Earnings Call: Q2 2021

Jul 29, 2021

Dear, ladies and gentlemen, welcome to the earnings call of Nenicek Group. At our customers' request, this conference will be recorded. As a reminder, all participants will be in a listen only mode. After the presentation, there will be an opportunity to ask questions. May I now hand you over to Stephanie Zimmermann, Vice President, Investor Relations, who will lead you through this conference. Please go ahead, madam. Thank you, operator, and hello, everybody, and welcome to our conference call. Thank you for joining us to discuss the results for the Q2 and the first half of twenty twenty one with us. Today's conference call is being recorded. A replay of the call will be available at our website after the call. We have prepared a presentation with the most important figures and strategic highlights of the first half. You will find the presentation, the quarterly report and the press release on our Investor Relations website as well. But now let's start with the presentation. I would like to hand over to our spokesman, Axel Kaufmann, who will lead you through the presentation. So go ahead, Axel. Thank you very much, Stephanie, and welcome also from my side to today's earnings call of the Nemeche Group for the Q2 of 2021. You all have probably seen our pre release on Tuesday already with the main headlines of our 2nd quarter results and I'll increase guidance for the entire year. For today's call, as Stefi said, we have prepared a little slide deck containing additional information with regards Our second quarter as well as the first half year results. I'd like to briefly walk you through the material so that we have still sufficient time for questions afterwards. We also might have to be one of the smaller announcement, which wasn't in the press release. So I would say, let's get started. As usual, we'll start with a short overview of the financial highlights of the last quarter on Page number 3. I think it's safe to say that we had a stellar second quarter with all of our major KPIs reaching new record highs. In concrete, revenues grew to almost €166,000,000 in the 2nd quarter, corresponding to an underlying foreign exchange adjusted growth 21.5%. This was the strongest organic quarterly growth since many years. Main growth drivers were once again our subscription and SaaS revenues with an increase of more than 50% on a currency adjusted basis. With this, we continued to increase the recurring revenues to a new high of almost €100,000,000 in the quarter. The over proportional EBITDA of €56,000,000 led to a very strong margin of 34%. It is a function of high growth, High efficiency as well as a healthy operating leverage in our business model. Looking at the bottom line, our EPS reached an impressive €0.29 per share. This success once again highlights the operational strength of our business, which is based on, 1st, A strong market position together with our attractive and innovative software solutions second, our successful strategic initiatives And last but not least, a high degree of commitment and motivation of our meanwhile more than 3,000 employees worldwide, whom I'd like to thank at this point for their great work. Page number 4 gives you a summary of our key business highlights after the 1st 6 months of the year. Similar to the Q2, the half one figures also testify our strong operational performance. Despite substantial headwind of more than 400 basis points, mainly stemming The U. S. Dollar, we were still able to achieve reported revenues of €324,000,000 On a currency adjusted basis, this means our top line increased We already talked about the growth drivers leading to an impressive EBITDA growth and a very high margin. Apart from our pure financial performance, I'd also want to highlight our strategic progress, which you can see on the right hand side of this chart. First, the successful completion of the first fully fledged integration of what used to be previously 3 separate business units, Red Giant, Redshift, We're both integrated into Maxim. And as promised, we now have created a solid basis and a true leader in that space. We also successfully executed on our announced strategy to invest into start up and ventures with investments in 2 young and innovative companies. In addition to the fast growing German company StaBlono, a digital solution provider for increasing efficiency in the construction process, We also invested into the U. S. Startup, Reconstruct, an expert in the quality control of construction site with its artificial intelligence based solutions. Both firms, according to our view, have a great future ahead of them. And by partnering with Nemechek, we will be part of this success. We also strengthened Alpland's position as a leading structural engineering software provider by combining it with our experts for precasted parts as well as by expanding its competence in the field of steel construction by incorporating our U. S. Brand SDS2. Lastly, the ongoing success of our subscription SaaS offerings underpin the success of our segment tailored approach In which each segment's subscription strategy is different and might be based on its geographic exposures, the business momentum, its customer needs and preferences. This leads us to the next Page 5. As all of you know, one of our main objectives is the topic recurring revenues and in particular, the development of our just mentioned subscription and SaaS business. As mentioned, we're very pleased with the development in this area, Showing a policy adjusted purely organic growth of more than 50% in the first half year. Due to the strong pickup in our license revenues, Our share of the carbon revenues remained stable over the year. When taking a closer look at the composition of the recurring part of the revenues, It becomes clear that our segment's tailored subscription strategy is very successful. In the middle of the slide, you can see the results from this acceleration of the program. While we started with just a share of 4% of total revenues in 2018, we were able to gradually increase our subscription SaaS shares to a remarkable 18% as of today. On the next Page, number 6, It provides a more comprehensive overview of our most important operational results. Going more detailed down the P and L, you see the over proportional increase of our EBIT and EPS. Besides the operational performance, this is mainly a function of 2 factors. 