Earnings Transcript for NEM.DE - Q2 Fiscal Year 2024

Stefanie Zimmermann: Hello everyone and a big welcome. Thanks for joining our earnings call today to discuss the results for the Second Quarter and the First Half of 2024 Results. With me today are our CEO, Yves Padrines; and our CFO, Louise Öfverström. Today's conference call is being recorded. A replay of the call will be available at our website after the call. Additionally, you will find the report, the presentation, and the press release on our Investor Relations website as well. But now, let's get started. So, I would like to turn over to our CEO, Yves.

Yves Padrines: Thank you, Stefanie. Welcome everyone to our H1 2024 earnings call. You have probably all seen our pre-release last Wednesday with main headlines of our Q2 2024 results, our fully confirmed organic guidance for 2024, as well as our expanded outlook following the completion of the GoCanvas acquisition. As usual, we've prepared a short and informative presentation containing additional information with regards to our second quarter as well as first half year results that our CFO, Louise Öfverström and I will talk you through briefly, but we have enough time to address any questions you may have in the end. To begin with let me summarize the key messages for the second quarter as well as the entire first half of 2024 on Page number 2. We are delighted to announce that we were able to officially close the acquisition of GoCanvas on July 1st and welcome all GoCanvas employees. This transaction, which marks the largest acquisition in Nemetschek more than 60 years' history, is progressing in line with our plans. We continue to see big potential in the acquisition of GoCanvas and believe it will create substantial value for our customers and our shareholders. Looking at the operational performance, we'll summarize our second quarter as a continuation of the successful start of the year we had in Q1 with an ongoing high growth of almost plus 10%. Main growth driver was once again the recurring part of our business, particular the very strong increase of around plus 83% in our subscription and SaaS revenues, which is also reflected in all our major KPIs where we reach new record levels across the board. While our reported profitability was only at last year's level, it was heavily impacted by one-off costs in connection with our M&A activities. If we exclude these non-operational one-off costs would have recorded a substantial margin expansion year-over-year. Despite the continued challenging environment and our ongoing subscription transition, design segment had a strong second quarter. In addition, the segment benefit slightly from pull-forward effects in connection with the announced price increase for perpetual license by one of our design brands. Together, the introduction of new features, price increase makes the subscription offering of our design brands once again commercially more attractive for our customers. With a consequently forecasted acceleration in subscription SaaS sales and its short-term accounting-related dampening effect on growth, together with a substitute comparison base, expect that the growth in Q3 will likely be below the levels we have seen in the first half of the year for the design segment. Build segments continue to see a very resilient demand, especially in the U.S. Highly successful subscription transition of Bluebeam is progressing as planned and we continue to be very confident that the 10% growth that we achieved in will consequently more than triple towards the end of the year in Q4. The H1 results we are therefore exactly where we wanted to be after the first six months of the year. Also looking at our journey to a subscription and SaaS-centric business model, we have made substantial progress in the first six months of 2024, as mentioned, not only in case of Bluebeam, but also with our various brands in the design segment. Based on our successful start of the year, the expected acceleration in growth in the second half as well as the continued progress on our strategic initiatives. We are well on track to once again reach all our goals for the first fiscal year and therefore, fully reiterate our organic outlook for 2024. In addition, we also expanded our outlook during the acquisition of GoCanvas, more details on that later in our presentation. On Page number 4, you can see an overview of the corresponding figures the Q2 development that we just discussed. Our annual recurring revenue driven by a very strong growth of around 83% in subscription and SaaS revenue remained at a high level with an ARR growth of over 26%. The continued strong increase in ARR is an important indicator for the group revenue and cash flow growth potential in the coming 12 months. Our revenue as already discussed increased on a reported as well as FX adjusted basis by plus 9.7% to €228 million. Our EBITDA in the second quarter increased by 9.5% to €61.4 million, corresponds to an EBITDA margin of 27%, at the same level as last year. However, please let me highlight here again, that our profitability in the second quarter was impacted not only by our subscription and SaaS transition, but also by M&A-related one-off expenses in the mid-single-digit million euro range. If we adjust for this extraordinary non-operating M&A costs, EBITDA margin would have expanded significantly by more than 240 basis points 29.4% in Q2 which is in line with our internal expectation. The net income for the quarter also driven by lower amortization charges and a strongly improved financial results grew over proportionally by 27.7% to €40.5 million, resulting in earnings per share of $0.36. Before Louise will go deeper now into our financial results of Q2 as well as the first half of the year, I would like to use this opportunity to also give you an overview on Page number 5. Of the various strategic highlights in the first six months of the year in each of our five defined strategic focus areas. Starting with our clear number one priority. Our journey to a subscription and SaaS-centric business model. After we have already accelerated our approach with the transition of Bluebeam, no have also accelerated the subscription transition of our design segment. The results of this strategy are evident when you look at our figures. Recurring parts of our revenues and in particular our subscription and SaaS offerings are the clear growth driver of our business. The overall proportion of growth translate into an ever-increasing share of our recurring revenue is no more than 85%. We'll talk more about that topic in a few minutes. As we consistently highlighted over the last years, the fact that we did not make any large-scale acquisition in recent year was by no means a sign that value-accretive M&A was no longer on top of our agenda. We're therefore excited that with GoCanvas, we were able to acquire the leading provider of SaaS solution for the paperless collection, porting an integration of field data in construction and other adjacent verticals. GoCanvas is a perfect complement in terms of technology, customer base and geographic presence to our existing portfolio of solutions in the build segments and therefore, also provide us with access to the rapidly growing market for field workers in construction other adjacent industries. A combining Bluebeam with its massive base of office workers with GoCanvas customers in the field will create a truly unique ecosystem for the construction industry. Resulting synergy potential by addressing the already large and diversified customer base of GoCanvas with our solution in the Build segment and more importantly, in addressing the millions of users of Bluebeam the solutions from GoCanvas. As you know, Innovation and technological leadership have always been an integral part of our company's DNA. This is why, of course, the field of artificial intelligence also plays a major role in our R&D activities. As part of our strategy to become a leader in the field of artificial intelligence in the ACO and media industries we launched the MedCheck Group AI innovation hub. Main focus over AI Hub is to drive and streamline AI initiatives across the brand portfolio with partners alliance and customers. In this context that, convinced that ethics and sustainability are essential dimensions to develop and deploy AI responsibly. And while we have already introduced various new features such as the AI visualizer new features in ArchiCAD, Allplan and Vectorworks or 3D drawings part of Bluebeam Cloud also in order to win platform and also space well energy. We'll continue to add additional AI features to our solution in the future. Stay tuned. On the go-to-market side, our strategic focus in the ongoing internationalization of our business. Our goal is not only to further increase our resilience, for instance by further reducing the dependency on the European market, to also benefit even more the higher expected growth in regions such as North America and Asia Pacific. In particular India. As well as the Indian construction market with is extremely low degree of digitalization, strong urbanization trends, favorable demographics, and high growth rates offer a tremendous growth opportunity in our view. India to become next year, the third largest construction market in the world, and is already the top five global economy. This is why we opened a new go-to-market office in Mumbai, this is our second location in the country following our share of service development in research Excellence Center in Hyderabad. The convenience by increasing our presence in India we're better able to participate in the enormous growth potential of the Indian construction market in the coming years in decades. And last, but certainly not least the area of business enablement continue to make progress on the harmonization as well as the ongoing buildup of our organization it is important to ensure that we will be able to make the most of our tremendous growth opportunities going forward as well. A key initiative in this area is therefore our continued efforts to further enhance operational excellence. And with that said, I will hand it over to you Louise.

