Bentley Systems (BSY) Q2 2024 earnings summary

Executive summary

• Q2 2024 delivered robust operating results with total revenues of $330.3M, up 11.3% year-over-year, driven by strong ARR and subscription growth, and supported by E365 and Virtuosity initiatives despite headwinds in China and Cohesive's IBM Maximo-related services.

• Subscription revenues now exceed 90% of total revenues, with ARR reaching $1.22B, and asset analytics ARR achieving a significant milestone for AI-driven solutions.

• Profitability and cash flow were strong, with operating income margin improving to 24.3% and adjusted operating income with SBC margin at 28.8%.

• Leadership transition completed: Nicholas Cumins appointed CEO, Gregory S. Bentley moved to Executive Chair, with new long-term, performance-based compensation plans.

• Public works/utilities and SMBs were key growth drivers, with rapid new logo additions and strong infrastructure demand.

Financial highlights

• Q2 total revenues were $330.3M, up 11.3% year-over-year (12% in constant currency); subscription revenues grew 14.7% to $297.4M.

• Adjusted operating income with SBC was $95.3M, up 30% year-over-year, with a margin of 28.8%.

• Net income for Q2 was $72.0M, with diluted EPS of $0.22; six-month net income was $142.4M, with EPS of $0.44.

• Operating cash flow for Q2 was $62.6M and $267.6M for the first half of 2024.

• Recurring revenues for the last twelve months grew 12% year-over-year to $1,163M, with a 99% account retention rate and 108% net retention rate.

Outlook and guidance

• ARR growth for 2024 is expected within the 10.5%-13% range, with acceleration anticipated in Q4 due to E365 renewals.

• Full-year 2024 revenue guidance: $1,350–$1,375M, representing 10–12% constant currency growth.

• Management expects continued revenue growth driven by subscriptions and recurring revenues, with strong end-market demand and AI-based solutions as key drivers.

• No significant FX impact expected for the remainder of 2024; effective tax rate projected at 20%.

• Total revenues are trending below the midpoint of the outlook due to professional services weakness, but recurring revenues exceed expectations.