Nemetschek SE (NEM) Earnings Call Transcript & Summary

Dear ladies and gentlemen, welcome to the earnings call of Nemetschek Group. At our customer's request, this conference will be recorded. [Operator Instructions] May I now hand you over to Stefanie Zimmermann, who will lead you through this conference. Please go ahead.

Thank you, operator. Hello, everyone, and a big welcome. Thanks for joining our earnings call today to discuss the results for 2021 and the outlook for the current year with us. With me today are our CEO, Yves Padrines; and our CFOO, Axel Kaufmann. Today's conference call is being recorded. A replay of the call will be available on our website after the call. Additionally, you will find the presentation, the annual report and the press release on our Investor Relations website as well. But now let's get started. A brief look at the agenda. In addition to the figures and strategic highlights in 2021, we will give you an update on our subscription roadmap and, of course, for the outlook for 2022. Before we get into the numbers, it's my great pleasure today to introduce Yves Padrines, who has been our CEO since March 1. So I would like to turn it over to Yves.

Thank you, Stefanie, and hello, everyone. Welcome to Nemetschek's Q4 and Fiscal Year 2021 Earnings Call. I'm thrilled to be part of this call for the first time today. I'm now exactly 22 days into my tenure as CEO of the Nemetschek Group. So I would like to use this opportunity to briefly introduce myself. I'm very excited to join the Nemetschek Group, which I don't need to tell any of you, is a wonderful company and a global market leader of software solutions for the AECO and Media & Entertainment markets. Professor Georg Nemetschek has transformed an initial idea into one of the most admired companies in our industries. So I was personally attracted to the business due to its unique and remarkable history and also the very strong brands, which are very close to their customers with a great culture of innovation. And as you will hear today, not only did we continue Nemetschek's track record of strong revenue growth combined with the high profitability in the last year, but we also strived to continue this development in the current fiscal year 2022. So building on this strong foundation, I'm here to lead Nemetschek to its next phase of growth to steer and sustain the evolution of its impressive success. Some of you on this call may know me from my previous role as CEO of Synamedia. Synamedia is the world's largest independent video software provider for Pay TV, telco and media companies. The business was a carve-out from Cisco owned by Permira and Comcast Sky. In my position as CEO, I built a high-performing business, transformed and stabilized its global operations, and positioned the company for continued growth. Before that, I was Vice President of Global Service Provider for EMEA at Cisco, responsible for the full suite of Cisco products and services for major telcos, broadcast and media companies as well as cloud and managed services providers. I joined Cisco as part of the sale of NDS, where I had a range of senior executive and general management roles. And in my early career, I began in management consulting with PricewaterhouseCoopers along with other exciting teams with Vivendi in France, where I started in ATV, but also in Creative Labs in California where we launched a music website, a start-up. So I strongly believe the Nemetschek Group has a unique opportunity to grab the potential in the overall building life cycle. We have world-class teams and best-in-class solutions covering the full spectrum of the AECO sector and, of course, in Media as well with 3D animation. Our job is to ensure that Nemetschek Group continues to enable creatives in the construction and media industries to shape the world. And I look forward to engaging with you all in the years ahead. Thank you again for joining us today. And I will now hand over to Axel Kaufmann, who will present our fiscal year '21 results.