Louise Öfverström: Well thank you Yves and a warm welcome to our H1 2024 earnings call from my side as well. I would like to start with an overview of the key financial highlights of the first six months of the year on page 7. Yves already stated, I think it's really fair to say that we had a very successful first half of the year, the strong and profitable growth. This is expertly true considering our ongoing transition to a subscription and SaaS-centric business model. And as you all know, the associated short-term accounting-driven burden of this on our financial results. Starting with our accumulated revenue for the period from January to June, which grew by 9.6% on a reported basis and even by 10% on a currency adjusted basis to €451.6 million. In line with our strategy, the main contributor as you heard to our growth was once again the recurring part of our business, which is represented by our annual recurring revenue KPI ARR that increased by 26.5% to almost €800 million. This strong increase in ARR clearly shows the sustained good growth outlook for our revenues in the coming 12 months, and of course, giving our strong cash generation also strong cash outlook on that. So despite the still challenging environment, especially in the European construction industry. As one would expect, the key driver of this strong increase in ARR was our subscription and SaaS revenue, which reported an impressive growth of 74.9% to €230.9 million in the first half of the year. Our reported EBITDA increased by 10.8% to €129.7 million, which corresponds to a margin of 28.7%. However, let me also emphasize here that if we adjust the first half of the year margin for the M&A related one-off costs in the mid-single-digit million euro amount, the underlying operational margin would be 130 basis points higher, and therefore, we're 30% already within our guidance range of 30% to 31% that we have given for the full year. On the right-hand side of this slide, you can also see our continued high cash generation with a strong cash conversion of 109% as well as the super quality of our balance sheet at the end of the first half of the year. We continue on Page 8, we are showing the development of our four segments during the first half of 2024. Let us start on the left-side with our design segment. Reported a strong and resilient development in the first six months of the year, despite unchanged environment in the European design markets, and as a result, the revenue increased by 9.5% on a reported basis and even 10.1% on a currency adjusted basis to €228 million. The main growth driver here was the subscription in SaaS part of the Design business, which in line with our transition strategy for the segment as you just heard from Yves, recorded an extraordinarily high growth of 77%. And as already mentioned, the growth in the second quarter was additionally helped by a smaller pull-forward effect due to a price increase for perpetual licenses in one of our biggest Design brands. In combination with our ongoing accelerated subscription SaaS transition and a substantially higher comparison base last year in 2023, therefore, expect that the growth for Design in the third quarter will be below the levels we have seen in the first half of the year. This is fully in line with our plans. The segment's EBITDA grew clearly over proportionately by 22.6%, corresponding to a margin expansion of almost 300 basis points to 27.3%. Part of this increase is related to the extraordinary cost effects we had in Q2 in the previous year that some of you might remember, but it's also showing our continuous improvement in our operating leverage. So as expected, the performance of our Build segment continued to reflect that our largest brand within the Bluebeam continues to progress successfully in its subscription and SaaS transition, still thanks to the continued good customer demand, especially in the imported US market. The revenue grew by 9.9% on a reported basis and by 10% on a currency adjusted basis to €142.2 million in the first half of 2024. Given this resilient market outlook and combined with the ongoing very successful transition and the comparison base in Q4, if you look at last year's figures, where this comparable base is really for the first time like-for-like as we have almost no in perpetual licenses included for the first time, we continue to be very confident in our forecast that the current level of growth for the Build segment will more than triple towards the end of the year in Q4. For the segment profitability, it declined year-on-year to 32.6%. However, also here, as said already, adjusted for M&A-related one-off costs, we would have seen a margin expansion also in the Build segment year-over-year. The Media segment, the market continued to be softer, especially in the US market. Nevertheless, with our reported as well as currency adjusted growth of 1.7% and 8.5% respectively, were once again able to outperform the overall market. Despite the current softness that we can see in the market, we continue to see this segment's attractive growth potential in the mid to long-term based on the strong growth fundamental drivers in this segment. In addition, the Media segment's profitability of 32.9% continued to be above the group average also in the first half of the year. And last but not least, our smallest segment managed reported the lowest growth within the group in the first half with an increase of 3.4%. However, the segment's growth in the second quarter was negatively impacted by a discontinuation of a low-margin advisory service unit that we disposed of. Despite the continued investments into the segment's product portfolio as well as future growth opportunities, the margin expanded markedly to 7.4% from just 0.2% last year. Nevertheless, the segment growth as we see today, as well as the margin is not where on the profitability level where we forecast it for the mid and long-term. We're not going to what is arguably the most important but certainly the most impressive slide of the entire presentation today on page 9. The slide comprehensively summarizes the financial results of one of our key strategic priorities, our highly successful transition to a subscription and SaaS-centric business model. If we start on the right-hand side, you can see why we are once again so pleased with our performance in the second quarter. We already discussed the Q2 development of one of our most important transition KPIs, the ARR, annual recurring revenue. And as a reminder according to our definition, the ARR includes all of our different recurring revenue streams. So that would be subscription and staff but also the maintenance contracts. That means that if we strip out the maintenance part, the underlying subscription and SaaS ARR growth of more than 80% would have been even substantially higher. As expected with the termination of perpetual licenses for existing customers at Bluebeam, as well as the ongoing transitions of several design brands. Our license revenue fell by 50% and absolutely in line with our plans. As you can see on the left-hand side of this slide this high growth translates into a substantial increase of the share of our recurring revenues by 10 percentage point year-over-year to now 85%. This represents a new record high for the Nemetschek Group after the first six months of the year. In addition, we are very proud to report that our subscription and SaaS revenues account for the majority of our revenues now for the first time with a share of 51%. Now on the left-hand side of the slide, you can also see, the longer term picture regarding the development of our recurring revenues. And as you can see while we started with a recurring revenue base of just €175 million in the first half of 2020, we now more than double these more resilient and better plannable revenues than the last four years. Moving at the chart, it is also becoming very clear what has been driving this strong increase in recurring revenues and that is our systematic and successful transition to a subscription and soft centric business model, which led to an almost all increase in our subscription and SaaS revenue base. The corresponding subscription and SaaS revenue CAGR reached an impressive 55%. Well let's conclude our review today of the results for the first half of 2024 with a more comprehensive overview of our key P&L and cash flow items on page 10. If we break down our cost base and look at its underlying drivers, you will see that we have continued to limit the increase in the key OpEx component also in the second quarter at a very reasonable pace. If we look very briefly on the other operating expenses, you can see that they grew a bit over proportionally. If you look at the percentage growth and that has of course impacted by the M&A one-off non-operational M&A cost as we already mentioned. But also if we look further take a closer look at the by far largest component of our overall cost base being our personnel costs, you will see that after an already moderate growth of 6.1% in the first quarter, the second quarter increased just by 1.5%. This is partially due to the extraordinary effects that we had in personnel expenses in the previous year. And some of you can recall that, but it's also showing very strongly our continued healthy operating leverage in our various operational excellence initiatives that enables us to grow very strongly in terms of profitability for the group, but also keep the operating leverage at a very good limit. We have already discussed the development of the EBITDA and the adjusted EBITDA in detail. So I would, therefore, like to instead highlight some of the developments below the EBITDA level. Therefore, going further down the P&L, you will notice the over-proportionate growth in our earnings per share of 22.3%. This development is partially attributable to a year-over-year decline in our amortization charges, which is perfectly in line with our planning to say the historical amortization that is now running off, as well as a strongly improved financial results, especially in the second quarter and the main reason for this development is a substantial positive effect in the other financial income line that comes from hedging activities in connection with the GoCanvas acquisition. So looking at our cash flow development, the high cash conversion, along with our strong free cash flow generation in the first half, underpin the high quality of our earnings. The free cash flow increase of 18% helped an improvement in working capital, as well as a slight reduction in CapEx. And lastly, thanks to the very strong earnings and cash flow development in the first half of 2024, we were once again able to improve our already extremely solid balance sheet. Our net cash position at the end of the first half grew to €307 million, which represents an increase of 82%, while our equity ratio also improved by more than 150 basis points year-over-year. And given the natural unexpected increase growth in debt that will be shown in the third quarter as a result of the GoCanvas acquisition, we still maintain a very solid balance sheet. And in addition, thanks to our aforementioned good operating performance, as well as our continued very strong cash flow generation capability, we will be able to very quickly delever and return to our usual balance sheet metrics also after the effect of the financing of the GoCanvas transition. And with that, I hand it back to you Yves.

