Summary
Bentley Systems reported second fiscal quarter 2021 revenue of $222.9 million, up 21.0% from the prior-year quarter. Six-month revenue reached $444.9 million, up 17.4%. Acquisitions and currency did much of the work. Seequent, bought on June 17, 2021, contributed about $4.0 million of revenue in the two weeks Bentley owned it, and the company put constant currency revenue growth at 16.5% for the quarter. Annualized recurring revenue was $882.4 million at June 30, 2021, a constant currency gain of 23%, and last twelve-month recurring revenues rose 12.1% to $746.2 million. Dollar-based net retention slipped to 106% from 110%, while account retention held at 98%. Recurring revenue made up 86% of the trailing twelve-month total.
The profit picture was less tidy. Gross profit rose 14.8% to $169.5 million, yet gross margin fell to 76.0%, down 4.1 percentage points. Operating income dropped 27.7% to $32.2 million and operating margin was 14.5%, down 9.7 percentage points. Costs outran sales. Cost of subscriptions and licenses and cost of services both climbed on headcount-related spending, including the redeployment of colleagues into User Success roles tied to the E365 subscription. General and administrative expense absorbed Seequent acquisition and integration costs, and stock-based compensation rose sharply after the Bonus Plan change let participants take vested Class B shares instead of cash for non-deferred bonuses. Net income still advanced 14.9% to $44.9 million, lifted by an income tax benefit tied to stock-based compensation. Diluted EPS was $0.14, up 7.7%. On a non-GAAP basis, adjusted EBITDA was $69.1 million and adjusted EBITDA margin was 30.9%, down from 31.2%, while adjusted net income reached $74.3 million.
Cash flow was the soft spot. Operating cash flow was $16.2 million for the quarter, down 74.5%, but $149.0 million for the six months, up 9.4%. The six-month gain came from higher net income, partly offset by working capital swings that included slower collections and higher prepaid income taxes. Capital expenditures were $2.1 million in the quarter, down 61.7%, and $4.75 million year to date, down 52.4%. Deferred revenue and remaining performance obligations both stood at $223.0 million on June 30, 2021.
The balance sheet changed shape quickly. Bentley paid $911.0 million in cash, net of cash acquired, plus 3,141,342 Class B shares for Seequent. It also sold $690.0 million of 0.125% convertible senior notes due 2026 and $575.0 million of 0.375% convertible senior notes due 2027, using part of the proceeds to repay borrowings under its credit facility and to fund capped call premiums. Interest expense, net rose as a result, and the amortization of debt issuance costs added to the drag on the quarter.
Full-year 2021 guidance was updated. The new total revenue outlook sits above the initial outlook, and management now points to constant currency ARR growth of 22% to 24%, versus an initial 8% to 10%, with 12% to 13% of that from Seequent and 10% to 11% from all other business. Adjusted EBITDA guidance moved to $305 million to $310 million, and management says it expects to hold its 32% adjusted EBITDA margin target for 2021 while absorbing Seequent, incremental public company operating costs, and a faster pace of programmatic growth acquisitions. The updated revenue outlook reflects a stronger U.S. dollar and Seequent-related opening balance sheet deferred revenue adjustments.
Risks cluster around demand. Bentley flagged unanticipated subscription attrition among mid-size enterprise accounts in greater China, persistent weakness in industrial and resources capital spending, and exposure to the Middle East and Southeast Asia. COVID-19 effects are expected to abate gradually by year end, though the ultimate impact remains uncertain.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2021 | Q1 FY2021 | QoQ | Q2 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $222.9M | $222.0M | +0.4% | — | — |
| Gross profit | $169.5M | $172.7M | -1.9% | — | — |
| Gross margin | 76.0% | 77.8% | -1.8 pp | — | — |
| Research & development | $52.8M | $47.8M | +10.4% | — | — |
| Sales & marketing | $38.0M | $32.4M | +17.2% | — | — |
| General & administrative | $41.9M | $33.4M | +25.4% | — | — |
| Total operating expenses | $137.3M | $117.1M | +17.2% | — | — |
| Operating income (loss) | $32.2M | $55.6M | -42.1% | — | — |
| Operating margin | 14.4% | 25.1% | -10.6 pp | — | — |
| Net income (loss) | $44.9M | $57.0M | -21.2% | — | — |
| Net margin | 20.1% | 25.7% | -5.5 pp | — | — |
| Diluted EPS | $0.14 | $0.18 | -$0.04 | — | — |
| Net retention rate | 106.0% | 107.0% | -1.0 pp | — | — |
Risks
Bentley completed eight acquisitions in the six months ended June 30, 2021, including Seequent for approximately $911.0 million in cash plus 3,141,342 Class B shares, and incurred $15,896 thousand of Seequent-related acquisition expenses. Integrating this volume of acquired businesses, people, and technologies, and the resulting purchase-accounting deferred revenue adjustments that reduce reported U.S. GAAP revenue, could disrupt operations and dilute margins.
The company issued $690.0 million of 0.125% convertible senior notes due 2026 (January 26, 2021) and $575.0 million of 0.375% convertible senior notes due 2027 (June 28, 2021) and amended its Credit Facility to $850.0 million. Interest expense, net increased in the quarter and long-term debt obligations will raise future interest cost, and the notes and Credit Facility carry affirmative and negative covenants and default provisions.
Gross margin was down 4.1 percentage points and operating margin was down 9.7 percentage points in the quarter (both versus the prior-year quarter), with operating income down 27.7% for the quarter despite revenue being up 21.0%. Total cost of revenues rose 45.6% for the quarter and total operating expenses rose 33.3%, outpacing revenue growth.
COVID-19 continued to affect results: perpetual licenses revenue decreased 8.0% for the quarter and 7.3% year to date as accounts delayed purchase decisions or shifted spend to subscriptions, and professional services revenues were impacted as accounts delayed new projects. Management also noted that 2020 cost savings are unlikely to be fully sustainable prospectively.
In 2020, 43% of revenues and 47% of operating expenses were denominated in foreign currencies, and the company does not hedge foreign currency exposure other than a natural hedge. Reported revenue growth of 21.0% for the quarter exceeded constant currency growth of 16.5%, showing reported results are being lifted by favorable exchange-rate movements that may reverse.
The recurring revenues dollar-based net retention rate declined to 106% for the twelve months ended June 30, 2021 from 110% in the prior-year period, even as recurring revenues reached 86% of total revenues. A further decline in expansion within existing accounts would weigh on revenue growth given the reliance on existing-account expansion.
Stock-based compensation expense rose sharply, including $11,595 thousand for the six months ended June 30, 2021 tied to the Bonus Plan change allowing share delivery in lieu of cash bonuses, plus execution of a new ESPP. Increased reliance on equity compensation can drive dilution and expense volatility.
SaaS KPIs
All quarters →Account Retention Rate
ARR
Adjusted EBITDA
ARR growth rate (constant currency)
Adjusted EBITDA margin
Last Twelve-Month Recurring Revenues
Summary, forecast, risks and KPIs are extracted from BENTLEY SYSTEMS INC's SEC filings for Q2 FY2021 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.