BENTLEY SYSTEMS INC Q2 FY2026 earnings

Bentley Systems reported second-quarter fiscal 2026 revenue of $410.73 million, up 12.8% from the prior-year quarter. Constant currency revenue growth was 12.2%. First-half revenue reached $834.91 million, up 13.6% from the prior-year period. The recurring revenue base continued to expand: annualized recurring revenue was $1,536.0 million at June 30, 2026, compared with $1,379.2 million a year earlier, and constant currency ARR growth was 12%. The last twelve-month recurring revenues dollar-based net retention rate held at 109%, matching the prior-year period, while account retention was 99%. Management said growth was led by the Resources sector, followed by Public Works Utilities, including demand tied to the electric grid. Bentley Open Applications and Seequent applications led the increase, with Bentley Infrastructure Cloud contributing as well.

Profitability showed a split picture. Gross profit rose to $336.74 million in the quarter, up 14.0%, and gross margin improved to 82.0%, up 0.9 percentage points. Operating income increased 4.9% to $88.61 million, but operating margin compressed to 21.6%, down 1.6 percentage points, as operating expenses grew faster than revenue. The MD&A pointed to higher general and administrative costs from a new enterprise-wide finance and quote-to-cash platform, annual compensation increases, higher bonuses, stock-based compensation, and non-recurring third-party costs tied to corporate initiatives. Net income was $78.57 million, up 11.5%, and diluted EPS was $0.25, up $0.03, or 13.6%. On a non-GAAP basis, adjusted EPS was $0.35, compared with $0.32, and AOI less Operating SBC margin was 28.3%, compared with 29.3%.

The first-half results followed a similar pattern. Gross profit for the six months reached $687.15 million, up 14.5%, and gross margin was 82.3%, up 0.6 percentage points. Operating income for the six months was $214.87 million, up 7.6%, while operating margin was 25.7%, down 1.4 percentage points. Net income for the six months was $173.96 million, up 7.5%, and diluted EPS was $0.55, up $0.05, or 10.0%. Cash generation was mixed. Second-quarter operating cash flow was $71.51 million, up 17.1%, but first-half operating cash flow was $264.92 million, down 5.6%. Capital expenditures were $7.72 million in the quarter, up 88.6%, and $13.27 million for the first half, up 85.9%. Free cash flow, a non-GAAP measure, was $63.8 million in the quarter, compared with $57.0 million, and $251.7 million for the first half, compared with $273.4 million.

The balance sheet showed deferred revenue of $263.15 million, up 6.7%, and remaining performance obligations of $280.64 million, up 6.0%. CFO Werner Andre said quarter-end net debt leverage was 1.9 times, with ample credit capacity. Bentley went live with new enterprise-wide finance and quote-to-cash platforms during the quarter and absorbed the costs within its margin commitment. It also repurchased shares during the first half and faces a mid-2027 convertible notes maturity. Guidance commentary was limited to the full-year outlook: management said the results position Bentley favorably within its full-year financial outlook. CEO Nicholas Cumins highlighted progress with Infrastructure AI, including instrumenting engineering applications so users can combine deterministic modeling, analysis, and simulation engines with AI assistants. Risks named in the release include adverse global economic or political conditions, tariffs and related policies, sanctions and embargoes, retention of key personnel, competition, product quality, ability to develop new products, access to financing, interest rates, and integration of acquisitions.