Group 1 - The article discusses the services provided by IPO Edge, which includes actionable information on growth stocks, first-look IPO filings, previews on upcoming IPOs, an IPO calendar, a database of U.S. IPOs, and a comprehensive guide to IPO investing [1]

[Part I: Business and Risk Factors](index=5&type=section&id=Part%20I) [Business Overview](index=5&type=section&id=Item%201.%20Business) Bentley Systems provides global infrastructure engineering software, enabling design, construction, and operation of infrastructure assets through diversified revenue and digital twin solutions - Bentley Systems defines itself as the "infrastructure engineering software company," focused on empowering users to design, build, and operate better infrastructure through intelligent digital twin solutions[18](index=18&type=chunk) Sector-Attributable Annualized Recurring Revenues (ARR) Breakdown | Sector | Attributable ARR % | | :--- | :--- | | Public Works/Utilities | 59% | | Resources | 27% | | Industrial | 9% | | Commercial/Facilities | 5% | - The company serves over **41,000 accounts** in **189 countries**. Revenue is split between engineering/construction firms (**51% in 2024**) and infrastructure asset owners/operators (**49% in 2024**)[55](index=55&type=chunk) - The sales model is predominantly direct, with account managers and the Virtuosity e-store generating approximately **93% of 2024 total revenues**. Channel partners account for the remaining **7%**[56](index=56&type=chunk) - No single account represented more than **2% of total revenues** in 2024, 2023, or 2022, indicating a low level of customer concentration[58](index=58&type=chunk) [Products and Solutions](index=5&type=section&id=Our%20Products%20and%20Solutions) Bentley Systems offers a comprehensive portfolio of engineering, geoprofessional, and cloud applications for infrastructure design and operation - The company's portfolio includes Bentley Open engineering applications (e.g., MicroStation, OpenRoads), Seequent geoprofessional applications (e.g., Leapfrog, PLAXIS), and the Bentley Infrastructure Cloud (ProjectWise, SYNCHRO, AssetWise) for enterprise collaboration[23](index=23&type=chunk)[27](index=27&type=chunk)[30](index=30&type=chunk) - The core technology platform, Cesium and iTwin Platform, was enhanced by the acquisition of Cesium in September 2024, enabling the creation and use of infrastructure digital twins[24](index=24&type=chunk)[35](index=35&type=chunk) - Bentley Asset Analytics solutions (e.g., Blyncsy, OpenTower iQ) utilize AI-powered digital twins to provide real-time insights and automate workflows for optimizing asset performance[34](index=34&type=chunk)[37](index=37&type=chunk) [Digital Twins Opportunity and AI Integration](index=10&type=section&id=The%20Digital%20Twins%20Opportunity) Bentley Systems leverages digital twin technology to unify market spaces and integrates AI to enhance productivity in infrastructure design and maintenance - The company believes the shift from siloed CAD/BIM and GIS systems to unified, "evergreen" infrastructure digital twins will merge separate market spaces and create new use cases[44](index=44&type=chunk)[45](index=45&type=chunk) - Artificial Intelligence (AI) is being integrated to enhance productivity, with examples including generative AI for civil site design and AI agents for maintenance issue identification[46](index=46&type=chunk) [Growth Initiatives](index=12&type=section&id=Our%20Primary%20Growth%20Initiatives) Key growth initiatives include expanding consumption-based subscriptions, scaling SMB business through digital channels, and accelerating digital twin adoption via ecosystem development - Key growth initiatives include expanding the **E365 consumption-based subscription model** for enterprise accounts, investing in the **Virtuosity e-store** for SMBs, and accelerating digital twin adoption through its **Cohesive business**[57](index=57&type=chunk) [Competition](index=13&type=section&id=Our%20Competition) The company faces strong competition across various sectors and lifecycle phases, but believes it competes favorably due to its comprehensive portfolio and direct sales channels - The company faces strong competition across different sectors and lifecycle phases, though no