Thank you, Yves, for this encouraging introduction. And also from my side, a warm welcome to Nemetschek's Fiscal Year 2021 Earnings Call. As usual, we have prepared a short slide deck that Yves and I will briefly walk you through, so that we have sufficient time for the Q&A session afterwards. On Page #5, we start with an overview or a recap of the various strategic highlights of the year 2021 in each of our 3 strategic focus areas: operational excellence and growth; M&A and venture investments; as well as innovation leadership. First, our efforts in the field of operational excellence and growth. Apart from the successful completion of the first fully fledged integration of various brands, good example is Redshift and Red Giant into Maxon, we further combined our forces and competencies in the build and design segments. To give an example, we integrated successfully SDS2 with its competence in the field of steel construction into Allplan in order to strengthen our leading brand for engineering software. Concerning the successful further shift to more cloud and data-centric business models, including subscription, we'll comment in a minute. Innovation and technological leadership have always been a core part of the Nemetschek Group's DNA. In 2021, we solidified our position as an innovative leader again on various fronts, for example, in the field of Smart Building or Energy Intelligence, Digital Twins and with our increased cloud and mobile capabilities in the Build segment, which will be essential for our upcoming subscription transition. Last but not least, and in line with the announcement of our venture investment strategy at the beginning of the year, we made already 3 minority investments in young and highly innovative companies from the U.S., Germany and Norway. Specifically, this has been Reconstruct, Sablono and Imerso. Those companies will help us to further increase our innovative strength and to cover important future topics such as AI, twins, real-time project monitoring and quality control. Our clear objective is to continue and even further accelerate that approach in the future. We were also successful in the traditional M&A field. Maxon further strengthened its position by acquiring Pixologic, the leader of 3D sculpting and painting software, which perfectly complements their existing product portfolio. And with this, coming to the financial review of '21 financials. As usual, we start with a short overview of the last quarter, Q4, on Page #6. On a high level, we saw a very successful development with the continuation of the trends of the previously 9 months before, strong growth combined with high profitability. Our top line grew by 17% in just the Q4. Main growth drivers were once again our Build and M&E segments as well as subscription and SaaS revenues, which increased by nearly 42% on a currency-adjusted basis. On this strong development, we were able to increase the share of subscription and SaaS revenues to a new record high of 19%, a year-over-year increase of 400 basis points. The over proportional increase in profitability corresponds to a margin of almost 33%. This development is a function of the high level of returns and revenues and improved efficiency as well as our healthy operating leverage overall. Looking at the bottom line, the increase in the EPS to EUR 0.33 in just the last quarter was a bit lower than what we recorded in our EBITDA growth. However, let's keep in mind the comparable numbers from last year and especially low tax rate in the fourth quarter 2020 versus the normal good level of around 20% this year. And with this, let's look at the summary of our key business highlights for the full fiscal year 2021. No surprise, it shows a very similar picture to our Q4 results. Strong organic growth of more than 15%, mainly driven by our recurring revenues and combined with an over proportional earnings growth at record high margins. I would also like to draw your attention to our high cash conversion rate of almost 97%, which once again underpins the high quality of our earnings. The resulting strong growth in free cash flow of more than 40%, combined with a new record high in earnings per share, enable us to propose a dividend of EUR 0.39 per share, a year-over-year growth of 30% and the ninth consecutive increase in a row. Last but not least, we have also further improved the quality of our balance sheet, represented an important metrics such as the equity ratio, which is now at 51% and a net cash position of around EUR 30 million. Therefore, the strong earnings and strong cash flow development, along with our extremely solid balance sheet, provide us not only with a high degree of safety going forward, but simultaneously enable us to act flexibly should value-generating M&A targets or venture investment opportunities rise up in the coming quarters and months. As mentioned several times, increasing the recurring revenue share of our business, mainly by a phased transition to a more subscription and SaaS model is one of our key priorities. On Page #8, we, therefore, included an update on the great progress that we have made in the recent past. We're very pleased with the development of our subscription and SaaS revenues in the fourth quarter and throughout the entire year of 2021, with a foreign exchange adjusted purely organic growth of nearly 50%. While also our license sales continued to grow with more than 10% in 2021, we were able to once again increase the share of recurring revenues in total to a new record high of 61%. Taking a closer look at the different components of this recurring part of our revenues, it becomes clear that our segment-tailored subscription strategy is particularly successful. Starting from just 5% end of 2018, we almost quadrupled our subscription and SaaS revenues by the end of last year, and we plan to continue this development in the coming years. Now to conclude my view, let's look at our 4 segments on Page #9. You can see how each of those segments or divisions contributed to the overall success nicely. Starting on the left side, the Design segment, where we saw a reacceleration of growth in the fourth quarter with a plus of 13% and a margin of more than 36%. Our Build segment was able to carry over its strong growth momentum into the fourth quarter with 20% plus on a currency-neutral basis. Bluebeam continued to be the main growth driver of this segment, which confirms our strategic decision in mid-summer last year to shift the subscription transition into 2022 this year in order to win additional market shares and start to transition from the highest possible user base. Media & Entertainment, once again, presented a very satisfactory development. The reported purely organic growth of 29% is in line with our outstanding performance of the segment during the first 9 months of the year. After successfully completing its subscription transition as well as the integration of Red Giant and Redshift, the margin even expanded to an above group average level of 36%. And last but not least, in our smaller segment, Manage, we still saw some negative effects on the global pandemic -- caused by the global pandemic, some hesitations and limited capabilities to access and/or perform on-site simulations or installations, i.e., hardware and services impacted. However, we strongly believe that the promising long-term growth potential for this segment remains unchanged. We feel well positioned to benefit from an increasing demand of smart and sustainable building management solutions. And with this, let me hand back to Yves for an update on the subscription transition.

