Summary
Bentley Systems reported third-quarter revenue of $306.6 million, up 14.3% from the prior-year quarter. Nine-month revenue reached $917.8 million, up 13.0%. Gross profit was $241.9 million for the quarter, up 15.7%, and $719.5 million for the nine months, up 12.9%. Gross margin was 78.9% in the quarter, up 1.0 percentage point, while nine-month gross margin was 78.4%, flat. Operating income rose 32.6% to $73.7 million in the quarter and 14.8% to $192.8 million for the nine months. Operating margin was 24.0% in the quarter, up 3.3 percentage points, and 21.0% for the nine months, up 0.3 percentage points.
Net income rose 43.3% to $53.0 million for the quarter. For the nine months, net income fell 1.2% to $147.2 million. Diluted EPS was $0.16 for the quarter, up 33.3%, and $0.46 for the nine months, flat. Adjusted EPS, a non-GAAP measure, was $0.22 for the quarter and $0.72 for the nine months. Adjusted OI w SBC margin, also non-GAAP, was 28.2% for the quarter and 27.2% for the nine months. Operating cash flow rose 4.8% to $72.8 million in the quarter and 38.4% to $329.6 million for the nine months. Capital expenditures rose 19.7% to $7.7 million in the quarter and 45.6% to $18.9 million for the nine months. Deferred revenue and remaining performance obligations were $227.0 million, up 12.6% from the prior-year quarter.
The quarter's operating metrics showed steady recurring demand. ARR was $1,124.8 million as of September 30, 2023, with a constant currency ARR growth rate of 12.5%. Last twelve-month recurring revenues dollar-based net retention rate was 110%, consistent with the same period last year. Account retention rate was 97%, compared with 99% a year earlier. Last twelve-month recurring revenues were $1,076.4 million, up $126.1 million from the prior twelve-month period. ARR from contracts with consumption measurement durations of less than one year was 46% of total ARR, up from 41% a year earlier. E365 daily consumption-measured ARR represented 39% of total ARR, up from 33%. For the twelve months ended September 30, 2023, 89% of revenues were recurring, compared with 88% a year earlier.
Management attributed the ARR growth to a more broadly balanced set of contributors, including the Infrastructure Investment and Jobs Act in the U.S., expansion of E365 as enterprise accounts accelerate going digital, and Virtuosity's momentum in penetrating small and medium-sized business prospects. The company said ARR growth by sector was led again by public works and utilities, which came in above the company average, including Seequent despite a slowdown in new mine exploration. The industrial sector landed below average, and commercial facilities stayed flat. By region, growth was led by the Americas, followed by Asia Pacific and then EMEA. At its Year in Infrastructure Conference, finalists reported a median of 18% in project engineering savings.
Management also pointed to some moving parts. The CFO said constant currency ARR growth momentum and seasonality reflected the E365 consumption impact from fewer working days and an increasing preference for perpetual licenses, especially in China. The company de-levered by 1.0x on a net debt to Adjusted EBITDA basis since the beginning of the year and said it will look to further de-lever in the coming quarters as conditions permit. Risks remain familiar for the infrastructure software vendor: global economic and political conditions, sanctions and embargoes, political, economic, regulatory and public health risks in the countries where it operates, failure to retain personnel, changes in the industries it serves, competition, product quality, its ability to develop and market new products, capital markets access, interest rates, and the integration of acquisitions. China remains uncertain because of geopolitical challenges, obstacles to cloud-deployed software, and the timing impact of a preference for license sales of locally developed solutions. No numeric guidance for the next quarter or the full fiscal year was provided.
Forecast
No forward guidance in this quarter's filings.
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2023 | Q2 FY2023 | QoQ | Q3 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $306.6M | $296.7M | +3.3% | $268.3M | +14.3% |
| Gross profit | $241.9M | $230.3M | +5.0% | $209.1M | +15.7% |
| Gross margin | 78.9% | 77.6% | +1.3 pp | 77.9% | +1.0 pp |
| Research & development | $65.5M | $70.1M | -6.6% | $63.8M | +2.6% |
| Sales & marketing | $53.8M | $54.4M | -1.1% | $46.1M | +16.6% |
| General & administrative | $42.7M | $39.3M | +8.7% | $37.8M | +12.9% |
| Total operating expenses | $168.3M | $177.0M | -4.9% | $153.6M | +9.5% |
| Operating income (loss) | $73.7M | $53.3M | +38.2% | $55.5M | +32.6% |
| Operating margin | 24.0% | 18.0% | +6.1 pp | 20.7% | +3.3 pp |
| Net income (loss) | $53.0M | $48.7M | +8.9% | $37.0M | +43.3% |
| Net margin | 17.3% | 16.4% | +0.9 pp | 13.8% | +3.5 pp |
| Diluted EPS | $0.16 | $0.15 | +$0.01 | $0.12 | +$0.04 |
| Net retention rate | 110.0% | 110.0% | ±0.0 pp | 110.0% | ±0.0 pp |
Risks
Interest expense, net rose to $10.05 million in the quarter (up 10.0%) and $30.62 million for the nine-month period (up 30.2%) on a higher weighted average interest rate on the revolver and Term Loan, against total debt of $1.59 billion versus $66.96 million of cash and cash equivalents at September 30, 2023.
The effective tax rate climbed to 23.7% in the quarter from 20.4% a year earlier and to 13.1% year to date from 5.2%, driven by the forecasted impact of the GILTI inclusion from mandatory capitalization of research and development expenses for U.S. tax purposes and fewer discrete tax benefits.
MD&A flags that future results in China remain uncertain because of continued geopolitical challenges, obstacles there to cloud-deployed software, and a local preference for perpetual license sales of locally-developed solutions rather than subscriptions.
Constant currency ARR growth rate decelerated to 12.5% for the twelve months ended September 30, 2023 from 14% a year earlier, and the account retention rate slipped to 97% from 99%, with the decline partly attributed to the decision to exit the Russian market (about 1% negative impact).
The deferred compensation plan line swung to $4.76 million of expense for the nine months ended September 30, 2023 from $21.87 million of income in the prior-year period, driven by mark-to-market moves on the plan liability, adding volatility to total operating expenses.
Other income (expense), net for the nine months ended September 30, 2023 included investment impairment charges of $7.32 million, partly offset by $2.36 million of gains on investments in the quarter, reflecting risk in the iTwin Ventures portfolio.
SaaS KPIs
All quarters →Account Retention Rate
Last Twelve-Months Recurring Revenues
ARR
Adjusted EBITDA
Adjusted OI w/SBC margin
Summary, forecast, risks and KPIs are extracted from BENTLEY SYSTEMS INC's SEC filings for Q3 FY2023 (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.