Bentley(BSY) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the unaudited consolidated financial statements and management's discussion and analysis of Bentley Systems Item 1. Unaudited Consolidated Financial Statements This section presents the unaudited consolidated financial statements of Bentley Systems, Incorporated for the periods ended June 30, 2025, and December 31, 2024 (balance sheet), and June 30, 2025 and 2024 (income, comprehensive income, equity, cash flows) Consolidated Balance Sheets Presents the company's financial position, including assets, liabilities, and equity, at specific points in time Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :---------------- | | Total assets | $3,423,284 | $3,399,807 | | Total liabilities | $2,261,114 | $2,358,687 | | Total equity | $1,162,170 | $1,041,120 | Consolidated Statements of Operations Details the company's revenues, expenses, and net income over specific reporting periods Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenues | $364,106 | $330,337 | $734,648 | $668,100 | | Gross profit | $295,330 | $267,144 | $600,213 | $543,077 | | Income from operations | $84,430 | $80,177 | $199,614 | $172,108 | | Net income attributable to Bentley Systems | $70,482 | $72,046 | $161,850 | $142,356 | | Basic EPS | $0.22 | $0.23 | $0.51 | $0.45 | | Diluted EPS | $0.22 | $0.22 | $0.50 | $0.44 | Consolidated Statements of Comprehensive Income Reports net income and other comprehensive income items, such as foreign currency translation adjustments Consolidated Statements of Comprehensive Income Highlights (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $70,500 | $72,046 | $161,838 | $142,356 | | Total other comprehensive income (loss), net of taxes | $28,492 | $(645) | $34,991 | $(8,277) | | Comprehensive income attributable to Bentley Systems | $98,970 | $71,401 | $196,833 | $134,079 | Consolidated Statements of Equity Shows changes in stockholders' equity, including net income, dividends, and stock-based compensation Consolidated Statements of Equity Highlights (in thousands) | Metric | Balance, December 31, 2024 | Balance, June 30, 2025 | | :-------------------------------- | :------------------------- | :--------------------- | | Total Bentley Systems stockholders' equity | $1,040,987 | $1,162,041 | | Total equity | $1,041,120 | $1,162,170 | Consolidated Statements of Cash Flows Summarizes the cash inflows and outflows from operating, investing, and financing activities Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $280,500 | $267,555 | | Net cash used in investing activities | $(7,135) | $(10,946) | | Net cash used in financing activities | $(257,509) | $(270,999) | | Cash and cash equivalents, end of period | $89,646 | $51,278 | Notes to Consolidated Financial Statements Provides detailed explanations and additional information supporting the consolidated financial statements Note 1: Basis of Presentation and Significant Accounting Policies Outlines the accounting principles and policies used in preparing the financial statements - The unaudited consolidated financial statements are prepared in accordance with U.S. GAAP and SEC rules for interim financial reporting, and should be read with the 2024 Annual Report on Form 10-K[34] - The Company capitalizes certain software development costs under its Accelerated Commercial Development Program (ACDP), totaling $806 thousand for the six months ended June 30, 2025, down from $2,434 thousand in the prior year[36] - Capitalized internal-use software implementation costs were $23,986 thousand as of June 30, 2025, up from $18,791 thousand as of December 31, 2024[37] Note 2: Recent Accounting Pronouncements Discusses the impact of recently issued accounting standards and SEC rules on the company's financial reporting - ASU No. 2024-03 (Expense Disaggregation Disclosures) is effective for the Company for the annual reporting period beginning after December 15, 2026, with early adoption permitted, and no expected change to consolidated financial statements other than additional disclosure[38] - The SEC's final rule on climate-related disclosures (SEC Release No. 33-11275) will begin phasing in for the Company's fiscal year beginning January 1, 2025, though the rule is currently stayed pending judicial review[39] - ASU No. 2023-09 (Improvements to Income Tax Disclosures) is effective for the Company for the annual reporting period beginning after December 15, 2024, and the Company is evaluating its impact on disclosures[40] Note 3: Revenue from Contracts with Customers Details the company's revenue recognition policies and disaggregation of revenues by type and geographic region Disaggregation of Revenues (in thousands) | Revenue Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Subscriptions | $333,452 | $297,444 | $675,770 | $604,533 | | Perpetual licenses | $10,193 | $10,863 | $20,985 | $20,375 | | Services | $20,461 | $22,030 | $37,893 | $43,192 | | Total