Bentley Systems Announces Fourth Quarter and Full Year 2023

Bentley Systems Announces Fourth Quarter and Full Year 2023 Results and 2024 Financial Outlook

Increased Quarterly Cash Dividend

On February 21, 2024, the Company’s Board of Directors increased by one cent the Company’s regular quarterly dividend effective from the first quarter of 2024 and declared a $0.06 per share dividend for the first quarter of 2024. The cash dividend is payable on March 28, 2024 to all stockholders of record of Class A and Class B common stock as of the close of business on March 20, 2024.

Call Details

Bentley Systems will host a live Zoom video webinar on February 27, 2024 at 8:15 a.m. EST to discuss results for its fourth quarter and full year ended December 31, 2023, and 2024 Financial Outlook.

Those wishing to participate should access the live Zoom video webinar of the event through a direct registration link at https://us06web.zoom.us/webinar/register/WN_N_lpPc0VQsKFdbH7fLbm1A#/registration. Alternatively, the event can be accessed from the Events & Presentations page on Bentley Systems’ Investor Relations website at https://investors.bentley.com. In addition, a replay and transcript will be available after the conclusion of the live event on Bentley Systems’ Investor Relations website for one year.

Non-GAAP Financial Measures

In this press release, we sometimes refer to financial measures that are not presented in accordance with U.S. generally accepted accounting principles (“GAAP”). Certain of these measures are considered non-GAAP financial measures under the United States Securities and Exchange Commission (“SEC”) regulations. Those rules require the supplemental explanations and reconciliations that are in Bentley Systems’ Form 8-K (Quarterly Earnings Release) furnished to the SEC.

During the fourth quarter of 2023, the Company changed its definitions of constant currency and constant currency growth rates. We made this modification in order to better align with how we manage the business, to better reflect our performance during a reporting period, and to make the effects of foreign currency fluctuations and constant currency information more easily comparable on a period‑over‑period basis.

We are providing what our constant currency and constant currency growth rates results would have been pursuant to the prior definition for the applicable periods so that investors and potential investors that have analyzed these non-GAAP financial measures historically using our prior definitions can compare our historical results to our current results with respect to these non-GAAP financial measures using the prior definitions. Refer to the section titled “Reconciliation of GAAP to Non‑GAAP Financial Measures” for reconciliations of constant currency non‑GAAP financial measures to their most directly comparable GAAP financial measures under the current and prior definitions.

Forward-Looking Statements

This press release includes forward-looking statements regarding the future results of operations and financial condition, business strategy, and plans and objectives for future operations of Bentley Systems, Incorporated (the “Company,” “we,” “us,” and words of similar import). All such statements contained in this press release, other than statements of historical facts, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations, projections, and assumptions about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, and there are a significant number of factors that could cause actual results to differ materially from statements made in this press release including: adverse changes in global economic and/or political conditions; the impact of current and future sanctions, embargoes and other similar laws at the state and/or federal level that impose restrictions on our counterparties or upon our ability to operate our business within the subject jurisdictions; political, economic, regulatory and public health and safety risks and uncertainties in the countries and regions in which we operate; failure to retain personnel necessary for the operation of our business or those that we acquire; changes in the industries in which our accounts operate; the competitive environment in which we operate; the quality of our products; our ability to develop and market new products to address our accounts’ rapidly changing technological needs; changes in capital markets and our ability to access financing on terms satisfactory to us or at all; the impact of changing or uncertain interest rates on us and on the industries we serve; our ability to integrate acquired businesses successfully; and our ability to identify and consummate future investments on terms satisfactory to us or at all.

Further information on potential factors that could affect the financial results of the Company are included in the Company’s Form 10‑K and subsequent Form 10‑Qs, which are on file with the SEC. The Company disclaims any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.

About Bentley Systems

Bentley Systems (Nasdaq: BSY) is the infrastructure engineering software company. We provide innovative software to advance the world’s infrastructure – sustaining both the global economy and environment. Our industry-leading software solutions are used by professionals, and organizations of every size, for the design, construction, and operations of roads and bridges, rail and transit, water and wastewater, public works and utilities, buildings and campuses, mining, and industrial facilities. Our offerings, powered by the iTwin Platform for infrastructure digital twins, include MicroStation and Bentley Open applications for modeling and simulation, Seequent’s software for geoprofessionals, and Bentley Infrastructure Cloud encompassing ProjectWise for project delivery, SYNCHRO for construction management, and AssetWise for asset operations. Bentley Systems’ 5,200 colleagues generate annual revenues of more than $1 billion in 194 countries.

www.bentley.com

© 2024 Bentley Systems, Incorporated. Bentley, the Bentley logo, AssetWise, Bentley Infrastructure Cloud, Bentley Open, Blyncsy, iTwin, MicroStation, OpenTower, ProjectWise, Seequent, SYNCHRO, and Virtuosity are either registered or unregistered trademarks or service marks of Bentley Systems, Incorporated or one of its direct or indirect wholly owned subsidiaries. All other brands and product names are trademarks of their respective owners.