Yves Padrines: Thank you, Louise. As we come to the end of our presentation on Page number 12, I would like to turn to our organic guidance for the current fiscal year 2024, as well as the expanded outlook following the acquisition of GoCanvas. We have discussed before with our H1 results, we are fully in line with our internal plans. We have laid a very good foundation to once again achieve all of our targets for this fiscal year. Based on the strong fundamentals, as well as our very resilient operational business model, we fully confirm our organic guidance for 2024 after the first half of the year. Therefore, continue to expect an attractive growth at the high profitability in 2024 as well. So even despite the still challenging market environment and the ongoing transition of our business model to subscription and SaaS models and its accounting-related dampening effect on our revenue and earnings. In particular, the Executive Board expects a revenue growth at constant currencies of 10% to 11%. In addition, the EBITDA margin is forecasted to be in the range of 30% to 31%. ARR growth is expected to be around 25%. The result, the share of recurring revenue is expected to reach around 85% by the end of the year. In addition, based on the consolidation of GoCanvas, as of July 1, the Executive Board expects an additional positive effect on the forecasted revenue growth of around three percentage points for the financial year 2024. EBITDA margin in 2024 is expected to be deleted by around 100 basis points due to the GoCanvas profitability, which is still below the Nemetschek Group's average. ARR growth is expected to increase from around 25% to more than 30% in 2024, while the share of recurring revenue is expected to continue to increase to around 85%. Please let me highlight here that these figures do not yet reflect the full potential of the GoCanvas acquisition. Both revenue, as well as the EBITDA contribution of GoCanvas, are reduced by a high single-digit million euro amount in the second half of the year due to the IFRS related purchase price allocation. The true potential of GoCanvas and the combination of Bluebeam's Office and GoCanvas feed worker communities become even more credible and clearly visible in the coming years. In this context, however, I would like to emphasize that in addition to our standard remarks, the guidance is based on the assumption that there are no material changes in the global macroeconomics or industry-specific conditions. It is also based on the assumption, the effects with the acquisition, the 2024 financial year are subject to the assumption that important key figures including the calculation of the BPA charges for GoCanvas will not be finalized until later in the year. To conclude and summarize the presentation the first six months of the year 2024. I think it's fair to say that financial results along with our fully confirmed organic guidance shows that we are once again delivering on our promises and goals. And that is not only true for operational development, Nemetschek continue to be one of the very few companies that is able to show an attractive top line growth and profitability, while transitioning its business model to subscription and SaaS, but also the progress of our different key strategic initiatives, which prepares an Nemetschek Group on its next phases of growth. And with that said, I would like to thank you for your attention, and we are now ready to take your questions. So, operator, please back to you.

Operator: And the first question is coming from Sven Merkt from Barclays.

Sven Merkt : Great. Good afternoon. Thanks for taking my questions. I have a few, but maybe we can go to them one-by-one. So, first, I wanted to ask you what revenue you expect to consolidate this year from GoCanvas, because given that the business generated €62 million in AR last year and with just some growth, I calculate it's probably more four percentage points. But did you take a revenue haircut? Is that the high single-digit million amount, or high single-digit million headwind you referred to.

Louise Öfverström : Yes. Should we start with the answer to that instantly? Yes, you're right. So, while we see the growth, and especially in line with what Yves just said, we have this high mid single-digit revenue haircut due to the IFRS merger accounted related effects. So that is what is flowing that down. Of course, we are consolidating from first of July. So we are consolidated half of the revenues for this year, and then you have the revenue haircut that we have there. The revenue haircut we see did you say until approximately within 12 months, we received it in this year and you will also see it in the first half of next year, and then that has been sweated out which is in line with IFRS regulations.