revenues | $364,106 | $330,337 | $734,648 | $668,100 | Revenues by Geographic Region (in thousands) | Region | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Americas | $194,059 | $176,310 | $393,034 | $360,503 | | EMEA | $105,414 | $95,865 | $212,419 | $190,579 | | APAC | $64,633 | $58,162 | $129,195 | $117,018 | | Total revenues | $364,106 | $330,337 | $734,648 | $668,100 | - Unbilled accounts receivable were $174,012 thousand as of June 30, 2025, an increase from $159,924 thousand as of December 31, 2024[46] - For the six months ended June 30, 2025, $175,935 thousand of revenues from the December 31, 2024 deferred revenues balance were recognized, with additional deferrals of $163,049 thousand primarily from new billings[49] - As of June 30, 2025, remaining performance obligations totaled $264,818 thousand, with approximately 93% expected to be recognized over the next 12 months[51] Note 4: Acquisitions Provides information on business acquisitions, including cash paid and purchase accounting adjustments Acquisition Activity (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Number of acquisitions | — | 1 | | Cash paid at closing | $— | $5,000 | | Net cash paid | $— | $5,000 | - The Company is finalizing purchase accounting for certain acquisitions completed during the year ended December 31, 2024, with preliminary allocations subject to revision[53] Note 5: Property and Equipment, Net Presents the carrying value of property and equipment and related depreciation expense Property and Equipment, Net (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :---------------- | | Property and equipment, at cost | $106,139 | $95,413 | | Less: Accumulated depreciation | $(71,762) | $(61,615) | | Total property and equipment, net | $34,377 | $33,798 | - Depreciation expense was $6,798 thousand for the six months ended June 30, 2025, compared to $6,680 thousand for the same period in 2024[54] Note 6: Goodwill and Other Intangible Assets Details changes in goodwill and the net book value and amortization of other intangible assets Goodwill Changes (in thousands) | Metric | Amount | | :------------------------------ | :------- | | Balance, December 31, 2024 | $2,367,179 | | Foreign currency translation adjustments | $49,262 | | Other adjustments | $374 | | Balance, June 30, 2025 | $2,416,815 | Other Intangible Assets, Net (in thousands) | Category | June 30, 2025 Net Book Value | December 31, 2024 Net Book Value | | :---------------------- | :--------------------------- | :----------------------------- | | Software and technology | $18,701 | $24,907 | | Customer relationships | $141,688 | $153,598 | | Trademarks | $32,362 | $35,441 | | Non-compete agreements | $— | $13 | | Total intangible assets | $192,751 | $213,959 | Total Amortization Expense (in thousands) | Period | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total amortization expense | $11,405 | $11,521 | $22,849 | $23,711 | Note 7: Investments Summarizes the company's investments, including cost and equity method investments Investments (in thousands) | Investment Type | June 30, 2025 | December 31, 2024 | | :-------------------- | :-------------- | :---------------- | | Cost method investments | $23,260 | $23,289 | | Equity method investments | $2,584 | $2,475 | | Total investments | $25,844 | $25,764 | - The Company invested $0 in technology development companies during the six months ended June 30, 2025, compared to $557 thousand in the prior year[59] - The Company sold its ownership in Teralytics Holdings AG during Q4 2024, resulting in no gain or loss, after acquiring a business from them for $5,000 thousand in Q2 2024[60] Note 8: Leases Provides information on operating lease costs, cash payments, and weighted average lease terms and discount rates Operating Lease Costs (in thousands) | Lease Cost Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating lease cost | $3,800 | $3,558 | $7,577 | $7,253 | | Variable lease cost | $1,006 | $1,115 | $2,177 | $2,288 | | Total operating lease cost | $4,806 | $4,673 | $9,754 | $9,541 | - Cash paid for operating leases included in operating cash flows was $8,156 thousand for the six months ended June 30, 2025, up from $7,409 thousand in the prior year[63] - The weighted average remaining lease term for operating leases was 4.1 years as of June 30, 2025, with a weighted average discount rate of 5.4%[63] Note 9: Accruals and Other Current Liabilities Details the components of accrued liabilities and other current liabilities Accruals and Other Current Liabilities (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :------------------------------ | :-------------- | :---------------- | | Accrued benefits | $48,348 | $40,762 | | Accrued compensation | $32,499 | $47,121 | | Other accrued and current liabilities | $72,974 | $81,639 | | Total | $153,821 | $169,522 | Note 10: Long-Term Debt Presents the company's long-term debt obligations, available credit, and