Bentley Systems Announces Operating Results for Third Quarter 2020
[ Back ]   [ More News ]   [ Home ]
Bentley Systems Announces Operating Results for Third Quarter 2020

EXTON, Pa. — (BUSINESS WIRE) — November 10, 2020 — Bentley Systems, Incorporated (Nasdaq: BSY) (“Bentley Systems” or the “Company”), the infrastructure engineering software company, today announced operating results for its quarter ended September 30, 2020.

Third Quarter 2020 Financial Results:

Definitions of the non-GAAP financial measures used in this press release and reconciliations of such measures to their nearest GAAP equivalents are included below under the heading “Use and Reconciliation of Non-GAAP Financial Measures.”

“Our encouraging operating results for the third quarter of 2020 continue to reinforce the relative resilience of infrastructure engineering, and the priority placed by our user organizations this year on going digital, as they have resourcefully ‘virtualized’ their mission-critical work,” said Greg Bentley, CEO. “2020’s inflection in their digital advancement is evidenced by the burgeoning use cases for infrastructure digital twins which our users and accounts showcased at our just-completed Year in Infrastructure 2020 Conference.”

Mr. Bentley continued, “Although infrastructure investment at large-- and our predictable business model-- continues to demonstrate resilience, we have now discerned a change within our application usage trends. During the first half of 2020 we could see waves of pandemic-related lockdowns adversely impacting our days of usage by a few percent, and then abating progressively by region. Beginning in the third quarter, we’ve been observing global usage impacts that instead are primarily a function of infrastructure sector -- with the commercial / facilities sector most affected, and our mainstay public works and utilities sector least affected. In the industrial / resources sector, capital projects activity has now perceptibly declined, reducing consumption of our applications by those affected (‘EPC’ engineering / procurement / construction firms). EPC accounts tend to have been early adopters of our consumption-based E365 commercial model, so our ARR and revenue growth are being somewhat attenuated. Our usual visibility into ARR momentum is likely to remain obscured to this degree.”

“Overall, we are nonetheless confident about promising returns on the purposeful reinvestment of our significant 2020 cost savings. Our new Chief Product Officer (Nicholas Cumins), inaugural Chief Success Officer (Katriona Lord-Levins), and new Chief Marketing Officer (Chris Bradshaw) bring us world-class public company experience in succession to many of our ‘foundation pillar’ executives whose retirements, upon our IPO after 36 years, have been anticipated. While maintaining our commitment to annual improvement in operating efficiency and margins, we are enthusiastically investing to accelerate accretion in our existing accounts, to better reach more small and mid-market prospects, to further enable our applications and systems through our iTwins Platform, and to develop our ecosystem of digital integrators to curate infrastructure digital twins.”

Financial Developments:

2020 Financial Outlook

For the full year of 2020, the Company currently expects:

Bentley Systems is not providing a quantitative reconciliation of its Non-GAAP financial outlook to the corresponding GAAP information because the GAAP measures that it excludes from its Non-GAAP outlook are not available without unreasonable effort on a forward-looking basis due to their unpredictability, high variability, complexity and low visibility.

Earnings Call Details

Bentley Systems will host a live Zoom Video Webinar on November 10, 2020 at 8:30 a.m. Eastern Time to discuss the financial results for the third quarter of 2020.

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_MIBAJ7xHTN-cmp5KHRA-Fg. Alternatively, the event can be accessed from the Events & Presentations page on Bentley Systems’ Investor Relations website at https://investors.bentley.com. A replay and transcript will be available after the conclusion of the live event on Bentley Systems’ Investor Relations website.

About Bentley Systems

Bentley Systems (Nasdaq: BSY) is the infrastructure engineering software company. We provide innovative software to advance the world’s infrastructure – sustaining both the global economy and environment. Our industry-leading software solutions are used by professionals, and organizations of every size, for the design, construction, and operations of roads and bridges, rail and transit, water and wastewater, public works and utilities, buildings and campuses, and industrial facilities. Our offerings include MicroStation-based applications for modeling and simulation, ProjectWise for project delivery, AssetWise for asset and network performance, and the iTwin platform for infrastructure digital twins. Bentley Systems employs more than 4,000 colleagues and generates annual revenues of more than $700 million in 172 countries. www.bentley.com.

