8-K: Bentley Systems Announces Strong Q4 and Full Year 2024 Results, Issues Positive 2025 Outlook

Bentley Systems reports a strong finish to 2024 with double-digit ARR growth and margin expansion, projecting continued growth and profitability into 2025.

Summary

• Bentley Systems announced its fourth quarter and full year 2024 financial results, along with its financial outlook for 2025.
• Total revenues for Q4 2024 were $349.8 million, up 12.6% year-over-year, or 13.2% on a constant currency basis.
• Subscription revenues for Q4 2024 reached $315.6 million, a 15.8% increase, or 16.4% on a constant currency basis.
• Annualized Recurring Revenue (ARR) stood at $1,283.3 million as of December 31, 2024, representing a 12% constant currency growth rate compared to $1,174.8 million in the previous year.
• The last twelve-month recurring revenues dollar-based net retention rate was 110%, compared to 109% for the same period last year.
• Operating income margin for Q4 2024 was 17.6%, compared to 12.2% for the same period last year.
• Net income per diluted share was $0.16, compared to $0.54 for the same period last year, while adjusted net income per diluted share was $0.21, compared to $0.20 for the same period last year.
• Cash flows from operations were $81.6 million, compared to $87.1 million for the same period last year.
• For the full year 2024, total revenues were $1,353.1 million, up 10.1% or 10.3% on a constant currency basis over 2023.
• Subscription revenues for the full year were $1,223.4 million, up 13.2% or 13.4% on a constant currency basis over 2023.
• Operating income margin for the full year was 22.3%, compared to 18.8% for 2023.
• Net income per diluted share was $0.72, compared to $1.00 for 2023, while adjusted EPS was $1.07, compared to $0.91 for 2023.
• Cash flows from operations for the full year were $435.3 million, compared to $416.7 million for 2023.
• The company is projecting total revenues in the range of $1,461 million to $1,490 million for 2025.
• The company is projecting constant currency ARR growth rate of 10.5% to 12.5% for 2025.
• The company is projecting adjusted OI w/SBC margin of approximately 28.5% for 2025.
• The company is projecting free cash flows in the range of $415 million to $455 million for 2025.
• The company's Board of Directors increased the regular quarterly dividend by one cent to $0.07 per share for the first quarter of 2025.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong growth in key metrics like ARR and subscription revenues. While net income per share decreased, adjusted EPS increased, and the company is projecting continued growth and profitability in 2025. The increased dividend further supports a positive sentiment.

Positives

• Strong growth in subscription revenues indicates a healthy recurring revenue base.
• The increase in ARR demonstrates the company's ability to acquire and retain customers.
• A high net retention rate of 110% suggests strong customer satisfaction and loyalty.
• Operating income margin improved for both Q4 and the full year, indicating increased efficiency.
• Adjusted EPS increased for the full year, reflecting improved profitability.
• Cash flows from operations increased for the full year, providing financial flexibility.
• The company's 2025 outlook is positive, with projected revenue and ARR growth.
• The increased dividend signals confidence in the company's future performance.

Negatives

• Net income per diluted share decreased for both Q4 and the full year.
• Cash flows from operations decreased in Q4 compared to the same period last year.
• Adjusted operating income inclusive of stock-based compensation expense (Adjusted OI w/SBC) margin was 21.5%, compared to 24.0% for the same period last year.

Risks

• The company's forward-looking statements are subject to various business, economic, regulatory, and competitive uncertainties.
• Adverse changes in global economic and/or political conditions could impact the company's performance.
• The company faces risks related to retaining personnel, managing succession, and adapting to changing technological needs.
• Fluctuations in foreign currency exchange rates could affect the company's financial results.
• The company's ability to integrate acquired businesses successfully is a risk factor.

Future Outlook

The company anticipates total revenues between $1,461 million and $1,490 million in 2025, with a constant currency ARR growth rate of 10.5% to 12.5% and an adjusted OI w/SBC margin of approximately 28.5%.

Management Comments

• Executive Chair Greg Bentley said that 24Q4 concluded a commendably satisfactory year in which every quarter improved operationally.
• CEO Nicholas Cumins said that the global demand environment remains robust across sectors and geographies, and their users continue to be optimistic about end market conditions.
• CFO Werner Andre said that their 2025 outlook is consistent with their 2024 results and their sustained execution and expectation of annual double-digit ARR growth, 100 basis-points expansion of adjusted operating income with SBC margin, and directly efficient free cash flow conversion.

Industry Context

Bentley Systems' focus on infrastructure engineering software positions it well to capitalize on global infrastructure development and modernization trends. The company's emphasis on digital twin solutions and AI aligns with the industry's increasing adoption of advanced technologies to improve project delivery and asset performance.

Comparison to Industry Standards

• Bentley Systems competes with companies like Autodesk, Trimble, and Hexagon AB in the infrastructure software market.
• A 12% constant currency ARR growth rate is competitive within the software industry, particularly for companies focused on established sectors like infrastructure.
• A net retention rate of 110% indicates strong customer loyalty and is a positive indicator compared to industry averages.
• The projected adjusted OI w/SBC margin of approximately 28.5% for 2025 demonstrates solid profitability compared to peers.

Stakeholder Impact

• Shareholders will benefit from the increased dividend and potential share buybacks.
• Employees may benefit from the company's continued growth and profitability.
• Customers will benefit from the company's focus on innovation and improved solutions.
• The company's strong financial performance supports its ability to invest in its business and create value for all stakeholders.

Next Steps

• The company will host a live Zoom video webinar on February 26, 2025, to discuss the results.
• The company will continue to execute its growth strategy and focus on innovation in infrastructure AI.
• The company will undertake to buy back shares to offset dilution from stock-based compensation.
• The company will pay the increased quarterly dividend on March 27, 2025.

Key Dates