1st, stable depreciation and amortization charges, including purchase price allocations as well as second, a better tax management, which led to a tax rate of just 19.7% compared to more than 24% last year. I'd also like to draw your attention to the very strong operating cash flow of almost 106 €1,000,000 which once again underpins the high quality of our earnings. Last but not least, we've also further improved the quality of the balance sheet, Represented an important metric such as the equity ratio, which now stands at almost 50%, precisely 49.3 and a net cash position of around €60,000,000 Those strong earnings, the cash flow development, along with our extremely strong balance sheet, all provide us Not only with a high degree of safety going forward, but simultaneously enables us also to act flexibly should value generating M and A targets and venture investment Now to conclude on the results, Let's look at our 4 reporting segments on Page number 7. Starting from the left side, our Design segment achieved an outstanding result in the 2nd quarter With a currency adjusted growth of 19.2% and a margin of 32.7%, mainly driven by An acceleration of our license sales with plus 36%. A similar picture with a growth of 20% and a margin of even 45% can be seen when we look at our build segment. The largest contribution was again coming from Bluebeam, our brand, which was able to win the highest number of new users in the company's history. Based on this superb business momentum, we decided That Bluebeam will choose a more conservative approach for the planned transition of its business into a subscription model in order to take advantage That approach offers multiple upsides in our view. It will allow Bluebeam to continue its currently strong growth path by winning new users and market shares and therefore start the transition from an even higher, Probably the highest ever user base in 2022. Also, our team will be able to test its new subscription offerings for a longer period with selected customers in order to gain even more valuable feedback and insights as we have done so far already. We're therefore convinced that this approach will not only support Bluebeam's business development, but also maximize the benefits for Bluebeam and the M Group's customers overall. In our managed segment, we saw a sequential pickup in growth to 15.5% after just 9.2% in the Q1. And then our media segment, which presents once again an astonishing development. While many of you know my particular passion for this business, It needs to be highlighted that the reported growth of 34% is purely organic, and we were also able to expand the margins after the Before we now get to the guidance for the fiscal year 20 21 in total. In just a minute, let me briefly give you a short overview of the state of our different end markets, how we see them. I think it's fair to say that in all of our end markets, as you can see on this slide, we're positive regarding the current market environment, our position as well as the future outlook. Again, from left to right, the residential sector, which was already nicely resilient during the crisis, continues to be buoyant and continues benefiting from demand for housing space in light of low interest rates, which should also prosper going forward. The same is true for the infrastructure market and most parts of the nonresidential market. Very healthy demand situation at the moment, which is also unlikely to change anytime soon given the various government investments and infrastructure programs, which will support the market also in the coming years. Just last night, we've seen the U. S. Senate, for example, supporting a new gigantic stimulus program in the U. S. The only sector where we still see some degree of uncertainty in some smaller pockets of growth is part of the commercial sector. However, please let me emphasize We're talking about few very specific submarkets and customer groups. For example, the occupancy of buildings does not yet fit to do pilot testing or owners simply acting somewhat more restrictive with investors due to the pandemic or experiences during the pandemic. Nevertheless, we consider this a future growth market, and the Nemechek Group remains well positioned to participate in the so called business around building life cycle management. Now with this slide, I'd like to turn you to our updated 2021 outlook. As a result of our very strong operational growth in the first half year, the continued confident outlook for the second half of the year As well as our strategic decision for a more conservative moving transition given the great business momentum, we have upgraded our outlook for this fiscal year. This means that from today's perspective and based on the current portfolio, we increased our revenue outlook for this year, now expecting the currency adjusted growth of 12% to 14% at constant currencies. In addition, we increased our EBITDA margin guidance to a range of 30% to 32%. This assessment is based on the assumption that there will be no deterioration in the macroeconomic environment and that the corona pandemic will continue to be under control. So to finally summarize today's key points on Page number 11. The Nemechek Group had a Super start into the year 2021 with a strong operational growth, mainly driven by the highly managed product innovative software solutions, all on a high level of profitability. Looking at the big picture, we can clearly see that all our long term structural growth drivers, such as the low degree of digitalization, Increasing BIM regulations or the need for more energy efficient and environmentally friendly constructions are intact and offer substantial growth potential in the coming years. We're bullish and we're convinced that our strong market conditions, the power of products and our close customer relationships will support this and allow us to remain a leading position in the industry. And while we continue our positive operational development, Be assured that we simultaneously also drive forward our various strategic initiatives in a structured and diligent way in order to master the expected future growth And with that, I'd like to thank you for your attention today, and we're now happy to take all of your questions. Operator, please back to you. Thank you. Ladies and gentlemen, we will now begin our question and answer And the first question we received is from George Webb of Morgan Stanley. Your line is now open, sir. Please go ahead. Good afternoon, Axel, and thanks for taking my questions. I have a couple on Bluebeam and then on margins. On Bluebeam, you mentioned that second quarter was very strong for new customer acquisition. Just thinking back pre pandemic, there was a bit of discussion over Bluebeam's domestic U. S. Market And how much of that opportunity had already been won? So just keen to understand which customer segments or regions are driving that strong growth for Bluebeam. Secondly, I sometimes found a little bit better the longer testing cycle you're going through with some bleeding customers. What are the discussion points that have been driven through testing so far? And are there any changes you need to make to your offer to make it more compelling? And then on margins, are you