Forward-Looking Statements

The foregoing forward-looking statements reflect Bentley Systems’ expectations as of today's date. Given the number of risk factors, uncertainties and assumptions discussed below, actual results may differ materially.

Any statements made in this earnings release that are not statements of historical fact, including statements about our financial outlook and our beliefs and expectations, are forward-looking statements and should be evaluated as such. Forward-looking statements include information concerning possible or assumed future results of operations, business plans, and strategies. Forward-looking statements are based on Bentley Systems management’s beliefs, as well as assumptions made by, and information currently available to, them. Because such statements are based on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected. Factors which may cause actual results to differ materially from current expectations include, but are not limited, to macroeconomic conditions, pandemic consequences, and other factors described under the heading “Risk Factors” in our final prospectus filed with the Securities and Exchange Commission (“SEC”) on September 24, 2020, and in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, and the Company’s subsequent filings with the SEC. Copies of each filing may be obtained from the Company or the SEC. All forward-looking statements reflect our beliefs and assumptions only as of the date of this press release. We undertake no obligation to update forward-looking statements to reflect future events or circumstances.

Definitions of Certain Key Business Metrics

Definitions of the non-GAAP financial measures used in this earnings release and reconciliations of such measures to their nearest GAAP equivalents are included below under “Use and Reconciliation of Non-GAAP Financial Measures.” Certain non-GAAP measures included in our financial outlook are not being reconciled to the comparable GAAP financial measures because the GAAP measures are not accessible on a forward-looking basis. The Company is unable to reconcile these forward looking non-GAAP financial measures to the most directly comparable GAAP measures without unreasonable efforts because the Company is currently unable to predict with a reasonable degree of certainty the type and extent of certain items that would be expected for these periods not to impact the non-GAAP measures, but would impact GAAP measures. Such unavailable information, which could have a significant impact on the Company’s GAAP financial results, may include stock-based compensation charges, expenses associated with the IPO, depreciation and amortization of capitalized software costs and of acquired intangible assets, realignment expenses, and other items.

Last twelve-month recurring revenues are calculated as recurring revenues recognized over the preceding twelve-month period. We define recurring revenues as subscription revenues that recur monthly, quarterly, or annually with specific or automatic renewal clauses, and professional services revenues in which the underlying contract is based on a fixed fee and contains automatic annual renewal provisions.

Constant Currency Metrics

In reporting period-over-period results, we calculate the effects of foreign currency fluctuations and constant currency information by translating current period results using prior period average foreign currency exchange rates. Our definition of constant currency may differ from other companies reporting similarly named measures, and these constant currency performance measures should be viewed in addition to, and not as a substitute for, our operating performance measures calculated in accordance with U.S. GAAP.

Use and Reconciliation of Non-GAAP Financial Measures

In addition to our results determined in accordance with GAAP, we have calculated adjusted cost of subscriptions and licenses, adjusted cost of services, adjusted research and development, adjusted selling and marketing, adjusted general and administrative, adjusted income from operations, Adjusted Net Income, Adjusted Net Income per diluted share, Adjusted EBITDA, and Adjusted EBITDA margin, each of which are non-GAAP financial measures. We have provided tabular reconciliations of each of these non-GAAP financial measures to such measure’s most directly comparable GAAP financial measure.

Management uses these non-GAAP financial measures to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, and to evaluate financial performance and liquidity. Our non‑GAAP financial measures are presented as supplemental disclosure as we believe they provide useful information to investors and others in understanding and evaluating our results, prospects, and liquidity period-over-period without the impact of certain items that do not directly correlate to our operating performance and that may vary significantly from period to period for reasons unrelated to our operating performance, as well as to compare our financial results to those of other companies. Our definitions of these non-GAAP financial measures may differ from similarly titled measures presented by other companies and therefore comparability may be limited. In addition, other companies may not publish these or similar metrics. Thus, our non-GAAP financial measures should be considered in addition to, not as a substitute for, or in isolation from, the financial information prepared in accordance with GAAP, and should be read in conjunction with the financial statements included in our Quarterly Report on Form 10-Q to be filed with the SEC.