Thank you, Axel. So we would like now to present you a short update on our subscription transition. And as Axel just said, our move to a more recurring and resilient business model is an important strategic priority for me and the entire leadership team here at Nemetschek. So let's move to Page 11, and let me start by briefly explaining the why. And we believe the move to a subscription or SaaS model has many benefits for our customers and, of course, also for us. Let me highlight the most important aspect. As you know very well, with such model, our customers are more flexible and don't have to pay the high upfront investments anymore. This was especially attractive for many customers during the pandemic. At the same time, they also benefit from a higher speed of innovation and improved services. Additionally, we also see benefits for our group. We can tap into completely new customer groups, expand our customer lifetime value and increase customer satisfaction that will lead to an even higher retention. All-in-all, we are convinced that this move to a higher share of recurring revenues will not only increase the predictability of our revenue streams, but also enable us to potentially even accelerate the double-digit growth that we are seeing today in the future. We, therefore, plan to grow on subscription and SaaS business significantly over the next years. We have already proven it in 2021, as Axel just mentioned, where our subscription and SaaS revenues increased by 47%. And we are doing it with our segmented approach, which is a perfect strategy for this ambition. After high growth in subscription in our Media segments in the last few years, we are now also seeing a strong pick up in subscription and SaaS revenue in our Design segments. And on top of that, Bluebeam will start it's subscription and cloud transition in the middle of this year, which will even accelerate this development. So let me give you some more details about the Bluebeam transition on the next page, so on Slide 12. Bluebeam is ready to launch its subscription and cloud solution in the second half of this year. And I would like to briefly go into a bit more detail about how Bluebeam has prepared for this transition, and of course, what the next steps will be. For months, the Bluebeam team has now been working on the expansion of their product portfolio in order to offer new features with a focus on their cloud and data-centric solutions. That went hand-in-hand with a company-wide SaaS and subscription business readiness. We also did some pilots with selected customers in order to gain valuable feedback on the new cloud and mobile capabilities. As you know, and as Axel just mentioned a few minutes ago, going into 2021, Bluebeam was faced with a historically strong growth in new users. Based on this super business momentum, a decision was made to shift the transition into '22 in order to win additional market shares and start the transition from the highest possible user base. In addition, we used the time for additional pilot testing and improved our subscription offering even further. We are, therefore, convinced that with this new offering, Bluebeam will maximize the benefits of its customers. Therefore, starting in Q3 this year, we will start with a subscription-only offering for new customers, phased globally by route-to-market and regions. In parallel, Bluebeam will encourage existing customers to move to subscription. And we still offer the flexibility to add new licenses for additional new users as they do today. The main idea behind this approach is to maximize customer retention and expansion during this journey. This will be a multiyear transition, and we believe that the vast majority of our customer will have already migrated by early 2025 later. So let's turn now to Page 13, which is clearly important to know that we will not simply migrate our customer with an existing solution to the cloud. We firmly believe in a customer-centric approach and believe that a subscription offering must consistently add incremental value to the customer. Therefore, as mentioned, Bluebeam developed and mark -- tested new features that increase customer value and make the move towards subscription offering more attractive for our customers and users. In our new Bluebeam cloud platform, in concert with our flagship product, Revu, collaboration features deeply connects user and data to enable a richer experience for all subscribers. Further, new capabilities, piloted with Atlas and Rover projects will also be available in top subscription packages. For example, with capabilities from Rover, we add an easy lightweight project and field management solution. And with Atlas, we bring geo location capabilities for data and documents. As you know, building infrastructure project sites are complex, and relevance of data is highly connected to location. So think of it as a Google Maps for the construction site, and all of that built to be accessed via an open API to enable third-party and customer integration. So taken together, this is why we are convinced that the adoption and willingness to migrate will be high. Let's go to Slide 14 now. So I've talked about the why behind our transition as well as the how to execute the next phase of this process. Our shareholders and, of course, you, as our analysts, may want to have an overview of how well we are progressing on this journey. We, therefore, decided that we will provide an additional KPI regarding our recurring business. This comes on top of the already reported share of recurring and subscription SaaS revenue. For this purpose, we have decided to introduce the industry standard KPI in the software space, ARR, annual recurring revenue, and we will do so with the start of Bluebeam transition in Q3 this fiscal year. I believe, with the introduction of this additional KPI, we will provide a continuous update on our subscription transition and provide investors the opportunity to assess how well we are progressing. So let me walk you through now the current outlook for our most important end market as well as our guidance for the fiscal year 2022. On Page 16, we show an overview of the outlook for our two main industry, AECO as well as Media in 3D animation markets, which combined, present a huge market potential of more than EUR 45 billion. As you can see by the green traffic lights and on almost all of our end markets, it's fair to say that this current market environment has not materially changed in recent weeks and months. We therefore continue to look positively into 2022 and the long-term growth of our business. Of course, be assured that we closely track the development concerning the war in Ukraine, the economic sanctions against Russia and the resulting implications on the global economy. Giving us core exposure to Russia and Ukraine, which is below 0.5% of sales, we currently see only very limited impact on our business. But despite this minor business impact, we, and I'm speaking here for myself and on behalf of all my colleagues at Nemetschek Group, hope that this terrible conflict will come to a peaceful solution and that the suffering of the Ukrainian people will end as soon as possible. Now taking a closer look at the different submarkets. So the residential sector continues to be very good. The same is true for the infrastructure markets where we see a very healthy demand situation. The only sector where we continue to still see some degree of uncertainty in the commercial sector. And looking at the 3D animation market, I can confirm that all verticals are still dynamic and growing. With that outlook as a foundation, we come to our guidance for 2022 on the last slide, #17. So we will continue to develop Nemetschek Group's successful business model by remaining focused on innovation leadership, our customer proximity as well as by targeted investments in startups and innovative companies. With the strong fundamentals, we, therefore, also expect a continued attractive growth at a high profitability in 2022. In particular, that means that from today's perspective, we expect a revenue growth at constant currency in the range of 12% to 14% for this financial year, and we target an EBITDA margin between 32% and 33%. Our outlook for this year demonstrates once again the strength of Nemetschek's business model. It's fair to assume that our underlying growth would even be a few percentage points higher without the transition to a subscription model. However, our outlook is based on the assumption that there will be no significant deterioration in the global macroeconomic as well as industry-specific conditions. So what are the different building blocks that give us confidence to achieve our guidance once again this year? First of all, as we highlighted on the previous slide, it's the huge market potential of the two industries that we address: AECO and Media 3D animation. We are confident that all of our growth drivers, such as the low degree of digitalization or the increasing demand of digital content, are fully intact. In addition, it's Nemetschek's ambition to not just participate in these markets, but to continue to be a market leader and to shape the industry with our best-in-class solutions. We will continue to be at the forefront of the latest technology trends, such as Digital Twin, AI, machine learning and VR. Lastly, for phased subscription transition, which already started in 2019, will enable us to enter into the next growth phase in the years ahead as evidenced by the highly successful transition of our brand Maxon on our Media and 3D animation markets. So -- and with that, I would like to thank you for your attention, and we are now happy to take your questions. So operator, Martin, please back to you.

