• Total Revenue (Q4 2024): $350 million, up 13% year-over-year.
• Total Revenue (Full Year 2024): $1.353 billion, up 10% year-over-year.
• Subscription Revenue (Q4 2024): Grew 16% year-over-year.
• Subscription Revenue (Full Year 2024): Grew 13% year-over-year.
• ARR (Q4 2024): $1.283 billion, 12% growth year-over-year.
• Adjusted Operating Income with SBC (Q4 2024): $75 million, margin of 21.5%.
• Adjusted Operating Income with SBC (Full Year 2024): $372 million, margin of 27.5%.
• Operating Cash Flow (Q4 2024): $82 million.
• Operating Cash Flow (Full Year 2024): $435 million.
• Net Debt Leverage (End of Q4 2024): 2.9 times adjusted EBITDA.
• Dividend: $72 million paid in 2024.
• 2025 Revenue Outlook: $1.461 billion to $1.490 billion (GAAP), $1.481 billion to $1.510 billion (constant currency).
• 2025 Subscription Revenue Growth Outlook: 10.5% to 12.5% on a constant currency basis.
• 2025 Free Cash Flow Outlook: $450 million to $455 million.

• Warning! GuruFocus has detected 4 Warning Signs with BSY.

Release Date: February 26, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Bentley Systems Inc (NASDAQ:BSY) reported a strong finish to 2024 with significant growth in ARR, profitability, and free cash flow.
• Subscription revenues now represent 90% of total revenues, improving growth consistency, predictability, and margin contribution.
• The company achieved a 16.3% compound annual growth rate in constant currency subscription revenues over five years.
• Bentley Systems Inc (NASDAQ:BSY) introduced OpenSite+, an AI-powered infrastructure engineering application, and strengthened its platform with the acquisition of Cesium.
• The company is well-positioned to benefit from infrastructure investments globally, with a broad portfolio of products across various infrastructure assets.

Negative Points

• China continues to be a significant drag on ARR growth due to soft economic conditions and a preference for local software.
• Service revenues declined by 21% for the quarter and 18% for the year, partly due to reduced Maximo-related work.
• The company anticipates a decline in ARR in China for 2025, with China now representing less than 2.5% of total ARR.
• There is a potential risk of volatility in professional services revenues, which adds volatility and subtracts from profitability.
• The company faces competitive pressures, with some competitors dropping prices significantly to gain market share.

Q & A Highlights

Q: What are the key factors that could propel Bentley Systems to the higher end of their ARR range in 2025? A: Nicholas Cumins, CEO, mentioned that the demand environment is robust, with potential tailwinds from permitting reform in the US that could accelerate new mine explorations and electric grid expansion. However, challenges remain with China and commercial facilities. Overall, consistent demand trends from 2024 are expected to continue into 2025.

Q: Have there been any signs of permitting reform being introduced in the US, and how should we think about its timing? A: Nicholas Cumins noted that while an executive order for permitting reform has been issued, it is still early, and no impact has been seen yet. Greg Bentley, Executive Chair, added that it is a bipartisan priority and likely to be accomplished during the year, although projects will not start immediately.

Q: How does Bentley Systems view the macro environment, particularly in the US, following the election and new administration? A: Nicholas Cumins stated that infrastructure investments remain a bipartisan topic globally, with strong alignment in Europe and the US. Despite political changes, infrastructure investment is expected to continue, driven by priorities like competitiveness, resiliency, and security.

Q: How quickly do you see your site management capabilities ramping, and how does the monetization model differ for construction versus other sectors? A: Nicholas Cumins explained that the commercial model for asset analytics is asset-based, whether used during construction or operations. Construction-related revenue is not recurring, unlike continuous monitoring during operations. The opportunity is significant in both areas, with construction serving as an entry point for asset operations.

Q: What are the principal objectives for the new Chief Operating Officer, and how is the integration of customer success and account teams progressing? A: Nicholas Cumins highlighted that the COO role focuses on cross-functional alignment, planning, and execution. The integration of account management and success management under the Chief Revenue Officer has improved growth opportunity identification and execution. The COO also oversees industry solutions and growth initiatives like asset analytics.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.