© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Dear ladies and gentlemen, welcome to the earnings call of Nemetschek Group. At our customers' request, this conference will be recorded. [Operator Instructions]May I now hand you over to Stefanie 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 second quarter and the first half of 2021 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, Stefanie, and welcome also from my side to today's earnings call of the Nemetschek Group for the second quarter of 2021. You all have probably seen in our pre-release on Tuesday already with the main headlines of our second quarter results and our increased guidance for the entire year. For today's call, as Stefanie said, we have prepared a little slide deck containing additional information with regards to 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 one rather 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 #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 EUR 166 million in the second quarter, corresponding to an underlying foreign exchange adjusted growth of 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 EUR 100 million in the quarter. The overproportional EBITDA of EUR 56 million 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 EUR 0.29 per share. This success once again highlights the operational strength of our business, which is based on, first, a strong market position together with our attractive and innovative software solutions; second, our successful strategic initiatives; and last, not least, the 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 the great work. Page #4 gives you a summary of our key business highlights after the first 6 months of the year. Similar to the second quarter, the H1 figures also testify our strong operational performance. Despite substantial headwind of more than 400 basis points, mainly stemming from the U.S. dollar, we were still able to achieve reported revenues of EUR 324 million. On currency adjusted basis, this means our top line increased by more than 16%. 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 were both integrated into Maxon. And as promised, we now operate at 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, Sablono, a digital solutions provider for increasing efficiency in the construction process, we also invested into the U.S. start-up Reconstruct, an expert in the quality control of construction sites with its artificial intelligence-based solutions. Both firms, according to our view, have a great future ahead of them. And by partnering with Nemetschek, we will be part of this success. We also strengthened Allplan's position as the 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 and SaaS offerings underpin the success of our segment-tailored approach, in which each segment's subscription strategy is different and likely 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 of 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 currency-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 recurring 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-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 share to a remarkable 18% as of today. On the next Page #6, we provide a more comprehensive overview of our most important operational results. Going more detail down the P&L, you see the overproportional increase of our EBIT and EPS. Besides the operational performance, this is mainly a function of 2 factors: first, stable depreciation and amortization charges, including purchase price allocation; 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 EUR 106 million, 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 in important metrics such as the equity ratio, which now stands at almost 50%, precisely 49.3%, and a net cash position of around EUR 60 million. Those strong earnings, the cash flow development, along with our extremely solid 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&A targets and venture investment opportunities rise up in the coming months and quarters. Now to conclude on the results, let's look at our 4 reporting segments on Page #7. Starting from the left side, our Design segment achieved an outstanding result in the second 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 of these additional opportunities. 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 to 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 N Group's customers overall. In our Manage segment, we saw a sequential pickup in growth to 15.5% after just 9.2% in the first quarter. 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 successful integration, as mentioned before. Before we now get to the guidance for the fiscal year 2021 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 that we're talking about a few, very specific submarkets and customer groups, where, for example, the occupancy of buildings that's not yet fit to do pilot testing or owners simply acting somewhat more restrictive with investments due to the pandemic or experiences during the pandemic. Nevertheless, we consider this a future growth market, and the Nemetschek 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 Bluebeam 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 a currency adjusted growth of 12% to 14% at constant currency. 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 #11. The Nemetschek Group had a super start into the year 2021 with a strong operational growth, mainly driven by the high demand for our 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 construction are intact and offer substantial growth potential in the coming years. We're bullish and we're convinced that our strong market position, 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 forward to EUR 1 billion mark. 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.
[Operator Instructions] The first question we received is from George Webb of Morgan Stanley.
I have a couple on Bluebeam and then on margins. On Bluebeam, you mentioned that the second quarter was very strong for new customer acquisition. Just thinking back pre-pandemic, there's a 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. And secondly, I just wanted to understand a little bit better the longer testing cycle you're going through with some leading customers. What are the discussion points that have arisen 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? Should we -- obviously, we should be extrapolating this year, but what's the right sort of level we should be thinking about?
Thank you, George, for the many questions. Let me try to go one after the other. So first, on Bluebeam. Indeed, this is a very 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. The Canada being quite strong. Europe, we're making progress. And finally, really getting up to a critical mass in the U.K., 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., where 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 customers but really spread evenly across various areas. And that makes us really feel good about the current momentum. So again, Bluebeam, if you just look at the second quarter, 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 a 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 2/3 of what I would call just the overall business development momentum and the cost savings, maybe 1/3 of that is related or can be attributed to the Bluebeam shift, if you want so, in terms of more favorable margin that we now see more likely going into the full year. Then last 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 '22 and '23 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 that 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 -- 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 with 27% to 29%, now 30% to 32%. When we think about 2022, what's the -- if you still have this Bluebeam transition to go through next year, presumably we shouldn't be taking 2021's 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 see some effect of that. But let's come up maybe back on this when the launch and also a few other parameters are a bit closer to the start in terms of timing of the [ new business ].
The next question received is from Sven Merkt of Barclays.
