Nemetschek’s Bet on HCSS and Recurring Revenue Faces a Crucial Test

Despite strong revenue and EBITDA growth, Nemetschek shares languish near 52-week low, as market questions speed of subscription transition. Analysts see 50% upside.

Nemetschek’s plan to turn its Build & Construct segment into a €1 billion revenue engine by 2028 hinges on the smooth absorption of US construction software firm HCSS. That unit already delivers an EBITDA margin of around 40% on roughly $215 million in sales and is growing at about 17% a year. Yet the parent company’s shares keep sliding, leaving the market to question whether a full-cycle shift to subscription revenue can be pulled off fast enough.

The stock recently changed hands at €59.00, barely 3% above its 52-week low of €57.60 and down 34.7% year-to-date. Over the past 30 days it has lost 14.4%; on a 12-month view the decline stands at 51.2%. The bearishness lingers despite solid operating numbers, a disconnect that has made the next few months a litmus test for management’s credibility.

Nemetschek owns roughly 72% of HCSS, with private equity firm Thoma Bravo holding the remaining 28% and contributing SaaS scale-up expertise. HCSS is the centrepiece of the Build & Construct target, which calls for more than 95% of segment revenue to come from predictable subscriptions by 2028, alongside a margin of over 40%. The broader group is already deep into the subscription transition: annualised recurring revenue (ARR) stood at €1.187 billion at the end of March, while ARR for the 2024 fiscal year reached €1.199 billion, up 17.6% from the prior year.

Full-year 2024 revenue came in at €1.191 billion, an increase of nearly a fifth. EBITDA climbed 23.3% to €371.1 million, and earnings per share reached €1.88. First-quarter 2025 numbers added to the momentum, with revenue rising 10.7% year-on-year to €313.1 million and EBITDA surging 22.0% to €98.4 million, translating into a 31.4% margin. That puts profitability within touching distance of the full-year target range of 32-33%.

Management has reaffirmed its 2025 outlook, calling for currency-adjusted revenue growth of 14-15% and an EBITDA margin of 32-33%. A dividend of €0.68 per share will be put to a vote at the annual meeting in May. Despite the stock’s doldrums, analysts remain bullish: the consensus price target of €93.38 implies more than 50% upside from current levels.

Investors will now watch closely for signs that HCSS is integrating as planned and that Build & Construct’s margin trajectory is on track. If the quarterly cadence supports the narrative, Nemetschek’s shares could finally catch up with a growth story that the market has so far chosen to doubt.