Company Reports

Bentley Systems' second-quarter revenue grew 12% in constant currency, supported by stable annual recurring revenue expansion. Net retention rate of 109% was stable over the past five quarters. Operating margin declined 160 basis points year over year, but still within management's expectations.

After successfully carving out a niche in computer-aided design with its construction-oriented software, MicroStation, Bentley Systems has been continuously expanding its family of offerings beyond the public works and utilities vertical to broaden its total addressable market. We find the opportunities in the resources sector attractive for Bentley Systems. With its 2021 acquisition of Seequent, Bentley now owns an industry-leading geotechnical tool that uncovers the complexities under the surface, a capability that many mining and energy companies are looking for. We think the proportion of revenue contributed by resource customers is on track to reach one-third of the company’s total over the next few years.

Bentley Systems' first-quarter results were strong, with total revenue and annual recurring revenue both growing 12% year over year in constant currency. Net retention rate was resilient at 109%. GAAP operating margin contracted 130 basis points to 29.8%, compared with a year ago.

Bentley Systems' full-year revenue of $1.5 billion and adjusted operating margin (excluding share-based compensation) of 28.6% both topped guidance. Management's 2026 revenue growth outlook of 13% at the midpoint is 200 basis points higher than 2025, sending shares up 10% in Feb. 26's trading.

After successfully carving out a niche in computer-aided design with its construction-oriented software, MicroStation, Bentley Systems has been continuously expanding its family of offerings beyond the public works and utilities vertical to broaden its total addressable market. We find the opportunities in the resources sector attractive for Bentley Systems. With its 2021 acquisition of Seequent, Bentley now owns an industry-leading geotechnical tool that uncovers the complexities under the surface, a capability that many mining and energy companies are looking for. We think the proportion of revenue contributed by resource customers is on track to reach one-third of the company’s total over the next few years.

We take a fresh look at Bentley Systems, a leading design and engineering software provider for infrastructure projects such as roads, bridges, and electricity grids.

After successfully carving out a niche in computer-aided design with its construction-oriented software, MicroStation, Bentley Systems has been continuously expanding its family of offerings beyond the public works and utilities vertical to broaden its total addressable market. We find the opportunities in the resources sector attractive for Bentley Systems. With its 2021 acquisition of Seequent, Bentley now owns an industry-leading geotechnical tool that uncovers the complexities under the surface, a capability that many mining and energy companies are looking for. We think the proportion of revenue contributed by resource customers is on track to reach one-third of the company’s total over the next few years.

Bentley Systems reported its third quarter with total revenue up 12% year over year, higher than expectations, and results roughly meeting our profitability estimates. Key metrics like annualized recurring revenue, or ARR, and retention rate were broadly stable.

Bentley Systems reported second-quarter results that were broadly in line with our expectations, with revenue up 10.2% year over year and a modest improvement in operating margins. However, key metrics like annualized recurring revenue, or ARR, and retention rate showed slight deceleration.

Bentley Systems reported solid first-quarter performance, which largely met our top-line estimates and exceeded our bottom-line expectations. We are particularly encouraged to see the shift in revenue mix toward high-margin, recurring subscription revenue (through its E365 enterprise contracts), which helps improve visibility and profitability. Looking at the macroeconomic environment, China represents a smaller proportion of total annual recurring revenue, or ARR (currently 2.5%, which is half its previous exposure), and exposure to sectors that are vulnerable to demand and interest rate cyclicality, like commercial and industrial sectors, has also decreased by half since the IPO. We maintain our fair value estimate of $45 per share and continue to see strong demand drivers like critical infrastructure needs, engineering shortages, and extended backlogs, all creating a maintained demand for Bentley’s solutions.

We maintain our $45 fair value estimate for narrow-moat Bentley Systems after the firm reported mixed fourth-quarter results, with revenue matching our estimates but profitability falling a bit short. China continues to be a headwind, as the country’s weak macroeconomic environment, as well as a shift in preference by state-owned enterprises to adopt domestic alternatives, affected demand. The revenue outlook for 2026 was softer than what we expected, with management being conservative on China, which led us to revise down our near-term growth forecasts. This adjustment was offset by the time value of money, leading to our steady fair value. We reiterate our long-term thesis as Bentley’s healthy retention rates, solid subscription-based revenue, and expectations of stable infrastructure demand alongside artificial intelligence adoption continue to drive growth. The stock price was up marginally on the news, and we view the shares as fairly valued.

Bentley Systems is a leading provider of engineering software, providing solutions that help design, construct, and manage infrastructure projects efficiently. Bentley Systems has carved out its niche in the fragmented computer-assisted design market, targeting public works and utility needs, covering everything from roadway design to wind analysis. Beyond these mainstay applications, Bentley has expanded its scope from purely single applications to integrated platforms that track project management and assets after the design and simulation phases of its applications, which we think provide significant growth potential as their markets remain underpenetrated.