BENTLEY SYSTEMS, INCORPORATED Consolidated Balance Sheets (in thousands) (unaudited)

	December 31,
	2023			2022
Assets
Current assets:
Cash and cash equivalents	$	68,412		$	71,684
Accounts receivable		302,501			296,376
Allowance for doubtful accounts		(8,965	)		(9,303	)
Prepaid income taxes		12,812			18,406
Prepaid and other current assets		44,797			38,732
Total current assets		419,557			415,895
Property and equipment, net		40,100			32,251
Operating lease right-of-use assets		38,476			40,249
Intangible assets, net		248,787			292,271
Goodwill		2,269,336			2,237,184
Investments		23,480			22,270
Deferred income taxes		212,831			52,636
Other assets		67,283			72,249
Total assets	$	3,319,850		$	3,165,005
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	18,094		$	15,176
Accruals and other current liabilities		457,348			362,048
Deferred revenues		253,785			226,955
Operating lease liabilities		11,645			14,672
Income taxes payable		9,491			4,507
Current portion of long-term debt		10,000			5,000
Total current liabilities		760,363			628,358
Long-term debt		1,518,403			1,775,696
Deferred compensation plan liabilities		88,181			77,014
Long-term operating lease liabilities		30,626			27,670
Deferred revenues		15,862			16,118
Deferred income taxes		9,718			51,235
Income taxes payable		7,337			8,105
Other liabilities		5,378			7,355
Total liabilities		2,435,868			2,591,551
Stockholders’ equity:
Common stock		2,963			2,890
Additional paid-in capital		1,127,234			1,030,466
Accumulated other comprehensive loss		(84,987	)		(89,740	)
Accumulated deficit		(161,932	)		(370,866	)
Non-controlling interest		704			704
Total stockholders’ equity		883,982			573,454
Total liabilities and stockholders’ equity	$	3,319,850		$	3,165,005

BENTLEY SYSTEMS, INCORPORATED Consolidated Statements of Operations (in thousands, except share and per share data) (unaudited)

	Three Months Ended						Year Ended
	December 31,						December 31,
	2023			2022			2023			2022
Revenues:
Subscriptions	$	272,468		$	251,489		$	1,080,307		$	960,220
Perpetual licenses		12,886			12,164			46,038			43,377
Subscriptions and licenses		285,354			263,653			1,126,345			1,003,597
Services		25,287			23,295			102,068			95,485
Total revenues		310,641			286,948			1,228,413			1,099,082
Cost of revenues:
Cost of subscriptions and licenses		45,231			39,674			169,406			147,578
Cost of services		22,566			22,677			96,677			89,435
Total cost of revenues		67,797			62,351			266,083			237,013
Gross profit		242,844			224,597			962,330			862,069
Operating expense (income):
Research and development		71,237			67,890			274,619			257,856
Selling and marketing		64,074			53,946			224,336			195,622
General and administrative		51,995			45,666			180,738			174,647
Deferred compensation plan		8,817			6,091			13,580			(15,782	)
Amortization of purchased intangibles		8,948			10,245			38,515			41,114
Total operating expenses		205,071			183,838			731,788			653,457
Income from operations		37,773			40,759			230,542			208,612
Interest expense, net		(9,170	)		(11,114	)		(39,793	)		(34,635	)
Other (expense) income, net		(14,429	)		9,505			(7,222	)		24,298
Income before income taxes		14,174			39,150			183,527			198,275
Benefit (provision) for income taxes		165,348			(13,062	)		143,241			(21,283	)
Gain (loss) from investments accounted for using the equity method, net of tax		63			(366	)		19			(2,212	)
Net income	$	179,585		$	25,722		$	326,787		$	174,780
Per share information:
Net income per share, basic	$	0.57		$	0.08		$	1.05		$	0.57
Net income per share, diluted	$	0.54		$	0.08		$	1.00		$	0.55
Weighted average shares, basic		313,526,604			310,025,480			312,358,823			309,226,677
Weighted average shares, diluted		333,418,588			323,916,511			332,503,633			331,765,158

BENTLEY SYSTEMS, INCORPORATED Consolidated Statements of Cash Flows (in thousands) (unaudited)