[Operator Instructions] We have a first question. It is from George Webb of Morgan Stanley.

Welcome also to Yves. I look forward to interacting going forwards. In terms of questions, I got a few. Firstly, could you just help us to understand a little bit the 32% to 33% margin guide? From that, I'm inferring that you're not expecting a very big headwind on build margins as you go through the Bluebeam subscription transition. So can you talk a little bit about on how you see the pathway to build margins through this year? Perhaps also the same on builds growth rates, or perhaps more simply, I mean, where do you see trough levels to build on margins and revenue growth as you go through this transition? And that's the first question. Secondly, can you give us any feel for kind of customer economics around the Bluebeam shift? So for example, how does the year 1 price of a subscription compared to that of a license, and how much of a pricing uplift would you expect to achieve when you transition a maintenance customer over to a subscription? And then thirdly, just a bigger question for you, Yves. When it comes to your perspective on Nemetschek's business strategy, is your approach to steer Nemetschek on its existing paths set out in the past few years, or based -- or are there any changes for areas such as M&A you're focused on accelerating?

Thank you, George, and very nice to meet you. So I think we will answer together your 3 questions here. So maybe I will start with the last one. Look, only the beginning -- after 22 days now in Nemetschek Group, but clearly, my personal view is...

So Martin and George, I don't know where we were cut. So maybe, George, I don't know what you heard [indiscernible].

Yes, just the very beginning of your section, so when you were getting into your kind of view on things from here.

All right. So what I was saying is that my view on the Nemetschek Group's strategy is not to change it. So we are clearly focusing on the overall building life cycle and looking at any opportunities to continue strong organic growth with our existing brands, bring innovation, bring new features to existing customers, be close to them, move to cloud solution, move to subscription and SaaS. But also, we are going to look -- continue significantly at further investment on start-ups and M&A activities within the building life cycle, AECO, but also on the Media 3D animation sector, and also look to see how this could potentially accelerate some new innovation and trends in technologies such as digital twins, AI, machine learning and VR. So then your question on the margin for this fiscal year. I will let Axel comment. But I think clearly, we are only starting the migration of Bluebeam in Q3, so in July time frame, which means that we still have the benefits of non-subscription revenue for the first half of the year. And we are seeing very strong performance going on, especially with high growth on other verticals, especially Media and still a good performance projection for the next 12 months or 10 months -- 9 months on the Design side.