Sven Merkt : Okay. Thank you. That's clear. And is it fair to say that you have not factored in any revenue synergies into this guidance yet? And could you give us a bit of an idea what level of revenue synergies you expect in the current year or possibly also next year? And overall what this would imply to -- for revenue growth next year and your 2025 revenue guidance?

Louise Öfverström : Yes. So given as Yves also alluded to in the signing call back then so we see -- one of the rationales of really, of course, there's a very, very impressive GoCanvas that we have just acquired with a very strong growth stand-alone and also in a very, very interesting growing segment. We also see considerable revenue synergies together with Bluebeam and also our other brands in the Build segment. So, that we see over time. We have not -- there's not a major impact there's no impact more or less in the first half of the year. Of course, we will have some minor effects, but that's nothing that we move the needle in 2024 and the revenues will then come start in 2025. But as we also outlined the revenues will come over time, and there's also different pockets of revenue synergies that we will see together. And some of those also include product integration, et cetera that will, of course, take a bit longer time. So we should expect to see the synergies so to say, starting from 2025, but then also in the years thereafter.

Sven Merkt : Okay. That's helpful. Thank you.

Louise Öfverström : But I general so to say, I think, that's just to give you a flavor of how we plan that and all kind of guidance, et cetera, out of that we will then give you more flesh on the bones in the 2025 guidance.

Sven Merkt : Perfect. Thanks.

Operator: And the next question comes from Knut Woller from Baader Bank.

Knut Woller: Yes. Hello. And thanks for taking my questions. Also a couple -- how long do you think it will take to that GoCanvas will be at group levels in terms of margins, and is there also from your perspective despite the high growth that the company enjoys potential to achieve margins above group average? That's the first question. The second question regarding your midterm ambition, I didn't find an update here. Is it fair to assume that at least mid-teens growth ambition should be rather will be at the higher teens level and going forward including GoCanvas. And just from a short-term perspective and this would be the last question. With you indicating that design growth should slow in Q3 below what we have seen in H1, should we expect Q3 to be below the 10% to 11% organic growth guidance? Or do you -- are you confident that this acceleration of growth could offset the weaker design growth? Thank you.

Yves Padrines: So thanks, Knut. Let me start with your last question regarding the design growth. So to make it clear, yes, design as you know is accelerating its move towards subscription. Now, obviously, the impact would be a little bit bigger in few quarters especially when Graphisoft for example is going to stop completely the sale of perpetual license for new customers starting from January 1, 2025. Nonetheless, we are doing that in a segmented way. You remember. So Vectorworks is now fully subscription since the beginning of this year the only market where they still sell perpetual license is in Japan, but Rest of the World is a fully subscription for Vectorworks even Allplan, when you look at Allplan, even if Allplan didn't announce yet really the end of perpetual sales entirely. Around 80% of the new seats sold on Allplan are subscription and only around 20% our perpetual license. So clearly the effect that we are selling less perpetual license over time now is going to have an accounting effect on the revenue. So if you look especially at Q3 three things. One, so the fact that yes it's the transition to subscription which is impacting the revenue. Second, there is this small kind of pull-forward effects in Q3 to Q2 mainly coming from one of our design brands. Remember Graphisoft they made a price increase of Perpetual license on April 1, but then they need it for their biggest market which is DAS for Germany, Austria and Switzerland and also some other markets on July 1. So they increased by around 10% their perpetual license price on July 1. Then they also announced as I just said that they will stop selling perpetual license on January 1 new customers. You can imagine that a lot of people then bought, especially, in that region and in other markets a lot of perpetual license in Q2 that means that we will probably have less perpetual license in Q3 now for such brands. Then number three, the last factor is the fact that in Q3 last year in 2023 Allplan had a big spike of perpetual license, especially, in September, right? Because it was an announcement that Allplan will stop selling standalone perpetual license excluding the attachment of maintenance of FSA which was kind of a last time buy of the possibility to buy a perpetual license only without mandatory as I say attached. So that's why we had big so we have a big comparison year-over-year on Allplan. So three effects should have a slight -- I mean impact we have to see now in Q3 on our design growth. And of course all will depend on success in subscription. So if we are more successful on subscription than we expected in design in Q3, while the revenue impact would be bigger than when this anticipated at the end for the mid long-term it would be good news.

Louise Öfverström: And maybe if you just want to underline because I think you also asked if that is to say impacting our 10% to 11% guidance for the full year for the group. No that's the way we have planned it. But Yves just alluded to that is in our plan and that was also the basis of the guidance. So that's why we do not see any dependency on that and say from that on our guidance for 2024.

Yves Padrines: Clearly, if you look at Q3 I mean on the Design segment we're expecting something lower operate and manage slightly better of course because we had this impact from the disposal of these advisory services. Then media should be better also in Q3. We already saw July which had some more positive movement especially in the US markets where this is where the biggest issue is in the media segment. That build should be in Q3 more or less the same level than Q2. But then as you said clearly Q4 is where automatically pure accounting-wise build is going to more than triple their performance that what they had in one single quarter in 2024.

Louise Öfverström: Yes. So maybe coming back to your first question Knut, if I got it correctly I think you said, first you started with a question, when we expect the group level, when GoCanvas be at the group level and also GoCanvas will have a potential to be over time over the group average. So I think first we have to – everything that goes into the – what we show in our results is of course impacted by the final PPA effects and also the revenue haircut that will last into the first half of 2025. So that's what we are going to finalize during the remainder of this year. And after that we can also as we said, with the 2025 guidance, we can be a little bit more specific on that as well. But that's an accounting-related effect. In general, if you look at GoCanvas standalone, they have a very, very strong growth development and also strong margin development. So they are already to say on pace they are, right now there were moving towards the group average that we have in the group as well. But so and I also see that in this segment a very attractive segment just likely with our build segments as well. Yes, it has the potential in general in this segment with over proportional leases over group average that we can see right now. However, and I think that is really what you chose to take into just that we have – as we have it for the other areas as well. We'll continue to invest into this growth, because this is a TAM or some dependent on how you see it that is very, very interesting to us. We continue to – we will not sacrifice our growth by optimizing margin but you know us well by now. So we will also not sacrifice the group margin in order to enable that growth. So whilst there are potentials, we will make sure that we leverage the balance between the growth and the margin in a way to create the highest value and we think that that's coming on the road.