	Year Ended
	December 31,
	2023			2022
Cash flows from operating activities:
Net income	$	326,787		$	174,780
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and impairment		71,861			71,537
Deferred income taxes		(198,878	)		(5,126	)
Stock-based compensation expense		72,972			75,206
Deferred compensation plan		13,580			(15,782	)
Amortization and write-off of deferred debt issuance costs		7,291			7,291
Change in fair value of derivative		5,038			(27,083	)
Foreign currency remeasurement (gain) loss		(452	)		6,000
Other		21,047			2,593
Changes in assets and liabilities, net of effect from acquisitions:
Accounts receivable		(5,180	)		(60,938	)
Prepaid and other assets		4,112			14,053
Accounts payable, accruals, and other liabilities		68,733			29,181
Deferred revenues		19,933			2,292
Income taxes payable, net of prepaid income taxes		9,852			320
Net cash provided by operating activities		416,696			274,324
Cash flows from investing activities:
Purchases of property and equipment and investment in capitalized software		(25,002	)		(18,546	)
Proceeds from sale of aircraft		—			2,380
Acquisitions, net of cash acquired		(26,023	)		(743,007	)
Purchases of investments		(11,602	)		(10,954	)
Proceeds from investments		2,123			—
Net cash used in investing activities		(60,504	)		(770,127	)
Cash flows from financing activities:
Proceeds from credit facilities		588,154			833,292
Payments of credit facilities		(841,723	)		(487,694	)
Settlement of convertible senior notes		—			(1,998	)
Repayments of term loan		(5,000	)		(5,000	)
Payments of contingent and non-contingent consideration		(4,324	)		(8,460	)
Payments of dividends		(58,756	)		(34,493	)
Proceeds from stock purchases under employee stock purchase plan		9,988			10,335
Proceeds from exercise of stock options		11,715			8,338
Payments for shares acquired including shares withheld for taxes		(58,937	)		(43,561	)
Repurchases of Class B Common Stock under approved program		—			(28,250	)
Other		(191	)		525
Net cash (used in) provided by financing activities		(359,074	)		243,034
Effect of exchange rate changes on cash and cash equivalents		(390	)		(4,884	)
Decrease in cash and cash equivalents		(3,272	)		(257,653	)
Cash and cash equivalents, beginning of year		71,684			329,337
Cash and cash equivalents, end of year	$	68,412		$	71,684

BENTLEY SYSTEMS, INCORPORATED Reconciliation of GAAP to Non-GAAP Financial Measures (in thousands, except share and per share data) (unaudited)
Reconciliation of operating income to Adjusted OI w/SBC and to Adjusted operating income:

	Three Months Ended					Year Ended
	December 31,					December 31,
	2023		2022			2023		2022
Operating income	$	37,773	$	40,759		$	230,542	$	208,612
Amortization of purchased intangibles		12,181		13,418			51,219		53,592
Deferred compensation plan		8,817		6,091			13,580		(15,782	)
Acquisition expenses		2,588		4,342			17,866		25,398
Realignment expenses (income)		13,270		(114	)		11,470		2,109
Adjusted OI w/SBC		74,629		64,496			324,677		273,929
Stock-based compensation expense		16,563		23,592			71,470		74,566
Adjusted operating income	$	91,192	$	88,088		$	396,147	$	348,495

Reconciliation of net income to Adjusted net income:

	Three Months Ended												Year Ended
	December 31,												December 31,
	2023						2022						2023						2022
	$			EPS ⁽¹⁾			$			EPS ⁽¹⁾			$			EPS ⁽¹⁾			$			EPS ⁽¹⁾
Net income	$	179,585		$	0.54		$	25,722		$	0.08		$	326,787		$	1.00		$	174,780		$	0.55
Non-GAAP adjustments, prior to income taxes:
Amortization of purchased intangibles		12,181			0.04			13,418			0.04			51,219			0.15			53,592			0.16
Stock-based compensation expense		16,563			0.05			23,592			0.07			71,470			0.21			74,566			0.22
Deferred compensation plan		8,817			0.03			6,091			0.02			13,580			0.04			(15,782	)		(0.05	)
Acquisition expenses		2,588			0.01			4,342			0.01			17,866			0.05			25,398			0.08
Realignment expenses (income)		13,270			0.04			(114	)		—			11,470			0.03			2,109			0.01
Other expense (income), net		14,429			0.04			(9,505	)		(0.03	)		7,222			0.02			(24,298	)		(0.07	)
Total non-GAAP adjustments, prior to income taxes		67,848			0.20			37,824			0.11			172,827			0.52			115,585			0.35
Income tax effect of non-GAAP adjustments		(12,333	)		(0.04	)		(4,227	)		(0.01	)		(31,636	)		(0.10	)		(18,059	)		(0.05	)
Tax benefit related to internal restructuring		(170,784	)		(0.51	)		—			—			(170,784	)		(0.51	)		—			—
(Gain) loss from investments accounted for using the equity method, net of tax		(63	)		—			366			—			(19	)		—			2,212			0.01
Adjusted net income ⁽²⁾	$	64,253		$	0.20		$	59,685		$	0.19		$	297,175		$	0.91		$	274,518		$	0.85