interest expense Long-Term Debt (in thousands) | Debt Type | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :-------------- | :---------------- | | Revolving loan facility due October 2029 | $— | $135,315 | | Convertible senior notes due January 2026 | $677,830 | $687,830 | | Convertible senior notes due July 2027 | $575,000 | $575,000 | | Unamortized debt issuance costs | $(6,987) | $(10,057) | | Total debt | $1,245,843 | $1,388,088 | - The Company had $1,299,850 thousand available under its Credit Facility as of June 30, 2025, and was in compliance with all debt covenants[66][67] - During Q1 2025, the Company repurchased $10,000 thousand aggregate principal amount of its 2026 Notes for $9,797 thousand under the BSY Stock Repurchase Program[68] Interest Expense, Net (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Contractual interest expense | $(1,932) | $(4,072) | $(4,375) | $(9,486) | | Interest income | $337 | $901 | $937 | $1,684 | | Interest expense, net | $(3,519) | $(5,100) | $(7,327) | $(11,620) | Note 11: Executive Incentive Plans Describes the company's executive incentive compensation programs and related expenses - Incentive compensation under the Bonus Plan was $4,828 thousand for the six months ended June 30, 2025, down from $13,398 thousand in the prior year[70] - The Company granted 28,913 RSUs with a fair value of $1,160 thousand under the Career Stock Program during Q1 2025, based on 2024 performance goals, with $1,087 thousand unrecognized compensation expense expected over 4.5 years[72] Note 12: Retirement Plans Provides information on deferred compensation plan expenses and liabilities - Deferred compensation plan expense was $6,338 thousand for the six months ended June 30, 2025, compared to $6,682 thousand in the prior year, attributable to the marked-to-market impact on liabilities[76] Deferred Compensation Plan Liabilities (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :---------------- | | Accruals and other current liabilities | $4,159 | $3,798 | | Deferred compensation plan liabilities | $98,895 | $96,684 | | Total DCP liabilities | $103,054 | $100,482 | Note 13: Common Stock Details common stock activity, including repurchase programs, dividends, and employee stock purchases - The Board approved a Repurchase Program authorizing up to $200,000 thousand for Class B common stock and/or convertible senior notes through June 30, 2026, with $113,358 thousand remaining available as of June 30, 2025[78] - During the six months ended June 30, 2025, the Company repurchased 1,173,041 shares for $50,023 thousand and $10,000 thousand aggregate principal amount of 2026 Notes for $9,797 thousand under the Repurchase Program[80] Cash Dividends Declared | Year | Quarter | Dividend Per Share | Amount (in thousands) | | :--- | :------ | :----------------- | :-------------------- | | 2025 | Second | $0.07 | $21,295 | | 2025 | First | $0.07 | $21,198 | | 2024 | Second | $0.06 | $17,980 | | 2024 | First | $0.06 | $17,871 | - Under the ESPP, colleagues purchased 130,212 shares of Class B common stock for $5,312 thousand in cash proceeds during the six months ended June 30, 2025[85] Note 14: Accumulated Other Comprehensive Loss Presents the components and changes in accumulated other comprehensive loss Accumulated Other Comprehensive Loss (in thousands) | Component | Balance, December 31, 2024 | Other Comprehensive Income (Loss), Net of Taxes (Six Months Ended June 30, 2025) | Balance, June 30, 2025 | | :-------------------------- | :------------------------- | :----------------------------------------------------------------------- | :--------------------- | | Foreign Currency Translation | $(103,900) | $34,937 | $(68,971) | | Actuarial (Loss) Gain on Retirement Plan | $(178) | $54 | $(124) | | Total | $(104,078) | $34,991 | $(69,095) | Note 15: Stock-Based Compensation Details stock-based compensation expense by category and operating function, and unvested RSU activity Total Stock-Based Compensation Expense (in thousands) | Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Restricted stock and RSUs expense | $16,495 | $15,987 | $31,442 | $29,677 | | Bonus Plan expense | $1,828 | $4,879 | $3,652 | $10,180 | | ESPP expense | $670 | $591 | $1,301 | $1,215 | | Stock grants expense | $600 | $600 | $600 | $600 | | DCP elective participant deferrals expense | $— | $44 | $— | $87 | | Total stock-based compensation expense | $19,593 | $22,101 | $36,995 | $41,759 | Stock-Based Compensation Expense by Operating Category (in thousands) | Operating Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Cost of subscriptions and licenses | $918 | $(732) | $2,050 | $362 | | Cost of services | $587 | $756 | $1,308 | $1,638 | | Research and development | $5,854 | $5,082 | $11,053 | $9,963 | | Selling and marketing | $4,206 | $3,542 | $7,963 | $6,320 | | General and administrative | $8,028 | $13,453 | $14,621 | $23,476 | | Total | $19,593 | $22,101 | $36,995 | $41,759 | Unvested RSUs Activity | Metric | Total RSUs | Time-Based RSUs | Performance-Based RSUs | | :------------------------ | :--------- | :-------------- | :--------------------- | | Unvested, December 31, 2024 | 3,417,009 | 3,067,703 | 349,306 | | Granted | 1,741,125 | 1,524,619 | 216,506 | | Vested | (1,145,903) | (830,999) | (314,904) | | Forfeited and canceled | (130,615) | (127,474) | (3,141) | | Unvested, June 30, 2025 | 3,881,616 | 3,633,849 | 247,767 | Note 16: Income Taxes Provides information on income before taxes, provision for income taxes, and effective tax rates Income Taxes (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Income before income taxes | $79,315 | $77,357 | $191,140 | $169,905 | | Provision for income taxes | $8,876 | $5,330 | $29,364 | $27,577 | | Effective tax rate | 11.2% | 6.9% | 15.4% | 16.2% | - The effective tax rate for the three months ended June 30, 2025, increased primarily due to a decrease in discrete tax benefits recognized, partially offset by a decrease in the forecasted effective tax rate impact of U.S. international tax provisions[100] - Discrete tax benefits from stock-based compensation were $8,114 thousand for Q2 2025, down from $18,543 thousand for Q2 2024[100] Note 17: Fair Value of Financial Instruments Describes the fair value hierarchy and measurement of financial assets and liabilities - The Company classifies financial assets and liabilities into a three-level hierarchy based on the observability of inputs used in fair value measurement (Level 1: quoted prices in active markets; Level 2: observable inputs; Level 3: unobservable inputs)[102][103] - The fair value of current assets and liabilities approximates their carrying amounts due to their short-term nature[104] Financial Assets and Liabilities Carried at Fair Value (in thousands) | Category | June 30, 2025 Total | December 31, 2024 Total | | :------------------------------------ | :------------------ | :-------------------- | | Assets: | | | | Money market funds | $17,248 | $5,648 | | Interest rate swap | $24,461 | $32,172 | | Total assets | $41,709 | $37,820 | | Liabilities: | | | | Deferred compensation plan liabilities | $103,054 | $100,482 | | Cash-settled equity awards | $410 | $440 | | Total liabilities | $103,464 | $100,922 | Note 18: Commitments and Contingencies Outlines future cash purchase commitments and the expected impact of legal actions - As of June 30, 2025, total non-cancelable future cash purchase commitments were approximately $88,000 thousand, to be paid through September 2029[109] - The Company does not expect the ultimate resolution of pending legal actions to have a material adverse effect on its financial position, results of operations, or cash flows[110] Note 19: Segment and Geographic Information Describes the company's single reportable segment and provides geographic long-lived asset data - The Company operates and manages its business in a single reportable segment: the development and marketing of computer software and related services[111] Reconciliation of Operating Income to AOI less SBC (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating income | $84,430 | $80,177 | $199,614 | $172,108 | | Amortization of purchased intangibles | $11,405 | $11,521 | $22,849 | $23,711 | | Deferred compensation plan | $7,584 | $883 | $6,338 | $6,682 | | Acquisition expenses | $1,804 | $1,969 | $2,642 | $4,328 | | Realignment expenses | $— | $743 | $— | $809 | | AOI less SBC | $105,223 | $95,293 | $231,443 | $207,638 | Long-Lived Assets by Geographic Region (in thousands) | Region | June 30, 2025 | December 31, 2024 | | :------------- | :-------------- | :---------------- | | Americas | $209,143 | $230,964 | | EMEA | $33,654 | $32,712 | | APAC | $15,804 | $16,384 | | Total | $258,601 | $280,060 | Note 20: Other (Expense) Income, Net Details the components of other expense and income, including interest rate swap and foreign exchange impacts Other (Expense) Income, Net (in thousands) | Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Change in fair value of interest rate swap | $(3,339) | $(429) | $(7,711) | $2,361 | | Foreign exchange | $196 | $(2,284) | $2,944 | $58 | | Receipts related to interest rate swap | $1,874 | $2,411 | $3,738 | $4,768 | | Other (expense) income, net | $(327) | $2,582 | $(118) | $2,230 | | Total other (expense) income, net | $(1,596) | $2,280 | $(1,147) | $9,417 | Note 21: Net Income Per Share Attributable to Bentley Systems Stockholders Presents basic and diluted net income per share and weighted average shares outstanding Net Income Per Share Attributable to Bentley Systems Stockholders | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic net income attributable to Bentley Systems stockholders | $70,471 | $72,025 | $161,821 | $142,314 | | Diluted net income attributable to Bentley Systems stockholders | $72,185 | $73,742 | $165,104 | $145,754 | | Basic weighted average shares | 314,622,491 | 