Summary
Bentley Systems reported third quarter fiscal 2022 total revenues of $268.3 million, up 6.7% from the prior-year quarter. Constant currency growth was 14.7%. Annualized recurring revenue reached $983.7 million as of September 30, 2022, with a constant currency ARR growth rate of 14%. Last twelve-month recurring revenues were $950.4 million, up 20.3% year-over-year. The recurring revenue dollar-based net retention rate was 110%, compared with 106% for the same period last year. Account retention rate was 99%, compared with 98%. Management said business performance was led by new business in the U.S. and for civil engineering organizations globally, along with growth in Virtuoso subscriptions, E365, Seequent, and Power Line Systems. ARR from consumption-measured contracts was 41% of total ARR as of September 30, 2022, up from 37% a year earlier. E365 daily consumption ARR represented 33% of total ARR. For the twelve months ended September 30, 2022, 88% of revenues were recurring.
On a GAAP basis, third quarter gross profit was $209.1 million, up 6.1%, while gross margin was 77.9%, down 0.5 percentage points from the prior-year quarter. Operating income was $55.5 million, up from an operating loss in the prior-year quarter. Operating margin was 20.7%, up 35.6 percentage points. Net income was $37.0 million, up from a net loss. Diluted EPS was $0.12, up from a loss per diluted share. The prior-year quarter included a one-time compensation charge tied to a deferred compensation plan modification. Adjusted Net Income was $61.8 million, compared with $56.3 million, and Adjusted EBITDA was $89.7 million, compared with $84.5 million. Adjusted EBITDA margin was 33.4%, compared with 33.6%.
For the nine months ended September 30, 2022, total revenues were $812.1 million, up 16.5%. Gross profit was $637.5 million, up 18.0%. Operating income was $167.9 million, up 227.1%. Net income was $149.1 million, up 172.9%. Diluted EPS was $0.46, up 170.6%. Operating cash flow was $238.2 million, up 14.8%. Capital expenditures were $13.0 million, up 16.4% year to date. In the quarter, operating cash flow was $69.5 million, up 19.0%, and capital expenditures were $6.4 million, flat with the prior-year quarter. Deferred revenue and remaining performance obligations each were $201.6 million, up 2.7% from the prior-year quarter. The company completed four acquisitions in the nine months ended September 30, 2022, compared with 12 acquisitions in the prior-year period.
Management reaffirmed its full year 2022 outlook on a constant currency basis. The company expects total revenues growth of 16.9% to 20.1% and ARR growth of 14% to 16% for the full fiscal year. It continues to expect an adjusted EBITDA margin of 33% for full year 2022. Foreign exchange remains a major swing factor. The CFO said that third quarter GAAP total revenues of $268.3 million would have been $283.3 million if the exchange rates used in the annual financial outlook had remained in effect. The company also said that 2022 full year total revenues as reported would be negatively impacted on the order of $40 million relative to the revenues based on the exchange rates in effect when the outlook was determined. The operating expense natural hedge should leave the adjusted EBITDA margin minimally affected by exchange rates.
Risks include the Russia-Ukraine war and the company's decision to wind down and exit the Russian market. That move reduced ARR by $5,190 as of March 31, 2022 and by a further $6,000 in the second quarter. Other risks cited in the filing include global economic and political conditions, sanctions and regulatory restrictions, retention of personnel, competition, product quality and development, integration of acquisitions, and access to capital markets. The quarter showed solid recurring revenue metrics and GAAP profitability, but reported revenue growth was dampened by a stronger U.S. dollar. On a constant currency basis, revenue growth was 14.7% in the quarter and 22.6% for the nine months. The recurring revenue base and retention rates point to a resilient business, while currency and Russia exit costs remain visible headwinds.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2022 | Q2 FY2022 | QoQ | Q3 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $268.3M | $268.3M | +0.0% | $248.5M | +8.0% |
| Gross profit | $209.1M | $208.6M | +0.3% | $194.2M | +7.7% |
| Gross margin | 77.9% | 77.8% | +0.2 pp | 78.2% | -0.2 pp |
| Research & development | $63.8M | $64.9M | -1.6% | $57.3M | +11.3% |
| Sales & marketing | $46.1M | $49.6M | -7.1% | $44.4M | +3.9% |
| General & administrative | $37.8M | $40.0M | -5.6% | $35.3M | +7.0% |
| Total operating expenses | $153.6M | $152.9M | +0.5% | $234.7M | -34.6% |
| Operating income (loss) | $55.5M | $55.7M | -0.3% | -$40.4M | +237.3% |
| Operating margin | 20.7% | 20.8% | -0.1 pp | -16.3% | +37.0 pp |
| Net income (loss) | $37.0M | $55.7M | -33.5% | -$50.1M | +173.8% |
| Net margin | 13.8% | 20.8% | -7.0 pp | -20.2% | +34.0 pp |
| Diluted EPS | $0.12 | $0.17 | -$0.05 | -$0.16 | +$0.28 |
| Net retention rate | 110.0% | 109.0% | +1.0 pp | 106.0% | +4.0 pp |
Risks
In response to the Russia-Ukraine war, the company paused sales in Russia and Belarus, reduced related ARR by $5,190 as of March 31, 2022, and then decided to wind down and exit the Russian market, which resulted in a further ARR reduction of $6,000. The exit also created realignment costs and reduced EMEA revenues.
In 2021, 47% of total revenues and 42% of total operating expenses were denominated in foreign currencies, and the company does not currently hedge foreign currency exposure. For the three and nine months ended September 30, 2022, total revenue growth was partially offset by overall negative foreign currency effects due to a stronger U.S. Dollar.
The company completed four acquisitions in the nine months ended September 30, 2022 and 12 in the prior-year period, including platform acquisitions Power Line Systems for $695,968 and Seequent for $883,336 plus shares. Frequent acquisitions create integration, retention, and acquisition expense risks.
Interest expense, net increased to $8,382 for the three months ended September 30, 2022 from $3,836 in the prior-year period due to a higher outstanding average balance and higher average interest rate under the revolving loan facility and a term loan entered into on December 22, 2021. The weighted average interest rate under the Credit Facility was 4.34% versus 2.33% in the prior-year quarter.
As of September 30, 2022, 94% of cash and cash equivalents were held outside the U.S., compared with 48% at December 31, 2021. The company repatriated $150,000 during the nine months ended September 30, 2022 to fund the Power Line Systems acquisition, and future U.S. liquidity needs may require ongoing cash flows or external borrowings.
SaaS KPIs
All quarters →Adjusted EBITDA
Constant Currency ARR Growth Rate
Adjusted EBITDA margin
Annualized Recurring Revenue (ARR)
Last Twelve-Month Recurring Revenues
Account Retention Rate (LTM)
Summary, forecast, risks and KPIs are extracted from BENTLEY SYSTEMS INC's SEC filings for Q3 FY2022 (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.