Business Context and Reporting Period
Company: Bentley Systems, Incorporated (BSY)
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended December 31, 2025
Business Overview: Bentley Systems is the infrastructure engineering software company, providing a comprehensive portfolio of integrated software offerings for the design, construction, and operation of infrastructure assets. The company operates in a single reportable segment and serves nearly 42,000 accounts in 189 countries. Key growth drivers include the transition to cloud-based subscriptions (Enterprise 365), expansion into asset analytics, and the integration of AI and digital twin capabilities via the Cesium and iTwin Platform.
Key Financial Metrics
| Metric (in thousands, except per share) | 2025 | 2024 | 2023 |
|---|---|---|---|
| Total Revenues | $1,501,779 | $1,353,095 | $1,228,413 |
| Subscriptions Revenue | $1,376,696 | $1,223,362 | $1,080,307 |
| Operating Income | $362,621 | $302,150 | $230,542 |
| Net Income | $277,794 | $234,433 | $326,787 |
| Diluted EPS | $0.85 | $0.72 | $1.00 |
| Operating Cash Flow | $538,464 | $435,292 | $416,696 |
| Annualized Recurring Revenue (ARR) | $1,462,145 | $1,283,256 | $1,174,774 |
| Total Debt | $1,248,912 | $1,388,088 | N/A |
| Cash and Cash Equivalents | $123,278 | $64,009 | $68,412 |
Margins: Gross profit margin was approximately 81.5% in 2025. Operating margin was approximately 24.1% in 2025.
Material Changes vs. Prior Period
- Revenue Growth: Total revenues increased 11.0% year-over-year (10.1% on a constant currency basis). Subscriptions revenue grew 12.5%, while services revenue declined 5.8% due to the winding down of a large services project.
- Profitability: Operating income increased 20.0% to $362.6 million. Adjusted Operating Income less Stock-Based Compensation (AOI less SBC) increased to $429.9 million.
- Debt Reduction: Total debt decreased by approximately $139 million. The company repaid the $678 million 2026 Convertible Senior Notes at maturity in January 2026 using cash and credit facility borrowings. The 2027 Notes ($575 million) remain outstanding.
- Capital Allocation: The company repurchased 2.9 million shares of Class B common stock for $125.1 million and increased the quarterly dividend to $0.07 per share (from $0.06 in 2024).
- Acquisitions: Completed 2 acquisitions in 2025 with net cash paid of $93.3 million, compared to 3 acquisitions in 2024.
Guidance, Outlook, and Risks
Management Commentary & Outlook:
- Growth Initiatives: Focus remains on accretion in enterprise accounts via the E365 subscription model, growth in small and medium-sized businesses (SMBs) via the Virtuosity e-store, and expansion of Asset Analytics leveraging AI and digital twins.
- Technology: Continued investment in AI capabilities (e.g., Bentley Copilot) and the Cesium and iTwin Platform to enhance digital twin workflows.
- Dividends: The Board declared a $0.07 per share dividend for Q1 2026, payable in March 2026.
Risks and Contingencies:
- Geopolitical & Economic: Approximately 59% of revenues are from outside the U.S. Risks include currency exchange fluctuations, trade tariffs, and reduced infrastructure spending in key regions like APAC (including China).
- Debt Covenants: The Credit Facility contains restrictive covenants, including a net senior secured leverage ratio not to exceed 3.00 to 1.00. A change in ownership where the Bentley Family holds less than 20% of voting power constitutes an event of default.
- Regulatory & Cyber: Exposure to evolving data privacy laws (GDPR, CCPA) and cybersecurity threats. The company maintains a comprehensive cybersecurity program but notes that risks cannot be entirely eliminated.
- Convertible Notes: The 2027 Notes ($575 million) are convertible and rank senior to common stock. Conversion could result in dilution or cash settlement obligations.
Investor Verification Checklist
- Debt Maturity: Verify the repayment of the 2026 Notes in January 2026 and the remaining obligations under the 2027 Notes and Credit Facility.
- Subscription Mix: Confirm the continued shift toward recurring revenue, noting that 93% of total revenues were recurring in 2025.
- China Exposure: Review the specific impact of geopolitical challenges and cloud deployment obstacles in China, where revenues were essentially flat in 2025.
- Stock Repurchase Program: Note the updated authorization of $500 million for share and debt repurchases through December 31, 2028, with $481.6 million remaining available as of year-end.
- Non-GAAP Reconciliations: Review the reconciliation of Operating Income to AOI less SBC to understand the impact of amortization of purchased intangibles and deferred compensation plan expenses.