BSY — Bentley Systems, Incorporated

Summary of Bentley Systems Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Total Revenues: $424 million, up 14.5% year-over-year (11.9% in constant currency).
• Subscription Revenue: 93% of total revenues, growing 14.7% (12.2% in constant currency).
• Annual Recurring Revenue (ARR): $1.495 billion, with a year-over-year growth rate of 11.5%.
• Net Revenue Retention Rate: 109%, consistent with previous quarters.
• GAAP Operating Income: $126 million.
• Adjusted Operating Income (AOI): $141 million, with a margin of 33.2%.
• Free Cash Flow: $188 million for the quarter; $492 million over the last 12 months, up 13%.
• Net Debt: Decreased by $134 million, with a leverage ratio of 1.9x adjusted EBITDA.

2. Strategic Updates and Business Highlights

• AI Initiatives: Bentley is focusing on leveraging AI to enhance its product offerings, particularly through API consumption and automation in engineering workflows.
• New Leadership: Bryan Friehauf appointed as General Manager of Bentley Asset Analytics to drive growth.
• Sector Performance: The resources sector is the fastest-growing, with strong contributions from Seequent and mining, while public works utilities also performed solidly.
• Geographic Growth: The Americas, particularly the U.S. and Latin America, showed strong growth. EMEA was the fastest-growing region despite geopolitical tensions in the Middle East.
• Event Strategy: Bentley is decoupling its awards from its user conference to create two distinct events, enhancing focus on both.

3. Forward Guidance and Outlook

• Bentley expects continued strong performance in 2026, with a focus on maintaining ARR growth and expanding its presence in the resources sector.
• The company anticipates stable year-over-year ARR growth rates throughout the year, driven by strong demand in infrastructure and resources.
• The financial outlook remains unchanged, with free cash flow expected to be between $500 million and $570 million for the year.

4. Bad News, Challenges, or Points of Concern

• Perpetual License Revenue Decline: Perpetual license revenues decreased by 18% in constant currency, indicating a shift away from this less predictable revenue stream.
• Geopolitical Risks: Ongoing tensions, particularly in the Middle East, have caused project delays and consumption shifts, although strength in other regions has offset this impact.
• Churn Management: While overall retention rates remain high, the growing base of the Virtuoso program introduces a higher dollar amount of churn that needs to be managed.

5. Notable Q&A Insights

• AI Adoption: Customers are increasingly interested in AI capabilities, with large engineering firms leading the way in adopting AI-driven workflows.
• Data Ownership: Bentley maintains a principled approach to data stewardship, emphasizing that customer data is not used to train AI unless explicitly permitted, which enhances trust.
• Growth Drivers: Key growth drivers include the performance of the resources sector, continued expansion of Bentley Asset Analytics, and successful cross-selling within existing accounts.
• Customer Feedback: Positive feedback from clients regarding AI initiatives indicates a strong demand for optimization and automation in engineering processes.

Overall, Bentley Systems reported a strong start to 2026, with solid financial performance and strategic initiatives focused on AI and infrastructure growth, despite some challenges related to revenue streams and geopolitical factors.