314,980,580 | 314,894,050 | 314,660,906 | | Diluted weighted average shares | 332,824,020 | 333,780,984 | 333,150,282 | 333,725,315 | | Basic EPS | $0.22 | $0.23 | $0.51 | $0.45 | | Diluted EPS | $0.22 | $0.22 | $0.50 | $0.44 | - For the three and six months ended June 30, 2025, 314,348 and 277,635 RSUs, respectively, were excluded from diluted EPS calculation due to their anti-dilutive effect[125] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the Company's financial condition and results of operations, highlighting key performance indicators, revenue trends by type and geography, cost of revenues, operating expenses, and non-GAAP financial measures Overview Provides a high-level description of Bentley Systems' business and operational structure - Bentley Systems is an infrastructure engineering software company focused on advancing global infrastructure through intelligent digital twin solutions[129] - The Company manages its business globally within one reportable segment: the development and marketing of computer software and related services[129] Executive Summary Presents a concise overview of key financial and operational highlights for the reporting periods Executive Summary Highlights (in thousands, except percentages) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenues | $364,106 (up 10.2%) | $330,337 | $734,648 (up 10.0%) | $668,100 | | Subscriptions revenues | $333,452 (up 12.1%) | $297,444 | $675,770 (up 11.8%) | $604,533 | | ARR (as of June 30) | $1,379,161 | $1,215,910 | | | | Constant currency ARR growth rate (YoY) | 11.5% | | | | | Last twelve-month recurring revenues dollar-based net retention rate (as of June 30) | 109% | 108% | | | | Operating income | $84,430 | $80,177 | $199,614 | $172,108 | | AOI less SBC | $105,223 | $95,293 | $231,443 | $207,638 | | Cash flows from operations | | | $280,500 | $267,555 | Results of Operations Analyzes the company's financial performance, including revenue, cost of revenues, and operating expenses Revenues Discusses revenue trends, disaggregation by type, and geographic performance Consolidated Revenues and Growth Rates (in thousands, except percentages) | Revenue Type | Three Months Ended June 30, 2025 | YoY Change % | YoY Change % (Constant Currency) | Six Months Ended June 30, 2025 | YoY Change % | YoY Change % (Constant Currency) | | :---------------------- | :------------------------------- | :----------- | :------------------------------- | :----------------------------- | :----------- | :------------------------------- | | Subscriptions | $333,452 | 12.1% | 11.2% | $675,770 | 11.8% | 11.9% | | Perpetual licenses | $10,193 | (6.2%) | (7.0%) | $20,985 | 3.0% | 3.3% | | Services | $20,461 | (7.1%) | (8.6%) | $37,893 | (12.3%) | (12.3%) | | Total revenues | $364,106 | 10.2% | 9.2% | $734,648 | 10.0% | 10.1% | - Subscriptions revenue growth was primarily driven by expansion from existing accounts and 3% growth from new accounts, notably small- and medium-sized, led by engineering applications[137][138] - Services revenues decreased due to a decline in business performance, primarily from weakness within Asset Performance Services[140] Revenues by Geographic Region and Growth Rates (in thousands, except percentages) | Region | Three Months Ended June 30, 2025 | YoY Change % | YoY Change % (Constant Currency) | Six Months Ended June 30, 2025 | YoY Change % | YoY Change % (Constant Currency) | | :------------- | :------------------------------- | :----------- | :------------------------------- | :----------------------------- | :----------- | :------------------------------- | | Americas | $194,059 | 10.1% | 10.3% | $393,034 | 9.0% | 9.7% | | EMEA | $105,414 | 10.0% | 6.2% | $212,419 | 11.5% | 10.2% | | APAC | $64,633 | 11.1% | 11.0% | $129,195 | 10.4% | 11.2% | | Total revenues | $364,106 | 10.2% | 9.2% | $734,648 | 10.0% | 10.1% | - APAC revenue growth was driven by subscription expansion in India and new account growth in China, partially offset by declines from existing accounts in China[148][149] Cost of Revenues and Operating Expenses Analyzes changes in cost of revenues and various operating expense categories Cost of Revenues and Growth Rates (in thousands, except percentages) | Cost Type | Three Months Ended June 30, 2025 | YoY Change % | YoY Change % (Constant Currency) | Six Months Ended June 30, 2025 | YoY Change % | YoY Change % (Constant Currency) | | :-------------------------------- | :------------------------------- | :----------- | :------------------------------- | :----------------------------- | :----------- | :------------------------------- | | Cost of subscriptions and licenses | $47,758 | 12.6% | 11.8% | $94,256 | 14.0% | 14.6% | | Cost of services | $21,018 | 1.2% | (0.3%) | $40,179 | (5.2%) | (5.0%) | | Total cost of revenues | $68,776 | 8.8% | 7.8% | $134,435 | 7.5% | 8.0% | - Cost of subscriptions and licenses increased due to higher headcount-related costs ($6,921 thousand for six