BENTLEY SYSTEMS INC Q1 FY2022 earnings

Bentley Systems closed its fiscal 2022 first quarter with total revenue of $275.5 million, up 24.1% from the prior-year quarter and up 27.7% on a constant currency basis. Gross profit rose 27.2% to $219.7 million, lifting gross margin to 79.8%, up 2.0 percentage points. Operating income increased 1.7% to $56.6 million, but operating margin slipped to 20.5%, down 4.5 percentage points. Net income edged down 1.1% to $56.4 million. Diluted earnings per share was flat at $0.18. Deferred revenue and remaining performance obligations both stood at $228.45 million, up 18.1% from the prior-year quarter. Operating cash flow was $101.7 million, down 23.4%, while capital expenditures rose 57.3% to $4.18 million. The revenue increase came with higher operating expenses, driven by headcount-related costs from acquisitions and annual salary adjustments, as well as higher acquisition expenses.

Non-GAAP results showed stronger momentum. Adjusted EBITDA was $97.6 million, compared with $83.0 million a year earlier, and Adjusted Net Income was $79.6 million, compared with $64.1 million. Adjusted EBITDA margin was 35.4%, compared with 37.4%. Adjusted Net Income margin was 28.9% in both periods. Annualized recurring revenue reached $962.6 million as of March 31, 2022, with a constant currency ARR growth rate of 27% from March 31, 2021. Last twelve-month recurring revenue was $885.9 million, up 23.6% year over year. The last twelve-month recurring revenue dollar-based net retention rate was 108%, up from 107%, and the account retention rate was 98%, consistent with the same period last year. For the twelve months ended March 31, 2022, 87% of revenues were recurring. ARR included a 39% contribution from annualized recurring contracts with consumption measurement durations of less than one year, and 30% of total ARR came from daily consumption-measured offerings.

The quarter included major portfolio moves. Bentley completed the acquisition of Power Line Systems on January 31, 2022, for $696.0 million in cash, net of cash acquired, using available cash and borrowings under its bank credit facility. It also acquired ADINA to add advanced non-linear analysis to its simulation portfolio and announced a first joint venture in China to localize its platform for Chinese provenance requirements. Management flagged two geographic disruptions. The company paused sales in Russia and Belarus and reduced related ARR by about $5.2 million, reflecting an estimated 50% reduction in business recurrence in the affected countries. It also absorbed comparable ARR attrition in China tied to what the CEO described as counter-globalism. Net of those disruptions, constant currency ARR growth was 12% from business performance plus 15% from platform acquisitions. The platform acquisition contribution came from Power Line Systems and Seequent.

Guidance context was limited. CEO Greg Bentley said the 22Q1 results were consistent with the company's established financial outlook for 2022, which is a full fiscal year reference. The release did not provide specific quarterly or full-year guidance figures. Risks named in the filing include sanctions and embargoes, adverse global economic and political conditions, foreign currency movements, failures in retaining personnel, competition, product quality and new product development, capital markets access and financing terms, acquisition integration, and the ongoing COVID-19 pandemic. Foreign currency was a tangible headwind: 47% of 2021 total revenues and 42% of 2021 operating expenses were denominated in foreign currencies. The company also noted that its cash and cash equivalents are concentrated in a few locations, with 95% held outside the U.S. at March 31, 2022, though it expects existing cash, operations, and credit facility liquidity to meet domestic and international needs over the next twelve months. Bentley said it was in compliance with all covenants under its Credit Facility and its convertible notes as of March 31, 2022.