able to break down at all this year's margin guidance uplift and how that splits down between the stronger revenue expectation Versus some of the COVID cost savings returning more slowly versus the Bluebeam transition being pushed out to 2022? And maybe just on that, are there any implications for margins we should think about when it comes to 2022? We should be obviously, we shouldn't be extrapolating this year, but What's the right sort of level we should be thinking about? Thank you. Thank you, George, for A favorable and positive development overall of the business that we see across really all regions. And I think the discussion that you were referring to was mainly to the core market at that time, which is the U. S, and that is currently driven as much as Europe and also APAC. So we really see a nice performance there across in terms of geographical territories, All regions there, Canada being quite strong. Europe, we're making progress and finally really getting up to a critical mass in the UK, DACH as well as the Nordics and then APAC also. That's one dimension to look at the Bluebeam business that we're happy about currently. In terms of the customer segmentation, I'd say the growth is mainly driven by the small and medium businesses. Currently, They come through an updated web store offering and functionality, and that is broadly spread across mainly the U. S, Were those small and medium customers really have landed so nicely? And that's very healthy because that is not relying depending on a few larger But really spread evenly across our various areas. And that makes us really feel good about the current momentum. So again, Bluebeam, if you just look at the Q2, we have achieved the highest increase in new users in the company's history. And That's just amazing. A part of that might be also, of course, the favorable macro leading me to your second part of the question in terms of What's really driving that and what is then maybe the going forward margin implications? Just starting with this year, if I understood your question correctly, I'd say that slight postponement certainly had a positive impact also on us looking at our margin guidance together with the overall Favorable business development also in the other divisions and along with the cost savings that some of them that we've seen in the first half Probably might be going on also in the second half. So if we attribute maybe 2 thirds What I would call just the overall business development momentum and the cost savings, maybe onethree of that is related or can be attributed To the blue beam shift, if you want, so in terms of more favorable margin that we now see more likely going into The full year. Then last but not least, you were asking about The more midterm guidance in terms of next year and also maybe the year after. And we're here today to really confirm the 2022 and 2023 Guidance that we have given as a midterm guidance earlier this year. There's no indication currently from none of the divisions, from none of the parameters We currently see why actually there should be a change. And then coming back to Bluebeam just for a second, you were asking about The testing and the pilot phasing, that's actually very positive at the moment. And whatever we can do in terms of the resourcing, trying to cope with both the great business momentum just in terms of daily operations and then this transition and the preparation and the communication around this with selected customers. It's been very positive, and there's not anything major that I see we needing to have having to need to pivot, as you were referring in your question, to other than to just continue consequently the path that we were preparing for. That's really helpful. Maybe just to come back on margins then. So I guess you started the year 27% to 29%, now 30% to 32%. When we think about 2022, what's Sir, if you still have this Bluebeam transition to go through next year, presumably, we shouldn't be taking 2021 margin as The base expectation, is that a fair assumption to make? Yes. I think that would be a tough comparison. At the moment, I'd say We wouldn't give really a very concrete margin guidance for 2022 or later, but we should I see some effect of that. But let's come out maybe back on this when the launch and also a few other parameters Are a bit closer to the start and in terms of timing of the new business. Super. Thank you very much. The next question we received is from Ben Mertz of Barclays. Your line is now open. Please go ahead. Good afternoon. Thank you for taking my question and congratulations on a great quarter. Maybe can you comment first when exactly are you now planning to move Bluebeam to the subscription model, will that be just right from the beginning of 2022? And are you expecting to convert All of Bluebeam's license revenues into subscription next year? And then secondly, could you also talk a little bit about the investment opportunities you're seeing at the moment? I was a bit surprised to see headcount being down sequentially. There are obviously a lot of growth Opportunities out there. And therefore, my question is, why are you not investing more for growth? Thank you. Thank you, Sven, and also thank you for the compliments on the so far performance. I'll pass it on So first of all, the Bluebeam launch, we really like to keep that somewhat flexible. But I think this being shifted into 2022, it's very unlikely that this will be an early start in 2022. That is absolutely right if you would apply that In your modeling and the assumptions, it is consequently also unlikely that we'll transition all of the customers, if that was your I understood correctly. Within those 12 months of 2022 already to subscription. We'll do it sequentially. There is parameters and Planning assumptions around customer types, about geographies, about regions, about features, And we'll put a very intelligent plan together and keep that somewhat flexible in terms of also seeing Where the current business momentum goes because that is just so positive and keeps us really busy in a sense that we want to grab as much market And as many customers to please them with the great solution that we have today already in more the perpetual license mode before we go into a broader launch of the subscription. So the timing really depends on somewhat the future growth. We'd also like To keep again a certain level of flexibility. Then you had a second Question related investments and in particular the headcount. You're right, we're facing I think we're not the only company, but we're indeed facing a tough Labor and job market overall. That has been the case in the second quarter. It has been the case Throughout the fiscal year so far, we are investing. And at the same time, you're right, there is an intent To continue to be committed to investments