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, Sven, and also thank you for the compliments on the so-far performance; I'll pass it on to the broader team. 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 question and 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 what 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 share and as many customers to please them with a 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 to investments and, in particular, the headcount. You're right, we're facing -- I think we're not the only company, 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 a certain market, 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 are 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, and 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 customer wouldn't see but they would help us to prepare the company to continue to grow and also master that kind of growth, and the growth kind of comes along with it. So that's well understood and well underway.
The next question received is from Mohammed Moawalla of Goldman Sachs.
[indiscernible] second quarter as well from my end. I had 2 questions, if I could, Axel. Firstly, in terms of the sort of slightly more delayed transition on Bluebeam, has anything changed in terms of some of the product delivery? 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 acquiring 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 over the next couple of years?
Thank you, Mohammed, for those 3 questions. I think that they're all being excellent ones. Let me start with maybe again Bluebeam. 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 innovation. 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 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. 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, if 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 second 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 nut of 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 preparing the products to become ready in various pockets of the organization. So that is independent really from whatever Bluebeam does at the end of the day. We have collectively gained so much positive experience from that topic of subscription overall in the last years that, actually, we're 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 to 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. And if I could squeeze one more in. Just 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 to still deliver in that kind of mid-teens growth 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, Mohammed, I think it's a bit early again to talk about the guidance in more preciseness on a year that is still to come in 2 years from now. And we'll 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 pays into, I would say, a confirmation of the previously outlined guidance. And there is not this one big single factor.
The next question is from Martin Jungfleisch of Kepler Cheuvreux.
Also congrats on a very strong quarter. Two questions, please, from my side. First one is on M&A. I mean you've recently done a few minority investments to start-ups. Is that a sign that it's increasingly difficult to do large M&A? And could you provide an update on M&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 Allplan and SDS2 and also Allplan and Precast. Can you share some initial feedback from customers? And if this also helps you grow in the larger customer segment?
Yes. Thank you very much, Martin. Good to have you in the call again. And related to M&A, I'd say, well, it's not -- haven't gotten much easier in terms of the M&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, 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 in our diligence work. 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 accurate 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 being somewhat careful. It does not mean that we don't go after those right ones. But given the consolidation that took place for established targets 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 the 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 Nemetschek Group, which sometimes is our internal way we're structured and 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 angles 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. 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 becoming even strong -- very, very strong relevant player in the infrastructure sector. And Allplan is positioned extremely well. Fair enough, more in Europe and the opportunity is across the Atlantic but even also here. And Precast as well as the steel competence serves 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 SDS2 is just brand new. And I would say, stay tuned, there's more to come.
Next question is from Uwe Schupp of Deutsche Bank.
Two questions remaining for me on the 2 smaller segments, if I may. Firstly, the Manage segment, they have 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 or 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 Redshift is pretty much done now. And basically, is that the main reason for the strong margin improvement? And again similar question really; is 35% margin basically the normal here or is it beyond -- is there room beyond the current -- or the integration work that you -- admittedly very hard integration work that you have done here?
Yes. Thank you, Uwe. Greetings to the Deutsche Bank's team. I -- 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 fruits 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 & 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 is a 3-phase approach. First, we want to integrate really and form a critical relevant player. Second, 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 really takes us seriously, gets to know us, gets to use the product. 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 Manage, I have a different opinion. I think Manage 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, during the presentation, we gave some reasons why that there is -- maybe that subsegment that they would target not being the easiest one with people not yet being fully back in the office, and facility managers and owners are somewhat 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 margins, I think we've been investing still with 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.
And the next question is from Sven (sic) [ Knut ] Woller from Baader Bank.
Actually, it's Knut. 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 the 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 quantitative perspective. Looking at travel and expense and hospitality, we have seen quite a substantial decline of 73% year-over-year from '19 to '20. It was down to EUR 3 million 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 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 a 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 a meeting with large 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 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 there's a good point that 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, I think, in all companies that would have launched subscription according to our intel on hand. And what we clearly would see is that the U.S. being the core centerpiece of our Bluebeam business from the last success years, that is definitely going in the first phase more than maybe international regions where if I just take the DACH region, the U.K. 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 and 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 and 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 and dual business models. So that can be a temporary effect. Yes, good point. And that's on the mind and in the scenarios currently as we think along the lines of the launch timing definitely. And then remind me of what your -- the third part...
The cost savings, Axel, from travel and expense, which was down 73% in 2020 to EUR 3 million. So what of that can be maintained in terms of percentages in your -- in the hybrid 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 there. 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 is 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 intelligence. 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 in the past, and that's contributing also a little bit to that. But again, compared second half to the first half and this year, there's going to be rather an uplift in terms of the expenditure levels by good reason and purposefully as we currently projected.
The next one is from Andreas Wolf of Warburg Research.
Congratulations on the quarter. Two questions from my side. So 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 more or less opportunistic, consolidation, and what we should expect going forward? And the second is on Bluebeam. I remember when Bluebeam was acquired, Bluebeam 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?
