Bentley Systems, Inc. — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021; unaudited consolidated results, compared with Q1 2020. Bentley provides software and related services for infrastructure engineering, project delivery, and asset operations.
Financial performance
| Metric | Q1 2021 | Q1 2020 | Change |
|---|---|---|---|
| Revenue | $222.0 million | $194.7 million | +14.0% reported; +9.4% constant currency |
| Gross profit / margin | $172.7 million / 77.8% | $157.4 million / 80.9% | Margin down 3.1 percentage points |
| Operating income / margin | $55.6 million / 25.1% | $46.0 million / 23.6% | Margin up 1.5 percentage points |
| Net income | $57.0 million | $29.7 million | +92.1% |
| Diluted EPS | $0.18 | $0.10 | — |
| Operating cash flow | $132.8 million | $72.6 million | +$60.2 million |
Subscriptions rose 10.5% to $188.1 million (6.1% constant currency); perpetual license revenue fell 6.5% to $10.1 million; services revenue increased 73.5% to $23.8 million, largely reflecting acquisitions. Adjusted EBITDA was $82.8 million, or 37.3% of revenue, versus $57.9 million and 29.8%; adjusted net income was $64.0 million versus $43.2 million. These are non-GAAP measures.
Balance sheet, debt, and liquidity
- Cash and cash equivalents were $569.5 million at March 31, 2021, up from $122.0 million at year-end 2020. The company reported $849.9 million available under its $850 million revolving credit facility.
- Long-term debt was $672.6 million, comprising $690 million principal of 0.125% convertible notes due 2026, net of issuance costs. Cash less reported debt was approximately $103.1 million of net debt. The notes’ initial conversion price is approximately $64.13 per share; capped calls intended to reduce dilution have a $72.98 cap price.
- Q1 financing cash flow included $672.8 million net proceeds from the notes, repayment of credit-facility borrowings, and $25.5 million for capped calls. Operating cash flow benefited substantially from increased accounts payable, accruals, and other liabilities, primarily higher customer CSS deposits.
- Deferred revenue was $193.5 million; the company expects to recognize 96.3% of remaining performance obligations within 12 months.
Changes, outlook, and notable items
- Trailing-12-month recurring revenue reached $716.9 million, up $69.3 million year over year; 86% of trailing-12-month revenue was recurring. ARR was $760.2 million, with 10% constant-currency ARR growth. Account retention was 98%; recurring-revenue dollar-based net retention was 107%, down from 109%.
- Net income growth was aided by a $13.7 million non-cash gain on the interest-rate swap, recorded in other income. Q1 2020 had an $8.8 million foreign-exchange loss. Tax expense was $10.4 million, with a 15.3% effective tax rate, including a discrete stock-compensation tax benefit.
- On March 11, Bentley agreed to acquire Seequent for approximately $900 million cash, net of cash acquired and subject to adjustments, plus 3,141,361 Class B shares. The deal was pending customary conditions and regulatory approvals, with closing expected in Q2 2021. Bentley expected to fund the cash consideration with cash, note proceeds, and credit-facility borrowings. It also reported approximately $54.2 million of cash consideration for two April acquisitions and a further agreed acquisition; the filing describes total post-quarter acquisition commitments of approximately $954.2 million cash plus shares.
- Management reported modest COVID-19 effects: Q1 application usage was approximately flat year over year and trending upward. Delayed projects and shifts to subscriptions weighed on perpetual licenses and organic services; shorter-reset consumption subscriptions were somewhat exposed. The company said its mission-critical offerings supported continued growth. No numerical quarterly or full-year revenue or earnings guidance is provided in the filing.
- Management stated that cash, operating cash generation, and facility availability were expected to meet working-capital and capital-spending needs for the next 12 months, while noting future funding needs could vary. The company cited foreign-exchange exposure and reported that 25% of cash was held outside the U.S. at quarter-end. It was in compliance with debt covenants; management did not expect pending legal matters to have a material adverse effect.
Important facts for investors to verify
- Whether and when the Seequent acquisition closes, its final cash and share consideration, financing mix, and resulting leverage and dilution.
- How much of Q1 operating cash flow reflects sustainable operating performance versus changes in CSS deposits and other working-capital items.
- Underlying earnings and margins excluding the swap fair-value gain, acquisition costs, stock-based compensation, and other non-GAAP adjustments.
- Whether subscription, ARR, retention, and consumption-based usage trends remain consistent, particularly as COVID-related project delays and customer spending shifts evolve.
- Credit-facility covenant headroom, acquisition funding requirements, and foreign-currency exposure; the filing does not provide a clear quantified forecast for these items.