We calculate these non-GAAP financial measures as follows:

We encourage investors and others to review our financial information in its entirety, not to rely on any single financial measure, and to view these non-GAAP financial measures in conjunction with the related GAAP financial measures.

BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except share and per share data)
(unaudited)

 

September 30,

December 31,

2020

2019

Assets

 

 

 

Current assets:

Cash and cash equivalents

$

137,598

 

 

$

121,101

 

Accounts receivable

 

172,600

 

 

211,775

 

Allowance for doubtful accounts

 

(6,492

)

 

 

(7,274

)

Prepaid income taxes

 

7,307

 

 

4,543

 

Prepaid and other current assets

 

27,897

 

 

 

23,413

 

Total current assets

 

338,910

 

 

353,558

 

Property and equipment, net

 

29,332

 

 

 

29,632

 

Operating lease right-of-use assets

 

46,006

 

 

 

Intangible assets, net

 

46,560

 

 

 

46,313

 

Goodwill

 

542,239

 

 

480,065

 

Investments

 

5,218

 

 

 

1,725

 

Deferred income taxes

 

44,543

 

 

51,068

 

Other assets

 

37,689

 

 

 

32,238

 

Total assets

$

1,090,497

 

$

994,599

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities:

Accounts payable

$

15,086

 

 

$

17,669

 

Accruals and other current liabilities

 

212,866

 

 

167,517

 

Deferred revenues

 

173,578

 

 

 

204,991

 

Operating lease liabilities

 

15,629

 

 

 

Income taxes payable

 

5,100

 

 

 

2,236

 

Total current liabilities

 

422,259

 

 

392,413

 

Long-term debt

 

589,583

 

 

 

233,750

 

Long-term operating lease liabilities

 

32,555

 

 

 

Deferred revenues

 

6,322

 

 

 

8,154

 

Deferred income taxes

 

9,502

 

 

8,260

 

Income taxes payable

 

7,874

 

 

 

8,140

 

Other liabilities

 

15,229

 

 

9,263

 

Total liabilities

 

1,083,324

 

 

 

659,980

 

Stockholders’ equity:

 

 

 

Common stock

 

2,622

 

 

2,548

 

Additional paid-in capital

 

441,723

 

 

 

408,667

 

Accumulated other comprehensive loss

 

(29,211

)

 

(23,927

)

Accumulated deficit

 

(407,961

)

 

 

(52,669

)

Total stockholders’ equity

 

7,173

 

 

334,619

 

Total liabilities and stockholders’ equity

$

1,090,497

 

 

$

994,599

 

BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except share and per share data)
(unaudited)

 

Three Months Ended

Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

Revenues:

 

 

 

 

 

 

 

Subscriptions

$

173,174

 

$

155,191

 

$

501,011

 

$

445,338

 

Perpetual licenses

 

12,827

 

 

 

13,787

 

 

 

36,020

 

 

 

38,255

 

Subscriptions and licenses

 

186,001

 

 

168,978

 

 

537,031

 

 

483,593

 

Services

 

16,996

 

 

 

17,610

 

 

 

44,946

 

 

 

50,139

 

Total revenues

 

202,997

 

 

186,588

 

 

581,977

 

 

533,732

 

Cost of revenues:

 

 

 

 

 

 

 

Cost of subscriptions and licenses

 

23,338

 

 

17,370

 

 

66,466

 

 

48,201

 

Cost of services

 

19,290

 

 

 

17,681

 

 

 

50,126

 

 

 

56,048

 

Total cost of revenues

 

42,628

 

 

35,051

 

 

116,592

 

 

104,249

 

Gross profit

 

160,369

 

 

 

151,537

 

 

 

465,385

 

 

 

429,483

 

Operating expenses:

Research and development

 

50,217

 

 

 

44,756

 

