Bentley Systems, Class B ((BSY)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Bentley Systems, Class B, painted a positive picture of the company’s performance and strategic direction. The sentiment was largely optimistic, driven by impressive ARR growth, a thriving SMB segment, and strategic investments in AI and infrastructure. Despite some challenges in China and volatility in asset analytics, the overall outlook remains strong and promising.
Strong ARR and Revenue Growth
Bentley Systems reported an 11.5% year-over-year growth in Annual Recurring Revenue (ARR), which increased to 12% when excluding China. The total revenues for the second quarter reached $364 million, marking a 10% increase year-over-year on a reported basis and a 9% increase on a constant currency basis. This growth underscores the company’s robust financial health and market position.
Record SMB Segment Performance
For the 14th consecutive quarter, Bentley Systems added over 600 new SMB logos through its online store, maintaining high retention rates. This consistent performance highlights the strong demand from smaller accounts and the company’s ability to cater to this segment effectively.
Geographic Expansion and Infrastructure Investment
The company experienced solid growth in the Americas and EMEA regions, with the Middle East leading EMEA growth. The U.S. market showed optimism due to potential permitting reforms, while the U.K. and Europe announced significant long-term infrastructure investments, positioning Bentley well for future growth.
Positive Impact of AI and Innovation
Bentley Systems is actively integrating AI into its offerings, with significant interest in agentic AI. The early access to OpenSite+ has shown promising engagement from accounts, indicating a positive reception to these innovative solutions.
Increased Free Cash Flow Guidance
The company has increased its free cash flow guidance to a range of $430 million to $470 million, benefiting from tax advantages due to the recently enacted One Big Beautiful Bill. This adjustment reflects Bentley’s strong cash flow generation capabilities.
Challenges in China
China accounted for only about 2% of Bentley’s total ARR, highlighting the ongoing economic and geopolitical challenges affecting performance in this region. Despite these headwinds, the company’s overall performance remains robust.
Seasonal and Volatile Asset Analytics
The asset analytics business contributes to revenue volatility due to large, lumpy deals and its reliance on construction phases. This segment’s performance can be unpredictable, affecting the company’s overall revenue stability.
Forward-Looking Guidance
Bentley Systems provided a strong forward-looking guidance, emphasizing a trajectory of low double-digit ARR growth and continued margin expansion. The company aims to maintain its net revenue retention rate at 109% and has increased its 2025 free cash flow outlook to $430 million to $470 million. Bentley is strategically focused on digital transformation in infrastructure engineering, with promising growth in software spending per engineer/technician.
In conclusion, Bentley Systems’ earnings call conveyed a positive sentiment, with strong ARR growth, a thriving SMB segment, and strategic investments in AI and infrastructure. Despite challenges in China and asset analytics volatility, the company’s overall performance and strategic positioning remain robust, with a promising outlook for future growth.