10-K: Bentley Systems Reports Strong 2025 Growth, New COO Appointed

Bentley Systems, Incorporated announced robust financial results for fiscal year 2025, driven by subscription revenue growth and strategic investments in AI and digital twin technologies, alongside the appointment of James Lee as Chief Operating Officer.

Summary

• Total revenues for 2025 were $1,501,779 thousand, an increase of 11.0% (10.1% on a constant currency basis) compared to the prior year.
• Subscriptions revenues reached $1,376,696 thousand in 2025, up 12.5% (11.7% on a constant currency basis) from the prior year.
• Annualized Recurring Revenues (ARR) stood at $1,462,145 thousand as of December 31, 2025, with a constant currency ARR growth rate of 11.5%.
• Operating income for 2025 was $362,621 thousand, a significant increase from $302,150 thousand in the prior year.
• Cash flows from operating activities improved to $538,464 thousand in 2025, up from $435,292 thousand in the prior year.
• The last twelve-month recurring revenues dollar-based net retention rate was 109% as of December 31, 2025, a slight decrease from 110% in 2024.
• James Lee was appointed Chief Operating Officer, effective January 1, 2025, bringing extensive experience from Google and SAP.
• The Board of Directors approved a new $500 million Class B common stock and/or outstanding convertible senior notes repurchase program in November 2025, superseding the prior $200 million authorization and expiring December 31, 2028.
• The company repaid $678,254 thousand of its 2026 Notes upon maturity on January 15, 2026, utilizing borrowings under its Credit Facility and available cash.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this as a strong report, highlighting robust revenue and operating income growth, particularly in subscriptions. Strategic investments in AI and digital twins, coupled with a significant share repurchase authorization, indicate a positive outlook despite minor dips in net retention and challenges in the China market.

Positives

• Total revenues increased by 11.0% (10.1% constant currency) to $1,501,779 thousand, demonstrating strong top-line growth.
• Subscription revenues, a key indicator of recurring business health, grew by 12.5% (11.7% constant currency) to $1,376,696 thousand.
• Annualized Recurring Revenues (ARR) increased to $1,462,145 thousand, with an 11.5% constant currency growth rate, indicating continued expansion of the customer base and usage.
• Operating income saw a substantial increase to $362,621 thousand from $302,150 thousand, reflecting improved operational efficiency.
• Cash flows from operating activities significantly improved to $538,464 thousand from $435,292 thousand, providing strong liquidity.
• The company maintained a high account retention rate of 99% for the twelve months ended December 31, 2025, showcasing strong customer loyalty.
• Strategic investments in AI in product development and go-to-market functions are expected to drive future growth and innovation.
• The authorization of a new, larger $500 million share repurchase program signals management's confidence in the company's financial health and commitment to shareholder returns.
• The successful repayment of $678,254 thousand of 2026 Notes upon maturity demonstrates sound financial management and debt servicing capability.
• The appointment of James Lee as Chief Operating Officer brings valuable leadership experience from major technology companies like Google and SAP.

Negatives

• The last twelve-month recurring revenues dollar-based net retention rate slightly decreased to 109% as of December 31, 2025, from 110% in 2024.
• Services revenues decreased by 5.8% (6.6% on a constant currency basis) due to the winding down of a large services project at the beginning of 2025.
• Revenues in China were essentially flat, with subscriptions decreasing from existing accounts, partially offset by an increase from new accounts.
• The future results in China remain uncertain due to continued geopolitical challenges, obstacles to cloud-deployed software, and a preference for license sales over subscriptions in that market.

