BENTLEY SYSTEMS INC Q2 FY2025 earnings

Bentley Systems posted second-quarter fiscal 2025 revenue of $364.1 million, up 10.2% year over year and up 9.2% on a constant currency basis. Year-to-date revenue was $734.6 million, up 10.0%. Gross profit was $295.3 million, up 10.6%, and gross margin reached 81.1%, up 0.2 percentage points. Operating income rose 5.3% to $84.4 million, but operating margin slipped to 23.2%, down 1.1 percentage points. Net income was $70.5 million, down 2.2%. Diluted EPS came in at $0.22, flat year over year. On a year-to-date basis, net income was $161.9 million, up 13.7%, and diluted EPS was $0.50, up 13.6%. The quarter showed solid top-line growth but mixed bottom-line leverage.

Operational trends remained healthy. Annualized recurring revenue was $1,379.2 million as of June 30, 2025, compared with $1,215.9 million as of June 30, 2024, a constant currency ARR growth rate of 11.5%. The last twelve-month recurring revenues dollar-based net retention rate was 109%, compared with 108% a year earlier, and account retention was 99%. Recurring revenues represented 92% of total revenues for the twelve months ended June 30, 2025, up from 90% in the prior twelve-month period. Management said improvements came mostly from existing accounts, with 3% growth from new accounts, especially small and medium-sized accounts. Engineering applications, geoprofessional applications, and Bentley Infrastructure Cloud led the expansion. Services remained a weak spot, primarily within Asset Performance Services.

Profitability on a non-GAAP basis held up. AOI less SBC margin was 28.9%, compared with 28.8% in the prior-year quarter, and adjusted EPS was $0.32, compared with $0.31. For the first six months, AOI less SBC margin was 31.5%, compared with 31.1%, and adjusted EPS was $0.67, compared with $0.62. Free cash flow was $57.0 million, compared with $59.5 million in the prior-year quarter. Year-to-date free cash flow was $273.4 million, compared with $260.9 million. Operating cash flow, a GAAP measure, was $61.1 million, down 2.4% year over year. Year-to-date operating cash flow was $280.5 million, up 4.8%. Capital expenditures were $4.1 million, up 32.4%. Deferred revenue was $246.6 million, up 4.2%, and remaining performance obligations were $264.8 million, up 5.1%.

Management framed the quarter as tracking toward the full-year 2025 outlook and said the company is positioned to achieve its annual outlook. The CFO noted that balance sheet strength and projected cash flow generation should provide capacity to repurchase shares to offset dilution from stock-based compensation, maintain the dividend, fund potential acquisitions, and refinance next year's maturing convertible debt if needed. The company also cited the One Big Beautiful Bill Act, signed on July 4, 2025, which management expects to have a favorable impact on cash paid for income taxes in 2025, mainly from restored immediate U.S. tax deductions for domestic research and development expenses.

Risks remain familiar for Bentley. The company operates in a global market and cited ongoing uncertainties, tariffs and related trade policies, sanctions and embargoes, foreign exchange fluctuations, and political and economic instability. China remains a specific concern because of geopolitical challenges, obstacles to cloud-deployed software, and a customer preference for license sales over subscriptions. Other risks include competition, product quality, retention of key personnel, integration of acquired businesses, interest rate changes, and access to financing. The 2026 convertible notes mature in January 2026, and the company said it has the ability and intent to refinance them through available capacity under its credit facility. Debt covenants also limit operational flexibility, including the amount of dividends the company can pay.