 

 

139,570

 

 

 

136,617

 

Selling and marketing

 

41,824

 

 

36,721

 

 

107,551

 

 

111,889

 

General and administrative

 

33,006

 

 

 

25,108

 

 

 

85,275

 

 

 

71,415

 

Amortization of purchased intangibles

 

3,869

 

 

3,550

 

 

10,984

 

 

10,402

 

Expenses associated with initial public offering

 

26,130

 

 

 

 

 

 

26,130

 

 

 

 

Total operating expenses

 

155,046

 

 

110,135

 

 

369,510

 

 

330,323

 

Income from operations

 

5,323

 

 

 

41,402

 

 

 

95,875

 

 

 

99,160

 

Interest expense, net

 

(1,934

)

 

(2,029

)

 

(4,450

)

 

(6,503

)

Other income (expense), net

 

13,741

 

 

 

(12,306

)

 

 

6,756

 

 

 

(14,053

)

Income before income taxes

 

17,130

 

 

27,067

 

 

98,181

 

 

78,604

 

Provision for income taxes

 

(10,705

)

 

 

(6,640

)

 

 

(22,145

)

 

 

(11,759

)

Loss from investment accounted for using the equity method, net of tax

 

(581

)

 

 

 

(1,447

)

 

 

Net income

 

5,844

 

 

 

20,427

 

 

 

74,589

 

 

 

66,845

 

Less: Net income attributable to participating securities

 

(4

)

 

(10

)

 

(4

)

 

(10

)

Net income attributable to Class A and Class B common stockholders

$

5,840

 

 

$

20,417

 

 

$

74,585

 

 

$

66,835

 

Per share information:

Net income per share, basic

$

0.02

 

 

$

0.07

 

 

$

0.26

 

 

$

0.23

 

Net income per share, diluted

$

0.02

 

$

0.07

 

$

0.25

 

$

0.23

 

Weighted average shares outstanding, basic

 

289,318,391

 

 

 

286,075,323

 

 

 

287,063,892

 

 

 

286,024,263

 

Weighted average shares outstanding, diluted

 

299,634,961

 

 

289,629,555

 

 

297,251,349

 

 

294,586,354

 

BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

 

Nine Months Ended

September 30,

2020

2019

Cash flows from operating activities:

 

 

 

Net income

$

74,589

 

$

66,845

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

25,836

 

 

23,334

 

Provision for accounts receivable allowance

 

(541

)

 

 

2,109

 

Deferred income taxes

 

7,853

 

 

833

 

Deferred compensation plan activity

 

2,487

 

 

 

2,968

 

Stock-based compensation expense

 

23,617

 

 

6,046

 

Amortization of deferred debt issuance costs

 

430

 

 

 

415

 

Change in fair value of derivative

 

3,365

 

 

159

 

Change in fair value of contingent consideration

 

(1,340

)

 

 

62

 

Foreign currency remeasurement (gain) loss

 

(9,067

)

 

13,956

 

Loss from investment accounted for using the equity method, net of tax

 

1,447

 

 

 

 

Changes in assets and liabilities, net of effect from acquisitions:

Accounts receivable

 

46,661

 

 

 

40,847

 

Prepaid and other assets

 

8,907

 

 

(6,505

)

Accounts payable, accruals and other liabilities

 

31,486

 

 

 

18,545

 

Deferred revenues

 

(35,134

)

 

(39,655

)

Income taxes payable

 

(4,571

)

 

 

(11,710

)

Net cash provided by operating activities

 

176,025

 

 

118,249

 

Cash flows from investing activities:

 

 

 

Purchases of property and equipment and investment in capitalized software

 

(12,805

)

 

(11,622

)

Capitalization of costs to translate software products into foreign languages

 

(728

)

 

 

(553

)

Acquisitions, net of cash acquired of $2,064 and $980, respectively

 

(68,920

)

 

(9,662

)

Other investing activities

 

(6,355

)

 

 

 

Net cash used in investing activities

 

(88,808

)

 

(21,837

)

Cash flows from financing activities:

 

 

 

