BENTLEY SYSTEMS INC Q1 FY2025 earnings call

• Greg Bentley highlighted the company's progress in enhancing business resilience by improving business mix across infrastructure sectors, life cycle, commercial models, account scale, and geography. The allocation within infrastructure sectors has shifted to more robust sectors. • Nicholas Cumins mentioned the company started the year strong with 12% ARR growth year-over-year, net revenue retention at 110%, E365 program as a growth driver, and new product launches like Seequent Evo and partnerships with Google. • Werner Andre discussed total revenues, subscription revenues growth to 92% of total, adjusted operating income, free cash flow, and capital allocation including debt repayment and share repurchases.

Among infrastructure sectors, commercial facilities and industrial combined proportion of total ARR is now less than 1/6, down from pre-IPO. The resources sector and geoprofessional disciplines, which were single-digit pre-IPO, now comprise almost a quarter of ARR. Total revenues for the first quarter were $371 million, up 10% year-over-year on the reported and 11% on a constant currency basis. Subscription revenues grew 11% year-over-year for the quarter in reported and 13% in constant currency, representing 92% of total revenues. Perpetual license revenues for the quarter grew 13% year-over-year in reported and 15% in constant currency. Professional services revenues declined 18% for the quarter in reported and 16% in constant currency and represent 5% of total revenues.

• Bentley Systems remains confident in delivering low double-digit ARR growth, 100 basis points of margin expansion, and strong cash flow generation. • Total revenues for Q1 were $371 million, up 10% year-over-year. • Expected quarterly sequential ARR growth to be back half loaded in line with contract renewal seasonality. • Projected to generate 60% of full-year free cash flow in the first half of 2025.

• Macro economic uncertainties and cyclicality in certain infrastructure sectors like commercial facilities and industrial. • Geopolitical risks such as tensions between India and Pakistan and their impact on operations in relevant regions.

Q: Joe Vruwink asked about business skew towards federal vs state infrastructure and changes in federal priorities.

A: Greg Bentley and Nicholas Cumins discussed the mix of federal and state funding and changing priorities being potentially positive for Bentley.

Q: Matt Hedberg inquired about macro sensitive areas and April trends.

A: Nicholas Cumins commented on commercial facilities and industrial being sensitive to demand and interest rates, with industrial showing more positive sentiment in the US.

Q: Jason Celino asked about linearity of ARR growth.

A: Werner Andre discussed seasonality of ARR growth and expectations for the rest of the year.

Q: Siti Panigrahi asked about Cesium acquisition and Google partnership.

A: Nicholas Cumins talked about progress with Cesium and Google partnerships and asset analytics traction.

Q: Taylor McGinnis asked about permitting reform timeline and impact.

A: Greg Bentley and Nicholas Cumins discussed permitting reform as a tailwind and its impact on related businesses.

Q: Jay Vleeschhouwer asked about pipeline and work on existing vs new infrastructure.

A: Greg Bentley and Nicholas Cumins talked about multi-solution sales, accounts being cautiously optimistic, and focus on existing infrastructure.

Q: Kristen Owen asked about European customers and infrastructure stimulus.

A: Nicholas Cumins and Werner Andre discussed European infrastructure investments and their impact on Bentley's business.

Q: Alexei Gogolev asked about ARR exposure to India and Pakistan markets.

A: Greg Bentley and Nicholas Cumins discussed ARR exposure and the attitude towards geopolitical risks in relevant regions.

Q: Blair Abernethy asked about AI and productivity.

A: Nicholas Cumins talked about AI's role in improving productivity for customers and internally.

Q: Michael Funk asked about asset analytics progress.

A: Greg Bentley and Nicholas Cumins discussed asset analytics progress, new wins, and growth opportunities.

Q: Jackson Bogli asked about convergence of data analytics and imaging.

A: Nicholas Cumins explained how the convergence drives innovation and client needs in asset operations.