Andreas, thank you very much for the 2 questions. So it was definitely not opportunistic what we did in regards to the brand consolidation. 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 Nemetschek 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 competencies to be stronger aligned with Allplan. 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 SDS2 and the steel competence, which is a strong position that SDS2 has there and a high stickiness of customers, very low churn, and it fits very well to also complement the Allplan story and the engineering journey on which path they are currently. So that is the way how we consolidate. Yes, as I indicated in earlier comment 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 it'd 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 large ones and then we have the smaller and medium-size businesses. Those were the ones coming via the web shop that also accelerated overproportionately in the second quarter beyond what we've been seeing there before. We've updated the web storage capabilities and functionalities. And while we continue to roll that out, it seems like we're very successfully reaching out to new customers that we didn't find ourselves being able to really address via the 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 receptence and acceptance of customers that are using Bluebeam Revu in its current fashion for the first time.
The next one is from of [indiscernible] of Berenberg.
Congratulations on the quarter. I've got 2 questions on Bluebeam and one on the harmonization of the group, if I may. On the Bluebeam, firstly, just wanted to check my understanding of it, I suppose. 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 transition plans?
Yes. Thank you very much. Again, on the Bluebeam transition, which I don't think the overall launch timing, if we ever have 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. And then second question on Bluebeam. You mentioned you've had quite a good success story or good success in web store orders, especially from the SMEs. I was wondering is it across all geos? Or is it coming from specific geographies?
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 frequent as in no other region. We're going down really some of the basic go-to-market work in the international markets, which, again, is very successful. We're seeing growth rates also there by, let's say, the traditional way to work by our dealers and resellers and do our own sales activities with own people and feet on the street. But the web store and the SMBs, 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 years down the line, is there a possibility that Nemetschek 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 Nemetschek is about. It's not in the Nemetschek's DNA. 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 know 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 3 divisions. We have done it in Media already. Basically, what you have said is the reality already. In Media & Entertainment, we have not a couple, we have 1, and that is Maxon. And there is a product that's even called Maxon One where you would find the entire product offering as a customer as really the place our creative studios and our customers want to be, right? Manage and Bluebeam are somewhat not as that complex. Manage and the Design are different. Build, I would say, is dominated by Bluebeam currently. And Design has the highest level of complexity and therefore, again, no surprise that we would have started lowering that level of complexity in that area more than in the others.
The next one is from the David Vignon of Bryan Garnier.
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 this division in Europe, and you are reporting the best quarter in Bluebeam's history when it comes to customer acquisition. Has Europe finally turned the corner on collaboration tools? And are you now expecting sustained high growth outside the U.S. for Bluebeam? And still linked to that, can you comment on the competitive landscape and what you're seeing when responding to RFPs, notably in terms of pricing?
Yes. Thank you very much, David. 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 Bluebeam, 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 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., at the Nordics or DACH, those being really the 3 main pillars of the Bluebeam business in Europe. We're very pleased with what we see there in terms of growth rates. So it's really nicely picking up.
That's helpful. And second is on the -- second question is on the guidance. The revenue guidance for 2021 implies that growth would actually slowdown in H2 compared to H1 and even compared to just Q1. And this is despite the Bluebeam transition being delayed to -- being delayed. Are you already seeing signs of a cooldown in the market? Or 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 in. And therefore, we calculate backward the implied growth for the second half, like you say, is a little bit slower than in the first half. But again, let's not forget where we come from in terms of comps.
The next one is from Holger Schmidt of Metzler Capital Markets.
I have 2 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 a guidance for the current year? And can we assume that the tax rate will be structurally lower?
Thank you very much for your 2 questions. So first of all, again, internationalization, if 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 DACH, are growing overproportionally. 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 DACH 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 to 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 terms of the tax reform of the new president that was announced. I'd say we will follow what will happen there. But [indiscernible] I think we're operating on a tax rate that is more or less likely to also be on that level going forward.
The last question for today is from Knut Woller of Baader Bank.
Just 2 follow-ups. The first one, trying to get some more thoughts regarding the integration that you indicated, Axel. Looking at the R&D ratios, it has been relatively high in the industry. So driven by the integration that you indicated, is there room for efficiency gains, pushing the R&D ratio maybe due to the integration of different products in major products. Is there room for efficiency gains going forward? That is the first part. And the second part of the question, just a technical one. The PPA, I think, went up quite substantially in the second quarter. 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 very much for your question as a follow-up. We look at the R&D ratios not really as the first priority when we do these consolidations or the simplification in terms of customers doing business with the Nemetschek Group. And we would have combined these units, and we'll continue to align also the product lines. Of course, we'd look at the R&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 Nemetschek 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 competencies under one roof, under one leadership. But we'll have a look at those and might 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 Nemetschek. 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 maybe an easier view for you to build your model, which is representative also for the entire year. I hope this is helpful.
As there are no further questions, I hand back to the speakers for closing remarks.
Thank you all of you for listening in, 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.