Proceeds from credit facilities

 

432,375

 

 

136,750

 

Payments of credit facilities

 

(201,125

)

 

 

(147,500

)

Proceeds from term loan

 

125,000

 

 

 

Payments of debt issuance costs

 

(432

)

 

 

 

Payments of financing leases

 

(141

)

 

 

Payments of acquisition debt and other consideration

 

(2,034

)

 

 

(9,878

)

Payments of dividends

 

(412,852

)

 

(18,830

)

Payments for shares acquired including shares withheld for taxes

 

(72,476

)

 

 

(18,417

)

Proceeds from Common Stock Purchase Agreement

 

58,349

 

 

4,510

 

Net proceeds from exercise of common stock options and restricted stock

 

3,206

 

 

 

3,039

 

Net cash used in financing activities

 

(70,130

)

 

(50,326

)

Effect of exchange rate changes on cash and cash equivalents

 

(590

)

 

 

(1,272

)

Increase in cash and cash equivalents

 

16,497

 

 

44,814

 

Cash and cash equivalents, beginning of year

 

121,101

 

 

 

81,183

 

Cash and cash equivalents, end of period

$

137,598

 

$

125,997

 

BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Measures
For the Three and Nine Months Ended September 30, 2020 and 2019
(in thousands)
(unaudited)

Reconciliation of net income to Adjusted EBITDA:

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

2020

 

2019

 

2020

 

2019

Net income

$

5,844

 

 

$

20,427

 

 

$

74,589

 

 

$

66,845

 

Interest expense, net

1,934

 

 

2,029

 

 

4,450

 

 

6,503

 

Provision for income taxes

10,705

 

 

6,640

 

 

22,145

 

 

11,759

 

Depreciation and amortization

9,172

 

 

7,968

 

 

25,836

 

 

23,334

 

Equity-based compensation

19,548

 

 

2,026

 

 

22,760

 

 

6,051

 

Acquisition expenses

3,489

 

 

1,425

 

 

8,498

 

 

4,103

 

Realignment expenses

9,943

 

 

(49

)

 

10,012

 

 

(492

)

Expenses associated with IPO

26,130

 

 

 

 

26,130

 

 

 

Other (income) expense, net

(13,741

)

 

12,306

 

 

(6,756

)

 

14,053

 

Loss from investment accounted for using the equity method, net of tax

581

 

 

 

 

1,447

 

 

 

Adjusted EBITDA

$

73,605

 

 

$

52,772

 

 

$

189,111

 

 

$

132,156

 

Reconciliation of net income to Adjusted Net Income:

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

2020

 

2019

 

2020

 

2019

Net income

$

5,844

 

 

$

20,427

 

 

$

74,589

 

 

 

$

66,845

 

Non-GAAP adjustments, prior to income taxes:

 

 

 

 

 

 

 

Amortization of purchased intangibles and developed technologies

5,236

 

 

4,638

 

 

14,694

 

 

 

13,699

 

Equity-based compensation

19,548

 

 

2,026

 

 

22,760

 

 

 

6,051

 

Acquisition expenses

3,489

 

 

1,425

 

 

8,498

 

 

 

4,103

 

Realignment expenses

9,943

 

 

(49

)

 

10,012

 

 

 

(492

)

Expenses associated with IPO

26,130

 

 

 

 

26,130

 

 

 

 

Other (income) expense, net

(13,741

)

 

12,306

 

 

(6,756

)

 

 

14,053

 

Total non-GAAP adjustments, prior to income taxes

50,605

 

 

20,346

 

 

75,338

 

 

 

37,414

 

Income tax effect of non-GAAP adjustments

(5,644

)

 

(1,473

)

 

(10,785

)

 

 

(4,981

)

Loss from investment accounted for using the equity method, net of tax

581

 

 

 

 

1,447

 

 

 

 

Adjusted Net Income

$

51,386

 

 

$

39,300

 

 

$

140,589

 

 

 

$

99,278

 

Reconciliation of GAAP Financial Statement Line Items to non-GAAP Adjusted Financial Statement Line Items:

