal development that we are doing and all our R&D effort at the moment around that, especially around agentic AI and with our AI Assistant. It could also come potentially from. A partnership or, who knows, maybe M&A of an AI or a startup, for example.
Thanks, Yves. Appreciate it.
The next question is from Nicolas David, ODDO BHF. Please go ahead with your question.
Yes. Good afternoon, Yves. Louise, thank you for taking my question. I have two. My first question relates to the Build segment, and notably, you mentioned a very strong performance from Bluebeam. Could you help us understand what drove this very strong performance?
Is it more volume-based and based on the very strong underlying demand, or is it also on the ASP side that you have some positive surprises here? Also, in the Build segment, coming back on GoCanvas, I mean, it's a bit difficult to be sure about the number, but could you comment? It looked like the growth was probably above 50%, if not above 60%. I understand that there are some elements about revenue cut and so on, but it looked like the growth is super strong. What should we expect in H2 for GoCanvas, and would it be accurate to build growth in H2? That would be my first question. The second question is, I think, Yves, you mentioned to the press lately that you were looking at M&A targets with a potential firepower of up to $2.5 billion.
Does it mean that you have something tangible in mind already, and what could be the timing? Thank you.
First of all, if you look at the Build segment, the growth driver is volumes. Bluebeam is really, I can say now, not becoming. Bluebeam is a verb in North America, especially in the U.S. In the construction industry, in collaboration to exchange PDF files, it became a verb. Our goal is to make sure we are able also to do that globally, internationally, and first of all, to start that in Europe. I must say that, yes, in Europe, we are very strong in the Nordics, good in the U.K., and we are seeing the last quarters, already end of last year, very strong success, but especially in H1. Extremely good success in France, but also in Germany, which is very good news.
In addition, we can see that there are also ongoing growth now coming in our high-growth region, especially if you look at India and Saudi Arabia, we see nice potential growth of Bluebeam. Bluebeam growth is purely volume-based. There is no price increase, no price adjustments. It is a pure volume play. If you look at GoCanvas now, the growth of GoCanvas is good. Again, it is as planned. We were slightly, maybe a little bit conservative in. Our business planning because we were not sure that all the synergy that we were planning to have will come true. In fact, they came, and they came really very well, especially, as I said, coming from these large Bluebeam resellers committed now also to sell GoCanvas. Remember, GoCanvas was only a direct go-to-market model. They didn't sell really indirectly via channel partners.
The growth on GoCanvas in H2, we are planning to continue to have a high growth of around 20% on a standalone basis for GoCanvas. There is an end of revenue haircut, of course, now starting from July 1st, which will also help with GoCanvas H2 growth. All in all, as planned and very good. On the M&A targets, I think maybe sometimes some journalists are, I mean, not change, say change, but the discussion I had was, what is our potential M&A power and what we could potentially have as investment in total maximum if we want to add all the potential M&A. In fact, as you know, we can leverage up to 2.5x, maybe potentially for some peak 3 x. Yes, we have currently an up to 10% approved capital increase, but which we are not planning at all to do.
Of course, if you take the 10% capital increase and it is 2.5 x- 3 x leverage, if you add all of that together, you may arrive at something close to potentially in the future, the numbers that you have seen in the press. We are not planning to do at all any capital increase. It's not in the short-term plan now. Of course, if there is something coming very strategic and big enough, we may use it, but we are not planning to do any capital increase, just to make it very clear. The current targets that we have are the usual ones that we have for some times, which are definitely how to complement our product offerings, especially around AI. This is why we made this acquisition beginning of this year with Manufacton on DFMA, offsite construction AI software.
It was also beginning of the year, end of last year with Synapse, SaaS solution for cloud detection software. We are, as you know, also still ongoing doing investment in startups and AI ventures. Maybe in some cases, some of these AI ventures will come potentially in the future as a potential M&A targets, but we are also looking at other AI startup or scale-up targets for M&A. This is mainly buy versus make in some area, especially when we look at our overall AI roadmaps. We see that potentially we could do some acquisition instead of doing some things internally where then some startups have already proven that they can monetize such features. We are also quicker in terms of time to market because at the end of the day, in our agent situation at the moment, it's all about speed also.
Yes, we are also looking at larger potential acquisition, potentially as big as GoCanvas or even bigger also to complement our offerings. Clearly, if you look at the segments that we are particularly looking, it's clearly in the build and in the design segments where we see opportunities. Of course, we are looking overall also in operate and manage and media. We are looking at the overall four segments we are playing in, but clearly, I would say that build and design are where we see the majority of the opportunities at the moment.
Thank you very much for the clarification. That's very helpful.
The next question comes from Florian Treisch, Kepler Cheuvreux. Please go ahead with the question.
Good afternoon, everybody. My question is on, I mean, you're probably faced by the dilemma now a bit.
