Bentley(BSY) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenues for Q4 2024 were $350 million, up 13% year-over-year, while full-year revenues reached$ 1.353 billion, also up 10% [52] - Subscription revenues now represent 90% of total revenues, an increase of over 2 percentage points from 2023, with subscription revenues growing 16% year-over-year for the quarter and 13% for the full year [53] - Adjusted operating income with stock-based compensation for Q4 was $75 million, flat year-over-year, with a margin of 21.5% [59] Business Line Data and Key Metrics Changes - The E365 program contributed significantly, representing 42% of 2024 subscription revenues, up from 38% in 2023 [53] - Perpetual license revenues grew 11% year-over-year for Q4, while service revenues declined 21% for the quarter and 18% for the year [54] - Last 12 months recurring revenues increased by 13% year-over-year, now representing 91% of total revenues [54] Market Data and Key Metrics Changes - ARR growth was 12% year-over-year, and 12.5% excluding China, with a trailing 12 months ARR growth rate of 12% [28][55] - EMEA showed strong performance, while the Americas also delivered strong growth despite uncertainties in federal spending [33][34] - Asia Pacific was led by India and Southeast Asia, but China faced significant headwinds, now representing less than 2.5% of total ARR [36][37] Company Strategy and Development Direction - The company aims for low double-digit ARR growth, 100 basis points of margin expansion, and strong cash flow generation in 2025 [27][63] - A strategic acquisition of Cesium broadened the platform ecosystem for geospatial digital twin developments [8] - Organizational changes were made to accelerate innovation, including the appointment of a new COO [49][50] Management's Comments on Operating Environment and Future Outlook - The global demand environment remains robust across most sectors, with optimism about end market conditions [27] - The company expects continued favorable market conditions and momentum in growth initiatives [63] - Management expressed concerns about the ongoing decline in ARR in China due to soft economic conditions and a shift in preferences [36][128] Other Important Information - The company plans to allocate free cash flow towards acquisitions, debt repayment, share repurchases, and dividends [62] - The 2025 financial outlook anticipates total GAAP revenues between$ 1.461 billion and $1.490 billion, reflecting a 1.5% headwind to revenue growth in constant currency [64] Q&A Session Summary Question: What could propel the company to the higher end of the ARR range in 2025? - Management noted that improvements in permitting reform in the U.S. could lead to new mine explorations, providing additional tailwinds [76][77] Question: Have there been any signs of permitting reform being introduced? - Management acknowledged an executive order calling for permitting reform but indicated it is still early to see any impact [81] Question: How does the macro environment compare to last year, especially in the U.S.? - Management highlighted strong alignment for infrastructure investments globally, despite political volatility in Europe and a slowdown in China [86][89] Question: What are the principal objectives for the new COO? - The COO will focus on cross-functional alignment, industry solutions, and portfolio development, particularly in asset analytics [110] Question: How is the competitive environment evolving? - Management stated that they are not losing market share and that competitors are struggling to gain traction in infrastructure [120][121] Question: Is the demand environment more or less favorable in 2025 compared to 2024? - Management indicated that the demand environment remains consistent and favorable, with the exception of challenges in China [129]