Bentley Systems, Incorporated (“Bentley Systems” or the “Company”), the infrastructure engineering software company, announced operating results for its third quarter and nine months ended September 30, 2021.
Third Quarter 2021 Financial Results:
- GAAP total revenueswere $248.5 million, and adjusted total revenues were $251.4 million, up 23.7% year-over-year;
- GAAP subscriptions revenueswere $212.2 million, and adjusted subscriptions revenues were $215.1 million, up 24.0% year-over-year;
- Last twelve-month recurring revenueswere $786.1 million, up 15.1% year-over-year;
- Last twelve-month recurring revenues dollar-based net retention ratewas 106% (calculated under Topic 606), compared to 110% (calculated under Topic 605) for the same period last year;
- Last twelve-month account retention ratewas 98% (calculated under Topic 606), compared to 98% (calculated under Topic 605) for the same period last year;
- Annualized Recurring Revenue (“ARR”)was $903.8 million as of September 30, 2021, representing a constant currency ARR growth rate of 26% from September 30, 2020;
- GAAP operating losswas $40.4 million, compared to GAAP operating income of $5.3 million for the same period last year. The third quarter of 2021 GAAP operating loss was due to a one-time compensation charge of $90.7 million resulting from a modification of our deferred compensation plan;
- GAAP net losswas $50.1 million, compared to GAAP net income of $5.8 million for the same period last year. GAAP net loss per diluted share was $0.16, compared to GAAP net income per diluted share of $0.02 for the same period last year. The third quarter of 2021 GAAP net loss was due to a one-time compensation charge of $83.4 million, net of tax, resulting from a modification of our deferred compensation plan;
- Adjusted Net Incomewas $56.3 million, compared to $51.4 million for the same period last year. Adjusted Net Income per diluted share was $0.17 compared to $0.17 for the same period last year;
- Adjusted EBITDAwas $84.5 million, compared to $73.7 million for the same period last year. Adjusted EBITDA margin was 33.6%, compared to 36.2% for the same period last year;
- Cash flow from operationswas $58.4 million, compared to $39.8 million for the same period last year.
Nine Months Ended September 30, 2021 Financial Results:
- GAAP total revenueswere $693.4 million, and adjusted total revenues were $697.3 million, up 19.7% year-over-year;
- GAAP subscriptions revenueswere $585.8 million, and adjusted subscriptions revenues were $589.7 million, up 17.6% year-over-year;
- GAAP operating incomewas $47.4 million, compared to $95.9 million for the same period last year. The nine months ended September 30, 2021 GAAP operating income includes a one-time compensation charge of $90.7 million resulting from a modification of our deferred compensation plan;
- GAAP net incomewas $51.8 million, compared to $74.6 million for the same period last year. GAAP net income per diluted share was $0.16, compared to $0.25 for the same period last year. The nine months ended September 30, 2021 GAAP net income includes a one-time compensation charge of $83.4 million, net of tax, resulting from a modification of our deferred compensation plan;
- Adjusted Net Incomewas $195.0 million, compared to $140.5 million for the same period last year. Adjusted Net Income per diluted share was $0.62 compared to $0.47 for the same period last year;
- Adjusted EBITDAwas $236.8 million, compared to $189.0 million for the same period last year. Adjusted EBITDA margin was 34.0%, compared to 32.4% for the same period last year;
- Cash flow from operationswas $207.4 million, compared to $176.0 million for the same period last year.
Definitions of the non-GAAP financial measures used in this press release and reconciliations of such measures to the most comparable GAAP financial measures are included below under the heading “Use and Reconciliation of Non-GAAP Financial Measures.”
“Our third-quarter operating results continued to track consistently with last quarter’s qualitative observations and with the expectations for full-year 2021 presented then. Significantly, BSY’s investments since 2020 in our new User Success organization (now numbering about 600 colleagues) and in our Virtuosity inside-sales group (now over 200 colleagues focused on SMB new business), seem to have served effectively to strengthen our underlying growth rate of business performance. While the industrial / resources ‘CAPEX’ downturn remains an enduring headwind globally, we do begin to discern new business improvement, presumably due to an energy price rebound, in regions dependent on such revenue sources,” said CEO Greg Bentley.
“With infrastructure spending increases anticipated, including pursuant to legislation finally advancing in the U.S., public works / utility sector, participants everywhere are fully anticipating hiring challenges and are acknowledging that going digital is ever more necessary to sustain growth, and infrastructure resilience and adaptation. The executive promotions that BSY has announced today, along with a carefully considered change to our deferred compensation plan for certain key executives of long standing, reflect our own prioritization of top talent retention and development,” he concluded.
Third Quarter 2021 Financial Developments:
In August 2021, our Board of Directors approved an amendment to our unfunded Nonqualified Deferred Compensation Plan (the “DCP”), which offered to certain active executives in the DCP a one-time, short-term election to reallocate a limited portion of their DCP holdings from phantom shares of the Company’s Class B Common Stock into other DCP phantom investment funds. This one-time reallocation opportunity was offered only to certain active executives (but not to Directors or Bentley family members) in order to encourage retention, as otherwise these executives could only have materially diversified their investments in Company equity (primarily held in the DCP) by voluntarily terminating employment to trigger DCP distributions. These executives in aggregate accordingly diversified 24% of their phantom shares of the Company’s Class B Common Stock. This resulted in a reduction of 1,500,000 shares in both the basic and diluted count of Company shares.
While DCP participants’ investments in phantom shares remain equity classified, as they will be settled in shares of Class B Common Stock upon eventual distribution, the amendment and elections resulted in a change to liability classification for the reallocated phantom investments, as they will be settled in cash upon eventual distribution. As a result, during the three and nine months ended September 30, 2021, the Company recognized a one-time compensation charge of $90.7 million to Deferred compensation plan expenses in the consolidated statements of operations and reclassified cumulative compensation cost of $4.7 million from Additional paid-in capital to Accruals and other current liabilities or Deferred compensation plan liabilities in the consolidated balance sheet to record the reallocated deferred compensation plan liabilities at their fair value of $95.5 million.
Subsequent to the one-time reallocation, these diversified deferred compensation plan liabilities will be marked to market at the end of each reporting period, with changes in the liabilities recorded as an expense (income) to Deferred compensation plan in the consolidated statements of operations.
Operating Results Call Details
Bentley Systems will host a live Zoom video webinar on November 9, 2021 at 8:15 a.m. EST to discuss operating results for its third quarter and nine months ended September 30, 2021.
Those wishing to participate should access the live Zoom video webinar of the event through a direct registration link at https://zoom.us/webinar/register/WN_m9k8Z07RTJGKt7iv-maurQ. Alternatively, the event can be accessed from the Events & Presentations page on Bentley Systems’ Investor Relations website. In addition, a replay and transcript will be available after the conclusion of the live event on Bentley Systems’ Investor Relations website for one year.