and to remain as an attractive employer as we are currently. And so the intent is clearly there, and I take your words as an encouragement to continue or even do more there, which is also the company's strategy. But again, we're facing Certain markets, particularly in the U. S. As well in terms of the job market and having to find maybe also the right model In between, what people are willing to be mobile and flexible and you read Some articles as well as we do in terms of the new resignation and people being open. And that is also where attractive companies like us Face the same job market, the same market situation, no doubt. And I'm sure you've been hearing this also from other companies. So that is The answer to the headcount in particular, but investments overall is definitely something that we're committed to do. So it's also part of the going forward assumptions. Investments in infrastructure, in the people, in programs, in structures and processes internally as well as Those ones that you wouldn't see or a customer wouldn't see, but it would help us to prepare the company to continue to grow and also master that kind of growth And the growth payment comes along with that. So that's well understood and well underway. Okay, great. That's helpful. Thank you very much. The next question received is from Marvin Mowala of Goldman Sachs. Your line is now open, sir. Please go ahead. Great. Thank you very much. And I think we're going to continue to see the Q2 as well from my end. I had two questions, if I could, Max. Firstly, in terms of the So slightly more delayed transition on Bluebeam. Has anything changed in terms of some of the product deliveries? Is there any perhaps delays around some of the additional features and functions that you are planning to kind of put in? Or is it simply just what you said earlier that It's an opportunity to sort of acquire new customers right now, given the environment and spending intentions. And then related to that on the sort of The transition of the subscription, how has your thinking changed on some of the other brands, particularly around kind of the design side? I know you expected these to follow Subsequent to Bluebeam, given this is the first major part of the core you're transitioning, would you envisage, given the slight delay on Bluebeam, A more accelerated move on the core or will the core also kind of follow in a more gradual manner? And then I had one more on just the cost base. Has anything structurally changed in terms of your route to market that when you think about the margins, Are you doing more kind of virtual selling or more virtual events that structurally from a margin standpoint you have? I know you're looking to invest, but something gives you an additional buffer around the margin as you move through the next couple of years. Thank you. Thank you, Moel, for those three Questions, I think that they're all being excellent ones. And let me start with maybe again, Lou being so no, there is no issues around product delivery In terms of us having to change or pivot anything, it's just that the business momentum at the moment is just so great with the current offering. And there is a constant addition to, of course, features and functionalities and innovations. That is what Bluebeam has been doing all the time. And it is currently a friendly market, if we can say so, and a great work by the team. And You want to take advantage of that as much as you can, certainly. And at the same time, we'll just continue preparing the subscription launch and be flexible somewhat to do that maybe in a phased approach. And also related to the other divisions or other brands, I'd confirm again that what we have discussed earlier this year around the core business, design for example, We're very positive. We're very pleased. If you look at some of the development, that's actually ahead of plan in terms of the perspective that I see already for this year. So no, there is no correlation that we would have to wait until a Bluebeam broader launch has happened. That was implied maybe in your question. We'll do that in parallel, and we're doing that as we speak here today already. So just as a number maybe, the design division being our biggest, largest division and more what we would call the core business grew more than 50% in their subscription growth in the 2nd quarter. So they're coming from a lower base, granted, but they're really catching up. And I think now finally, we have cracked that knot Understanding why does that make sense? How can we win that together with the customers? The products are ready. And we're doing a lot of work in So that is independent really from whatever Bluebeam does at the end of the day. We have collectively I gained so much positive experience from that topic of subscription overall in the last years that actually were independent there. And lastly, your third point on the cost, if I had understood you correctly, then in terms of the selling and go to market, of course, We've been also finding ways that we would accelerate and continue to be using in a more digital way. There is definitely A different way of how we do maybe a hybrid mode in terms of trade shows. We've been experiencing that very positively in the last 12, 15 months, and we'll continue with that. I'm not saying we're entirely virtual or digital. I think that would be wrong or not honest to say because many of our leaders, and I'm speaking a lot Our people there are prepared and hungry to also meet with customers, talk about trends, the solutions, showcases. It doesn't have to be maybe as much as it used to be previously. So we'll find ourselves in somewhat what you indicated in probably a hybrid mode there, absolutely. Okay. That's great. If I could squeeze 1 more in. Just again bridging the gap on the kind of midterm guidance for 2023 That you've laid out, given the kind of the shifting of some of the timing on the transition, are you essentially counting on kind of a much Stronger kind of structural market growth and more share gains to kind of compensate, do you still deliver that kind of mid teens Go trajectory by 2023? Or is there something else from a kind of new product launch standpoint or something more specific That would sort of bridge the gap? Or is it simply you've been sort of conservative and you've got a bit more of a buffer? Yes. Thank you for the follow-up questions. I think it's many little things at the end of the day. Some of you, I'd say, you have mentioned. In all fairness, Mohit, I think it's a bit early again to talk about the guidance in more precise on a year that is still to come in 2 years from now. And will be out there in due time as you know us. Overall, I think it's again, many things that play into that. We're overly Optimistic in terms of the business momentum in various areas of the