Yes, I think good point. George, from my side, Axel here. I think we're continuing to very carefully spending in various areas as we go into this year, what we've seen so far in the first weeks. And again, your math, I think, is right that we're trying to compensate and it seems to be possible some of those impacts that we will be facing in the second half. So that makes us feel confident to give that kind of guidance. And regarding -- and maybe in combination to that, also part of your question was whether -- if I understood it correctly, we would see some pricing customer-facing uplifts or possibilities, opportunities there regarding Bluebeam subscription. But rest assured that I think the main focus of the team currently is really to convert as many customers, existing customers to the new subscription offering as well as to get -- continue to get as many new users on board as we have been getting on board in the last few months, then for them, primarily in the subscription model right away from the beginning, but the focus is really not on any large pricing increases or uplift there for the moment, right?

Yes, that's clear. And maybe if I can just follow up on that last one. I mean, I guess, typically across the rest of software, we've seen customers do maintenance to subscription shifts on existing customers, you kind of typically see somewhere between 20% and maybe 35% uplift on the pricing in exchange for the additional functionality you'd get. Is that ballpark the same sort of area we're talking about here?

Well, I guess again, pricing is something that all the brands, those that go through a part of the transition or just have the underlying normal business take very seriously, especially in this kind of environment. But again, I mean, if we're talking about 22 in concrete, and this is the guidance call for this year, and I don't think that much of an impact from what you indicate would be included in the guidance. Long term, there's no doubt that in terms of the rationale that Yves was summarizing for all of you, it's more why we're doing it and how we're doing it. Of course, some of those new features will lead also into a differentiated pricing. So that's the benefit, I think, that we all would see as part of the rationale for that transition long term.

The next question is by Chandramouli Sriraman of Stifel.

Maybe a couple of questions from my side. Just Axel, you had historically mentioned that because of the product-wide transition, you would stick to the margin guidance range that you have historically talked about. Clearly, this year's guidance range is much more optimistic than that. How should we see this evolve in the coming years as you move more solutions to subscriptions on SaaS?

Thank you, Chandra. I think again, we're trying to answer in a combined way all of your good questions, Axel here. So I mean, no doubt that we were talking about the historical 27, 29, I think this is what you referred to in average margin for the Nemetschek Group. There could be periods and a constant ambition to strive for higher overall and create additional value, no doubt. So again, I mean, we've shown that we can do it. I think we've delivered on the promises that there's no reason to believe that we would limit our visions in the future, I would say.

Perfect. And maybe a quick one on the M&A contribution for this year. From the last couple of acquisitions, would it be fair to say it's in the low single digits?

I think, it would be even fair to say that it's a bit higher. The acquisition in terms of the growth rates, but in terms of the absolute numbers, we're talking mid-teens. That's an estimation of our best knowledge at the moment. You know that the last large acquisition, Pixologic in the Media segment is something that we totally combine and integrate into the existing Maxon. So we're not really tracking this as a complete separate. But the dimension of how we started the year, how we estimate the year is in the absolute numbers. So that's a smaller number in terms of percentages than what you had indicated in your question, definitely no.

The next question is by Sven Merkt of Barclays.

Great congratulations on the good results. My first question is on the guidance, which is clearly much better than what the market expected and also much higher than what you usually initially guided over the past year despite the headwinds from the Bluebeam transition and the backdrop of economic uncertainty. Therefore, really my question here is to what extent has there been a change in the approach, how you set the guidance? Is it fair to say that you have constructed your guidance maybe a bit less conservative way than what you have done in the past, or has the demand backdrop simply just improved? And then secondly, I was wondering if you could speak a bit about how large the market for energy-efficient renovations and redevelopments is for your customers. And if this has been a growth driver for you in the past and I know that some governments have subsidized this already, and I wondered if there's a possibility that this could become a more important growth driver for U.S., Europe tries to move away from its gas dependency.

So Sven, it's Yves, so clearly, in terms of the guidance, we had a very, very, very deep look at it, especially myself as the new CEO of this wonderful company. And I can tell you that I'm strongly confident that this guidance are strong and real. And I don't know -- I cannot comment on the past. I was not there. But I can tell you that these are realistic, fair guidance that I strongly believe we will achieve this fiscal year, both on the revenue and on the EBITDA margin. So I would not say they are very conservative. I will not say they are very aggressive. I would say, they are realistic.

Yes. Sven, Axel here, and I think it's also fair that over the last years and the times of the pandemic, we've also seen that we can -- at the cost of operation a little bit down in order to show the operational leverage. That's also part maybe of some of the learnings that we've seen in the last quarters. Now to your second question, the -- I think renovation does from what we hear, especially in the architect space and authoring tools definitely play an important role for our people, for our customers, for our project, for our business success. And in regards to the sponsoring that you mentioned by government, indeed, and we've seen just a recent initiative also from the European union. Whenever it's about energy efficiency, that's something typically where you would get subsidies and we get sponsoring also on the residential side. So to me, I think that's an underlying additional positive to what any way we would have seen in the construction market advantage.