single competitor offers a portfolio as comprehensive, with key competitors including Autodesk, Trimble, and Hexagon AB[61](index=61&type=chunk)[63](index=63&type=chunk) - Principal competitive factors include product features, reliability, openness, price, and brand reputation, with Bentley believing it competes favorably due to its comprehensive portfolio and flexible commercial models[64](index=64&type=chunk) [Human Capital Management](index=16&type=section&id=Human%20Capital%20Management) Bentley Systems employs approximately 5,500 full-time colleagues globally and implements a hybrid work strategy through its Infrastructure Empowered Workforce Plan - As of December 31, 2024, the company had approximately **5,500 full-time colleagues** globally[75](index=75&type=chunk) Employee Distribution by Region | Region | Number of Colleagues | | :--- | :--- | | Americas | ~2,200 | | EMEA | ~1,500 | | APAC | ~1,800 | - The company has implemented the Infrastructure Empowered Workforce Plan (IEWP), a global strategy combining in-office collaboration with remote work flexibility[77](index=77&type=chunk) [Risk Factors](index=18&type=section&id=Item%201A.%20Risk%20Factors) The company faces multiple risks including demand volatility, international market exposure, IT and IP vulnerabilities, debt covenants, and concentrated voting control from its dual-class stock structure - **Business & Industry Risks:** Demand is subject to volatility in infrastructure sectors, with approximately **58% of total revenues for 2022-2024** from outside the U.S., exposing the company to foreign economic, political, and currency exchange risks[87](index=87&type=chunk)[89](index=89&type=chunk)[93](index=93&type=chunk) - **IT & IP Risks:** The business is vulnerable to interruptions in IT systems, security breaches, and unauthorized data access, and is subject to increasingly complex global data privacy laws (e.g., GDPR, PIPL, CCPA)[110](index=110&type=chunk)[111](index=111&type=chunk)[116](index=116&type=chunk) - **Debt Risks:** The credit facility contains restrictive covenants, with a significant risk that if the Bentley Family's collective ownership of voting power falls below **20%**, it would constitute an event of default[141](index=141&type=chunk)[142](index=142&type=chunk) - **Stock & Governance Risks:** The dual-class stock structure (Class A: **29 votes/share**, Class B: **1 vote/share**) concentrates approximately **53.5% of voting power** with the Bentley Control Group, limiting public stockholder influence[154](index=154&type=chunk)[155](index=155&type=chunk) - **AI-Related Risks:** The increasing use of AI in software solutions exposes the company to potential new regulations, lawsuits, and reputational harm if not managed properly[108](index=108&type=chunk)[109](index=109&type=chunk) [Cybersecurity](index=32&type=section&id=Item%201C.%20Cybersecurity) Bentley Systems maintains a comprehensive cybersecurity risk management program overseen by its CISO and the full Board of Directors, with no material impact from threats to date - The company has a formal process for identifying, analyzing, and managing cybersecurity risks, led by a dedicated Information Security Team and CISO with over **15 years of experience**[162](index=162&type=chunk)[163](index=163&type=chunk) - The full Board of Directors, in conjunction with the Audit Committee, has ultimate oversight responsibility for cybersecurity risks and incidents[165](index=165&type=chunk) - To date, the company's business, operations, and financial condition have not been materially affected by risks from cybersecurity threats[166](index=166&type=chunk) [Part II: Financial Information](index=34&type=section&id=Part%20II) [Market for Common Equity and Related Matters](index=34&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Bentley Systems' Class B common stock trades on Nasdaq, with the company paying quarterly dividends and executing a stock repurchase program authorized for up to $200 million - The company paid quarterly dividends of **$0.06 per share** in 2024, up from **$0.05** in 2023 and **$0.03** in 2022[175](index=175&type=chunk) Class B Common Stock Repurchases (Q4 2024) | Period | Shares Purchased | Average Price Paid | Value of Shares Remaining Under Plan | | :--- | :--- | :--- | :--- | | Nov 1-30, 2024 | 379,996 | $48.90 | $173,154,860 | - In March 2024, the Board of Directors authorized the repurchase of up to **$200 million** of Class B common stock and/or convertible senior notes through June 30, 2026[181](index=181&type=chunk) [Management's Discussion and Analysis (MD&A)](index=36&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In FY2024, Bentley Systems achieved **$1.35 billion** in total revenues, a **10.1% increase**, driven by strong subscription growth and a **110% recurring revenues dollar-based net retention rate**, maintaining strong liquidity 2024 Financial Highlights | Metric | 2024 Value | YoY Change (Constant Currency) | | :--- | :--- | :--- | | Total Revenues | $1,353.1 M | +10.3% | | Subscriptions Revenues | $1,223.4 M | +13.4% | | ARR (Year-End) | $1,283.3 M | +12.0% | | Recurring Revenues Net Retention | 110% | N/A | | Operating Income | $302.2 M | N/A | | Adjusted OI w/SBC (Non-GAAP) | $372.2 M | N/A | | Cash Flow from Operations | $435.3 M | N/A | [Results of Operations](index=37&type=section&id=Results%20of%20Operations) Total revenues increased by **10.1%** in 2024, primarily driven by a **13.2%** growth in subscription revenues, partially offset by a decline in services revenue Revenues by Type (in thousands) | Revenue Type | 2024 | 2023 | % Change | | :--- | :--- | :--- | :--- | | Subscriptions | $1,223,362 | $1,080,307 | 13.2% | | Perpetual licenses | $45,961 | $46,038 | (0.2%) | | Services | $83,772 | $102,068 | (17.9%) | | **Total revenues** | **$1,353,095** | **$1,228,413** | **10.1%** | Revenues by Geographic Region (in thousands) | Region | 2024 | 2023 | % Change | | :--- | :--- | :--- | :--- | | Americas | $717,002 | $650,926 | 10.2% | | EMEA | $388,384 | $353,550 | 9.9% | | APAC | $247,709 | $223,937 | 10.6% | | **Total revenues** | **$1,353,095** | **$1,228,413** | **10.1%** | - The increase in total revenues was driven by a **$143.1 million** improvement in subscriptions business performance, led by engineering applications and Seequent geoprofessional applications, partially offset by an **$18.3 million** decline in services revenues[194](index=194&type=chunk)[195](index=195&type=chunk)[197](index=197&type=chunk) - The 2023 Program, a strategic realignment, resulted in costs of **$0.8 million** in 2024 and **$12.6 million** in 2023, primarily for employee termination benefits[205](index=205&type=chunk) - The effective tax rate was **20.0%** in 2024, compared to **(78.0%)** in 2023, with the 2023 rate significantly impacted by a one-time net discrete tax benefit of **$170.8 million** from an internal legal entity restructuring[229](index=229&type=chunk)[231](index=231&type=chunk) [Key Business Metrics](index=44&type=section&id=Key%20Business%20Metrics) Key business metrics show strong ARR growth of **12%** in constant currency and a recurring revenues dollar-based net retention rate of **110%**, with consumption-based offerings growing to **50%** of total ARR Key Business Metrics Comparison | Metric (Constant Currency) | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | :--- | | ARR | $1,283.3 M | $1,174.8 M | $1,036.5 M | | ARR Growth Rate | 12% | 12.5% | 15% | | Account Retention Rate | 99% | 98% | 98% | | Recurring Revenues Dollar-Based Net Retention Rate | 110% | 109% | 110% | - ARR from consumption-based offerings (like E365) is growing as a percentage of total ARR, reaching **50%** as of Dec 31, 2024, up from **47%** in 2023 and **43%** in 2022[237](index=237&type=chunk) [Non-GAAP Financial Measures](index=46&type=section&id=Non-GAAP%20Financial%20Measures) The company's primary non-GAAP measure is Adjusted Operating Income inclusive of stock-based compensation (Adjusted OI w/SBC), which adjusts operating income for specific non-cash and acquisition-related expenses - The company's primary non-GAAP performance measure is Adjusted Operating Income inclusive of stock-based compensation expense (Adjusted OI w/SBC), defined as operating income adjusted for amortization of purchased intangibles, deferred compensation plan expense/income, acquisition expenses, and realignment expenses[250](index=250&type=chunk)[251](index=251&type=chunk)[253](index=253&type=chunk) Reconciliation of Operating Income to