organization, mainly organic, the recurring That we have seen this year and will continue and the one that we will accelerate next year overall in terms of subscription will pay out also in 2023. So that all plays into, I would say, a confirmation of the previously outlined guidance. And there's not this one big single factor. Okay. That's great. Thank you very much. The next question is from Martin Jungfleisch of Kepler Cheuvreux. Your line is now open, sir. Please go ahead. Yes, good afternoon and thanks for taking my questions. And also congrats on the very strong quarter. Two questions, please, from my side. First one is on M and A. I mean, you have recently done A few minority investments to start ups. Is that a sign that it's increasingly difficult to do larger M and A? And could you provide an update on M and A going forward if there's still also larger acquisitions possible? And then the second question is on the combination of brands. You recently bundled the competencies of Outplan and SDS 2 and also Outplan and Precast. Can you share some initial feedback from customers And if this also helps you grow in the larger customer segment? Thank you. Yes. Thank you very much, Martin. Good to have you on the call again. And related to M and A, I'd say, Well, it's not haven't gotten much easier in terms of the M and A because also our philosophy to be really selective in this approach. You want to make sure that you have a second, if not a third look at some business models and how they have gotten through the pandemic, How robust really the business model is, the share of recurring, all of these things, I think we're a little bit more selective. And our diligence works, And we're constantly looking into targets, and we have a pipeline, and we're finding ourselves in a lot of assessments. Sometimes, we find ourselves just being more than ever before in terms of verifying, testifying, questioning some of those. But it is on our radar. Clearly, I think price targets, price expectations from sellers and what I just mentioned leads us To just be somewhat careful, does not mean that we don't go after those right ones. But given the consolidation that took place for established And given the some of the price expectations out there in the market and some players that found an entry into our Industry in the last, I'd say, 2 to 3 years, that's certainly not easier than it used to be before. That's a careful answer. In terms of the complexity, I have a very clear opinion. I think it is the absolute right move That we make it as easy as possible for our customers to do business with The Nemechek Group, which sometimes is our internal way we're structured organized. But it's also and you mentioned 2 great examples, the product offering. And if we find that there is a customer pain point that we can address from multiple with an even stronger product portfolio. By combining those, that is the approach I think we'll continue to take. And at the beginning of the call, I would have indicated that there is probably more to come without going into more details. But that has been landing very well with customers. As I just referred to, for example, the Bridge business, you were mentioning the precast, for example. They had one of their best quarters in history, really. And we remain and become even stronger a strong very, very strong relevant player in the infrastructure sector. And Alpland It's positioned extremely well. Fair enough, more in Europe, and the opportunity is across the Atlantic, but even also here. And pre class as well as The steel competence has served us with a full range of material competence together with the engineering and the BIM logic That we would need to serve those customers. So that's been landing very well. Of course, the SPA2 is just brand new. And I would say stay tuned. There's more to come. That's very helpful. Thank you. Thank you. Next question is from Uwe Schupp of Deutsche Bank. Your line is now open. Please Yes. Good afternoon, Axel, Alut from IR team. Two questions remaining for me on the 2 smaller segments, if I may. Firstly, the managed segment, they had actually very good growth in the quarter against the relatively low comp, but the margins were still down meaningfully year over year. And I was just wondering how happy you are with that? What if the current margin level is basically the new normal even if growth is staying in The mid teens, shall we say? And then secondly, on the Media and Entertainment segment, you indicated, I think, in your prepared remarks that The integration of Ratchet is pretty much done now. And basically, is that the main reason for the strong margin improvement? Again, similar question really. Is 35% margin basically the normal year or is it beyond is there room beyond the current or the integration work that you The admittedly very hard integration work that you've done here. Thank you. Yes. Thank you, Uwe. Greetings to the Deutsche Bank team. Yes. Let me start with maybe the second question, if you allow. I don't think from today's standpoint, there's any doubt that The work that was done last year, that's now the fruit that we could and can harvest this year. The integration and Some of the investments also in terms of getting these together, it was not just an integration of organizations. There was the harmonization of products, Of pricing, of dealers, sales reps, of teams, of tools, of processes behind the scenes, backbone, ERP, There was a lot of work really done and a big applause, I'd say, to the leadership team of what we now call Maxon or the Media and Entertainment division. Really, that pays off. However, I limit the fantasy of going beyond what we currently see, not in the short term. I said we want to continue to grow. We always said that there's a 3 phase approach. First, we want to integrate really and form a critical relevant player. 