Bentley(BSY)2022-11-12 15:19Financial Data and Key Metrics Changes - Total revenues for Q3 2022 were $268 million, growing 7% year-over-year or 15% on a constant currency basis [62] - Year-to-date total revenues grew 17% or 23% on a constant currency basis, with almost all revenue growth coming from subscriptions, which represented 88% of total revenues during Q3 2022 [62] - Adjusted EBITDA for Q3 grew approximately 6% over Q3 2021, with a year-to-date adjusted EBITDA margin of 33.7% [71] Business Line Data and Key Metrics Changes - Subscription revenue grew approximately 18% year-over-year on a constant currency basis, supported by the E365 program and Virtuosity subscriptions [62][63] - The account retention rate rounded up to 99%, with a net retention rate of 110% driven by the E365 consumption-based commercial model [64] Market Data and Key Metrics Changes - Constant currency revenue growth was 12% in the Americas, 14% in EMEA, and 23% in APAC for Q3 2022 [62] - The U.S. civil engineering firms showed accelerating new business momentum, correlating with funding from the Infrastructure Investment and Jobs Act [15][32] Company Strategy and Development Direction - The company is focusing on enhancing its E365 program, which is becoming increasingly important for enterprise accounts, providing tailored solutions and real-time support [40][42] - A strategic alliance was announced with Fukui in Japan to leverage local expertise and accelerate digital transformation in infrastructure engineering [34] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the fourth quarter, citing strong conditions and enthusiasm from quota carriers, although concerns remain regarding geopolitical issues in China [78] - The company reaffirmed its full-year constant currency ARR growth outlook despite challenges from exiting Russia and associated impacts in China [14][65] Other Important Information - The company reported a significant year-over-year currency headwind, with GAAP revenues negatively impacted by approximately $40 million due to the strengthening U.S. dollar [67] - Insider ownership remains strong, with the Bentley family holding a total economic ownership interest of 59% [50] Q&A Session Summary Question: What was the incremental FX headwind to ARR during the quarter? - Management indicated that calculating the FX headwind for ARR was complicated and did not provide a specific figure [76] Question: Does new business acceleration serve as a leading indicator for renewals? - Management noted that while renewals are still significant, the E365 program has reduced the relative importance of renewals in Q4 [82] Question: What was the magnitude of the EPC headwind absorbed in ARR? - Management quantified the EPC work subsidence at about 20%, but noted optimism for recovery in 2023 [84] Question: How material can the new growth engine Virtuosity be for long-term ARR growth? - Management believes that the SMB segment represents a significant untapped market, with potential for substantial growth in the coming years [85] Question: How are various regions in Europe performing? - Management highlighted that Northern Europe has improved, while Southern Europe is lagging, with India showing exceptional growth [88]