Bentley Systems is a leading provider of engineering software, providing solutions that help design, construct, and manage infrastructure projects efficiently. Bentley Systems has carved out its niche in the fragmented computer-assisted design market, targeting public works and utility needs, covering everything from roadway design to wind analysis. Beyond these mainstay applications, Bentley has expanded its scope from purely single applications to integrated platforms that track project management and assets after the design and simulation phases of its applications, which we think provide significant growth potential as their markets remain underpenetrated.

Narrow-moat-rated Bentley Systems reported solid third-quarter results that aligned with our expectations. Full-year guidance was largely maintained, with only some slight changes to the capital-expenditure spending planned for the year and a few other minor items. With trends matching our expectations and no major updates, we plan to maintain our fair value estimate of $45 per share and view shares as slightly overvalued.

Bentley Systems is a moaty engineering software firm that has solid growth opportunities ahead, in our view. Since the 1980s, Bentley Systems has carved out its niche in the fragmented computer assisted design market, targeting public works and utilities needs, covering anything from roadway design to wind analysis. These applications are anything but discretionary in nature, as we see little chance of its users going back to pencil and paper for the design and modeling of infrastructure assets. But beyond these mainstay applications, over the last decade, Bentley has expanded its scope from purely single applications to platforms. Such platforms track project management and assets after the design and simulation phases of its applications, and we think they bode significant growth potential as their markets remain underpenetrated—like digital twin deployment. In addition to its platform approach, small to medium-sized businesses remain a growth avenue for the firm as they make up about half of Bentley’s $30 billion total addressable market but only about one third of revenue. These factors combined have us confident Bentley can achieve top-line growth over 13% over the next five years, with margin expansion in tow.

We reduce the fair value estimate for narrow-moat Bentley Systems to $45 from $48 following the firm's second-quarter earnings result. While the firm reported strong growth in E365 renewals, we have lowered our top-line expectations to adjust for weaker-than-anticipated professional services sales in the near term. Nevertheless, we are pleased to see Bentley's enduring strength in the public services and utilities markets, and traction in the SMB space. Solid annual recurring revenue, or ARR, growth was driven by SMB retention, asset analytics deals, and subscription renewals, but was offset by continued preference for perpetual licenses in China. Management guidance for fiscal 2024 remains unchanged. While we expect end-market digitization to drive top-line growth over the long term, we remain cautious of the market's overly optimistic outlook of the same. Shares were up 6% following results and remain moderately overvalued relative to our valuation.

We raise our fair value estimate for narrow-moat Bentley Systems to $48 from $42, following a solid first-quarter earnings report. Annualized recurring revenue, or ARR, continues to be affected by perpetual license sales in China, but the firm’s solid public services sales base and growing SMB market kept the firm’s top-line growth strong. Looking ahead, we expect savings from scaled-based operating leverage and increased sales from digitization in end markets to fatten margins. Shares were up marginally following the earnings release but continue to screen as overvalued relative to our raised valuation.

Bentley Systems is a moaty engineering software firm that has solid growth opportunities ahead, in our view. Since the 1980s, Bentley Systems has carved out its niche in the fragmented computer assisted design market, targeting public works and utilities needs, covering anything from roadway design to wind analysis. These applications are anything but discretionary in nature, as we see little chance of its users going back to pencil and paper for the design and modeling of infrastructure assets. But beyond these mainstay applications, over the last decade, Bentley has expanded its scope from purely single applications to platforms. Such platforms track project management and assets after the design and simulation phases of its applications, and we think they bode significant growth potential as their markets remain underpenetrated—like digital twin deployment. In addition to its platform approach, small to medium-sized businesses remain a growth avenue for the firm as they make up about half of Bentley’s $30 billion total addressable market but only about one third of revenue. These factors combined have us confident Bentley can achieve top-line growth over 13% over the next five years, with margin expansion in tow.

We maintain our $42 fair value estimate for narrow-moat Bentley Systems for now, as Reuters reported April 18 that the company is exploring strategic options, including a possible sale of the business. We also maintain our $240 fair value estimate for narrow-moat Cadence Design Systems, which Reuters suggested is among the companies interested in acquiring Bentley. Shares of Bentley appear modestly overvalued to us on a fundamental basis if no deal were to go through. We continue to view Cadence as overvalued, independent of this news and with no guarantee that Cadence will emerge as the winning bidder. Cadence's shares were down about 3% midday, and we surmise that the market is reacting negatively to this report, as investors might fear that Cadence could potentially overpay for Bentley. Cadence will report earnings on Monday, April 22, so if it were to win this bid for Bentley, we wouldn't be stunned if the merger were to be consummated over the weekend and discussed in more detail Monday.

We are maintaining our $42 fair value estimate for narrow-moat Bentley Systems, after the firm reported a mixed fourth quarter, with earnings per share coming in above our prior expectations but revenue falling a bit short. Growth in annual recurring revenue was tepid in the quarter, due to customers in China increasingly opting for perpetual licensing, leading to Bentley’s 2024 revenue guidance falling short of our prior estimates. We still think Bentley is well positioned to capitalize on digitization in end markets over the long term, with the opportunity exacerbated by the significant resource capacity gap at engineering firms. Despite the attractive growth profile, shares remain overvalued relative to our unchanged valuation.