2nd, we want to build on that and continue to grow because now we have reached a critical mass So that really everyone in the creative industry will take us seriously, get to know us, get to use the products. And then third, we'll invest in the strategic Options going beyond that, including also inorganic growth. And those would also mean that I'm not committing to a higher margin than what you're currently seeing on that level where we speak today. On Managed, I have a different opinion. I think Managed can do better in terms of the margin. I think we're fairly satisfied With the growth, given the environment that they're operating in, and I think in the intro or during the presentation, we gave some reasons Why there is maybe that sub segment that they would target not being the easiest one where people not yet being fully back In the office and facility managers and owners somewhat a little bit more hesitant in investing there when they cannot run pilots, for example. In that environment, I think they've been doing really well in the first half year in terms of the business momentum, their SaaS products, Which will pay off also later and be a long standing value contribution here to the division and to the company. In terms of margin, think we've been investing through the integration of the Dexma product suite and the Dexma team from Spain that you might remember that we took on board earlier this year. And I think we can do better and will do better, and that's our firm intent To improve the margin beyond what we can say, that's not the new normal, definitely not what you have there. Although you've seen the improvement maybe also quarter over quarter, That was visible there, but we'll need to continue to be working on this, and we will. Also already in the second half of this year? Yes. Thank you very much. Thank you. And the next question is from Sven Waller of Baader Bank. Your line is now open. Please go ahead. Yes. Actually, it's Knut, but thanks for taking my questions. First question, we are seeing supply bottlenecks in the construction industry, Axel. Is that any headwind to your growth? Or is that rather boosting growth to be even more efficient in the industry? The second question would be to get still a better feeling for the Bluebeam transition. Just hypothetically, if we would continue to see some regions on their growth good growth trajectory or even accelerating next year, Would it also be possible that these regions then don't transition to subscriptions already in 2022 and that This could rather be the case then for 2023. How should we think about that? And then lastly, Which a question that was already asked from a qualitative perspective. I tried to give it also a quantitative perspective. Looking at Travel and Expense and Hospitality, we have seen quite a substantial decline of 73% year over year from 2019 to 2020. It was down to $3,000,000 in 2020. When we look at these cost savings, which percentage do you think you can maintain? You mentioned that you will Pursue a hybrid approach in your marketing. So which percentage of these cost savings are sustainable and which will be reinvested going forward? Thank you. Hello, Knut, and thank you very much for your good questions. So let me start with the supply chain related question. I think this was more a temporary phenomenon, and we're hearing definitely indication and seeing statistics where Price levels, for example, are going down and supply chain issues get removed. I think wood was one of the examples that we just heard in the meeting with Larger construction firms earlier this week, as a matter of fact. So I'd say that that's not a negative. And to be creative, I think You're right. If I was one of those firms being confronted with such constraints, I'd really I think more than ever before about how I could streamline my processes, better cost planning, better project management, better collaboration when we pull through some of the construction projects. So that is definitely something that goes along with the theme of a greater degree of digitalization. I wouldn't know Any reason why that would go against that? As a matter of fact, maybe that's even a tailwind. On Bluebeam, I think Yes. There's a good point. The parameter of in which regions, geographic territories the subscription will be launched In which to which degree and in which approach, that's a constant theme and I think in all companies that would have launched subscription according to our Intel on hand. And what we clearly would see that the U. S. Being the core centerpiece of our Bluebeam business from the last Success years. That is definitely going in a first phase more than maybe international regions, If I just take the DACH region, the UK region or the Nordics, now we're having a great business momentum. We have invested and are continuing to invest In the infrastructure, in the teams, in talent, great people that are now transporting the success story from the U. S. Into customers' minds and convince them to apply similar processes there. And they've been doing very successfully in the last few weeks months By taking today's Bluebeam's offering, and we know that especially in Europe, maybe reception overall is a little bit more conservative overall For subscription offerings, that does not mean that we wouldn't go there. And I find it hard. It could only be a temporary effect that when you say You go in a phased approach. Ultimately, all customers in all regions will be transitioned clearly because The least thing you want to do from experience from also other companies is that for several years, you maintain a dual mode of an operation For dual product offerings in dual business models. So that can be a temporary effect, yes, good point. And that's on the mind and in these scenarios currently as we think along the lines of the launch timing definitely. And then remind me of what your the third question was? The cost savings, Axel, From travel and expense, which was down 73% in 2020 to €3,000,000 So what of that Can be maintained in terms of percentages in your in the hybrids world that you suggested in earlier comments? Yes. I wouldn't want to comment really on the longer out there for the next years. But what I see for the second half, for example, is that A good half of what we would consider the normal, we're expecting currently to come back. And that's In line with the announcements that we made already for trade shows, Graphisoft, Maxon, they're having big announcements of customer events And they will go back to hopefully, if the macro environment allows, to a more normalized Level that we've been using. But again, as I said earlier in another question as well, the hybrid mode It's more likely than anything else. I don't speak to anyone in the organization currently that wants to go back to the old normal 2019. We'll all make use of Some of those intelligent. It does not mean that they don't cost something. We've invested also in some digital offerings as well, but we can be more efficient than we have been the past, and that's contributing also a little bit to that. But again, compared second half to the first half in this year, There's going to be rather an uplift in terms of the expenditure levels by good reason and purposefully as we currently project it. Excellent. Thank you very much. You're welcome. The next one is from Andreas Wolf of Two questions from my side. The first would be on the brand consolidation. Should we expect more consolidation going forward within your portfolio? Maybe you could also provide a general view on how you plan to proceed with regard to the brands, whether it was Just a more or less opportunistic consolidation and what we should expect going forward. And the second is on Bluebeam. I remember when Gluvium was acquired, Gluvium