Risks

• Demand for software 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 outside the U.S., exposing the company to legal, regulatory, social, political, and economic risks of foreign operations.
• Decreased investment by APAC, including China, may have a negative effect on the business.
• Fluctuations in currency exchange rates could negatively impact financial results and cash flows, as approximately 33% of total revenues are denominated in non-U.S. dollars.
• 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 harm future revenues.
• Consolidation among accounts and other enterprises in the markets could result in a loss of business, pricing pressure, and erosion of margins.
• Acquisitions or investments in new businesses, software, or technologies may fail to achieve anticipated synergies or integrate successfully.
• Quality problems, defects, errors, failures, or vulnerabilities in software or services could harm reputation and adversely affect business.
• Failure to cross-sell software offerings to current and future accounts could harm business, financial condition, and prospects.
• Significant costs and restrictions are associated with the repatriation of cash from non-U.S. operations, with approximately 68% of cash and cash equivalents held outside the U.S. as of December 31, 2025.
• Failure to successfully execute and manage new business initiatives, including reorganizations of sales, marketing, R&D, and administrative functions, could negatively impact results.
• A portion of revenues are from sales by channel partners, and the company could be subject to loss or liability based on their actions.
• Challenges with properly managing the use of artificial intelligence (AI) in software offerings could result in reputational harm or liability due to increasing regulatory scrutiny.
• Interruptions in the availability of server systems, communications with Internet, third-party hosting facilities, or cloud-based services, or failure to maintain data security, could harm business.
• Failure to protect intellectual property rights could impair the ability to protect proprietary technology and brand.
• Increasing regulatory focus on privacy, data protection, cross-border data flows, and information security issues, and noncompliance with such rules, may limit the use and adoption of services or expose the company to increased liability (e.g., GDPR, PIPL, CCPA/CPRA).
• Recent and potential tariffs imposed by the U.S. government or a global trade war could increase the cost of products and services and the cost of conducting business.
• Exposure to product or professional liability claims, particularly for increasingly complex and high-profile infrastructure projects, could cause liability for damages.
• The credit agreement contains restrictive covenants that may limit operating flexibility, and certain changes in ownership by the Bentley Family could constitute an event of default.
• The company's convertible notes (2027 Notes) have rights senior to Class B common stock and could dilute the ownership interest of existing stockholders upon conversion.
• The dual class structure of common stock concentrates voting control with the Bentley Control Group (approximately 53.5% of voting power), limiting other stockholders' ability to influence corporate matters.
• The choice of forum provision in the amended and restated certificate of incorporation could limit stockholders' ability to obtain a favorable judicial forum for disputes.
• Global economic and political conditions may negatively impact business, financial condition, results of operations, and cash flows.
• Changes in existing financial accounting standards or practices, or taxation rules or practices, may adversely affect results of operations.
• If goodwill or amortizable intangible assets become impaired, the company could be required to record a significant charge to earnings.

Future Outlook

The company expects general and administrative expenses to include amortization of internal-use software implementation costs starting in 2026. It anticipates continued substantial investments in research and development, driven by compelling opportunities in the infrastructure engineering software market, particularly in AI and digital twin technologies. The company intends to continue paying quarterly dividends, subject to Board discretion and financial factors. Cash tax favorability is expected to continue in 2026, primarily due to the restoration of immediate U.S. tax deductions for domestic research and development expenses under the OBBBA. However, future results in China remain uncertain due to geopolitical challenges, obstacles to cloud-deployed software, and the financial timing impact of the preference for license sales over subscriptions in that region. The company expects to fully consume its contractual purchase commitments in the ordinary course of operations.

Management Comments

• Our purpose is to advance the world's infrastructure for better quality of life.
• Our mission is to reshape how infrastructure systems and critical resources are delivered and optimized.
• We believe that the growing adoption of data-centric workflows, via infrastructure digital twins, will serve to overcome the factors that have held back the digital advancement of infrastructure engineering and will facilitate the broader use of engineering data in the operation of infrastructure assets.
• We believe that helping infrastructure organizations deploy AI across the lifecycle represents a significant opportunity for Bentley.
• We anticipate that we will continue to make substantial investments in research and development because we believe the infrastructure engineering software market presents compelling opportunities for the application of new technologies that advance our current offerings.
• We actively manage headcount-related costs to align to our trending run rate of revenue performance, with the objective of enhancing visibility and predictability of resulting operating profit margins.

Industry Context

StockSavvy.ai notes that Bentley Systems' strong performance in subscription revenue and ARR, coupled with strategic investments in AI and digital twin platforms, positions it well within the evolving infrastructure engineering software market. The industry is shifting towards data-centric workflows and AI-powered solutions, which Bentley is actively addressing through its product development and acquisitions like Cesium. The slight dip in net retention rate, while minor, warrants monitoring in a competitive landscape where major players like Autodesk, Trimble, and Hexagon AB are also vying for market share across various infrastructure sectors. The company's diversified revenue streams across public works/utilities, resources, industrial, and commercial/facilities sectors provide resilience against cyclical downturns in specific segments.

Comparison to Industry Standards

• Bentley Systems' 109% recurring revenues dollar-based net retention rate is a strong indicator, comparable to leading SaaS companies that often target 110-120% for healthy growth from existing customers, suggesting effective customer value realization.
• The 11.5% constant currency ARR growth rate is solid, aligning with expectations for a mature, yet innovative, software company in a specialized niche, though some high-growth SaaS peers might achieve higher rates.
• The company's comprehensive portfolio across professional disciplines and infrastructure sectors (e.g., Public Works/Utilities, Resources, Industrial, Commercial/Facilities) provides a competitive advantage against more specialized competitors like Datamine (mining) or Esri (GIS), allowing for broader market penetration and cross-selling opportunities.
• The strategic focus on digital twins and AI, as seen with the Cesium and iTwin Platform, positions Bentley to compete with companies like Autodesk and Hexagon AB, which are also investing heavily in these areas for AEC (Architecture, Engineering, and Construction) and geospatial solutions.

