Nemetschek Stock Slides as Margin Contraction Overshadows Revenue Beat

Shares of Nemetschek (NEKG) dropped as much as 7.5% to €62.15 on Tuesday after the German construction-software company reported second-quarter earnings that missed market expectations on profitability.

Margin Miss Drives Sell-Off

While Nemetschek's currency-adjusted revenue growth of 14.5% in the second quarter slightly surpassed analyst forecasts, investors focused on a contraction in the company's operating margin. The key metric fell to 30.1% from 30.5% in the same period last year.

The company attributed the margin pressure to an extraordinary foreign-currency revaluation effect connected to its recent acquisition of HCSS, which weighed on operating profit. The revenue growth also marked a deceleration from the 17.0% pace reported in the first quarter.

Context and Analyst Views

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The negative market reaction was amplified by the stock's recent performance. Shares had rallied nearly 20% over the four trading sessions leading into the report, setting a high bar for the results and leaving little room for disappointment.

Despite the sell-off, Nemetschek confirmed its full-year guidance, forecasting organic growth of 14% to 15% and an EBITDA margin between 32% and 33%. Analyst sentiment remains divided:

• JPMorgan maintained an Overweight rating, arguing that the underlying earnings development was stronger than the headline figure suggested and that organic revenue growth was solid.
• UBS, in contrast, had issued a Sell rating in mid-July, citing potential write-downs related to the HCSS deal and a broader de-rating of software valuations.