had already strong penetration within the large construction companies. So if you look at recent demand, was it driven by big construction companies or also by smaller ones implementing the solution. Hello, Andreas, and thank you very much for the two questions. So It was definitely not opportunistic what we did in regards to the brand conversation. I would say it was very strategic. It was really driven from what is the pain point of the customers and how easy do we make it for them to do business with the Nemecher Group and to please and address their concerns and have them really as a long standing customer. That is what we were thinking, what we were working out, And it has led us to the combination of the precast material, precasted parts, preproduction Competence is to be stronger aligned with Alpland. Also organizationally, they did it already in terms of the go to market Activities, but even now also in terms of the development and the organization and the leadership teams. And the same really applies For the STS II and the steel, our competence, which is a strong position that STS II has there And high stickiness of customers, very low churn, and it fits very well to also complement the Outland story in the engineering journey on which path they are currently. So that is the way how we consolidate. Yes, As I indicated in earlier comments in this call, there's going to be more. I think we have some further ideas, again, always driven from the customer, From the complexity, from the solution perspective and definitely not opportunistic rather be very, very strategic. And then once again to Bluebeam, the types of customers, as also mentioned earlier in this call, Are twofold. We have those, the large ones and then we have the smaller and medium sized businesses. Those were the ones coming via the web shop that also accelerated over proportionally in the second quarter Beyond what we've been seeing there before, we've updated the Web Store and its capabilities and functionalities. And while we continue to roll it out, it seems like we're very distribution channel or the large enterprise sales, which was the core of our business in previous years. So that's to me Very positive because of also the broad distribution of customers and the little dependency And the obviously very positive acceptance and acceptance of customers that are using Bluegreen Review in its current fashion for the first time. Great. Thank you. You're welcome. The next one is from Max O'Nein of Berenberg, your line is now open. Please go ahead. Hi, Akhil. Firstly, good afternoon and congratulations on the quarter. I've got 2 questions on Bluebeam and 1 on the harmonization of the group, if I may. On the Bluebeam, firstly, just wanted to Check my understanding of it, I suppose, and you mentioned that given the updated transaction transition plans, There will be a longer period for testing. Does that mean that we will have a longer time frame for the transition? Or does it just mean that You will now utilize the H2 of this year for testing out the transaction transition plans. Yes. Thank you very much. Again, on the Bluebeam transition, which I don't think the overall launch timing, if we ever had quantified this, is going to change dramatically. You're right in saying that we'll be able to test our new subscription solutions and the offering for a longer period with selected customers. And that's what we will do towards the from here to the end of the year and going into the next year, while at the same time, I think those things can happen in parallel. Why would we not start launching it already and for in specific regions? So we want to be as flexible as possible And seeing in parallel also monitoring where the business really goes. And therefore, I don't think that the overall Transition, I'd say, will change a lot. I think it rather will be shifted horizontally on the timetable. Perfect. That's really helpful. Thank you. And then second question on Bluebeam. You mentioned you had quite a good success story or good Success in web store orders, especially from the SMEs. I'm just wondering, is it across all geos? Or is it coming from specific Yes. We can allocate most of that to the U. S. Really. That is where the functionality, the acceptance and the usage of the web store is as much frequented as in no Other region, we're going down really some of the basic go to market work in the international markets, which again It's very successful. We're seeing growth rates also there by, let's say, the traditional way to work via dealers and resellers and through our own Sales activities with own people on feet on the street. But the Web Store and the SMB, That is a connection that we see more allocated in the U. S. Perfect. That's really helpful. Great insight. And last Question on the harmonization of the group. You mentioned there will be more to come, so I look forward to it. But thinking about medium, long term, 3 to 5 Is there a possibility that Namachek could become a highly integrated Group whereby we only see 1 or 2 brands for each segment? Or is it unlikely that it will happen? This is it's not what Nemechek is about. It's not The ManTech CNA, if you could help me understand what it will look like down the road, that would be really helpful. Yes. Thank you. I think that's an excellent question. I think it depends on what we would define as a highly integrated. I think We're doing the right steps at the moment, and we're seeing divisions where indeed the end game and our goal Could be what you indicated really, to have strong leading brands per division, for market arena, as we call them, or per segment. And that consolidation, I think it's no surprise to no one that it will rather happen more On the design segment, the way we've clustered it when we got introduced those divisions in 2019 than in any of the other three divisions. We have done it in media already. Basically, what you have said is reality already. In media and entertainment, we have Not a couple. We have one, and that is Maxon. And there is a product that's even called Maxon 1, where you would find the entire product offering as a customer as really the place where creative studios and our customers want to be, right? Managed And Bluebeam are somewhat not as that complex management and the designs are different. And build, I would say, is dominated by Bluebeam currently, and design has the highest level of And therefore, again, no surprise that we would have started lowering that level of complexity in that area more than in the others. Super. Thank you very much, Axel. You're welcome. The next one is from Del De Nune of Bryan Garnier. Your line is now open. Please go ahead. Thank you. Good afternoon, Axel and Stephanie, and I have 2, please. The first question is on the build division in Europe. Your American peers