Strong growth today, but we want to have confidence that this very good growth can continue going into 2026 without asking for precise guidance now. Can you maybe give us, let's say, your key drivers for a strong continued momentum into 2026? I mean, you mentioned, for example, Bluebeam, no significant price increases. Can this be something which you will put in place in the next year? I realized looking through your quarterly reporting that the German business is actually down year by year. Not everything is booming. It's a good German home country not following the trend. Is that something where you expect clear improvements in the coming quarters? I mean, we're talking a lot about these German stimulus packages and so on. Thank you.
Thank you very much. Clearly, Germany, yes, it is disappointing for some time now.
H1 revenue growth in Germany at a group level is flat. If you look at Q2, we're slightly positive versus slightly negative in Q1. In H2, hopefully, yes, we will see slight growth. Next year, clearly, we have no confidence that Germany will clearly see some much stronger growth. Yes, we expect some slight slow growth in the coming quarters. Potentially, yes, potentially in the second half of 2026, we may see some interesting. Move, especially in infrastructure investment with the new government in Germany. That's our wish, of course. We are very careful how we look at that. The good news, as you know, we have now 93% of our revenue in Q2 is recurring. We have clearly way over 70% of our revenue now as a group on subscription. If you look at Bluebeam, purely revenue-based, a lot is already in the revenue.
Most often now, the next months of sales is translated in revenue, really, full year revenue in 2026. The beauty is that we see in terms of sales extremely good growth and better than expected in 2025, stronger growth in build segments, especially in Bluebeam that we anticipated, which would translate in very good growth in revenue in 2026. That's why we're still very confident that we still have very strong internationalization of Bluebeam. Nice Bluebeam volumes will be still there. If you look at design, we have still the subscription transition effect impact. As we say, we only are planning to migrate one-third of our existing SSA maintenance customers to subscription this year. We still have two-thirds to go in the coming years. That's why for the moment, we're not going to give you guidance for 2026 today.
I can tell you that for the coming years, we are still planning as of today to have average meetings organic revenue growth in the coming years. We are very confident for that. The guidance for 2026, as you know, is planned for March.
Great. Thank you very much, Yves.
The next question is from Michael Briest, UBS. Please go ahead with your question.
Yes. Good afternoon. Congratulations from my side as well. Just a couple of questions. Obviously, currency was a headwind in the quarter. I know you guide at constant currency, but can you give a sense for the second half, if rates stay as they are, how much of a headwind you'll see in the half or the year, both at revenues and profit level?
Then Louise, on the sort of multi-year contracts, in order to track their impact, should we be looking at the long-term deferred income or contract liabilities as an indicator? I ask because sequentially, there wasn't really any growth. Is that a sign that the new ones you're signing are sort of lapping with ones that were issued last year and are dropping out? Finally, on the U.S., the construction market is now turning negative, so your performance is all the more creditable. Can you talk a bit about the U.S. market and any indicators from customers that are more cautious?
Let me jump on your last question. Thank you. Clearly, we do not see any deceleration in the U.S. market. It became really a structural aspect, especially with Bluebeam, but GoCanvas is growing very nicely. All our brands, by the way, are growing very, very nicely.
You saw very strong growth in Americas in the first half. Of course, some of it is also inorganic via GoCanvas, but frankly, very, very strong growth. Yes, it's true that end of Q1 there were some questions and potential risk of much more turbulence with some of our customers, with much more delays, etc., in some decisions. Clearly, when you see the level of speed where Bluebeam, especially, is growing, also with existing large accounts, we do not see any deceleration at all. It became really a structural networking impact. Now we have more and more SMB also in construction in the U.S., which are moving to Bluebeam. We had already a majority of our customers were SMB, but here it's more and more. That's why your web store sale in Bluebeam is really growing significantly.
We have a very good partner of revenue coming from the web at Bluebeam, which is reflecting these structural drivers, the networking effect of Bluebeam, and the fact that Bluebeam is now a verb in the construction industry for collaboration.
Let me then go over to your question on the multi-year contracts impact where you will look for that. You can see the effect of multi-year contracts more in the contract assets that you can find on the non-financial long-term assets. That's the better indicator to look at there. As they are not prepaid for, we have the annual payment to the three-year contract. That's where you don't have the long-term deferred revenue on that one. That would be the one to look for. As to your question on the U.S. dollar, we have a significant part of our revenues and also our cost in U.S. dollars.
We have quite a natural hedge, so to say, on the EBITDA from it. As a rule of thumb, you can take $0.01 of difference in the U.S. dollar rate to euro would have an approximately $4.5 million impact on the top line, of course, either direction. That is something
that you can apply to the numbers.
Great, thank you.
The next question is from Knut Woller, Baader Bank. Please go ahead with your question.
