Bentley(BSY) - 2023 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Unaudited Consolidated Financial Statements This section presents Bentley Systems' unaudited consolidated financial statements for the quarter ended March 31, 2023, including balance sheets, income statements, and cash flows, showing revenue growth, decreased net income, and increased operating cash flow Consolidated Balance Sheets As of March 31, 2023, total assets increased slightly to $3.19 billion, total liabilities decreased to $2.57 billion, and total stockholders' equity grew to $614.2 million Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total Assets | $3,188,022 | $3,165,005 | | Cash and cash equivalents | $93,567 | $71,684 | | Goodwill | $2,247,797 | $2,237,184 | | Total Liabilities | $2,573,832 | $2,591,551 | | Long-term debt | $1,668,781 | $1,775,696 | | Total Stockholders' Equity | $614,190 | $573,454 | Consolidated Statements of Operations For Q1 2023, total revenues increased 14.1% to $314.4 million, but higher operating expenses and interest led to a 19.3% decrease in net income to $45.5 million Q1 2023 vs. Q1 2022 Statement of Operations (in thousands, except per share data) | Metric | Q1 2023 | Q1 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $314,411 | $275,517 | +14.1% | | Subscriptions | $277,845 | $241,233 | +15.2% | | Gross Profit | $247,227 | $219,732 | +12.5% | | Income from Operations | $65,785 | $56,592 | +16.2% | | Net Income | $45,490 | $56,388 | -19.3% | | Net Income per Share, diluted | $0.14 | $0.18 | -22.2% | Consolidated Statements of Cash Flows Net cash provided by operating activities significantly increased to $176.2 million in Q1 2023, while investing activities decreased sharply due to lower acquisition spending, and financing activities shifted to net cash used Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $176,223 | $101,731 | | Net cash used in investing activities | ($20,761) | ($700,575) | | Net cash (used in) provided by financing activities | ($134,241) | $399,931 | | Increase (decrease) in cash | $21,883 | ($199,720) | Notes to Consolidated Financial Statements Detailed notes disclose revenue disaggregation by type and region, acquisition details, debt structure, and stock-based compensation, providing context for the financial statements Revenue by Type (in thousands) | Revenue Type | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Enterprise subscriptions | $103,904 | $81,827 | | SELECT subscriptions | $63,343 | $66,598 | | Term license subscriptions | $110,598 | $92,808 | | Total Subscriptions | $277,845 | $241,233 | | Perpetual licenses | $9,547 | $10,205 | | Services | $27,019 | $24,079 | Revenue by Geographic Region (in thousands) | Region | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Americas | $168,345 | $154,260 | | EMEA | $92,832 | $77,480 | | APAC | $53,234 | $43,777 | | Total Revenues | $314,411 | $275,517 | - The company completed one acquisition in Q1 2023 for net cash paid of $10.3 million, compared to one acquisition in Q1 2022 for $696.0 million (Power Line Systems)[63][64] - Total stock-based compensation expense was $19.5 million in Q1 2023, up from $15.1 million in Q1 2022[120] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses the financial results, highlighting a 14.1% revenue increase driven by subscription growth, detailing changes in costs and expenses, and confirming strong liquidity and positive business metrics Results of Operations Total revenues grew 14.1% (17.1% constant currency) driven by subscription and services growth across all regions, while operating expenses increased due to headcount-related costs, partially offset by lower acquisition expenses Revenue Growth by Type (YoY) | Revenue Type | Growth (%) | Constant Currency Growth (%) | | :--- | :--- | :--- | | Subscriptions | 15.2% | 18.0% | | Perpetual licenses | (6.4%) | (3.1%) | | Services | 12.2% | 17.3% | | Total Revenues | 14.1% | 17.1% | Revenue Growth by Region (YoY) | Region | Growth (%) | Constant Currency Growth (%) | | :--- | :--- | :--- | | Americas | 9.1% | 9.5% | | EMEA | 19.8% | 26.3% | | APAC | 21.6% | 27.8% | - General and administrative expenses decreased by 8.5%, primarily due to lower acquisition expenses of approximately $5.4 million compared to the prior year period[133][195] - Interest expense, net, increased 64.4% to $11.1 million, primarily due to a higher weighted average interest rate on borrowings[134][196] Key Business Metrics Key business metrics show strong performance with Annualized Recurring Revenue (ARR) reaching $1.07 billion (13% constant currency growth) and the recurring revenues dollar-based net retention rate improving to 110% Key Business Metrics Comparison | Metric | As of March 31, 2023 | As of March 31, 2022 | | :--- | :--- | :--- | | ARR | $1,070,955 thousand | $962,550 thousand | | Last twelve-months recurring revenues | $1,014,113 thousand | $885,882 thousand | | Twelve-months ended constant currency ARR growth rate | 13% | 27% | | Account retention rate | 98% | 98% | | Recurring revenues dollar-based net retention rate | 110% | 108% | - Recurring revenues represented 89% of total revenues for the twelve months ended March 31, 2023, up from 87% for the same period in 2022[218] Liquidity and Capital Resources The company maintains a strong liquidity position with $93.6 million in cash and $610.2 million available credit, supported by a 73% increase in operating cash flow, sufficient for future needs Cash Flow Activity Summary (in thousands) | Activity | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net Cash Provided By Operating Activities | $176,223 | $101,731 | | Net Cash Used In Investing Activities | ($20,761) | ($700,575) | | Net Cash (Used In) Provided By Financing Activities | ($134,241) | $399,931 | - As of March 31, 2023, the company had $1.675 billion in total debt, down from $1.781 billion at year-end 2022[249] - The company has a stock repurchase program authorizing up to $200 million in repurchases of Class B Common Stock and/or convertible senior notes, with $169.8 million remaining available as of March 31, 2023[103] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company states that there have been no material changes in its market risk exposure from what was disclosed in its 2022 Annual Report on Form 10-K - There have been no material changes in market risk exposure as described in the 2022 Annual Report on Form 10‑K[241] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2023, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of the end of the period, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level[243] - No changes in internal control over financial reporting occurred during the quarter ended March 31, 2023, that have materially affected, or are reasonably likely to materially affect, internal controls[252] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company reports that it is not currently involved in any material legal proceedings and does not expect ordinary course claims to materially affect its financial condition - The company does not believe it has any material litigation pending and does not expect the outcome of ordinary course legal actions to have a material adverse effect on its financial position, results of operations, or cash flows[254] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's 2022 Annual Report on Form 10-K - No material changes have occurred from the risk factors previously disclosed in the 2022 Annual Report on Form 10‑K[255] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During Q1 2023, the company issued 1,052,738 shares of Class B Common Stock related to Deferred Compensation Plan distributions, deemed exempt from registration under Rule 701 - From January 1, 2023, to March 31, 2023, the company issued 1,052,738 shares of Class B Common Stock related to distributions from its Deferred Compensation Plan (DCP)[264] - The sales of these securities were considered exempt from registration under the Securities Act, relying on Rule 701 as transactions pursuant to employee benefit plans[265] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL documents - The report includes standard exhibits such as CEO/CFO certifications (Exhibits 31.1, 31.2, 32) and Inline XBRL data files (Exhibits 101 and 104)[268]