Yves Padrines: I think then your last question – I mean the second question was around the ambition for next year in 2025. Well, I mean we're continuing to say that organically, as we are at least in the mid-teens growth, no change here. And then with GoCanvas, we will give you more flavor, once we have a little bit more detail, especially on the PPA effect, which is going to have an effect as Louise said, also next year, especially in the first half.

Knut Woller: Great. Thank you. Understood. And just one final clarification. On the tripling of the Build segment's growth in Q4. That's in an organic perspective excluding GoCanvas I assume, and if I understand your comments regarding Q3, correctly and also what you say about Q4 and builds potential there. Is it then fair to assume that Q3 overall, while not understanding against your full year guidance, should be rather below the 10% to 11% growth target? Or do you expect it to be within. Thank you.

Yves Padrines: I mean clearly, if you look at Q4 for the Build segment, when I say that it's going to triple in Q4 excluding GoCanvas. Yes. Now if you look at Q3, we might be potentially more in the high single-digit than double-digit growth correct.

Knut Woller: Great. Thank you for your answers and help.

Operator: Thank you very much. And the next question comes from Martin Jungfleisch from BNP Paribas.

Martin Jungfleisch: Yes. Hi, everyone. Thanks for taking my question. I have two, please. The first one is a follow-up on the GoCanvas acquisition and the synergy. In terms of users, you mentioned that Bluebeam has more than 3 million users but how many are addressable for the GoCanvas cross-sell, given that not all are paying and also you have some regional differences, would it be more than half, so 1.5 million roughly. And then the second question is on the Build segment. Builds revenues were up 10% quarter-on-quarter, implies that Bluebeam still has set to user growth of more than 20%. Is that correct? Or was Nevaris, particularly strong in the second quarter. Thank you.

Yves Padrines: Yes. So clearly, when you look at the Bluebeam users, you're right. So it's around 3 million users but a lot of them are not on paying users. They used to buy a privilege license and no momentum. So we have clearly around half of them which are paid users. Most of them I mean a big partner, a majority of them as you know move to subscription. And by the end of this year, we should be around 90% should be on subscription. So, obviously, as you also know, when we are moving them from SSA from maintenance to subscription, they are going to have this special price where it's a difference between the price of SSA maintenance and subscription. And then, they have the 10% yearly increase. Now to say, who is the addressable market? I mean of course, this is a ongoing exercise. There are already Bluebeam users who are using GoCanvas. They are Bluebeam users especially, if you look at architecture firms, et cetera, which are not necessary potential GoCanvas customer base. So, this is currently ongoing exercise that the teams are doing, just started the training of first of all, GoCanvas people to learn about Bluebeam. And then now also, for some of the Bluebeam team to also more about the GoCanvas portfolio. And we are also now looking at the overall, the overall synergy that we can do also on the product side, and also trying to see over time now, how we can probably do a white label of GoCanvas for Bluebeam and doing more workflow integration, between GoCanvas and Bluebeam solution. If you look at the performance of the second question, of the Build segment. I mean clearly, yes, there has been some good growth as we said for Bluebeam, but Nevaris was not as expected. Clearly, this is where Nevaris had some issues in Q2, which is clearly linked by some delays from some customers. And as you may know, Nevaris they are providing ERP for construction company in Germany. And as you know, unfortunately the German market is suffering a lot from a huge slowdown in construction. So they have also business in Austria, but it's the same in Austria. Clearly, it's Nevaris which is putting dragging build growth, a little bit down in Q2.

Louise Öfverström: Yes. And then I think we should always also bear in mind that especially, when you go through the 2024 financial year for Bluebeam. You always have to bear in mind, that you have the comparable issue because in the previous year in 2023, Blubeam still had considerably higher perpetual licenses up until Q4. It always was on the comparable basis. That's of course, what's balancing out that. And as I just alluded to despite that effect that is of course balancing it down, we have very strong growth in our new user growth. So, that's the assumption that you can take.

Martin Jungfleisch: That’s great. Thank you very much.

Operator: Thank you very much. And next question comes from Florian Treisch from Kepler Cheuvreux.

Q – Florian Treisch: Yes. Thank you very much for taking my questions. I have three actually, one is a quick follow-up to your comment around, as mentioned on the let's say, the fast shift in the design segment towards subscription? And what you mentioned around new business in Allplan for example 80% of seats are now subscription-based. So, is there a time line? And can you kind of accelerate the time line to be let's say, more aggressive than you were expecting to be in a way, I don't know stopping every license say it's the beginning of 2025, to really bring that subscription to an earlier end? The second question is around the Build segment. So if I look at quarter-on-quarter revenue growth, and if I add back to the mid-single-digit euro amount to the EBITDA level as I would assume it's 100% allocated to build, you grow EBITDA in absolute terms faster than the revenue terms. So is there any specific reason, why the margin was really popping up very nicely. So on my calculation, back to 40% plus. And last but not least, you reported the regional print with H1 number. So APAC has seen a nice growth acceleration compared to 25%, so up 10% in H1 that was flat in 2023, is there any specific driver for that? Is it already impacted by India? Or is it too early to assume that India can have an impact. Thank you.

Yves Padrines: So let me take your first question on the design side. So I mean, clearly, we made an acceleration of subscription for design, over the last 18 months and we are going to accelerate that. If you look at brand-by-brand, they have smaller brands who are maybe less advanced, but orders who were fully there already in subscription. If you take readout, for example, they are already fully subscription. Solibri, they are mainly now also subscription especially since they launched a new cloud and SaaS platform. Then when you look at our three largest brands, as I said, Graphisoft is going to stop selling perpetual license to existing customers on January 1st, 2025, but existing customers will still have the opportunity to buy perpetual license until January 1st, 2026. And then as I said Vectorworks is already fully subscription, excluding Japan, which will come later. And then ALLPLAN, I mean they are currently analyzing and see what could be a more aggressive move, but again 80% is already subscription. So, we are not -- we are already now planning to do some much more aggressive shift to subscription and design with this new announcement that we just made especially with Graphisoft the last few weeks. So, this is a big news. And we are expecting the design division in -- by the end of 2025 or sometimes early 2026 to be around 90% recurring revenue and around 50% of the total revenue of the design segment is planning to be subscription.