Thank you for taking my questions. Two, one for Yves and one for Louise. Firstly, you mentioned, Yves, that you're focusing more on larger accounts. Can you give us some color? Given likely longer sales cycles on larger accounts than for your traditional customer base, when we should expect a tailwind from this initiative? Secondly, a similar question to Michael. On the short term, the third revenue momentum, we saw quite a sharp decline of 9% quarter-over-quarter from 35% to 26%. While I understand that currency headwind has been more pronounced and probably plays a role here, what have been the other drivers of this deceleration? I mean, 26% is still healthy, but still 9% is quite a drop in a quarterly perspective. Thank you.
Knut, can you maybe repeat that question? We have something in the line here. We couldn't hear your question. Can you repeat the question again, please? Sorry.
The second one.
The second one.
The second one or no?
No, the second one.
The second question.
Okay.
Second question.
Short-term default revenue momentum decelerated by 9 percentage points quarter-over-quarter. I understand that the currency headwind has been more pronounced in the second quarter than in the first, which probably plays a role here. What were the other drivers of this deceleration?
Thanks, Knut. If you look at larger accounts, the good news is that you can see the impact right now in our figures. Remember, all the large construction companies in the U.S. are Bluebeam customers, but also here very large multidisciplinary, large engineering firms in Europe, etc. They are using these large Bluebeam customers to also upsell other products from the Nemetschek Group. We are also now, with some of these large customers, especially the very, very big one, doing enterprise license agreements. First, they're doing it at Bluebeam level to increase the number of seats, and sometimes we're increasing very significantly these number of seats with some of these accounts. From there, we are moving also to a Nemetschek Group level enterprise license agreement.
Clearly, we see very nice momentum in this direction, and it is already reflected in our H1 performance, especially in Q2, where we had some very, very strong success there.
You are right, Knut, on the deferred revenue. Of course, in Q2, we had a more adverse effect on the U.S. dollar. This is a strong impact what you have there. You also have some effects of the absolute, so to say, the buildup of the deferred revenues, the buildup by revenue, so to say, by Bluebeam, and in light of their subscription move is always relatively higher. As they continue to build, the relative growth isn't as high, right? The effect is the stronger effect, so to say, that is impacting the declines, as you were mentioning. In general, in relative terms, so to say, you will see that, so to say, more stable effect as we have moved through subscription. We have a large double-digit amount in euros, so to say, due to the effects in the second quarter.
Great. Thank you both very much.
The last question is from Joe George, JP Morgan. Please go ahead with your question.
Yeah, hi, guys. Thanks very much for taking my question. I just have two, please. Firstly, are you doing anything specifically to reduce the proportion of multi-year deals within the design revenue mix? What gives you the confidence that this will happen through H2? The option to purchase these three-year plans still appears available on the web portals of Allplan and Graphisoft. We still had a few quarters now of these deals contributing quite meaningfully to growth. Will you just stop selling these at some point, or how do you plan to reduce these within the mix in the near term? Secondly, Louise, thank you for the color on the headwinds to free cash flow generation through Q2. I just wanted to clarify one point on the multi-year deals. Is the lower cash conversion here purely because of the timing issue related to the revenue recognition and the cash collection?
Have you offered any cash collection incentives or rebates to customers or anything similar in order to sign them up to these longer deals? Thank you.
Thanks, Joe. On the multi-year contracts, as it is driven a lot also via some resellers, we are able also to change some of the contract with a reseller to also change the incentivization in terms of setting a three-year contract so that the incentives is more on one year or also, of course, on the new seats, which is even more important. To this ongoing discussion with some of the resellers, also, in some aspect, in some region, decision has been made also to reduce the number of resellers who are able to sell three-year contracts. Overall, that's also helping on the overall volume expectation of three years. These are the current actions that Graphisoft and also Allplan are planning to do or already started to do. End of Q2 for H2 and also beyond.
Yeah, and Joe, let me take the question on the free cash flow. You're right in the assumption that it's coming from the EBITDA side, so to say. It's driven by the revenue accounting, how much we account for upfront. We also accrue dealer commissions over time over the contract. There are no incentives in the cash collection. We have yearly payments, and we have not done any incentive, and we don't intend to do any incentive on that side either. It's purely due to the accounting effect and, of course, combined with the accrual of the dealer commissions.
Okay, great. Thanks very much.
As there are no further questions from the audience, I would like to hand back for the closing remarks.
Thank you, and thanks everyone for attending. We are looking forward to catching up with you next quarter. If you have any follow-up questions, please do not hesitate to contact us. Let's conclude our call today. Thanks again for joining. Bye-bye.
Thank you very much, everyone.
Thank you.
Have a great day.
Thank you, everyone.
Bye-bye.
Bye-bye.
The recording has been stopped.