Enterprise Software Made in Germany: Why Nemetschek, SAP's Mid-Cap Rivals, and TeamViewer Deserve Attention

When investors think of German enterprise software, SAP occupies the entire field of vision. The Walldorf giant — with revenues exceeding €35 billion and a cloud transition now fully underway — is a legitimate global technology bellwether. But the fixation on SAP obscures a deeper, more interesting investment landscape: a cohort of focused, vertically specialized German software businesses delivering subscription economics, high retention, and margin profiles that compare favourably with US SaaS peers trading at multiples that German names do not command.

This is a structural mispricing that warrants institutional scrutiny.

The German Software Ecosystem: Structural Advantages

Germany's enterprise software sector benefits from several characteristics that are rarely articulated in aggregate but matter enormously for investment analysis.

First, customer stickiness is extreme. German industrial and construction companies are conservative technology adopters. When they embed a software system into their operational workflows — particularly in engineering, simulation, or production management — switching costs are prohibitive. Implementation cycles measured in years, certification requirements, and deeply embedded workflows create retention dynamics that US SaaS benchmarks would envy.

Second, the customer base is global but anchored in Germany's export-oriented industrial complex. A software platform serving the global architecture, engineering, and construction (AEC) sector — as Nemetschek does — benefits from the international footprint of its European industrial customers without requiring the sales and marketing spend that a pure US-market vendor would need.

Third, the talent base is deep and relatively cost-effective. Germany's engineering universities produce software developers with domain expertise in industrial, construction, and manufacturing applications that pure computer science programmes elsewhere rarely replicate.

Germany accounts for 22.3% of the European ERP software market, the largest national share, with the sector projected to grow from €5.78 billion in 2024 to €16 billion by 2035 — a compounding growth rate of nearly 10% annually. Against this backdrop, the focused mid-cap players are better positioned than the headline figure suggests.

Nemetschek: The AEC Software Compounder

Nemetschek Group may be the most compelling software investment case in European mid-cap equities that institutional investors have systematically underweighted. The Munich-based company provides software for the entire building lifecycle — from architectural design (through Allplan and Graphisoft) through structural engineering (Scia) to construction project management (Bluebeam) and facility operations (Spacewell).

Full-year 2024 revenue grew 16.9% to €995.6 million, approaching the €1 billion threshold for the first time in the company's history. For 2025, management has guided for 17-19% revenue growth with EBITDA margins sustained at approximately 31% — a combination that, in any other geography, would attract significant multiple expansion.

The strategic pivot to subscription-based pricing — away from perpetual licences — is creating the kind of revenue visibility that institutional investors in infrastructure and credit particularly value. Subscription revenues now dominate the mix, and the conversion from legacy licence holders is creating an embedded ARR base that will compound independently of new customer acquisition.

Nemetschek's competitive position in AEC software is genuinely difficult to assault. The building information modelling (BIM) workflows that Nemetschek's tools enable are increasingly mandated by governments — EU procurement regulations for public construction projects increasingly require BIM-compliant submissions. This regulatory tailwind converts what might otherwise be an adoption question into a compliance necessity.

For analysis of European industrial software and the investment-grade credit landscape, see dirkroethig.com. The sustainability and impact investment framework is covered at verdantis-impact.com.

TeamViewer: Misunderstood, Undervalued, and Improving

TeamViewer's post-IPO history reads as a cautionary tale: a 2019 IPO at €26 per share, a subsequent fall to single digits after the Manchester United shirt sponsorship debacle, and years of effort to repair credibility with institutional investors. The underlying business, however, has been executing a coherent transformation from remote access software into an enterprise-grade platform for augmented reality-assisted industrial operations and digital workplace management.

The 2025 full-year results tell the cleaned-up story. Total revenue reached approximately €790 million, with adjusted EBITDA margin at 44.3% — a number that compares favourably with the best-in-class SaaS businesses globally. The Enterprise segment, covering large corporates using TeamViewer for industrial IoT, AR-assisted maintenance, and remote monitoring, delivered 15% revenue growth in Q2 2025 alone, with Enterprise ARR reaching €227 million and growing at 13% annually.

The distinction between TeamViewer's Consumer/SMB business — still large but slower-growing — and the Enterprise segment is the critical analytical point. Investors who price the company on blended metrics miss the margin and growth profile of the Enterprise segment that will increasingly dominate the mix.

TeamViewer's Frontline platform, enabling augmented reality workflows for warehouse picking, quality inspection, and field service maintenance, positions the company at the intersection of Industry 4.0 and the post-pandemic reshoring of industrial production. German and European manufacturers investing in production resilience represent a captive customer base for exactly this capability.

The Mid-Cap Ecosystem: Depth Below the Headline Names

Beyond Nemetschek and TeamViewer, Germany's enterprise software ecosystem contains a cluster of Mittelstand-scale companies that institutional investors rarely encounter but that operate dominant positions in their respective verticals.

GK Software, with a market capitalisation of approximately €513 million, provides point-of-sale and retail management software to major European and global retailers. The company's customer list includes names that would require years to displace, and the migration of its platform to cloud delivery is creating the same subscription revenue dynamics visible at larger software peers.

The German government's "Digital Now" investment programme allocated €3.2 billion between 2021 and 2024 to subsidise ERP adoption among Mittelstand companies, resulting in over 35,000 implementations. This policy-driven demand pool has created sustainable revenue growth for software vendors serving the 3.5 million SME companies that constitute Germany's industrial backbone.

Forterro, Abas ERP, and a constellation of specialist vendors have built deeply embedded positions in manufacturing ERP for mid-sized industrial companies. These businesses rarely attract capital markets attention — many are private — but they represent the software layer that the German industrial Mittelstand depends upon.

Valuation: The Discount That Cannot Last

German enterprise software trades at a persistent discount to US SaaS comparables, despite similar or superior retention economics, lower customer acquisition costs (regulatory mandates do part of the work), and margin profiles that are frequently competitive. The discount reflects several factors: lower analyst coverage, smaller float, investor familiarity bias toward US technology, and the historical association of "German tech" with hardware rather than software.

These factors are structural, not fundamental. As European institutional capital increasingly targets tech exposure through a home-market lens — driven partly by currency considerations, partly by ESG mandates that prefer proximate supply chains — the German software sector stands to benefit from a reallocation that is still in its early stages.

Nemetschek at approximately 8x forward revenue, TeamViewer at below 3x forward revenue on blended metrics (and significantly less on Enterprise-segment-only analysis), and the mid-cap ecosystem at private-equity-equivalent multiples present entry points that a rigorous institutional investor should find difficult to ignore.

The German engineering ethos — precision, reliability, long-term customer relationships, domain expertise — turns out to be an excellent foundation for enterprise software. It took longer to recognise than it should have.

Dirk Roethig (Dirk Röthig) is the founder of VERDANTIS Impact Capital with over 25 years of experience in corporate credit, securitization (CLOs, CDOs), and European mid-cap markets. Contact: [email protected]