Louise Öfverström: Shall I take your second question versus the best margin? You're right Florian, to take out the M&A cost. June actually did show a nice margin expansion. The full amount of M&A cost is not in completely built, but the majority is built. So, we take that out we would actually we have seen a nice margin expansion also in the first half. And that's a little bit due to the economies of scale. So, due to the revenue growth that you see there as well and also the timing of the investment. We are investing heavily also into to the build segment in order to accommodate that growth in the following years but that's a little bit the timing on so say the build-up effects of that. So, yes, I think what you can conclude is that if you take out the one-off expenses related to build, they are still managing to strengthen their margin. But also going forward we will also use the part of that of course in our already planned investments that we also see -- that we have also included in our guidance. The third question, I'm not really clear that if I got that correctly, maybe you can repeat that please?

Florian Treisch: Yes. Sure. It was around the performance of APAC. So, first of all, if I look at your reported like it was up 10% in H1. I think it was just flat in 2023, ignoring FX for a second. So, clearly, let's call, it acceleration. Is it India? Is it a general better business in APAC and what to expect here?

Yves Padrines: Yes, so as you know India is a big focus for us. Now saying that India made already a significant revenue impact in the last few weeks and months no. We are just at the beginning. So, it is not coming from India, but it's coming from the fact that overall if you look at APAC, we saw nice growth especially then in Europe with the end markets. And we have a nice business, especially, in Australia, in New Zealand, Japan, these are very strong markets for us, especially when you look at Graphisoft and Vectorworks, frankly even Maxon. I mean very good performance there in Japan. Singapore, we were small and we are starting to have a little bit more momentum also in Singapore. I also personally spent some time there and we also received in all the local authorities and people from the government from Singapore here in our headquarter in Munich in Q2 to try to build a stronger partnership in Singapore. So, clearly, APAC is a strong focus for us. The -- so we can see the growth because the market is better and also because we have a stronger focus than in the past. But again I think it will take time of course to see the real effect of our investment, especially in India. As you know you have to be patient there. You have to be resilient. You need to invest especially also on education and that's why we were in India in the last few weeks for the inauguration of the office, but also to meet local government bodies and ministers there. And we also did some strong partnerships with new -- a new partnership with education and academia there. For example, we signed a partnership with JJ University, which is the most prestigious and oldest architecture art and design university in India, based in Mumbai where we have now opened an AEC Center of Excellence which is JJ Nemetschek AEC Center of Excellence with around a few dozens of computers and free licenses of our different products from Allplan Nemetschek, but also Graphisoft, Vectorworks, Bluebeam, Solibri et cetera. And we just did the same this week with another very large University in India and more to come. So of course all of that will have effects overtime, because as you know also in our business, it's not only to have the best product on the planet and then the strongest marketing, but you also need to make sure that people going out from school, they know about your product. If not, you're not going to be successful. So that's why we are going to invest significantly on education, in the Indian market.

Florian Treisch: Great. Thank you very much.

Operator: And the next question comes from Nicolas David from ODDO BHF.

Nicolas David: Yes. Thank you for taking my question. I have two actually. The first one is coming back on the Q3 trend. So just to clarify when you say, high single-digit growth for Q3, its organic right excluding GoCanvas contribution. Just maybe a question on that, because then I have two questions about it, maybe which will be on that.

Yves Padrines: Yeah. It is excluding GoCanvas, of course. Yes, purely organic.

Nicolas David: Okay. So it looks like, when you look at your comparison basis in Q3, not the Design Segment, but also at Build segment with some pull-forward license deals in Q3 2023. It looked like a pretty strong performance because, I mean, looking at the comps notably for design, I would have expected design to be growing maybe mid-single digit in Q3. And it looks like, you will be doing better. Is it because you have factoring some also this year pull-forward deals, notably on the Graphisoft side, as you are going to stop seeing licenses in January? Is it why it's not going to be so soft? That's my first question.

Yves Padrines: So I mean clearly, I mean 2024, is benefiting a lot of last-time buy of perpetual license mainly coming from Graphisoft. Obviously this is why we have also some push on the revenue side thanks to perpetual license. Now the fact is that, as I said, H1 was heavy on perpetual license and there will be still some perpetual in H2, but less than in H1, because also we made this price increase on -- in H1 especially on [indiscernible]. So if you look at what we said before regarding the Q3 performance on the revenue side organically excluding GoCanvas, when we say okay we should grow around high-single digit is for the group, not only for design. So design might be a little bit more impacted again, because of the three factors, I said below before. First of all, if we are better in terms of subscription, it will have a bigger impact. And we have this small pull-forward from Q3 to Q2, as I said due to the price increase. And third, we have very high comparable for Allplan where they had a very big spike of perpetual license, last September. So you're right, design might be -- may have a lower growth in Q3 than, definitely in H1. But overall, we should be still as a group in the high-single digits.

Nicolas David: All right.

Yves Padrines: Then the big growth the very big growth will come in Q4, coming from the Build division.

Nicolas David: Yes, definitely. That's clear. And my second question is regarding the dilution at the EBITDA margin level coming from GoCanvas. Could you give us a clarification ninth split between what's more the underlying margin dilution coming from GoCanvas and what is linked to exceptional costs? And maybe could you give us guidance for exceptional cost will stay at €5 million or mid-single-digit number? Or do you expect more cost in H2? And what do you see in terms of exceptional costs in 2025? Thank you.

Louise Öfverström: So in general, if you look at the margin on GoCanvas as I think we have not guided for that as I said as well, you can see that they will be slightly dilutive. And the dilution comes from that GoCanvas has not yet reached a group average. They are very well-profitable, but they have not yet reached the group average of the Nemetschek Group is quite high on the margin side. And that's due to that they are in the growth phase. So the impact you can see that you will see that the dilution of the 800 basis points that we have indicated that's due to that. And it's also due to the fact as we alluded to before that we have this deferred revenue haircut that we need to do under IFRS and that's of course drifting down to the EBITDA as well. So that's the two main effects. Of course, we will also going forward. In H2, we don't have a huge amount of any other costs. Of course going forward as we alluded to as we want to have synergy costs and et cetera integration, we will also invest into that. But that we will take together with you then in 2025. But in general so say in H2, you shouldn't expect any larger amount for that.

Nicolas David: All right. And just to be sure about that. I mean, 100 bps includes the M&A cost dilution, or is it outside?

Louise Öfverström: No, no. That is purely the effect of GoCanvas as such.

Nicolas David: All right. Clear answer. Thank you very much.

Operator: And the next question is coming from Naing Nay Soe from Berenberg.

