Summary of Bentley Systems FY Conference Call Company Overview - **Company**: Bentley Systems (NasdaqGS:BSY) - **Industry**: Infrastructure Engineering Software - **Founded**: 1984, went public in 2020 - **CEO**: Nicholas Cumins, in role for 1.5 years, first non-Bentley CEO [9][10] Core Business and Strategy - Bentley Systems focuses on software for infrastructure projects, covering all engineering disciplines and lifecycle phases from design to maintenance [9][10] - The strategy remains consistent with previous leadership, emphasizing AI integration and organizational changes for better product and technology alignment [11][12] Market Demand and Trends - There is unprecedented investment in global infrastructure to support economic growth, address climate change, and ensure energy security [13] - A significant shortage of engineers is creating a backlog in engineering firms, leading to increased demand for productivity-enhancing software [14][15] - In Europe, 50% of the water infrastructure workforce is expected to retire in the next decade, while demand for water services is expected to rise [15] Financial Performance and Outlook - Bentley Systems has over 40,000 accounts with low revenue concentration; approximately 60% of Annual Recurring Revenue (ARR) comes from public works utilities, which are countercyclical [18] - The company expects low double-digit ARR growth, with margin expansion of about 100 basis points annually and robust free cash flow generation [19][46] Growth in Small and Medium Business (SMB) - The SMB segment has been a significant growth driver, contributing approximately 300 basis points to ARR growth over the past five years [20][22] - Bentley has successfully onboarded over 600 new SMB accounts each quarter for 15 consecutive quarters [22] Asset Analytics and AI Integration - Bentley is investing in asset analytics to help owners and operators understand the physical conditions of infrastructure assets using AI and computer vision [25][26] - AI is being integrated into both traditional and next-generation applications to enhance design efficiency and productivity [27][28] Data Center Infrastructure - The company sees substantial opportunities in the data center buildout, likening data centers to mini cities requiring extensive infrastructure [35][36] - Bentley's construction modeling software is becoming the standard for data center design, driven by the demand for electric grid expansion [37] M&A Strategy - Bentley's acquisition strategy has shifted towards focusing on asset analytics startups, while still considering core engineering applications [41][44] - The company has conducted over 120 acquisitions historically, but is now more selective in targeting innovative technologies [41][44] Conclusion - The outlook for Bentley Systems remains positive, with strong demand in the infrastructure sector expected to continue into 2026, supporting the company's long-term financial goals [46]

Financial Data and Key Metrics Changes - Total revenues for Q3 2025 were $376 million, up 12% year over year on a reported basis and 11% on a constant currency basis [25] - Year-to-date total revenues grew 11% and 10% on a reported and constant currency basis, respectively [25] - Subscription revenues grew 14% year over year for the quarter in reported and 12% in constant currency, representing 92% of total revenues, up 2 percentage points from the same quarter last year [26][25] - Adjusted operating income less stock-based compensation expense was $104 million for the quarter, up 16% year over year with a margin of 27.7%, and year-to-date adjusted operating income was $335 million, up 13% with a margin of 30.2% [30] Business Line Data and Key Metrics Changes - The resources sector was the fastest-growing sector in the quarter, with solid performance in public works/utilities driven by sustained global infrastructure investment [22] - Perpetual license revenues for the quarter were $11 million, essentially flat compared to the prior year, while professional services revenues declined 2% for the quarter [26] - E365 performance remained solid, contributing 300 basis points of ARR growth from new logos, primarily within the SMB segment [22] Market Data and Key Metrics Changes - Asia-Pacific had a strong quarter, followed by the Americas and EMEA, with North America leading growth in the Americas [23] - The Middle East continued to lead EMEA with strong performance, supported by robust investment in transport, water, and energy [24] - China's performance was consistent with expectations, representing only about 2% of total ARR [25] Company Strategy and Development Direction - The company is focusing on AI-driven innovations and partnerships, particularly with Google, to enhance asset analytics and infrastructure management [52][51] - Bentley Systems is investing in AI capabilities to improve engineering productivity and is engaging with customers to evolve its applications to better support AI use cases [46][18] - The company aims to shift from time and materials billing to value-based pricing, leveraging AI to enhance productivity and service delivery [49] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving annual financial targets, with expectations for stronger ARR growth in Q4 due to significant renewal activity [39][38] - The ongoing government shutdown has had minimal impact on revenues, with funding for awarded projects continuing to flow [40] - Concerns about permitting reform in the U.S. could affect future growth, but the company is well-positioned to benefit from upcoming developments in energy infrastructure [23] Other Important Information - Free cash flow was $111 million for the quarter and $384 million year-to-date, consistent with seasonal expectations [31] - The company fully paid down its senior debt, resulting in a net debt leverage of 2.2 times adjusted EBITDA, down from 2.9 times at the end of 2024 [32] Q&A Session Summary Question: Can you elaborate on the opportunity for better ARR growth and asset analytics? - Management indicated that they only monetize actual consumption and are not yet monetizing API consumption, but expect to see a strong renewal period in Q4 [36][37] Question: What impact has the government shutdown had on your business? - Management noted minimal impact, as direct revenue from the U.S. federal government is less than 1%, and funding for awarded projects continues [39][40] Question: How is the partnership with Google progressing? - The integration of Google Geo data across the portfolio is going well, with exciting opportunities for asset analytics and deeper infrastructure asset understanding [51][52] Question: Are you seeing proactive RFPs from customers around AI capabilities? - It is still early for specific AI capabilities requests, but there is a clear demand for data accessibility for AI purposes [53][54] Question: How do you plan to evolve your product development in light of AI? - The company aims to maintain a close feedback loop with users and iterate on product development to ensure readiness for market scaling [59][60]

Core Insights - Bentley Systems announced the launch of Bentley Infrastructure Cloud Connect, a foundational layer designed to enhance connectivity among data and people throughout the infrastructure lifecycle and value chain [1][15] Group 1: Product Features - Bentley Infrastructure Cloud Connect provides a connected data environment, allowing infrastructure professionals to access and manage project and asset data in one place, improving collaboration from design to operations [2][3] - The platform supports over 50 distinct file formats and integrates with various enterprise systems, creating digital twins of assets in their built and natural environments [3][4] - A unified web experience visualizes infrastructure data in full geospatial context, enhanced by Bentley's Cesium 3D capabilities, and includes a mobile app for project connectivity [5][6] Group 2: User Benefits - Early adopters report that the platform has facilitated access to curated views of 72 projects for over 900 external stakeholders from 86 organizations, helping to avoid costly missteps and save millions in potential rework [3] - Connect enables seamless collaboration across infrastructure ecosystems, allowing users to share files, capture feedback, and manage deliverables efficiently [4] Group 3: Future Availability - Bentley Infrastructure Cloud Connect is set to become generally available in December 2025, serving as the entry point to more advanced workflows in ProjectWise and AssetWise [6]