Financial Data and Key Metrics Changes - Total revenues for Q2 were $364 million, up 10% year over year on a reported basis and 9% on a constant currency basis [27] - Subscription revenues now represent 92% of total revenues, up two percentage points from the same period last year, with subscription revenues growing 12% year over year [28] - Free cash flow was $57 million for the quarter and $273 million year to date, with an increased full-year free cash flow outlook raised to a range of $430 to $470 million [34][36] Business Line Data and Key Metrics Changes - ARR grew 11.5% year over year, with a net revenue retention rate of 109% [18][31] - The fastest-growing sector was Resources, particularly driven by mining, which outpaced civil for the first time in six quarters [19] - Perpetual license revenues for the quarter were $10 million, down $1 million year over year, making up only 3% of total revenues [28] Market Data and Key Metrics Changes - Growth in the Americas was solid, with Latin America standing out, while the US accounts remained confident despite uncertainties [21] - EMEA delivered solid growth, with the Middle East leading, and investment remains strong across various infrastructure sectors [22] - In Asia Pacific, India showed positive sentiment, while Australia experienced a slowdown in transportation spending [24] Company Strategy and Development Direction - The company is focused on going digital as a long-term growth driver, emphasizing the need for enhanced software utilization and AI [5] - The acquisition strategy is now focused on asset analytics opportunities rather than broad programmatic acquisitions [69] - The integration of Cesium and AI capabilities is a priority, with ongoing developments expected to enhance product offerings [66][90] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting full-year outlook based on low double-digit ARR growth and continued margin expansion [17] - The demand for better infrastructure continues to outpace available engineering resources, positioning the company favorably [17][41] - The company anticipates a favorable impact from recent legislative changes regarding infrastructure investment [21][23] Other Important Information - The company highlighted the success of its first Cesium Data conference, showcasing its 3D geospatial platform and integration with existing products [25] - The company is well-positioned to support major infrastructure projects tied to upcoming events like the 2032 Brisbane Olympics [24] Q&A Session Summary Question: Inquiry about macroeconomic conditions and SMB strength - Management noted a consistent environment with strong investment in infrastructure, despite tariff uncertainties [39][40] Question: Addressing the long tail of engineers and product offerings - The company confirmed it has a full range of products to address various market segments, with MicroStation being a key entry point for new users [43][44] Question: Data center opportunity and partnerships - Management discussed the infrastructure needs surrounding data centers and the potential for partnerships with hyperscalers [47][49] Question: Clarification on free cash flow guidance - The company confirmed that the increase in free cash flow guidance is due to tax benefits and will provide multiple years of benefits [53][54] Question: Development priorities and R&D hiring trends - The focus is on AI and Cesium integration, with a strategic approach to hiring in R&D to support these initiatives [61][66] Question: Drivers of slight downtick in net revenue retention - Management explained that the NRR is stable and influenced by pricing and consumption factors, with China’s impact noted [81][85]

Financial Data and Key Metrics Changes - Total revenues for Q2 2025 were $364 million, up 10% year over year on a reported basis and 9% on a constant currency basis [26] - Subscription revenues now represent 92% of total revenues, up two percentage points from the same period last year, with subscription revenues growing 12% year over year [27] - The company ended Q2 with an Annual Recurring Revenue (ARR) of $1.379 billion, with a year-over-year growth rate of 11.5% on a constant currency basis [29] - Free cash flow was $57 million for the quarter and $273 million year to date, with an increased full-year free cash flow outlook raised to a range of $430 to $470 million [33] Business Line Data and Key Metrics Changes - The company added 300 basis points of ARR growth from new logos, primarily within the SMB segment, and added more than 600 new SMB logos for the fourteenth consecutive quarter [18] - Subscription revenues grew 12% year over year, while perpetual license revenues decreased to $10 million, down $1 million year over year [27][28] - Professional services revenues declined 7% for the quarter, now representing 6% of total revenues [28] Market Data and Key Metrics Changes - The Americas region showed solid growth, particularly in Latin America, while the US accounts remained confident despite uncertainties related to tariffs and policy shifts [20] - EMEA delivered solid growth, with the Middle East leading the region, and investment remains strong across transportation, energy, and water infrastructure [21] - In Asia Pacific, India showed positive sentiment across strategic national programs, while Australia experienced a slowdown in transportation spending [23] Company Strategy and Development Direction - The company is focused on going digital as a long-term growth driver, emphasizing the need for enhanced software utilization and AI in infrastructure engineering [4] - The acquisition of Cesium is aimed at expanding capabilities in 3D geospatial technology and integrating it with existing platforms [24][62] - The company is prioritizing AI and asset analytics in its R&D efforts, indicating a strategic shift towards leveraging AI to enhance productivity in engineering tasks [61][92] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting the full-year outlook based on low double-digit ARR growth and continued margin expansion [16] - The demand for resilient infrastructure continues to outpace available engineering resources, positioning the company's software as crucial for productivity [16] - There is optimism regarding legislative changes that could enhance infrastructure investment, particularly in the US [20] Other Important Information - The company is well-positioned to benefit from upcoming infrastructure funding initiatives in the UK and Europe, with significant long-term funding earmarked for infrastructure projects [22] - The company’s net debt leverage was reduced to 2.4 times adjusted EBITDA, down from 2.9 times in 2024, indicating improved financial health [34] Q&A Session Summary Question: Did you notice an improvement sequentially now that we're past some of the initial tariff uncertainty? - Management indicated a consistent environment with positive outlooks from accounts, highlighting a demand problem rather than a capacity issue [40] Question: Do you have the right product set to reach engineers spending below a thousand? - The company confirmed that its traditional product, MicroStation, serves as an entry point for engineers and remains a growth driver in the SMB segment [43] Question: Can you elaborate on the data center opportunity? - Management noted that data centers represent a significant infrastructure opportunity, with software designed for both the data center and its surrounding infrastructure [49] Question: What drove the slight downtick in net retention rate (NRR)? - The NRR is fluctuating between 109% and 110%, with historical pressures from China affecting the overall figure [82] Question: How is the company leveraging AI in its products? - AI is seen as a key area for enhancing productivity in engineering tasks, with ongoing efforts to integrate AI capabilities into the company's software offerings [92]