Three Months Ended

Nine Months Ended

September 30,

September 30,

2020

 

2019

2020

 

2019

Cost of subscriptions and licenses

 

$

23,338

 

 

$

17,370

 

 

$

66,466

 

 

$

48,201

 

Amortization of purchased intangibles and developed technologies

 

(1,367

)

 

(1,088

)

 

(3,710

)

 

(3,297

)

Equity-based compensation

 

 

(861

)

 

 

(27

)

 

 

(908

)

 

 

(60

)

Realignment expenses

 

(50

)

 

 

 

(50

)

 

51

 

Adjusted cost of subscriptions and licenses

 

$

21,060

 

 

$

16,255

 

 

$

61,798

 

 

$

44,895

 

 

Cost of services

 

$

19,290

 

 

$

17,681

 

 

$

50,126

 

 

$

56,048

 

Equity-based compensation

 

(2,526

)

 

(84

)

 

(2,701

)

 

(363

)

Acquisition expenses

 

 

(615

)

 

 

 

 

 

(1,050

)

 

 

 

Realignment expenses

 

(1,548

)

 

12

 

 

(1,548

)

 

185

 

Adjusted cost of services

 

$

14,602

 

 

$

17,609

 

 

$

44,827

 

 

$

55,870

 

 

Research and development

 

$

50,217

 

 

$

44,756

 

 

$

139,570

 

 

$

136,617

 

Equity-based compensation

 

(6,661

)

 

(749

)

 

(7,817

)

 

(2,306

)

Acquisition expenses

 

 

(1,969

)

 

 

(1,129

)

 

 

(5,113

)

 

 

(3,083

)

Realignment expenses

 

(841

)

 

37

 

 

(910

)

 

79

 

Adjusted research and development

 

$

40,746

 

 

$

42,915

 

 

$

125,731

 

 

$

131,308

 

 

Selling and marketing

 

$

41,824

 

 

$

36,721

 

 

$

107,551

 

 

$

111,889

 

Equity-based compensation

 

(4,803

)

 

(632

)

 

(5,607

)

 

(1,757

)

Acquisition expenses

 

 

(86

)

 

 

(61

)

 

 

(243

)

 

 

(164

)

Realignment expenses

 

(5,183

)

 

 

 

(5,183

)

 

263

 

Adjusted selling and marketing

 

$

31,752

 

 

$

36,027

 

 

$

96,518

 

 

$

110,231

 

 

General and administrative

 

$

33,006

 

 

$

25,108

 

 

$

85,275

 

 

$

71,415

 

Equity-based compensation

 

(4,696

)

 

(535

)

 

(5,726

)

 

(1,565

)

Acquisition expenses

 

 

(532

)

 

 

(199

)

 

 

(1,611

)

 

 

(546

)

Realignment expenses

 

(2,321

)

 

 

 

(2,321

)

 

(86

)

Adjusted general and administrative

 

$

25,456

 

 

$

24,374

 

 

$

75,617

 

 

$

69,217

 

 

Income from operations

 

$

5,323

 

 

$

41,402

 

 

$

95,875

 

 

$

99,160

 

Amortization of purchased intangibles and developed technologies

 

5,236

 

 

4,638

 

 

14,694

 

 

13,699

 

Equity-based compensation

 

 

19,548

 

 

 

2,026

 

 

 

22,760

 

 

 

6,051

 

Acquisition expenses

 

3,489

 

 

1,425

 

 

8,498

 

 

4,103

 

Realignment expenses

 

 

9,943

 

 

 

(49

)

 

 

10,012

 

 

 

(492

)

Expenses associated with IPO

 

26,130

 

 

 

 

26,130

 

 

 

Adjusted income from operations

 

$

69,669

 

 

$

49,443

 

 

$

177,968

 

 

$

122,520

 

 



Contact:

Investor Contact:
Ankit Hira or Ed Yuen
Solebury Trout for Bentley Systems
ir@bentley.com
1-610-458-2777

Media Contact:
Carey Mann
carey.mann@bentley.com
1-610-458-3170