Adjusted weighted average shares, diluted ⁽³⁾	333,418,588						330,825,309						332,503,633						331,765,158

________________________
(1)	Adjusted EPS was computed independently for each reconciling item presented; therefore, the sum of Adjusted EPS for each line item may not equal total Adjusted EPS due to rounding.
(2)	Adjusted EPS numerator includes $1,717 and $1,695 for the three months ended December 31, 2023 and 2022, respectively, and $6,874 and $6,810 for the years ended December 31, 2023 and 2022, respectively, related to interest expense, net of tax, attributable to the convertible senior notes using the if‑converted method.
(3)	Adjusted weighted average shares, diluted includes incremental shares, which were considered anti-dilutive on a GAAP basis, of 6,908,798 shares for the three months ended December 31, 2022 related to the dilutive effect of convertible senior notes using the if‑converted method.

Reconciliation of cash flow from operations to Adjusted EBITDA:

	Three Months Ended						Year Ended
	December 31,						December 31,
	2023			2022			2023			2022
Cash flow from operations	$	87,053		$	36,126		$	416,696		$	274,324
Cash interest		8,019			8,934			37,389			26,581
Cash taxes		13,728			7,388			42,431			25,890
Cash deferred compensation plan distributions		—			—			2,125			7,336
Cash acquisition expenses		1,632			2,999			21,409			26,168
Changes in operating assets and liabilities		(9,964	)		38,588			(94,458	)		8,088
Other ⁽¹⁾		(2,383	)		(1,472	)		(8,803	)		(1,947	)
Adjusted EBITDA	$	98,085		$	92,563		$	416,789		$	366,440

________________________
(1)	Includes receipts related to interest rate swap.

Reconciliation of total revenues and subscription revenues to total revenues and subscription revenues in constant currency under the current and prior definitions:

Current definition:

	Three Months Ended December 31, 2023						Three Months Ended December 31, 2022
	Actual		Impact of Foreign Exchange at 2022 Rates		Constant Currency		Actual		Impact of Foreign Exchange at 2022 Rates		Constant Currency
Total revenues	$	310,641	$	(2,549)	$	308,092	$	286,948	$	274	$	287,222
Subscriptions revenues	$	272,468	$	(2,147)	$	270,321	$	251,489	$	278	$	251,767

	Year Ended December 31, 2023						Year Ended December 31, 2022
	Actual		Impact of Foreign Exchange at 2022 Rates		Constant Currency		Actual		Impact of Foreign Exchange at 2022 Rates		Constant Currency
Total revenues	$	1,228,413	$	2,486	$	1,230,899	$	1,099,082	$	981	$	1,100,063
Subscriptions revenues	$	1,080,307	$	1,239	$	1,081,546	$	960,220	$	809	$	961,029

Prior definition:

	Three Months Ended December 31, 2023						Year Ended December 31, 2023
	Actual		Impact of Foreign Exchange		Constant Currency		Actual		Impact of Foreign Exchange		Constant Currency
Total revenues	$	310,641	$	(5,723)	$	304,918	$	1,228,413	$	(7,664)	$	1,220,749
Subscriptions revenues	$	272,468	$	(5,107)	$	267,361	$	1,080,307	$	(8,095)	$	1,072,212

Comparison of total revenues and subscription revenues growth rates to total revenues and subscription revenues constant currency growth rates under the current and prior definitions:

Current definition:

	Three Months Ended				% Change		Year Ended				% Change
	December 31,				2022 to 2023		December 31,				2022 to 2023
	2023		2022		%	Constant Currency %	2023		2022		%	Constant Currency %
Total revenues	$	310,641	$	286,948	8.3%	7.3%	$	1,228,413	$	1,099,082	11.8%	11.9%
Subscriptions revenues	$	272,468	$	251,489	8.3%	7.4%	$	1,080,307	$	960,220	12.5%	12.5%

Prior definition:

	Three Months Ended				% Change		Year Ended				% Change
	December 31,				2022 to 2023		December 31,				2022 to 2023
	2023		2022		%	Constant Currency %	2023		2022		%	Constant Currency %
Total revenues	$	310,641	$	286,948	8.3%	6.3%	$	1,228,413	$	1,099,082	11.8%	11.1%
Subscriptions revenues	$	272,468	$	251,489	8.3%	6.3%	$	1,080,307	$	960,220	12.5%	11.7%

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