months) and cloud-related costs ($4,455 thousand for six months)[152] - Cost of services decreased for the six months ended June 30, 2025, primarily due to a reduction in third-party personnel costs[153] Operating Expenses and Growth Rates (in thousands, except percentages) | Expense Type | Three Months Ended June 30, 2025 | YoY Change % | YoY Change % (Constant Currency) | Six Months Ended June 30, 2025 | YoY Change % | YoY Change % (Constant Currency) | | :-------------------------------- | :------------------------------- | :----------- | :------------------------------- | :----------------------------- | :----------- | :------------------------------- | | Research and development | $75,385 | 14.7% | 14.5% | $147,835 | 10.3% | 11.2% | | Selling and marketing | $69,873 | 22.3% | 21.8% | $132,932 | 19.2% | 20.0% | | General and administrative | $49,857 | (9.1%) | (9.4%) | $97,085 | (4.2%) | (3.7%) | | Deferred compensation plan | $7,584 | NM | NM | $6,338 | (5.1%) | (5.1%) | | Amortization of purchased intangibles | $8,201 | (2.3%) | (2.6%) | $16,409 | (5.5%) | (5.4%) | | Total operating expenses | $210,900 | 12.8% | 12.5% | $400,599 | 8.0% | 8.7% | - General and administrative expenses decreased primarily due to lower incentive compensation expense related to the reduction in Gregory S. Bentley's fractional interest under the Bonus Plan and non-recurring corporate initiatives expenses from the prior year[158][159] Interest Expense, Net Explains the components and changes in net interest expense Interest Expense, Net (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Interest expense | $(3,856) | $(6,001) | $(8,264) | $(13,304) | | Interest income | $337 | $901 | $937 | $1,684 | | Interest expense, net | $(3,519) | $(5,100) | $(7,327) | $(11,620) | - Interest expense, net, decreased primarily due to lower weighted average debt outstanding under credit facilities[161] Other (Expense) Income, Net Details the factors influencing other expense and income, such as fair value changes and foreign exchange Other (Expense) Income, Net (in thousands) | Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Change in fair value of interest rate swap | $(3,339) | $(429) | $(7,711) | $2,361 | | Foreign exchange | $196 | $(2,284) | $2,944 | $58 | | Receipts related to interest rate swap | $1,874 | $2,411 | $3,738 | $4,768 | | Other (expense) income, net | $(327) | $2,582 | $(118) | $2,230 | | Total other (expense) income, net | $(1,596) | $2,280 | $(1,147) | $9,417 | Provision for Income Taxes Discusses the income tax provision and effective tax rate, including recent legislative impacts Provision for Income Taxes (in thousands, except percentages) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Income before income taxes | $79,315 | $77,357 | $191,140 | $169,905 | | Provision for income taxes | $8,876 | $5,330 | $29,364 | $27,577 | | Effective tax rate | 11.2% | 6.9% | 15.4% | 16.2% | - The effective tax rate for the three months ended June 30, 2025, was higher due to decreased discrete tax benefits, partially offset by a lower forecasted impact of U.S. international tax provisions[163] - The recently signed One Big Beautiful Bill Act (OBBBA) is expected to have a favorable impact on cash paid for income taxes in 2025, primarily due to the restoration of immediate U.S. tax deductions for domestic R&D expenses[165] Key Business Metrics Defines and presents key operational metrics used to evaluate business performance and growth Key Business Metrics | Metric | June 30, 2025 | June 30, 2024 | | :------------------------------------------ | :-------------- | :-------------- | | ARR | $1,379,161 | $1,215,910 | | Last twelve-months recurring revenues | $1,309,010 | $1,162,849 | | Twelve-months ended constant currency ARR growth rate | 11.5% | 11% | | Account retention rate | 99% | 99% | | Recurring revenues dollar-based net retention rate | 109% | 108% | - Recurring revenues are subscriptions and professional services revenues with specific or automatic renewal clauses, useful for evaluating retention and growth within existing accounts[168] - ARR (Annual Recurring Revenue) is a key metric for evaluating business scale and growth, defined as the annualized value of recurring revenue contracts and annualized last three months of consumption-based subscriptions[169][170] - The last twelve-months recurring revenues increased by $146,161 thousand, primarily due to ARR growth from existing accounts and new accounts[175] Non-GAAP Financial Measures Explains and reconciles non-GAAP financial measures used by management to assess performance Adjusted Operating Income Less Stock-Based Compensation Expense ("AOI less SBC") Defines and explains the utility of this non-GAAP measure for evaluating operational strength - AOI less SBC is a non-GAAP measure used to assess operational strength and performance, excluding amortization of purchased intangibles, deferred compensation plan expense/income, acquisition