Bentley Systems Earnings Call Highlights AI and Growth

Bentley Systems, Class B ((BSY)) has held its Q3 earnings call. Read on for the main highlights of the call.

Bentley Systems Reports Strong Earnings with Focus on AI and Digital Twin Initiatives

The recent earnings call for Bentley Systems, Class B, painted a picture of robust performance, driven by strong growth in Annual Recurring Revenue (ARR) and subscription revenue. The company is making significant strides in AI and digital twin technology, despite facing challenges in professional services and the China market. Bentley’s strategic focus on AI and infrastructure projects positions it well for future growth.

Strong ARR Growth

Bentley Systems reported a 10.5% year-over-year increase in Annual Recurring Revenue (ARR), with a net revenue retention rate of 109%. Excluding the impact of China, ARR growth was even higher at 11%. This growth underscores the company’s ability to retain and expand its customer base, contributing to its overall financial health.

Subscription Revenue Increase

The company saw a 14% year-over-year increase in subscription revenues for the quarter, which now represent 92% of total revenues, up 2 percentage points from the previous year. This shift towards subscription-based revenue models enhances revenue visibility and stability, providing a solid foundation for future growth.

AI and Digital Twin Initiatives

Bentley Systems is heavily investing in AI and digital twin technology, focusing on asset analytics and infrastructure AI co-innovation initiatives. These investments are expected to drive future growth and innovation, positioning the company as a leader in the digital transformation of infrastructure.

Year in Infrastructure Conference Success

The Year in Infrastructure Conference highlighted Bentley’s advancements in AI capabilities and the launch of Bentley Infrastructure Cloud Connect. This platform enhances project and asset information collaboration, showcasing Bentley’s commitment to innovation and customer engagement.

Professional Services Revenue Decline

Despite the overall positive performance, professional services revenues declined by 2% for the quarter. This segment is expected to remain at current levels, which is about $5 million less than originally planned for the full year, indicating a need for strategic adjustments.

China Market Challenges

Bentley’s performance in China remains consistent with expectations, given the economic and geopolitical headwinds. The China market represents only about 2% of total ARR, minimizing its impact on the company’s overall performance.

Forward-Looking Guidance

Looking ahead, Bentley Systems provided guidance for Q3 2025, anticipating a 10.5% year-over-year increase in ARR on a constant currency basis, with particular strength in the Asia Pacific region. Subscription revenue growth is expected to remain solid at 14%, with a net revenue retention rate of 109%. The company is also projecting significant growth in AI spending among AEC firms, which could further accelerate technology spending as a percentage of revenue. Bentley’s strong balance sheet supports a free cash flow target of $430 million to $470 million for the year.

In summary, Bentley Systems’ earnings call reflects a strong financial performance, driven by growth in ARR and subscription revenues, and significant investments in AI and digital twin technology. Despite challenges in professional services and the China market, the company’s strategic initiatives position it well for future growth and innovation.