Adjusted OI w/SBC (in thousands) | Line Item | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | **Operating income** | **$302,150** | **$230,542** | **$208,612** | | Amortization of purchased intangibles | $46,679 | $51,219 | $53,592 | | Deferred compensation plan | $12,382 | $13,580 | $(15,782) | | Acquisition expenses | $10,222 | $17,866 | $25,398 | | Realignment expenses | $789 | $11,470 | $2,109 | | **Adjusted OI w/SBC** | **$372,222** | **$324,677** | **$273,929** | [Liquidity and Capital Resources](index=50&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with **$435.3 million** in operating cash flow for 2024, a new **$1.3 billion** credit facility, and **$1.39 billion** in total debt, with most cash held overseas - As of December 31, 2024, the company held **$64.0 million** in cash and cash equivalents, with approximately **96%** held by foreign subsidiaries[261](index=261&type=chunk)[104](index=104&type=chunk) - Net cash provided by operating activities was **$435.3 million** for the year ended December 31, 2024, compared to **$416.7 million** in the prior year[265](index=265&type=chunk)[266](index=266&type=chunk) - In October 2024, the company entered into a new credit agreement providing a **$1.3 billion** revolving credit facility, used to repay all indebtedness under the previous 2017 facility[270](index=270&type=chunk) Contractual Obligations as of Dec 31, 2024 (in thousands) | Obligation Type | Total | Long-Term | | :--- | :--- | :--- | | Debt Obligations | $1,398,145 | $1,398,145 | | Purchase Obligations | $113,700 | $54,500 | | DCP Obligations | $100,482 | $96,684 | [Critical Accounting Estimates](index=53&type=section&id=Critical%20Accounting%20Estimates) Key accounting estimates requiring significant judgment include revenue recognition, goodwill and intangibles impairment testing, and income tax assessments due to complex global tax laws - Key estimates requiring significant judgment include revenue recognition (determining standalone selling price and estimating usage of 'portfolio balancing' material right), goodwill and intangibles (annual impairment testing), and income taxes (assessing deferred tax asset recoverability and applying complex global tax laws)[284](index=284&type=chunk)[285](index=285&type=chunk)[287](index=287&type=chunk)[291](index=291&type=chunk) [Market Risk Disclosures](index=55&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are foreign currency exchange rates, with **58%** of revenue from outside the U.S., and interest rates on its floating-rate debt, partially mitigated by an interest rate swap - **Foreign Currency Risk:** Approximately **58% of 2024 revenue** was derived from outside the U.S., with **34%** denominated in non-USD currencies; a hypothetical **10% strengthening of the U.S. dollar** would have reduced 2024 annual operating income by about **$1.5 million**[295](index=295&type=chunk) - **Interest Rate Risk:** The company is exposed to interest rate fluctuations on its Credit Facility, partially hedged by a **$200 million** notional value interest rate swap, fixing the rate on a portion of its debt[296](index=296&type=chunk) [Financial Statements and Supplementary Data](index=56&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) The consolidated financial statements, audited by KPMG LLP with an unqualified opinion, detail the company's financial position, operations, and key accounting notes including revenue disaggregation, acquisitions, debt structure, and a significant 2023 tax benefit [Report of Independent Registered Public Accounting Firm](index=65&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) KPMG LLP issued an unqualified opinion on the consolidated financial statements and internal controls, identifying IT systems for revenue recognition as a Critical Audit Matter - KPMG LLP issued an unqualified (clean) opinion on both the consolidated financial statements and the effectiveness of the company's internal control over financial reporting as of December 31, 2024[341](index=341&type=chunk) - The audit identified one Critical Audit Matter (CAM): the evaluation of IT systems used in recognizing subscriptions and licenses revenues, due to high transaction volume across multiple IT systems requiring subjective auditor