Global Urbanization And SaaS Will Accelerate BIM Adoption

Key Takeaways

• Accelerated SaaS transition, synergistic acquisitions, and AI-driven product strategy position Nemetschek for margin expansion, higher recurring revenue, and outsized operating leverage beyond consensus expectations.
  
• Rapid global infrastructure growth, regulatory trends, and sustainable design leadership will expand the addressable market, fueling multi-year topline growth and reinforcing revenue resilience.
  
• Transition risk, market concentration, pricing pressure, macroeconomic exposure, and rising R&D costs threaten Nemetschek's growth, margins, and ability to sustain organic profitability.

Catalysts

Provides software solutions for architecture, engineering, construction, operation, and media industries in Germany, the rest of Europe, the Americas, the Asia Pacific, and internationally.

• Analysts broadly agree that Nemetschek's SaaS and subscription transition enables high recurring revenue and margin expansion, but given the remarkable pace-in H1 2025, recurring revenue hit 92% with a sevenfold rise in SaaS revenues since 2021 and accelerating international subscription adoption-the market is underestimating how quickly this will drive structural improvements in net margins and cash flow conversion.
  
• Analyst consensus expects solid incremental revenue from the GoCanvas integration, yet with Bluebeam's channel unlocking new cross-sell velocity and GoCanvas delivering above-plan growth as well as earlier-than-expected synergy realization, this acquisition could catalyze a step-change in group revenue growth and operating leverage through 2026, well beyond current expectations.
  
• The ongoing global surge in infrastructure and urbanization-especially in high-growth markets like India, Saudi Arabia, and Southeast Asia, where Nemetschek is now present-will expand the company's total addressable market far more rapidly than consensus models, supporting multi-year double-digit topline expansion.
  
• Nemetschek's unique AI-first product strategy, including its agent-based AI assistant platform and a robust partner pipeline with Google Cloud, positions the company to monetize upsell opportunities and command premium pricing ahead of competitors, which will materially lift average revenue per user and drive gross margin expansion in coming years.
  
• As regulators and building owners intensify focus on energy efficiency and green compliance, Nemetschek's leadership in BIM-native and sustainable design software will translate into pricing power and increased demand resilience, thus securing long-term revenue durability and margin expansion independent of construction cycles.

Nemetschek Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Nemetschek compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Nemetschek's revenue will grow by 16.5% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 16.9% today to 23.0% in 3 years time.
• The bullish analysts expect earnings to reach €405.9 million (and earnings per share of €3.52) by about August 2028, up from €188.2 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 54.8x on those 2028 earnings, down from 83.9x today. This future PE is greater than the current PE for the GB Software industry at 30.2x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.33%, as per the Simply Wall St company report.

Nemetschek Future Earnings Per Share Growth

Risks

• The transition from perpetual licenses to subscription-based revenue is still underway and, while progressing, management signals that only about one third of legacy users in key brands have migrated, leaving substantial transition risk. Any customer resistance, lower-than-expected adoption, or fatigue as incentives for multiyear deals are reduced could cause deceleration in both reported revenue growth and operating margins in the next years.
  
• The company's heavy reliance on the Architecture, Engineering, and Construction sectors exposes it to macroeconomic cycles, and although management highlights strong growth in international markets, continued stagnation or contraction in key mature markets like Germany could limit license and subscription revenue growth, especially given demographic shifts and the slow pace of expected recovery in these regions.
  
• The rapid growth of Nemetschek's Build segment is currently volume-driven, but with no significant price increases realized yet and intensifying competition from larger incumbents and BIM startups, there is long-term risk that average revenue per user could stagnate or decline, which would ultimately place pressure on overall revenue growth and gross margins.
  
• The increasing share of recurring revenue at 92-93% is presented as a core strength; however, if sector-wide construction demand softens due to higher interest rates, global economic volatility, or declining infrastructure spending, Nemetschek's highly recurring base could be insufficient to counteract broader market-driven declines in organic growth and profitability.
  
• The growing need for advanced data privacy, cybersecurity compliance, and the demand for seamless cross-platform integration may outpace Nemetschek's product development capacity, especially as software ecosystems become more open and competitive, resulting in higher R&D costs and risking both customer churn and slower sales growth, thereby impacting net margins and operating earnings over time.

Valuation

• The assumed bullish price target for Nemetschek is €161.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Nemetschek's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €161.0, and the most bearish reporting a price target of just €83.0.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be €1.8 billion, earnings will come to €405.9 million, and it would be trading on a PE ratio of 54.8x, assuming you use a discount rate of 6.3%.
  
• Given the current share price of €136.7, the bullish analyst price target of €161.0 is 15.1% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.