10-K: Bentley Systems Reports 2024 Results: ARR Growth Strong, Driven by Subscriptions

Bentley Systems reports a 10.1% increase in total revenue for 2024, driven by subscription growth and strategic acquisitions.

Summary

• Bentley Systems' total revenues for 2024 reached $1,353.1 million, a 10.1% increase compared to the previous year.
• Subscription revenues were a key driver, totaling $1,223.4 million, up 13.2% from 2023.
• The company's Annual Recurring Revenue (ARR) grew to $1,283.3 million, reflecting a 12% constant currency growth rate.
• Bentley Systems' recurring revenue dollar-based net retention rate was 110% as of December 31, 2024.
• Operating income increased to $302.2 million, compared to $230.5 million in the prior year.
• Cash flow from operations also saw an increase, reaching $435.3 million.
• Approximately 58% of total revenues were from outside the U.S.
• The company provides software solutions to over 41,000 accounts in 189 countries worldwide.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong financial performance, particularly in subscription revenues and ARR growth. Strategic acquisitions and a high net retention rate further contribute to a favorable sentiment.

Positives

• Strong growth in subscription revenues indicates a successful shift towards recurring revenue models.
• High ARR and net retention rates suggest strong customer loyalty and expansion within existing accounts.
• Increased operating income and cash flow from operations demonstrate improved profitability and financial health.
• Strategic acquisitions, such as Cesium, enhance the company's platform and capabilities.
• The company's global presence provides diversification and resilience.

Negatives

• Services revenues decreased by 17.9%, driven primarily from weakness in Maximo-related work within our digital integrator, Cohesive.
• The future results in China remain uncertain as a result of continued geopolitical challenges, the obstacles there to clouddeployed software, and the financial timing impact of the preference there for license sales, rather than subscriptions.

Risks

• Demand for software solutions is subject to volatility in accounts' underlying businesses, including infrastructure projects that typically have long timelines.
• The majority of revenues and an increasing percentage of operations are attributable to operations outside the U.S., and results of operations therefore may be materially affected by the legal, regulatory, social, political, economic, and other risks of foreign operations.
• The company is exposed to fluctuations in currency exchange rates that could negatively impact financial results and cash flows.
• The company may not be able to increase the number of new subscription-based accounts or cause existing accounts to renew their subscriptions, which could have a negative impact on future revenues and results of operations.
• Quality problems, defects, errors, failures, or vulnerabilities in software solutions or services could harm reputation and adversely affect business, financial condition, results of operations, and prospects.
• Failure to protect intellectual property rights could impair ability to protect proprietary technology and brand.
• Increasingly regulatory focus on privacy, data protection, cross-border data flows, and information security issues, and new and expanding laws may apply to business and noncompliance with such rules may limit the use and adoption of services, adversely affect business, or expose to increased liability.

Future Outlook

The company intends to continue paying quarterly dividends, subject to the discretion of the Board of Directors. The company expects to continue to make substantial investments in research and development because it believes the infrastructure engineering software market presents compelling opportunities for the application of new technologies that advance current solutions.

Industry Context

Bentley Systems competes with large, global companies like Autodesk, Trimble, Hexagon AB, AVEVA (Schneider Electric), Dassault Systmes, and Nemetschek SE. The company differentiates itself through the comprehensiveness of its software portfolio, commitment to integration and interoperability, flexible commercial models, and direct sales channels.

Comparison to Industry Standards

• Comparable companies in the infrastructure software space include Autodesk, Trimble, and Hexagon AB.
• Bentley's ARR growth of 12% is competitive within the industry, but specific comparisons would require detailed analysis of each competitor's financial reports.
• The 110% net retention rate indicates strong customer loyalty, which is a key metric for SaaS companies.

Management Changes

Stakeholder Impact

• Shareholders can expect continued dividends and potential share repurchases.
• Employees benefit from a focus on colleague experience and professional development.
• Customers gain access to enhanced software solutions and services.
• The company's commitment to sustainability benefits communities and the environment.

Next Steps

• The company looks forward to sharing updates for its full year 2024 performance in its next Impact Report, scheduled to be published in the second quarter of 2025.

Key Dates