judgment[349](index=349&type=chunk)[350](index=350&type=chunk) [Consolidated Financial Statements](index=67&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements provide a snapshot of the company's financial position, operations, and cash flows for the periods ended December 31, 2024 Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Assets | $3,399,807 | $3,319,850 | | Goodwill | $2,367,179 | $2,269,336 | | Total Liabilities | $2,358,687 | $2,435,868 | | Total Debt (Current & Long-Term) | $1,388,088 | $1,528,403 | | Total Equity | $1,041,120 | $883,982 | Consolidated Statement of Operations Highlights (in thousands) | Account | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | Total Revenues | $1,353,095 | $1,228,413 | $1,099,082 | | Gross Profit | $1,095,328 | $962,330 | $862,069 | | Income from Operations | $302,150 | $230,542 | $208,612 | | Net Income | $234,433 | $326,787 | $174,780 | | Diluted EPS | $0.72 | $1.00 | $0.55 | [Selected Notes to Consolidated Financial Statements](index=76&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Key notes detail revenue recognition, significant acquisitions like PLS, the **$1.39 billion** debt structure including convertible notes, dividend payments, share repurchases, and a **$170.8 million** tax benefit in 2023 - **Note 3 (Revenue):** Total license-related revenues (perpetual and term) recognized upfront were **$679.8 million** in 2024, up from **$592.7 million** in 2023[392](index=392&type=chunk) - **Note 4 (Acquisitions):** The company completed **3 acquisitions** in 2024 for net cash of **$130.4 million**, and the significant platform acquisition of PLS in 2022 for **$696.0 million** in net cash[415](index=415&type=chunk)[416](index=416&type=chunk) - **Note 10 (Debt):** As of Dec 31, 2024, total debt was **$1.39 billion**, primarily consisting of the **$135.3 million** revolving loan, **$687.8 million** in 2026 convertible notes, and **$575.0 million** in 2027 convertible notes[453](index=453&type=chunk) - **Note 13 (Equity):** The company declared and paid total dividends of **$72.1 million** (**$0.24/share**) in 2024, and repurchased **1.3 million shares** for **$64.4 million** under its stock repurchase program[518](index=518&type=chunk)[510](index=510&type=chunk) - **Note 16 (Income Taxes):** A 2023 internal legal entity restructuring to align IP ownership resulted in a net discrete income tax benefit of **$170.8 million**, significantly impacting the 2023 effective tax rate[548](index=548&type=chunk) - **Note 22 (EPS):** Diluted EPS was calculated based on net income of **$241.6 million** and **333.8 million weighted average shares** for 2024[589](index=589&type=chunk)

Financial Data and Key Metrics Changes - Total revenues for Q4 2024 were $350 million, up 13% year-over-year, while full-year revenues reached $1.353 billion, also up 10% [52] - Subscription revenues now represent 90% of total revenues, an increase of over 2 percentage points from 2023, with subscription revenues growing 16% year-over-year for the quarter and 13% for the full year [53] - Adjusted operating income with stock-based compensation for Q4 was $75 million, flat year-over-year, with a margin of 21.5% [59] Business Line Data and Key Metrics Changes - The E365 program contributed significantly, representing 42% of 2024 subscription revenues, up from 38% in 2023 [53] - Perpetual license revenues grew 11% year-over-year for Q4, while service revenues declined 21% for the quarter and 18% for the year [54] - Last 12 months recurring revenues increased by 13% year-over-year, now representing 91% of total revenues [54] Market Data and Key Metrics Changes - ARR growth was 12% year-over-year, and 12.5% excluding China, with a trailing 12 months ARR growth rate of 12% [28][55] - EMEA showed strong performance, while the Americas also delivered strong growth despite uncertainties in federal spending [33][34] - Asia Pacific was led by India and Southeast Asia, but China faced significant headwinds, now representing less than 2.5% of total ARR [36][37] Company Strategy and Development Direction - The company aims for low double-digit ARR growth, 100 basis points of margin expansion, and strong cash flow generation in 2025 [27][63] - A strategic acquisition of Cesium broadened