In this Research Note, we examine Spacewell, part of the Manage segment of Nemetschek, which provides software for the management and operations phase in the building lifecycle. This article is based on their 2022 annual results, investor presentations, the Annual Report of the parent company, published on 23rd March 2023 and the group’s strategy in the smart buildings space.
The Nemetschek Group, the No 1 Architecture, Engineering and Construction (AEC) software provider in Europe and one of the top three global AEC software vendors, is driving the digitalization of the building industry, through its portfolio of independent brands, including Allplan, Bluebeam, dRofus, GraphiSoft, Nevaris, Vectorworks and Solibri focused on Building Information Management (BIM). Listed since 1999 and quoted on the Frankfurt Stock Exchange, the Munich-based company generated revenues of €801.8 million in 2022, an increase of 17.7% compared with the previous year.
A new Digital Twin business unit was created in 2022 to act as a horizontal binding element between the Architecture, Engineering, Construction and Operations (AEC/O) segments. The dRofus brand is assigned to the Digital Twin business unit and consolidated in the Manage segment as of 1 January 2023. With its data management and BIM collaboration solutions for supporting workflow, dRofus has the expertise to provide building information throughout the entire building lifecycle. In addition, a new Chief Division Officer was appointed for the Operate & Manage division and the Digital Twin unit.
The Manage segment has two brands – Spacewell and Crem Solutions - which offer software solutions across all commercial processes in property management as well as modular and integrated solutions for property, facility and workplace management (IWMS). The portfolio also includes a smart building platform that uses intelligent sensors and big data analysis to help improve productivity and efficiency in the operation and management of buildings. These are complemented by artificial intelligence-based energy management solutions for optimizing the use of energy in buildings and reducing CO2 emissions.
The smallest of four reportable segments accounting for 6% of Nemetschek 2022 revenues, the Manage segment increased revenue growth by 6.8% (adjusted for currency effects:7.1%) to €46.7 million.
In the Spacewell Manage segment, the effects of the overall uncertain macro-economic situation coupled with the influence of the Covid-19 pandemic are noticeable, and the client group of building managers, which is important for the segment, particularly in commercial construction, was reluctant to invest in the 2022 financial year. However, the market situation is increasingly stabilizing. As the degree of digitalization is particularly low in this segment and the importance of energy efficiency and savings in existing and operated buildings is also steadily increasing, there may be catch-up effects once the reluctance to invest has ended.
During 2022, the segment-wide solution portfolio was further harmonized and standardized and integration processes resulting from previous acquisitions were accelerated:
- Axxerion workflow-based facility management software and its leading Cobundu IoT platform for Smart Buildings was merged into a single SaaS platform solution with a unified user interface and design rebranded as Spacewell Workplace.
- Dexma which provides data-driven Energy Intelligence through a Software-as-a-Service (SaaS) solution, was rebranded as Spacewell Energy.
Segment EBITDA fell by 5.6% from EUR 4.1 million in the previous year to EUR 3.8 million. This led to a decline in the EBITDA margin from 9.3% in the previous year to 8.2% in the 2022 financial year, partially due to the integration and harmonization activities.
The Manage segment’s aim is to digitalize the management of buildings through a software portfolio. Nemetschek sees a large potential here, not only with respect to increasing efficiency in the use of buildings, but also in terms of taking a more targeted approach to users’ needs, as well as operating buildings in a sustainable and environmentally friendly way while optimizing energy consumption.
Owing to the still low level of software penetration, particularly in the area of workplace management systems, the current geographical focus is on developing existing markets in Europe as well as internationalization in selected countries in which the Nemetschek Group sees the greatest market potential. The Manage segment works with a network of local sales partners to enable it to meet customers’ needs in an optimal fashion and accelerate its access to the market.
According to the announcement of the new Spacewell CEO in January 2023,
The focus for the coming years will be on moving towards a full SaaS solution and scaling up the business to enable more customers to benefit from the world´s only fully integrated building management software.
Spacewell face strong competition from a range of global and regional vendors of building management software. They rank high in the global IWMS marketplace and are starting to gain traction in the broader smart buildings space.