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].

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |----------------------------|-------|-------|-------|-------|-------|-------|-------|-------|---------------------------------------------------------------------------------------------------------------------| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ...

Revenue Performance - Total revenues for the three months ended September 30, 2024, were $335,173, representing a 9.3% increase compared to the same period in 2023[133]. - Subscription revenues for the three months ended September 30, 2024, were $303,239, up 12.0% year-over-year[133]. - Annual Recurring Revenue (ARR) as of September 30, 2024, was $1,270,726, reflecting a 12% growth rate in constant currency compared to the previous year[133]. - Revenues from the Americas for the three months ended September 30, 2024, were $175,609, an increase of 8.2% year-over-year[145]. - EMEA revenues for the three months ended September 30, 2024, were $95,343, reflecting a 9.6% increase compared to the same period in 2023[145]. - APAC revenues for the three months ended September 30, 2024, were $64,221, up 12.1% year-over-year[145]. - Total revenues for the nine months ended September 30, 2024, were $1,003,273, with a constant currency adjustment resulting in $1,002,382[200]. - Subscription revenues for the nine months ended September 30, 2024, were $907,772, adjusted to $906,988 in constant currency[200]. Operating Income and Expenses - Operating income for the three months ended September 30, 2024, was $68,630, a decrease from $73,679 in the same period of 2023[133]. - Total cost of revenues for the three months ended September 30, 2024, was $64,832, a slight increase of 0.2% compared to the same period in 2023[154]. - Research and development expenses for the three months ended September 30, 2024, increased by 7.0% to $70,068, primarily due to headcount-related costs[158]. - Selling and marketing expenses for the three months ended September 30, 2024, increased by 20.8% to $64,940, driven by higher headcount-related costs[162]. - General and administrative expenses for the three months ended September 30, 2024, increased by 20.3% to $51,359, mainly due to increased headcount-related costs and higher charitable contributions[163]. - Total operating expenses for the three months ended September 30, 2024, increased by 19.9% to $201,711 compared to the same period last year[158]. - Operating expenses for the three months ended September 30, 2024, totaled $201,711 million, compared to $168,257 million for the same period in 2023, indicating a significant increase[203]. Cash Flow and Liquidity - Cash flows from operations for the nine months ended September 30, 2024, were $353,660, compared to $329,643 for the same period in 2023[133]. - Cash and cash equivalents as of September 30, 2024, amounted to $72,175 million, up from $68,412 million at the end of 2023[204]. - Net cash provided by operating activities for the nine months ended September 30, 2024, was $353,660 million, an increase of $24,017 million compared to $329,643 million in the prior year[208]. - Net cash used in investing activities increased to $135,680 million for the nine months ended September 30, 2024, primarily due to higher acquisition-related payments[209]. - The company plans to continue funding acquisitions and growth investments through cash generated from operations and available liquidity under the Credit Facility[205]. Debt and Financing - Long-term debt as of September 30, 2024, was $1,418,870 million, down from $1,518,403 million at the end of 2023[212]. - On October 18, 2024, the company entered into a $1,300,000 revolving credit facility, including $125,000 in swingline loans and $125,000 in letters of credit[214]. - The company has a $500,000 "accordion" feature to increase the credit facility in the form of revolving indebtedness and/or incremental term loans[214]. - As of September 30, 2024, the company was in compliance with all covenants under the Credit Facility and the 2026 and 2027 Notes[213]. Shareholder Returns - The quarterly dividend per share increased to $0.06 in 2024 from $0.05 in 2023, resulting in higher dividend payments[210]. - Quarterly dividends paid were $0.06 per share during the nine months ended September 30, 2024, up from $0.05 per share in the same period of 2023[220]. - The Board of Directors authorized a stock repurchase program of up to $200,000 for Class B common stock and/or outstanding convertible senior notes, extended through June 30, 2026[215]. - The company repurchased 912,737 shares for $45,769 during the nine months ended September 30, 2024, compared to no repurchases in the same period of 2023[216]. - Future dividend payments will depend on various factors, including results of operations and capital requirements, and are subject to limitations under the Credit Facility[220]. Retention and Growth Metrics - The dollar-based net retention rate for recurring revenues was 109% as of September 30, 2024, slightly down from 110% in the prior year[133]. - The account retention rate for the twelve months ended September 30, 2024, was 99%, an increase from 97% in the prior year[172]. - The recurring revenues dollar-based net retention rate was a key metric, indicating the company's ability to retain and grow recurring revenues from existing accounts[183]. - The account retention rate is a critical metric for evaluating long-term account relationships, demonstrating the company's ability to maintain its account base[181]. - The company continues to focus on growing recurring revenues within existing accounts, as evidenced by the increase in the dollar-based net retention rate[185]. Tax and Interest - The effective tax rate for the three months ended September 30, 2024, was 28.1%, up from 23.7% in the same period last year, primarily due to decreased discrete tax benefits[168]. - The company reported a net interest expense decrease of 53.5% for the three months ended September 30, 2024, totaling $(4,669) due to lower average debt outstanding[166]. Non-GAAP Measures - Non-GAAP financial measures, including adjusted operating income, are used to provide investors with a clearer view of operational performance[186]. - Adjusted operating income for the three months ended September 30, 2024, was $105,419, compared to $104,366 for the same period in 2023, reflecting operational strength[193]. Market Risk and Other Considerations - There have been no material changes in the company's market risk exposure as described in the 2023 Annual Report[222]. - The impact of foreign exchange on total revenues was a consideration, with adjustments made to present results in constant currency for better comparability[196]. - The timing and value of shares repurchased under the Repurchase Program will depend on market conditions and the company's assessment of intrinsic value[217]. - The company recognized approximately $6,200 in costs associated with internal-use system implementations during the nine months ended September 30, 2024[164]. - The amortization of purchased intangibles decreased by 12.1% for the three months ended September 30, 2024, due to fully amortized intangible assets[165].