Aareon continues growth trajectory

Mainz, 17 March 2022 – Aareon, the leading provider of ERP software and digital solutions for the European property industry and its partners, continued growing in 2021, increasing its consolidated revenues by 4% to € 269 million (previous year: € 258 million). Adjusted EBITDA was increased by 8% to € 67 million (previous year: € 62 million).

“In the second fiscal year dominated by the Covid-19 pandemic, we continued to implement our strategy successfully and grew further,” said CEO of Aareon AG Dr Manfred Alflen. “This once again reflects the robust nature of our business model. At the same time, we invested in the expansion of our digital product portfolio and in the implementation of the Value Creation Program developed in 2020. We aim to develop Aareon into a Rule of 40 SaaS company with a high share of recurring revenues by 2025.” The Rule of 40 indicator looks at the sum of the revenue growth rate and (adjusted) EBITDA margin: if it is 40% or higher, this generally denotes an attractive growth company. In 2021, the share of recurring revenues accounted for 71% of consolidated revenues (previous year: 67%), helped by the expansion of the SaaS/subscription offering.

The Aareon Group also grew non-organically, acquiring six companies in 2021. “Alongside organic growth, non-organic growth through M&A constitutes a central pillar of our overall growth strategy,” said Dr Alflen.

Aareon’s growth trajectory is also illustrated by the number of employees, which rose significantly to 2,010 as at 31 December 2021 (previous year: 1,795). The international subsidiaries account for 44% of the workforce (previous year: 42%).

Operating business: expansion of the portfolio

Aareon invested further in the expansion of its Aareon Smart World portfolio in 2021. Aareon Smart World is a digital ecosystem that connects the relevant market players at property companies. Aareon is gradually migrating its ERP systems to new, cloud-enabled product generations offered as Software as a Service. What’s more, the deployment of new technologies such as Business Intelligence will enable the development of further user-centric functionalities for customers. A pioneering role has been played by the new product generation Wodis Yuneo, which was launched in 2020 and continued to be marketed intensively throughout 2021. Wodis Yuneo also performed impressively in the ERP Architecture category at the “ERP System of the Year” competition run by the Center for Enterprise Research.

In the Digital Solutions product group, Aareon began to market new products, including PrediMa, a new AI-based solution for the predictive maintenance of property holdings, Digital Agency, an end-to-end solution designed to support the entire tenant life cycle, and AiBATROS® energy and CO₂ analytics for an automated energetic renovation process. In the wake of the new EED requirements, Aareon was able to offer its customers an EED-compliant application to satisfy the property industry’s new information obligations vis-à-vis tenants thanks to the interaction between the CRM portal/app and vacancy management solutions from Aareon Smart World.

Implementation of the Value Creation Program under way

The Value Creation Program, developed together with shareholders Aareal Bank and Advent International, is designed to accelerate the pace of Aareon’s growth. One focus of its implementation in 2021 was the gradual transition of the licensing model with the SaaS/subscription model. Another key project was the optimisation of market access and market organisation (go-to-market strategy), with the aim of acquiring new customers and tapping into new market segments. Measures for the increased automation of marketing processes have already been implemented on the basis of an analysis of the status quo.

M&A: six companies acquired

Aareon acquired six companies in 2021. In the DACH region, Aareon added the ERP system immotion® to its ERP product portfolio with the acquisition of the GAP-Group, and another SaaS solution for an entirely digital rental process to its range of offerings with the acquisition of the PropTech wohnungshelden. In the UK, Aareon tapped into a new segment, the SMB market, through three acquisitions (Arthur Online, Tilt, Fixflo). In the Netherlands, Aareon is now also represented in the market segment for shared-ownership property management thanks to the acquisition of Twinq, a provider of SaaS solutions for the shared-ownership property management sector.

Outlook: adjusted EBITDA of around € 155 million expected in 2025

Aareon will further step up the pace of growth under new CEO Hartmut Thomsen as well, who is set to move to the company from SAP on 1 April. In 2022, Aareon expects to post a significant increase in revenues, which are set to reach € 305–325 million (2021: € 269 million). Adjusted EBITDA should rise to € 73–78 million (2021: € 67 million). The M&A activities which were intensified last year will also continue apace. The parent company Aareal Bank plans to add another € 100 million to the line of credit for acquisitions, bringing the total sum available to € 350 million by 2024. The mobilisation of further external funding from institutional investors or banks could also be considered going forward.

Aareon had previously planned to increase its adjusted EBITDA to € 135 million by 2025. This forecast has been raised on the basis of last year’s successful acquisitions: adjusted EBITDA of around € 155 million is now expected by 2025, including a contribution of some € 20 million from the acquisitions completed in 2021, but not taking any contribution from future mergers and acquisitions into account. “Last year’s investments in new products, in our Value Creation Program and in non-organic growth (M&A) laid the foundation for us to increase both our pace of growth and profitability in 2022 and the subsequent years, thereby creating added value for our stakeholders,” said Dr Alflen of the Aareon Group’s growth trajectory.

Aareon Annual Report 2021 published

By thinking and acting in a progressive, sustainable and collaborative manner, we are working today to shape the success of tomorrow – for our customers, partners and the entire property industry. This is the pioneering, future-focused conviction that Aareon holds as a technology and industry leader. By systematically fostering transformation and growth, we make it possible to develop innovative, people-centred solutions. In the process, we pave the way for responsible living and work spaces – for the benefit of all. You can find more information on this in our Annual Report 2021.

Aareon Annual Report 2021 (online version)