The next question is by Knut Woller, Baader Bank.

And also welcome Yves from my side. It's actually 3 questions. The first one, also getting back to the margin topic, if I look at R&D expenses, the ratio has come down to 21.8%, which is, I think, a relatively low level compared to previous years. Is that a level of costs as a percentage of revenues, you see sustainable going forward? Then the second question is just a housekeeping question. Can you share with us the growth rates of Bluebeam and also its share of revenues in 2021? And then the last question, looking at your transition to subscriptions, I think you managed it compared to other companies quite smoothly. And can you give us here some ideas how we should think about license growth in the coming years despite the shift to subscription. I think you will provide choice to the customers that already use Bluebeam that they can add for a certain period of time still under the traditional model licenses. So how should we think about -- or what's your view on licenses in the near future?

So nice to meet you, Knut. So maybe let me start with your last question. So clearly, as you said, we have a segmented approach, which means that we are not doing a full migration to subscription of all our brands at once. We started over time with Design. Maxon did a full transition already and they started in 2019, and they are very, very successful in their subscription transition. And now we are doing Bluebeam. Clearly, I think each brand, each sector, each submarket, if you want, have specific needs. So I don't think we can say that we are going to apply exactly the same business model for an architect, which is in SMB or a large construction company or civil engineering or infrastructure customer. Seeing each of them have different needs, markets are also different in terms of geography. So obviously, if you look at Western markets, North America, clearly, subscription is really well received. In some other markets, a little bit more complicated. But that's why I think it's going to be a case by case, and we have a specific tailored segmented strategy. So it's not only segmented, but it's also tailored for each brand, each product line, we are tailoring such migration. Also depending on the level of new feature tests that we are able to bring moving to SaaS and cloud, new features for each product line, et cetera, are different for each brand. And there is -- so clearly, on our side, Bluebeam and Maxon, for example, if you look at the strategy, they are quite different. But at the end, the goal is to have a smooth transition and have very high customer satisfaction, have very low churn and make sure that retention is there and that we are going to continue to grow the business. So again, I think this tailored segmented approach is the best one for the group.

Yes, Knut, Axel here. Maybe just to add to what Yves said already. I mean, your question around the margin and the R&D, rest assured that the management is interested in order to run the business on a sustainable level. So in terms of just a single quarter, looking at some quota of some functional costs, I think we need to view that from a longer perspective and that the company is still continuing to hire and always had announced that the expenditure levels that we would have seen in 2020 and in 2021, our ambition is certainly to continue to invest in certain areas in the business, right? It depends on the market circumstances, of course. We would not, to your other question, break out the exact Bluebeam growth. I think that would go down to a brand level. But I can comment, many on, when you look at the Build division overall and its growth in the year 2021, it's a very good indication also knowing that Bluebeam is the vast majority of that division. So there's not much of a difference to the remaining part of that division when you want to calculate it backwards to what was just the Bluebeam growth overall. So that, again, is something of the positive elements that make us feel confident to go into the transition in the second half because we've been adding constantly over the last months and quarters, new users, additional business to that business and gaining share. And then the last part of your question, I mean, the license as Yves was saying license in general, is an important part of our business model. And especially when you think of the Design division, for example, and that's why we go through this phased approach and the licenses in those areas where it's still representing the majority of the business will continue to be a very important part that we keep monitoring, keep investing and keep also growing the business definitely.

And just a quick follow-up. I mean, you mentioned that this year, you still have the tailwind from half year, excluding the transition to subscriptions. Looking now at 2023, I know you don't provide guidance beyond that. But just -- should we expect then to see a dip in terms of margins on the back of the transition, or are you confident to be able to maintain the margin that you set for this year despite the transition also having a full year impact of this transition in the books?

Well, this is something which is currently work in progress to see that we are currently working on. We have -- for the moment, I received some positive views for next year. But of course, we need now to go deeper in the details to understand the exact impacts and mitigation plan and So we're not ready yet. So we need more time.

The next question is by Martin Jungfleisch, BNP Paribas.

My questions are 3, if I may. So the first one is a follow-up on the guidance really on the Bluebeam transition. So how much of a headwind from the Bluebeam transition is baked into the revenue guidance for this year? Do you still expect overall billed revenues to increase this year? Or should those rather stay flattish given the transition? The second question is on the Manage segment. The decline here was relatively surprising in Q4 following growth in 9 months, what has driven the decline in fourth quarter? And what are your more midterm expectations for the segment? And the third question is on headcount. Headcount was only up 3% year-on-year, I think, which is the lowest increase in the past what are your expectations on headcount additions this year? And how difficult is it really to gain the talent? And maybe you can also talk about personnel cost inflation, I think, as expenses were disproportionately higher than the increase in headcount?