Naing Nay Soe: Hi. Thank you for squeezing me in, and in interest of time, I just limit to one question. The question I have is on 2025 growth outlook, please considering some of the subscription transition headwinds that we might have in the decline segment in 2025 with the current demand environment in Manage and Media. If I would assume those three segments on average grow at high single digit in 2025 to achieve growth in mid-teens next year, I would need over 22% year-on-year growth in build, which by then shouldn't have much technical growth contributions related to Bluebeam transition. So I just want to firstly check if that line uptick is correct? And if it is correct that it will be great to hear from you what would be the building blocks behind that over 20% or so growth in build please?

Yves Padrines: It is correct. So clearly I mean the build segment is planning to grow with 20% plus potentially. I mean this is the area. And that's mainly coming from Bluebeam. I mean, the driver is user growth simple as that. Of course, the subscription impact, the pure accounting impact of subscription and all the deferred revenue that we have and user growth, user growth in the US, but then also all the internationalization push that we are currently doing the last few months and to come to really have a Bluebeam also much more present in Europe and in APAC and not only in North America, but its really a Bluebeam performance and accountability topic due to the subscription effect.

Naing Nay Soe: Perfect. Okay. And would you be able to quantify how much that accounting contribution would be towards that 20-plus growth in 2025?

Louise Öfverström: No, I think you can -- it's not a challenging. I mean you know how it is with the deferred revenues that you have deferred revenues in a subscription model. So while you are building up, you have very subscription growth at the beginning. Of course, you build up to say and then you start to recognize that revenue over time. And, of course, we continue to grow very, very strongly as we said in the new subscriptions but you have a proportionally higher effect at the beginning of that deferred revenue that you would then ask to, but we are now starting to in Q4 really to see a strong effect of. So that's the normal accounting treatment of subscription and SaaS revenue model. Sorry, so maybe just to be clear on that. So for the organic build, we do not expect any news to say accounting related effect in 2025, because then our subscription move has been finalized. Where we expect the accounting-related effect is in [indiscernible], so that's an additional guidance as we said as well. So the organic growth for build is more than if there is an effect that is still as I said the normal revenue recognition out of the growth that we have not seen in our subscription. And the second thing is, of course, you have a little bit of comparable still in 2024. So you always have to see the comparable in 2024, how much of perpetual revenue did we -- as we say for perpetual, we don't have any longer, but how strong was the growth, of course, the revenue in this segment. So there's no other accounting-related effects in 2025 in the organic case.

Nay Soe Naing: Right. Okay. And just to clarify here. So the normal accounting related deferred revenue on subscription contracts will be related to the ones that would have signed this year that the revenue recognition will ramp up because of the timing on the subscription.

Louise Öfverström: Which is a natural, right? Because when you start with subscription at the beginning you, of course, have more and more deferred revenues that will more and more sold say being recognized over time. And that's of course, added on by the growth that we have. But as you had a stronger proportional growth at the beginning, you cannot recognize so much at the beginning of that have a stronger effect also in the next year. So that is coming, but that's continuing as long as we are growing. So that's nothing unusual than. This is normal subscription.

Yves Padrines: It is normal subscription. The beauty of subscription model.

Louise Öfverström: Exactly.

Nay Soe Naing: Yeah. Got it. Understood. Thank you both.

Operator: And the next question comes from Victor Cheng from Bank of America.

Victor Cheng: Hi. Thanks for taking my questions. Two, if I may. First of all, on design, I mean you gave a lot of color by brand, how the subscription transition is. But if we take a step back and think about the segment as a whole, what percent currently is subscription? And maybe similar to what you've done with Bluebeam, how do we think about where the trough is in terms of slower growth and for the revenues that moved to subscription. What is the pricing power in there as people that move to subscription? Can you still do price increases similar to what you have done with licenses? And then secondly, relating to GoCanvas, is it correct for me to think that by H2 2025 onwards that there will be kind of no haircut on revenue. So it's -- so we should expect at least maybe four or even five percentage point of contribution to group revenues?

Yves Padrines: First of all, on the Design segment. Currently, we are in the mid-20s in terms of subscription revenue in design. So we still have a big way to go. But we know we are at the beginning. And of course, knowing the fact that we have some of the large brands doing this big push, I think it will still take a couple of years probably by let's say beginning of 2027 to have a good -- a stronger percentage. But again, as I said we are planning to be around 50% subscription by the end of next year or early 2026 for design in terms of subscription revenue. And design is planning to be around 88%, 90% recurring revenue already by the end of 2025. Regarding the price impact, I mean as the price increase were mainly on perpetual license, I mean, yes, there is no huge price increase contribution here in the overall revenue performance. Once we move to subscription, yes, I mean, of course, there will be still a price power over time, but it has to be linked of course what type of packages and new features we will going to offer. So that's why it's all about the packaging and the bundling and the new feature sets that we're going to offer for these different design products and different design packages. It's going to be a -- not going to be a like-for-like just price increase. That's not what we are going to do. Maybe partially with some brands, but majority will be more packages linked to price adjustment, especially when you look at AI features that we are planning to launch more and more in the coming years with generative design features.

Louise Öfverström: Maybe I should just confirm the GoCanvas. Yes, Victor, you're right. There would be no haircut effect in the second half of the -- of 2025 and that's due to the GoCanvas contracts are 12 months. So that's also the effects that we have to revalue at the beginning in that case, until the contract goes out and for the new contracts, of course, there's no effect. So starting H2 2025 there are no further effects out of that. And while we haven't guided on 2025 yet and on the GoCanvas something we would do. But -- but I mean, I think you can still say that you're not completely off in your thinking here. Of course, we will be better than what we now gave guided for the remainder of this year as we have this effect and that will go out next year. So that's the right line of thought and let us then guide as soon as we can then for 2025.

Victor Cheng: Very clear. Thank you.

Operator: And the next question comes from George Webb from MS.

George Webb: Hi, Yves and Louise. A couple of questions on media from my side. So look, if we're running more mid-single-digit percent organically at the moment kind of curious to see where you got where you see growth returning to beyond the current weaker demand environment. And I'm kind of really thinking about the fact that obviously Media had its own subscription transition before, which would have elevated some of those historical growth rates. So in short, do you think media can get back to a double-digit or even low-teens growth rate when you look out a little bit further? And then on the second quarter margin for Media at 28% that sounds like a pretty significant dip year-over-year. And any one-offs in there? Or were you planning for planning cost growth for a higher rate of revenue growth than you actually saw? Thank you.