the platform ecosystem for geospatial digital twin developments [8] - Organizational changes were made to accelerate innovation, including the appointment of a new COO [49][50] Management's Comments on Operating Environment and Future Outlook - The global demand environment remains robust across most sectors, with optimism about end market conditions [27] - The company expects continued favorable market conditions and momentum in growth initiatives [63] - Management expressed concerns about the ongoing decline in ARR in China due to soft economic conditions and a shift in preferences [36][128] Other Important Information - The company plans to allocate free cash flow towards acquisitions, debt repayment, share repurchases, and dividends [62] - The 2025 financial outlook anticipates total GAAP revenues between $1.461 billion and $1.490 billion, reflecting a 1.5% headwind to revenue growth in constant currency [64] Q&A Session Summary Question: What could propel the company to the higher end of the ARR range in 2025? - Management noted that improvements in permitting reform in the U.S. could lead to new mine explorations, providing additional tailwinds [76][77] Question: Have there been any signs of permitting reform being introduced? - Management acknowledged an executive order calling for permitting reform but indicated it is still early to see any impact [81] Question: How does the macro environment compare to last year, especially in the U.S.? - Management highlighted strong alignment for infrastructure investments globally, despite political volatility in Europe and a slowdown in China [86][89] Question: What are the principal objectives for the new COO? - The COO will focus on cross-functional alignment, industry solutions, and portfolio development, particularly in asset analytics [110] Question: How is the competitive environment evolving? - Management stated that they are not losing market share and that competitors are struggling to gain traction in infrastructure [120][121] Question: Is the demand environment more or less favorable in 2025 compared to 2024? - Management indicated that the demand environment remains consistent and favorable, with the exception of challenges in China [129]

Core Insights - Bentley Systems, Incorporated (BSY) reported revenue of $349.82 million for the quarter ended December 2024, marking a year-over-year increase of 12.6% [1] - The earnings per share (EPS) for the same period was $0.21, slightly up from $0.20 a year ago [1] - The reported revenue fell short of the Zacks Consensus Estimate of $350.66 million, resulting in a surprise of -0.24% [1] - The company experienced an EPS surprise of -8.70%, with the consensus EPS estimate being $0.23 [1] Financial Performance Metrics - Total Revenue year-over-year growth was 12.6%, compared to the average estimate of 12.7% based on four analysts [4] - Annualized Recurring Revenues (ARR) stood at $1.28 billion, below the estimated $1.32 billion by three analysts [4] - Subscription revenue grew by 15.8% year-over-year, slightly below the estimated 16.5% by two analysts [4] - Revenues from subscriptions and licenses were reported at $329.90 million, compared to the average estimate of $330.07 million [4] - Service revenues were $19.92 million, significantly lower than the estimated $21.95 million, representing a year-over-year decline of -21.2% [4] - Subscription revenues were $315.59 million, compared to the estimated $316.96 million, reflecting a year-over-year increase of 15.8% [4] - Revenues from perpetual licenses were $14.31 million, exceeding the average estimate of $12.33 million, with a year-over-year change of +11.1% [4] Stock Performance - Shares of Bentley Systems have returned -1.9% over the past month, compared to a -2.3% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Bentley Systems, Incorporated (BSY) came out with quarterly earnings of $0.21 per share, missing the Zacks Consensus Estimate of $0.23 per share. This compares to earnings of $0.20 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -8.70%. A quarter ago, it was expected that this company would post earnings of $0.25 per share when it actually produced earnings of $0.24, delivering a surprise of -4%.Over the last four quarters, th ...