Well, Martin, good to meet you. Three good questions. Maybe in the same sequence. Look, I think, Yves has indicated it already when he was walking you through the rationale of the Bluebeam transition and what we're doing. And it was fair to say that the growth this year would have been probably a little bit higher. We're talking a low single-digit percentage point we would guesstimate depending on a lot of parameters that play into this in the second half, and we'll see how we'll end the Q3 and Q4. But definitely, that's factored and assumed as the current forecast stands definitely. And the logic, yes, will be that naturally, this effect will be greater next year because we'll face the full year effect. But again, we're saying it's a bit too early really to give concrete parameters of guidance on 2023, depending on how the first few months maybe of the transition will go. And therefore, I think it's a great decision that will provide additional KPIs to just show the expected success of the transition in terms of the conversion and the new wins. The question regarding Manage, I think we tried to comment on during the presentation already in terms of the overall economics out there and the environment, it is the division, luckily the smaller size segment where we experienced the most hesitation and influence from the environment. It's mid- and long-term topic that we're totally convinced. Short term, we need to carefully look at individual projects. We need to work harder on customers, that themselves do not have yet the full visibility on, for example, occupancy in office buildings. And that's why, I guess, the entire industry, be it including real estate, is somewhat still impacted from that. It does not mean that, again, the promising long-term growth potential that we would see. And that leads us maybe to your question regarding headcount and personnel costs. No surprise. I mean this industry as many others, as we see it also in terms of the general inflation, does experience a job market for IT, tech, R&D, but also other functional positions and costs that is asking for some higher costs. At the same time, the company is hiring depending on different geographies, countries, size and locations and this continues to commit to invest in a further increase also in staff, clearly. So that would be the answer to those three areas.

The next question is by Deepshikha Agarwal.

This Deepshikha Agarwal from Goldman Sachs. Yves, congratulations on the new role, and overall, congratulations team on a great quarter. So the first question -- I have a few questions, basically. The first question is more to Yves. He indicated in the release an increased focus on the next growth phase by building on sales trends as well as new technologies. Please can you elaborate on that some more color on the same and when do you expect to see the benefit of the investments for this growth phase, and when will that impact the overall growth? The second one, then coming back to the topic of margins. Definitely, margin guidance has been ahead of expectations. Now in the past, we have talked about hiring in FY '22 and then there is this transition of Bluebeam. We just like trying to understand what exactly is done in this half than expected margin for FY '22 the guidance. Are there any costs that have been pushed out or are there any longer-term cost savings we start here to say, basically? So what makes understand, in that context, how should we think about the margins in the medium term? And the third one is more on the venture investments. They are more in the Design and Build segment. So can you talk about how you expect these investments to enhance growth and contribute to growth metrics over the longer term?

Very nice to meet you, Deepshikha and thank you. So I think, look, the next growth phase is something that we need to define now. I'm here, again, only my 22nd day. But what I can tell you is that what we worked on with the team already for fiscal year '22 guidance, and you can see it already a next phase of growth with higher expectation than the market had on both revenue, but especially on the margin side. How do we see that for the midterm is clearly something again that we need to work on, too early to say. We need to see now how Bluebeam transition will work and how successful it will be and what will be the exact impact starting from Q3 this fiscal year. And then, of course, we need to see how we can accelerate some innovation. And on some of our brands to add new features and increase customer loyalty and retention in general and to sell additional features end product and to continue to be the leader, providing state-of-the-art solution to our customers, which is clearly the fact that when I start talking to customers, I can tell you that I'm receiving excellent feedback about our feature set and the fact that in most of the cases, clearly, we have the best product in each of our segments globally compared to competition. Well, this is what our current customers are saying. I'm not saying that I'm talking to people who are not our customers yet, but receiving excellent feedback about our technology and features about the company in general by brand, obviously. Now the guidance on the margin, again, I think here the same answer that what Axel answered before, too early to say. We need to see what will be the impact on the transition in more detail to subscription, especially for But in general, first of all, for this fiscal year, we are highly confident with our guidance. And in terms of OpEx, well, yes, as Axel sayes, it's -- we are still hiring. We continue to hire. So it's not like we are not able to hire. Obviously, like any industry and ad market, it's much more difficult to hire today than 2 years ago. But we are hiring, and we are able to attract very good talents. And on the start-up side, so we are continuing our venture investments. This is something that I want to see how we can even accelerate further potentially. Obviously, the main focus was until now to really focus on start-ups, which are bringing additional technology or business model or complement solutions that we have in our existing division and brands, which is still the main focus. But potentially, we may also invest in adjacent startups, which are in the building life cycle or in the Media 3D animation cycle. So we are currently looking at it. I'm having a regular review of the pipeline, et cetera, so work in progress.

