Bentley Systems Earnings Call Highlights Growth And Cash

Bentley Systems, Class B ((BSY)) has held its Q4 earnings call. Read on for the main highlights of the call.

Bentley Systems, Class B struck an upbeat tone on its latest earnings call, underscoring durable double‑digit growth, rising profitability, and strong cash generation. Management highlighted accelerating traction in AI‑driven asset analytics and disciplined balance sheet management, while acknowledging pockets of weakness in services revenue, China, and FX‑related margin pressure.

Accelerating ARR Underscores Durable Growth Engine

Q4 annualized recurring revenue rose 11.5% year over year in constant currency to $1.462 billion, confirming Bentley’s recurring model as its core growth driver. Management expects ARR to continue expanding at a 10.5%–12.5% constant‑currency pace into 2026, with seasonality patterns similar to 2025.

Revenue Expansion Led by Subscriptions

For 2025, total revenue climbed to $1.502 billion, up 11% on a reported basis and 10% in constant currency, with Q4 revenue advancing 12% reported. Subscription revenue grew even faster at 13% reported and now represents 92% of total sales, reflecting Bentley’s ongoing shift toward recurring software.

Retention Metrics Highlight Customer Stickiness

Last‑12‑month recurring revenue increased 12% and now accounts for 93% of total revenue, underscoring the predictability of the business. Account retention held at a robust 99% in constant currency, while net revenue retention of 109% indicates solid expansion within the existing customer base.

Margin Expansion Boosts Profitability

Adjusted operating income excluding stock‑based compensation reached $430 million for 2025, a 16% increase that lifted the margin to 28.6%, up 110 basis points. In Q4, the same profitability metric hit $94 million with a 24.1% margin, signaling steady progress on operating leverage.

Strong Free Cash Flow Fuels Deleveraging

Free cash flow grew 24% to $520 million in 2025, yielding a roughly 35% FCF margin and supporting aggressive balance sheet repair. Net leverage fell to 2.1x, a four‑year low, while Bentley retired its 2026 convertible notes and left a $1.3 billion revolver fully undrawn, preserving ample financial flexibility.

Asset Analytics and Targeted M&A Gain Traction

Asset analytics consumption revenue reached a $50 million run rate, as Bentley capitalizes on AI‑enhanced infrastructure monitoring. The company’s acquisitions, including Pointivo assets and Talon Analytics, deepened capabilities in point cloud processing and telecom and utilities analytics, helping OpenTower iQ ARR reach eight‑figure levels.

SME and E365 Offer Scalable Growth Channels

Small and midsize enterprise customers continued to add momentum, with new logos contributing 300 basis points of ARR growth in Q4 and at least 600 new SME logos added for the 16th straight quarter. E365, Bentley’s enterprise subscription framework, now accounts for 45% of subscription revenue, up from 42% a year earlier.

Services Revenue Weakness Creates Near‑Term Drag

Services revenue slipped 6% reported, or 7% in constant currency, for 2025, despite a modest sequential uptick in Q4. Management sees this as a cyclical soft spot rather than a structural issue and expects a rebound in 2026 as activity tied to Maximo implementations picks up.

Timing Limits Asset Analytics ARR Recognition

While asset analytics is scaling quickly, much of its growth is still booked as consumption rather than ARR because inspection work often occurs on multi‑year cycles. For example, electric distribution pole inspections may be required only every five years, which delays recognition of steady recurring revenue despite strong usage.

Regional and FX Headwinds Temper Growth

China, though only about 2% of ARR, continued to see economic and geopolitical pressure that management expects to persist through 2026, while the U.K. softened in Q4 as some projects paused. Additionally, growth in the Seequent business and evolving global cost patterns are projected to knock roughly 50 basis points off reported margins via FX.

Cash Flow Timing and Higher Interest Costs

Management noted that free cash flow can be lumpy given collection timing, especially with Q4 as the largest renewal period. The decision to repay the 2026 convertible notes will increase 2026 cash interest by roughly $30 million versus 2025, slightly dampening year‑over‑year FCF growth despite the cleaner capital structure.

M&A Remains Programmatic and Modest

Acquisitions contributed less than 40 basis points to ARR growth in 2025, underscoring Bentley’s disciplined deal pace. While the company has capacity for up to roughly $400 million of programmatic M&A annually, recent deals have been smaller, strategically focused moves aimed at enhancing key vertical and analytics capabilities.

Constructive 2026 Outlook Builds on 2025 Strength

For 2026, Bentley guided to 11%–13% constant‑currency revenue growth, implying $1.685–$1.750 billion, with subscriptions rising at the same pace and services poised to reaccelerate 15%–20% in constant currency. Management also targets ARR growth of 10.5%–12.5%, adjusted operating income of $495–$510 million, and free cash flow between $500 million and $570 million.

Bentley’s latest earnings call painted a picture of a software company balancing steady growth with rising margins and disciplined capital allocation. While services, China, FX, and cash flow timing represent manageable headwinds, the company’s expanding recurring base, growing asset analytics franchise, and clear 2026 roadmap support a constructive long‑term equity story.