Financial Performance - Total revenues for Q4 2024 were $349.8 million, representing a year-over-year increase of 12.6%[3] - Subscription revenues for Q4 2024 reached $315.6 million, up 15.8% year-over-year[3] - Annualized Recurring Revenues (ARR) as of December 31, 2024, were $1,283.3 million, reflecting a constant currency growth rate of 12%[3] - Total revenues for the year ended December 31, 2024, increased to $1,353,095, up 10.2% from $1,228,413 in 2023[24] - Subscription revenues for the year ended December 31, 2024, amounted to $1,223,362 million, up from $1,080,307 million in 2023[32] - For the three months ended December 31, 2024, total revenues were $349,822 million, compared to $310,641 million in the same period of 2023[32] - Subscription revenues for the three months ended December 31, 2024, were $315,590 million, an increase from $272,468 million in 2023[32] Income and Profitability - The net income per diluted share for Q4 2024 was $0.16, compared to $0.54 for the same period last year[3] - Net income attributable to Bentley Systems for the year ended December 31, 2024, was $234,787, down 28.2% from $326,787 in 2023[30] - The company reported a diluted net income per share of $0.72 for the year ended December 31, 2024, compared to $1.00 in 2023[30] - Adjusted operating income for the year ended December 31, 2024, was $445,727, an increase of 12.5% from $396,147 in 2023[28] - Adjusted EBITDA for the year ended December 31, 2024, was $465,368, compared to $416,789 in 2023, indicating a growth of 11.6%[31] Expenses and Investments - Total operating expenses for the year ended December 31, 2024, were $793,178, an increase from $731,788 in 2023[24] - Research and development expenses for the year ended December 31, 2024, totaled $281,247, up from $274,619 in 2023[24] - The company utilized $130,407 for acquisitions in 2024, significantly higher than $26,023 in 2023[26] Cash Flow and Dividends - Cash flows from operations for 2025 are anticipated to be between $415 million and $455 million[12] - Cash flow from operations for the year ended December 31, 2024, was $435,292, compared to $416,696 in 2023, reflecting a 4.4% increase[26] - The company plans to increase its quarterly dividend to $0.07 per share starting from Q1 2025[11] Future Projections - For the full year 2025, total revenues are projected to be in the range of $1,461 million to $1,490 million, with subscription revenues growth rate of 10.5% to 12.5% in constant currency[12] - The adjusted operating income margin for 2025 is expected to be approximately 28.5%, representing an annual improvement of 100 basis points[12] Foreign Exchange Impact - The impact of foreign exchange on total revenues for the year ended December 31, 2024, was a decrease of $846 million[32] - The impact of foreign exchange on subscription revenues for the year ended December 31, 2024, was a decrease of $814 million[32] - The constant currency total revenues for the year ended December 31, 2024, adjusted for foreign exchange, were $1,353,941 million[32] - The constant currency subscription revenues for the year ended December 31, 2024, adjusted for foreign exchange, were $1,224,176 million[32] - The total revenues for the three months ended December 31, 2024, in constant currency were $351,559 million[32] - The subscription revenues for the three months ended December 31, 2024, in constant currency were $317,188 million[32]

Analyst Background - The analyst has a mathematics education background and a career in the financial industry, including experience as an investment analyst in a family office and currently as a finance professional in a boutique investment bank [1] - The analyst focuses on small to mid-cap companies with market capitalizations of less than $20 billion, which are significant in their industries and poised to attract capital market attention [1] - The investment approach targets high-quality yet undervalued companies with robust cash flow, strong moats, consistent earnings growth, and potential for growth through innovation, expansion, or market recovery [1] Disclosure and Editorial Notes - The analyst has no current stock, option, or derivative positions in the mentioned companies but may initiate a long position in BSY within the next 72 hours [2] - The article expresses the analyst's personal opinions and is not compensated by any company mentioned [2] - Seeking Alpha welcomes the analyst as a new contributing analyst and encourages others to share investment ideas for potential publication and earnings [3]

Group 1 - The article discusses the author's perspective on Bentley Systems (NASDAQ: BSY), maintaining a hold rating due to uncertainty about near-term earnings performance and concerns regarding high valuation [1] - The author emphasizes a fundamentals-based approach to value investing, focusing on companies with long-term durability, steady growth, and strong balance sheets [1] - There is a belief that while investing in successful companies carries risks, the potential for significant development can make immediate price less critical [1]