expenses, and realignment expenses[182][183] - Management uses AOI less SBC for budgeting, forecasting, evaluating financial performance, and in executive incentive compensation programs[185] Adjusted Operating Income ("AOI") Defines this non-GAAP measure, which further excludes stock-based compensation from AOI less SBC - Adjusted operating income (AOI) is a non-GAAP measure that further excludes stock-based compensation expense from AOI less SBC[187] Reconciliation of Operating Income to AOI less SBC and AOI (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating income | $84,430 | $80,177 | $199,614 | $172,108 | | Amortization of purchased intangibles | $11,405 | $11,521 | $22,849 | $23,711 | | Deferred compensation plan | $7,584 | $883 | $6,338 | $6,682 | | Acquisition expenses | $1,804 | $1,969 | $2,642 | $4,328 | | Realignment expenses | $— | $743 | $— | $809 | | AOI less SBC | $105,223 | $95,293 | $231,443 | $207,638 | | Stock-based compensation expense | $19,319 | $21,856 | $36,624 | $41,193 | | Adjusted operating income | $124,542 | $117,149 | $268,067 | $248,831 | Constant Currency Explains this non-GAAP measure used to assess underlying business performance by removing foreign currency fluctuations - Constant currency is a non-GAAP measure that excludes the estimated effects of foreign currency exchange rate fluctuations to evaluate underlying business performance[188] Reconciliation of Consolidated Revenues to Constant Currency (in thousands) | Revenue Type | Three Months Ended June 30, 2025 (Actual) | Impact of Foreign Exchange at 2024 Rates | Three Months Ended June 30, 2025 (Constant Currency) | | :---------------------- | :---------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Subscriptions | $333,452 | $(3,191) | $330,261 | | Perpetual licenses | $10,193 | $(95) | $10,098 | | Services | $20,461 | $(317) | $20,144 | | Total revenues | $364,106 | $(3,603) | $360,503 | Reconciliation of Operating Expenses to Constant Currency (in thousands) | Expense Type | Six Months Ended June 30, 2025 (Actual) | Impact of Foreign Exchange at 2024 Rates | Six Months Ended June 30, 2025 (Constant Currency) | | :-------------------------------- | :-------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Research and development | $147,835 | $1,196 | $149,031 | | Selling and marketing | $132,932 | $838 | $133,770 | | General and administrative | $97,085 | $419 | $97,504 | | Deferred compensation plan | $6,338 | $— | $6,338 | | Amortization of purchased intangibles | $16,409 | $14 | $16,423 | | Total operating expenses | $400,599 | $2,467 | $403,066 | Liquidity and Capital Resources Discusses the company's cash position, sources and uses of cash, and debt management strategies Cash and Cash Equivalents Details the company's cash holdings and their geographic distribution Cash and Cash Equivalents (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :-------------- | :---------------- | | Cash and cash equivalents held domestically | $5,575 | $2,845 | | Cash and cash equivalents held by foreign subsidiaries | $84,071 | $61,164 | | Total cash and cash equivalents | $89,646 | $64,009 | - The Company's primary source of operating cash is from the sale of subscriptions, perpetual licenses, and services, while the primary use is for operating costs, debt obligations, dividends, and stock repurchases[192] - Management believes current and anticipated liquidity sources, including cash from operations and the Credit Facility, will be sufficient to meet working capital and capital expenditure requirements[193] Cash Flows Activity Analyzes changes in cash flows from operating, investing, and financing activities Net Cash Provided by (Used in) Activities (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :----------------------------- | :----------------------------- | | Operating activities | $280,500 | $267,555 | | Investing activities | $(7,135) | $(10,946) | | Financing activities | $(257,509) | $(270,999) | - Net cash provided by operating activities increased by $12,945 thousand, driven by higher net income, partially offset by lower non-cash adjustments and changes in operating assets/liabilities[195] - Net cash used in investing activities decreased by $3,811 thousand, primarily due to lower acquisition-related payments[196] - Net cash used in financing activities decreased by $13,490 thousand, mainly due to lower net paydowns of credit facilities, partially offset by higher payments for shares acquired and increased dividend payments[197] Long-Term Debt Provides information on the company's long-term debt, credit facilities, and compliance with covenants Long-Term Debt (in thousands) | Debt Type | June 30, 2025 | December 31, 2024 | | :-------------------- | :-------------- | :---------------- | | Current portion of long-term debt | $— | $— | | Long-term debt | $1,245,843 | $1,388,088 | | Total debt | $1,245,843 | $1,388,088 | - As of June 30, 