are reportedly becoming more and more aggressive in build And you are reporting the best quarter in Bluebeam's history when it comes to customer acquisitions. As Europe finally turned the corner on collaboration tools and are you now Sustained high growth outside the U. S. For Bluebeam. And still linked to that, can you comment on the competitive landscape and on what you are seeing when responding to RFPs, So, David, in terms of pricing? Yes. Thank you very much, David, and good afternoon. First of all, the build business in Europe is not only Bluebeam. Let's not forget that we have A strong business with a business unit brand called Nevaris, and that's been developing really nicely as well. For Luby, in Europe, in particular, we've been preparing really a lot of the infrastructure and that's accelerating its growth nicely with really being able to reach out to customers there. So we don't I feel an increased pressure by those competitors that you might have in mind when posing that question. We don't only See that. We also do not really see RFPs or quotes or a price war in that sense. I think the Bluebeam offering is really Unique, I think we've been so far preparing what to repeat a success that we would have In the American market, because the use case is there, the acceptance is meanwhile there, the critical mass is there. We have reference customers now. If I just look at the U. K. Or at Nordics or DAS, those being really the 3 main pillars of the booking business in Europe, we're very pleased with what we see there in terms of growth rates. So it's really nicely picking up. Thank you. That's helpful. And the second is on the second question is on the guidance. The revenue guidance for 2021 implies that growth would actually slow down in H2 compared to H1 and even compared to just Q1. And this is despite the Bluegreen transition being delayed. Are you already seeing Signs of a cool down in the market, also should we look at the guidance as relatively conservative on your part? Yes. Thank you very much for the follow-up question. I think we should not forget that the comparables for the second half From 2020 last year are also quite different ones than from the first half. So in that sense, We are projecting a nice growth for the second half, factoring all of those elements and parameters And therefore, we calculate backwards. The implied growth for the second half, like you say, is a little bit slower And in the first half, but again, let's not forget where we come from in terms of comps. Okay. Thank you. You're welcome. The next one is from Holger Schmidt of Nexstar Capital Markets. Your line is now open. Please go ahead. Hi. Good afternoon, everyone. I have two questions. The first one is with regard to the market share gains you mentioned in your presentation. Can you Talk about where you have gained market share and what are the reasons here? Do you have new features, a different go to market? Or is competition falling back? And the second question is on your tax rate. It was lower. Could you give guidance Thank you very much for your two questions. So first of all, again, internationalization, the question was referring mainly to the build division as we understood. Those international markets that I mentioned several times now, Nordics, U. K. Or DAS are growing over proportionally. I'd say We've been winning market share if there was a true competition for many, again, of those products, I would doubt if there is really an apple to apple competitive offering, The DAS region, for example, in Bluebeam would have grown more than 50%, just to give one percentage number. And that's an astonishing rise that Now I think it pays off what we have invested in terms of the team, the way we transport the key values and messages and advantages of the product Also European, in this case, German speaking customers. On your question of the tax rate, I wouldn't say that Today's tax rate is unrealistic to be on the same level also for next year. There's a big question mark coming from the U. S. In The tax reform of the new president that was announced, I'd say we'll follow what will happen there. But ceteris paribus, I think we're operating on a tax rate that is more or less likely to also be on that level going forward. Okay, great. Thank you. You're welcome. The last question for today is from Knut Waller of Baader Bank. Your line is now open. Please go ahead. Yes. Thank you. Just two follow ups. The first one, trying to get some more thoughts regarding the integration that you indicated, Axel. Looking at the The R and D ratio has been relatively high in the industry. So driven by the integration that you Is there room for efficiency gains pushing the R and D ratio maybe due to the integration of different products in major products? Is there room for efficiency gains going forward? That's the first part. And the second part of the question, Just a technical one. The PPA, I think, went up quite substantially in the Q2. Can you give an idea briefly here What that would mean and what the run rate would be for the remainder of the year? Thank you. Thank you very much for your question. As a follow-up, we look at the R and D ratios not really at the Firstly, when we do these consolidations or the simplification in terms of customers Doing business with the Nemesch Group, and we would have combined these units and will continue to align also the product lines. Of course, we'd look at the R and D teams and we take maybe one management layer out and try to develop the product more jointly as opposed to the very decentral going forward approach that Nemechek used to have. But it's not the first priority. I think we want to develop the right products for those customers by combining really The competence is under one roof, under one leadership, but we'll have a look at those and might I'll be able to report on some of those successes also in terms of the internal simplification leading to some efficiency gains there and some synergies. And on your second question, the PPA amortization, We would have had a onetime effect in terms of very complex accounting integration when we Took on board entities and integrated them under the roof of Nemechek. So quarter over quarter, sometimes we would have a hard comparison. I think we're on the run rate for the first half overall. That's maybe an easier view for you to build your model, which is representative also for the entire year. Hope this is helpful. Absolutely. Thank you. You're welcome. As there are no further questions, I hand back to the So thank you all of you for listening and for your good questions. I wish you a wonderful summer break and hope to hear you in the next call in October. We'll be back. Thank you very much, everyone. Stay tuned. Talk to you soon. Bye bye. Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.