Core Viewpoint - Investors in Bentley Systems, Incorporated (BSY) should closely monitor the stock due to significant movements in the options market, particularly the high implied volatility of the Dec 20, 2024 $70.00 Call option [1] Company Analysis - Bentley Systems currently holds a Zacks Rank 3 (Hold) in the Internet - Software industry, which is positioned in the top 16% of the Zacks Industry Rank [3] - Over the past 60 days, no analysts have raised their earnings estimates for the current quarter, while three analysts have lowered their estimates, resulting in a decrease of the Zacks Consensus Estimate from earnings of 25 cents per share to 23 cents per share [3] Options Market Insights - The high implied volatility surrounding Bentley Systems shares suggests that options traders are anticipating a significant price movement, which could indicate an upcoming event that may lead to a substantial rally or sell-off [2][4] - Options traders often seek to sell premium on options with high implied volatility, aiming to benefit from the decay of the option's value if the underlying stock does not move as much as expected by expiration [4]

Financial Data and Key Metrics Changes - In Q3 2024, the company reported a 12% year-over-year growth in Annual Recurring Revenue (ARR), reaching $1.271 billion, with a constant currency growth rate of 12.5% excluding China [45][59]. - Subscription revenues grew 12% year-over-year, now representing 91% of total revenues, up from 88% in the prior year [53][54]. - Total revenues increased by 9% year-over-year, driven by strong subscription performance despite a decline in professional services revenues [57][75]. - Adjusted operating income with stock-based compensation was $90 million for the quarter, up 4% year-over-year, with a margin of 26.7% [64]. Business Line Data and Key Metrics Changes - The E365 programs were highlighted as a major growth driver, contributing significantly to ARR growth through upgrades and new accounts [46][59]. - The professional services segment saw a decline of 14% year-over-year, primarily due to delays in IBM Maximo related implementations [55][75]. - The asset analytics business is expected to add incremental revenue opportunities, although it currently contributes less than 50 basis points to ARR growth [60][94]. Market Data and Key Metrics Changes - The Americas region delivered strong growth, particularly in North America, while Asia Pacific also showed robust performance, especially in Southeast Asia and India [50][51]. - China’s contribution to ARR has decreased to approximately 2.5%, down from 3% a year ago, due to soft economic conditions and geopolitical tensions [45][59]. - The public works/utilities sector remains a key growth driver, benefiting from global infrastructure spending [49]. Company Strategy and Development Direction - The company is focusing on enhancing its digital twin capabilities and integrating AI into its product offerings, which is expected to open new monetization opportunities [39][41]. - The acquisition of Cesium is seen as a strategic move to enhance 3D geospatial capabilities and expand the customer base [36][26]. - The company aims to maintain a consistent annual margin improvement of 100 basis points while investing in long-term initiatives [66][74]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing visibility and linearity of ARR growth, with expectations for continued strong performance in Q4 [9][74]. - The sentiment in the U.S. engineering sector remains positive, with firms expecting higher backlogs and optimistic financial outlooks [48]. - The company anticipates that the upcoming U.S. elections may not significantly disrupt infrastructure investment priorities, which are expected to remain bipartisan [90][91]. Other Important Information - The company has entered into a new five-year senior secured credit agreement, providing increased flexibility for capital allocation and debt management [71][72]. - The company is raising its cash flow conversion expectations for the year from 80% to 85% due to strong cash collections and profitability [75][68]. Q&A Session Summary Question: About the Year in Infrastructure Conference and AI capabilities - Management indicated that the asset analytics portfolio represents an incremental opportunity for AI-enabled digital twins, while existing products will also benefit from enhanced interoperability and new features [80][82]. Question: Growth drivers for next year - Management expects next year to be consistent with this year, driven by project backlogs and the asset analytics business, with a focus on maintaining low double-digit ARR growth [85][86]. Question: Impact of U.S. elections on project sentiment - Management noted that the IIJA provides visibility for infrastructure spending, and there is optimism about bipartisan support for infrastructure investment [89][90]. Question: Contribution of Cesium to ARR - Management clarified that while Cesium's financial impact is currently minimal, its strategic importance and user engagement are significant [94][96]. Question: Drivers of SMB growth - Management highlighted the success of Virtuosity subscriptions in attracting new SMB accounts, indicating a deep market for these services [97][100]. Question: Water infrastructure demand - Management acknowledged a long-term growth trend in water infrastructure, with a global uptick in orders, although it is not concentrated in the U.S. [102]. Question: Changes in customer selection criteria - Management noted that customers are increasingly prioritizing data management and interoperability, which aligns with the company's open approach [106][108].