Bentley Systems, Incorporated announced results for its fourth quarter and full year ended December 31, 2023, and its financial outlook for 2024.
Fourth Quarter 2023 Results
- Total revenues were $310.6million, up 3% or 7.3% on a constant currency basis, year-over-year;
- Subscriptions revenues were $272.5million, up 3% or 7.4% on a constant currency basis, year-over-year;
- Annualized Recurring Revenues (“ARR”) was $1,174.8million as of December 31, 2023, compared to $1,036.5 million as of December 31, 2022, representing a constant currency ARR growth rate of 5%;
- Last twelve-month recurring revenues dollar-based net retention rate was 109%, compared to 110% for the same period last year;
- Operating income margin was 2%, compared to 14.2% for the same period last year;
- Adjusted operating income inclusive of stock-based compensation expense (“Adjusted OI w/SBC”) margin was 0%, compared to 22.5% for the same period last year;
- Net income per diluted share was $0.54, compared to $0.08 for the same period last year;
- Adjusted net income per diluted share (“Adjusted EPS”) was $0.20, compared to $0.19 for the same period last year; and
- Cash flow from operations was $87.1million, compared to $36.1 million for the same period last year.
Full Year 2023 Results
- Total revenues were $1,228.4million, up 8% or 11.9% on a constant currency basis over 2022;
- Subscriptions revenues were $1,080.3million, up 5% or 12.5% on a constant currency basis over 2022;
- Operating income margin was 8%, compared to 19.0% for 2022;
- Adjusted OI w/SBC margin was 4%, compared to 24.9% for 2022;
- Net income per diluted share was $1.00, compared to $0.55 for 2022;
- Adjusted EPS was $0.91, compared to $0.85 for 2022; and
- Cash flow from operations was $416.7million, compared to $274.3 million for 2022.
CEO Greg Bentley said, “Our financial results for 23Q4 and the full year underscore the sustained combination of auspicious infrastructure engineering markets and the strength of our operations. I enthusiastically congratulate COO Nicholas Cumins and our teams for delivering another year of unsurpassed performance, resourcefully reaching fully 100% of our new business target while also clearing our established hurdle of 100 basis points in annual operating margin improvement. Most notably, we achieved ARR growth (year‑over‑year constant currency business performance, including programmatic acquisitions) of 12.5%, and excluding China, as our purposeful transitions from direct subscriptions there gain traction, we achieved a high-water mark of 13.5%.
“Our financial outlook for 2024 reflects our confidence in sustaining consistent organic growth with comparable annual improvement in operating margin (including stock‑based compensation). Our investment programs will prioritize outright acquisitions in asset analytics, where our breakthrough offerings for communications towers (OpenTower) and for roadway conditions (Blyncsy) are proving that AI now enables ‘instant-on’ infrastructure digital twins, at scale. I believe that asset analytics cloud services, monetized per asset, can significantly increase our total addressable market and digital twin growth.”
COO Nicholas Cumins commented, “Our Bentley colleagues across the board deserve credit for our solid 2023 financial results. Our main growth drivers continue to be North America, application mix accretion in our E365 enterprise accounts, and in our small- and medium-sized accounts our Virtuosity subscriptions as well as license sales, which provide us competitive differentiation. For 2024, while striving for consistent operational performance, we will increase our focus on marketing, and continue to adopt digital twin technology throughout Bentley Infrastructure Cloud and within our modeling and simulation applications.”
CFO Werner Andre said, “We are pleased to report another solid quarter and year. Our 2024 financial outlook is supported by continued favorable market conditions and the momentum of our growth initiatives. It also assumes a slightly larger than normal range of possible outcomes to account for our commercial model shift in China (from ARR), lower acquisition expectations, and reduced escalations based on inflation. Our consistent strong cash conversion has allowed us to completely repay our revolving line of credit after year-end and enables us to raise our modest dividend, continue to buy back shares to offset dilution from stock‑based compensation, and pursue programmatic acquisitions to expand our AI‑driven asset analytics business.”
Recent Developments
- During the fourth quarter of 2023, we recognized a net discrete income tax benefit of $170.8million attributable to internal legal entity restructuring and related intra-entity transactions as part of our continuing efforts to align intellectual property ownership with our business operating model; and
- During the fourth quarter of 2023, we recorded a $12.6million charge for realignment expenses primarily to provide for severance (affecting under 5% of our workforce) in order to reinvest in go-to-market functions, as well as in AI product development.
2024 Financial Outlook
The Company is sharing the following financial outlook for the full year 2024:
- Total revenues in the range of $1,350 million to $1,375 million and constant currency growth of 10% to 12%;
- Constant currency ARR growth rate (business performance, including programmatic acquisitions) of5% to 13%;
- Adjusted OI w/SBC margin annual improvement of approximately 100 basis points;
- Effective tax rate of approximately 20%;
- Cash flow from operations representing a conversion rate from Adjusted EBITDA of approximately 80%; and
- Capital expenditures of approximately $22 million.
The 2024 outlook information provided above includes non-GAAP financial measures management uses in measuring performance and liquidity. The Company is unable to reconcile these forward-looking non-GAAP measures to GAAP without unreasonable efforts because it is not possible to predict with a reasonable degree of certainty the actual impact of certain items and unanticipated events, including stock‑based compensation charges, amortization of acquired intangible assets, realignment expenses, and other items, which would be included in GAAP results. The impact of such items and unanticipated events could be potentially significant.
The 2024 outlook is forward-looking, subject to significant business, economic, regulatory, and competitive uncertainties and contingencies, many of which are beyond the control of the Company and its management, and based upon assumptions with respect to future decisions, which are subject to change. Actual results may vary and those variations may be material. As such, our results may not fall within the ranges contained in this outlook. The Company uses these forward-looking measures to evaluate its ongoing operations and for internal planning and forecasting purposes.
Call Details
Bentley Systems will host a live Zoom video webinar on February 27, 2024 at 8:15 a.m. EST to discuss results for its fourth quarter and full year ended December 31, 2023, and 2024 Financial Outlook.
Those wishing to participate should access the live Zoom video webinar of the event through a direct registration link. Alternatively, the event can be accessed from the Events & Presentations page on Bentley Systems’ Investor Relations website at https://investors.bentley.com. 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.