Management Changes

Corporate Governance

Legal Proceedings

• The company is subject to various investigations, claims, and legal proceedings that arise in the ordinary course of business, including commercial disputes, labor and employment matters, tax audits, and alleged infringement of intellectual property rights.
• Management believes that the ultimate resolution of pending matters is not expected to have a material adverse effect on the company's financial condition, results of operations, or cash flows.
• The company currently believes that it does not have any material litigation pending against it.
• The company is currently under tax audit in the U.K. for years 2018 through 2023, in Ireland for year 2023, and in Canada for years 2019 through 2024, as well as in various other foreign taxing jurisdictions not material to the consolidated financial statements.
• The company's U.S. consolidated federal income tax returns for years 2022 through 2025 may be subject to examination by the Internal Revenue Service.

Related Party Transactions

• The company's equity method investments in joint ventures are considered related parties, but transactions between the company and its joint ventures were not material during the years ended December 31, 2025 and 2024.
• Ongoing operating and fixed costs related to an aircraft (part of property and equipment) are shared on a proportional use basis subject to a cost-sharing agreement, as the company's Executive Chair owns 50%. Such costs were not material during the years ended December 31, 2025, 2024, or 2023.
• The dual class structure of common stock concentrates voting control with the Bentley Control Group (the Bentleys and certain family members/trusts), who collectively hold approximately 53.5% of the voting power of the outstanding common stock.

Stakeholder Impact

• Shareholders: Positive impact from strong financial performance, increased operating cash flow, and a new $500 million share repurchase program. Potential dilution risk from convertible notes and concentrated voting control by the Bentley Control Group remain factors.
• Employees: New Chief Operating Officer appointed. The 2023 strategic realignment program, which impacted less than 5% of total headcount, was completed by the end of 2024. Continued investment in professional development and belonging/inclusion programs, along with eligibility for ESPP and other benefit plans.
• Customers: Benefit from continued investment in R&D, new AI-powered and digital twin offerings, and expanded E365 subscriptions. Potential for improved collaboration and productivity through Bentley Infrastructure Cloud.
• Creditors: Debt obligations are being managed, with the 2026 Notes repaid. The company remains in compliance with its credit facility covenants.
• Suppliers: Microsoft is a principal cloud services supplier, with Google Cloud added in 2024 to expand capabilities and optimize costs, indicating diversified supplier relationships.

Next Steps

• Publish full-year 2025 performance updates in the next Impact Report, scheduled for Q2 2026.
• Continue to expand the reach of the Enterprise 365 (E365) subscription within enterprise accounts.
• Continue investment in the Virtuosity business and e-store for small and medium-sized businesses (SMBs), with development and deployment of low-touch/no-touch digital experience.
• Further expansion into asset operations and maintenance, leveraging digital twin opportunities to be incrementally monetized through cloud subscriptions charged per asset.
• Continue to make substantial investments in research and development, balancing technological advances and new offerings with continuous enhancements to existing offerings.
• Monitor the status of the SEC's climate-related disclosure rule pending judicial review and SEC clarity on its position.
• The Board of Directors declared a $0.07 per share dividend for the first quarter of 2026, payable on March 19, 2026.
• General and administrative expenses are expected to include amortization of internal-use software implementation costs starting in 2026.

Key Dates

Recommendation

The company delivered robust financial performance in 2025, marked by double-digit revenue and subscription growth, significant increases in operating income and cash flow from operations, and a healthy ARR growth rate. The authorization of a substantial $500 million share repurchase program signals management's confidence and commitment to shareholder value. Strategic investments in digital twin and AI technologies position the company for continued innovation and market leadership in the infrastructure engineering software sector. While a slight dip in net retention and challenges in the China market are noted, the overall trajectory and strategic initiatives suggest strong future potential.

Keywords

Infrastructure engineering software, Digital twins, AI, SEC 10-K, Financial results, Subscriptions, ARR, Operating income, Cash flow, Share repurchase, Corporate governance, Risk factors, Bentley Systems, BSY, Software development, Cloud services, Cybersecurity, International operations, Convertible notes