Yves Padrines: So on your first question regarding media. Clearly, if you look at the Maxim and media performance, I mean, the slowness is really coming from the US market in general. If we look in China, but it's mainly US Rest of the world performance are as planned, they are good. Now, are we planning to be again in the mid-teens growth, not for the moment. I think, we should assume high single-digit growth for the full year of 2024, and then probably similar or potentially slightly at the beginning of the double-digit growth, if we look at 2025 but that will also depend on how the market is performing. Here, the impact is mainly coming from the fact that as you may know, content production spending decreased significantly, especially, if we compare to 2022 figures. There has been a decrease mainly in the US market of minus over a decrease in content production spending, which of course has an impact overall in the industry. Addition to the fact that, they were all Hollywood strikes et cetera last year et cetera but really the content production spending is having an effect on the overall industry.

Louise Öfverström: Yeah. So let me take your question on the margin for media. So I think that's a little bit related also to waive just said, we were clearly outperforming the margin even with this slightly softer results than we have in the past for media. So I think our story our product portfolio and also given that we have already gone through the subscription transition for. So we have the suite of products reseller subscription very successfully. That is something that gives us really a very good position in the market that so that we manage is to outperform the market, and that we are continuing to invest in. We're investing into a new feature in our products et cetera for the media segment, because you can see in the current figures you saw that is quite successful. So that is also impacting the margin. According to plan, there are some one-offs in the media in the Q2 as well. But to say, we are also -- I think the message you should take away here is really that we continue to invest into this segment, because we see that our position in the market gives us really the right to grow above the market even if the market is a little bit softer.

George Webb: Okay. Thank you.

Operator: And the last question comes from Agarwal Deepshikha from Goldman Sachs.

Deepshikha Agarwal: Hi. Thanks for taking my question. I'll just keep it quick. The first one is basically macro. A lot of your peers are kind of talking about like a lot of -- that they're seeing slowdown in overall construction market. So, like what exactly is driving your resilient? It doesn’t like -- what is making it different that the macro is not -- you're not seeing any change? And how do you think about macro going like maybe even six months down the line? Then in terms of -- like when we think about the Design segment you talked about the accelerated transition. So when we think about a more normalized the revenue model, when it will be more subscription, should we assume that Design will eventually go to somewhere close to lower-single-digit growth once that transition is complete? And the third one is a more quick clarification on that 100 bps dilution. So the 100 bps dilution does not include even the mid-single-digit M&A cost that was there in the second quarter.

Yves Padrines: Sorry, we cannot hear you any longer. Hello?

Deepshikha Agarwal: Am I audible? Hello.

Yves Padrines: Sorry, we lost you. The line is very bad. Can you please repeat?

Deepshikha Agarwal: Can you hear me?

Yves Padrines: Yes.

Deepshikha Agarwal: Yes. So, just basically three questions. One was on macro as compared to peers like who have been highlighting soft macro environment and construction, what is like how are you seeing macro for you even like maybe a quarter down the line? The second one is more…

Yves Padrines: Yeah. Sure.

Deepshikha Agarwal: And the second one is like if you look at the Design segment, once the subscription transition is complete, how are you thinking about the normalized growth? Will it be more closer to like low double-digit growth versus the high-single-digit that we are seeing? And the third one is a more clarification on the 100 bps dilution on the FY 2024 EBITDA that does not -- the clarification is basically that does not include the mid-single-digit M&A cost that was incurred in the second quarter, right?

Yves Padrines: Yes. So let me start with the macro one. So, if you look -- yes, as the construction industry as we all know and as already discussed in this call, there has been a lot of impact for the construction industry, especially if you look at the building and residential markets overall. But this is good news also somehow for digitalization, because clearly business as usual is not an option for a lot of players in the construction industry. 90% of the projects are late or over budget, 20% of the material used in the construction project are wasted, 40% of the global CO2 emission is coming from the construction industry and not only from design and planning but of course, a lot also on operate and manage. And last but not least, there is a huge lack of manpower in the construction industry. I mean the latest figures I've seen is there is an estimation of seven million people missing in the construction industry as skilled workers, et cetera, also, of course, mainly in the field. So if you add all these challenges. And then if you look at the margin of our construction project, which is often in the low-single-digits, I mean clearly business as usual is not an issue -- it's not an option anymore. And they need to find ways to really streamline their workflow to use more software solutions to deliver on time, on budget to really also have software solutions to design greener building that's already in the design phase to make sure that thanks to the ordering tools that they are using from us and others and that they are able to manage properly the quantities of material use during the construction projects and to work on use cases around energy efficiency et cetera, et cetera, et cetera. Despite the fact that yes the construction industry is facing a lot of challenges, ACO software industry. So it's not only Nemetschek, but if you look at the market growth the market is still growing. I mean this is what you can see if you look at data from different market analysts et cetera. Obviously, if you look at design and planning, especially in Europe. Here there has been still a slowdown because I mean a lot of our customers are architecture firms, architecture firms in Europe are a lot small and medium businesses and a lot of them are also linked to the residential market and the building market. And of course they are impacted by the fact that residential market, I mean is not growing so much last two years. Nevertheless, even in Europe, there has been a lot of renovation work going on et cetera. So, there is still some type of growth. Now, are we expecting huge changes in the coming quarters? No. Are we planning currently that 2025 will be weaker or better than 2024? No. So our assumption is that, there is no changes in the current macro dynamics in the coming quarters. Also in 2025 especially when we mentioned or at least mid-teens growth for the organic piece of our revenue growth in 2025. So, if you look at the Design segment, normalized growth after subscription, it's going to be in the very -- I mean in the high single digits in end up being in the mid-single digits, so, which is what we are planning to have now. Obviously if the market and the macro economy is also doing better, we may see maybe low double digits instead of high teens.

Louise Öfverström: Yes. And I think to get your last question was again the clarification regarding the impact of GoCanvas, the margin effect out of that. And that is including, you say the lower profitability that GoCanvas have currently stand-alone below the Nemetschek Group average and it's also by the PPA effects that we are currently estimating. And I think everybody should stand at these estimations because we haven't concluded the PPA and of course the deferred revenue calculation in full which is being down into the remainder of the year. I hope that answered your question. So perhaps back to the operator.

Operator: Thank you very much. I think she just follow up the line, but there are no further questions left. Thank you.

Stefanie Zimmermann: So if there are no further questions I would say then we conclude our call today. Thanks everyone for attending. We are looking forward to catching up with you soon. If there are any follow-up questions, so please do hesitate to contact Patrick or myself. We are available all day long and also tomorrow of course. And thank you very much for joining here. Have a nice afternoon. Thank you and goodbye.

Yves Padrines: Thank you everyone. Bye-bye.

Louise Öfverström: Thank you. Good bye.