2025, the Company had $1,299,850 thousand available under its Credit Facility and was in compliance with all debt covenants[198] - The 2026 Notes ($677,830 thousand outstanding) are classified as long-term due to the Company's ability and intent to refinance them through the Credit Facility[199] Stock Repurchases Details the company's stock repurchase program and related activities - The Board of Directors approved a Repurchase Program authorizing up to $200,000 thousand for Class B common stock and/or convertible senior notes through June 30, 2026[200] - During the six months ended June 30, 2025, the Company repurchased 1,173,041 shares for $50,023 thousand and $10,000 thousand aggregate principal amount of 2026 Notes for $9,797 thousand under the program[201] Withholding Taxes on Certain Equity Awards Explains the company's approach to tax withholdings for equity awards - The Company exercised its right to require gross issuance of Class B common stock for tax withholdings in Q1 2025 but allowed net settlement options in Q2 2025[203] Dividend Payments Provides information on declared and paid dividends and the factors influencing future declarations - The Company paid quarterly dividends of $0.07 per share in the six months ended June 30, 2025, an increase from $0.06 per share in the prior year[204] - Future dividend declarations are at the discretion of the Board of Directors and subject to various factors, including financial performance and debt agreement limitations[204] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section states that there have been no material changes to the Company's market risk exposure since the 2024 Annual Report on Form 10-K - No material changes in market risk exposure have occurred since the 2024 Annual Report on Form 10-K[205] Item 4. Controls and Procedures Management, including the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures as of June 30, 2025, and concluded they were effective at a reasonable assurance level - Management concluded that disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2025[207] - No material changes in internal control over financial reporting were identified during the quarter ended June 30, 2025[209] PART II. OTHER INFORMATION This section contains additional disclosures not covered in the financial information, including legal proceedings, risk factors, equity sales, and exhibits Item 1. Legal Proceedings The Company is involved in various legal actions in the ordinary course of business but does not expect the ultimate resolution of pending matters to have a material adverse effect on its financial condition, results of operations, or cash flows - The Company does not expect pending legal proceedings to have a material adverse effect on its financial condition, results of operations, or cash flows[211] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the Company's 2024 Annual Report on Form 10-K - No material changes from the risk factors previously disclosed in the 2024 Annual Report on Form 10-K[212] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the issuance of Class B common stock under the Deferred Compensation Plan and provides a table of Class B common stock repurchases under the BSY Stock Repurchase Program during the three months ended June 30, 2025 - From April 1, 2025 to June 30, 2025, the Company issued 883,626 shares of Class B common stock in connection with distributions from its Deferred Compensation Plan[213] Class B Common Stock Repurchases (Three Months Ended June 30, 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plan | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan | | :--- | :--- | :--- | :--- | :--- | | April 1, 2025 to April 30, 2025 | 499,143 | $40.07 | 499,143 | $113,358,334 | | May 1, 2025 to May 31, 2025 | — | $— | — | $113,358,334 | | June 1, 2025 to June 30, 2025 | — | $— | — | $113,358,334 | | Total | 499,143 | $40.07 | 499,143 | | Item 5. Other Information The Company's Chief Technology Officer terminated a Rule 10b5-1 trading plan on May 14, 2025. No other directors or executive officers adopted or terminated such plans during the quarter - Julien Moutte, CTO, terminated a Rule 10b5-1 trading plan on May 14, 2025. No other Company directors or executive officers adopted or terminated such plans during the three months ended June 30, 2025[217][218] Item 6. Exhibits This section lists the exhibits filed or furnished with the Quarterly Report on Form 10-Q, including certifications, XBRL documents, and the cover page - The report includes certifications from the CEO and CFO, Inline XBRL Instance Document, Taxonomy Extension Schema, Calculation Linkbase, Definition Linkbase, Label Linkbase, Presentation Linkbase, and the Cover page formatted as Inline XBRL[218] SIGNATURE This section confirms the official signing of the report by the Chief Financial Officer - The report was signed by Werner Andre, Chief Financial Officer, on August 6, 2025[222]