The next question is [indiscernible], Berenberg .

The first one I've got is on the Bluebeam transition. Just wanted to get a sense of -- it was mentioned -- you mentioned that the existing customers will have a limited time period to continue on the model. Just want to get a sense of what is that time limit? And if you have any internal target or expectations in terms of how much of the existing customer base you would like to have transitioned in the first year, i.e., FY '22 onto the subscription transition? And I've got three more questions, which I'll follow up later, if that's okay.

Okay. Axel here. Good to meet you in the call, again. We talked about the Bluebeam, I think, transition already during the call. We hear you in terms of can we be a bit more concrete, in terms of what is the limited period of time. Again, this is an average statement and there is definitely, I think, subject to the Bluebeam's management team's decision in individual cases. But on average, imagine about a 1-year transition period in terms of still having the option for existing customers to choose, right?

Right. Okay. That was helpful. And then also, I've got a question on margins, which a lot of you talked about. Just trying to get -- I'm trying to work out the mechanics behind it, I suppose in my head, we've got a few macro structural and then the transition headwinds to which in my head are worked out about 2 to 3 percentage points headwinds instead of margins. But with your guidance, you're almost citing almost up to 100 basis point increase potential for next year. So I wanted to understand where you're able to see the margin expansion coming through. Is it in the underlying operational leverage improvements from some of the brand consolidation that you've done in the past? And insights would be helpful here.

Yes. I think you gave the answer already yourselves. I think we'll be cautious in terms of the expenditure levels in OpEx. We will realize a continued synergies in terms of the operational leverage, as you had mentioned. And that again is together with also some good developments in the coming months in terms of the operational, just business performance, allows us to compensate somewhat the expected effects in the second half after the Bluebeam transition.

Super. Very helpful, and congrats on the quarter and a good set of guidance next year.

Thank you.

The next question is by Andreas Wolf, Warburg Research.

Congratulations on a strong year. The first question is for Yves. Hi, Yves, welcome to Nemetschek. I understand that you're still in an early phase of analyzing the company, I guess, and getting acquainted that with everything. Nemetschek has been run basically in a decentralized way so far, heading the role of a CEO might probably focus more on a centralized approach. Is it how we should look at it? And would you, if yes, see potential to find synergies within the brands? And then the second question would be regarding growth in general in the Build and Design segment, what is basically driving growth? Is it predominantly right now geographies, adding new users? To what extent is it basically more revenue per user by adding functionalities?

So just to answer your first question. So I think clearly, what attracted me clearly with Nemetschek Group are the strong brands. I mean, we have fantastic brands who are very close to our customers, who are bringing a lot of innovation and are very agile, and this is clearly something that I do not want to kill. Now it's true that we used to have even more brands, and we are already starting now to integrate some smaller brands within some bigger brands, and I think this is probably something that you will continue to see over time in the future. So it's not like a full centralization, but it's clearly probably doing some synergies, especially within the division. Like, for example, Maxon, we did some Media & Entertainment acquisition, we integrated all the acquisitions we have done within Maxon. So we may look at that more and more. Now saying that we are going to centralize everything is definitely not something I'm currently planning. But of course, I will analyze all the options and see what is the best for the group. But in particularly, the main focus is customer, what is the best forecasting, how can we bring the best innovation to our customers and have helped them to find solution for their needs. And so far, my understanding is that the strong brand approach and the strong customer that we have is working. But this is definitely not something that we want to kill. Now can we do more in terms of go-to-market and look at being more aggressive on the go-to-market side? Probably yes, and this is something that we will look at in the future. So the growth on the Build and Design, so I think clearly, what we are seeing, especially with Bluebeam, is a lot of net additional users and subscribers. So clearly, we have new seats coming with existing customers, but we have also new seats coming from new type of customers. So it's definitely not a price increase, it's really adding on new seats and new customers, in general, in particular, on the Build side. And on the Design side, I think we are also seeing some good traction.

Yes. And I think the part of the question we would agree with in terms of the international business, not all brands are available yet and as successful as they are in their core markets in some new markets in terms of the internationalization, meaning going from Europe to the U.S. vice versa. So that's definitely true when we can control that being also a growth driver currently.

There are no further questions for the moment. And so I will hand back.

So thanks, everyone, for attending. We will look forward to catching up with you in the next quarter. If you have any follow-up questions today, please do not hesitate to contact me or my team. So let me conclude the call. Thank you again for your attention and for joining the call.

Thank you, everyone. I look forward to working with you in the future.

See you soon.

Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.