Increases Quarterly Dividend
Bentley Systems, Incorporated (Nasdaq: BSY), the infrastructure
engineering software company, today 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 $310.6 million, up 8.3% or 7.3% on a
constant currency basis, year-over-year;
- Subscriptions revenues were $272.5 million, up 8.3% or 7.4% on
a constant currency basis, year-over-year;
- Annualized Recurring Revenues (“ARR”) was $1,174.8 million as
of December 31, 2023, compared to $1,036.5 million as of December
31, 2022, representing a constant currency ARR growth rate of
12.5%;
- 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 12.2%, 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 24.0%, 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 $87.1 million, compared to $36.1
million for the same period last year.
Full Year 2023 Results
- Total revenues were $1,228.4 million, up 11.8% or 11.9% on a
constant currency basis over 2022;
- Subscriptions revenues were $1,080.3 million, up 12.5% or 12.5%
on a constant currency basis over 2022;
- Operating income margin was 18.8%, compared to 19.0% for
2022;
- Adjusted OI w/SBC margin was 26.4%, 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 $416.7 million, 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 $170.8 million 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 $12.6 million
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) of 10.5% 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.
Increased Quarterly Cash Dividend
On February 21, 2024, the Company’s Board of Directors increased
by one cent the Company’s regular quarterly dividend effective from
the first quarter of 2024 and declared a $0.06 per share dividend
for the first quarter of 2024. The cash dividend is payable on
March 28, 2024 to all stockholders of record of Class A and Class B
common stock as of the close of business on March 20, 2024.
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 at
https://us06web.zoom.us/webinar/register/WN_N_lpPc0VQsKFdbH7fLbm1A#/registration.
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.
Non-GAAP Financial Measures
In this press release, we sometimes refer to financial measures
that are not presented in accordance with U.S. generally accepted
accounting principles (“GAAP”). Certain of these measures are
considered non-GAAP financial measures under the United States
Securities and Exchange Commission (“SEC”) regulations. Those rules
require the supplemental explanations and reconciliations that are
in Bentley Systems’ Form 8-K (Quarterly Earnings Release) furnished
to the SEC.
During the fourth quarter of 2023, the Company changed its
definitions of constant currency and constant currency growth
rates. We made this modification in order to better align with how
we manage the business, to better reflect our performance during a
reporting period, and to make the effects of foreign currency
fluctuations and constant currency information more easily
comparable on a period‑over‑period basis.
We are providing what our constant currency and constant
currency growth rates results would have been pursuant to the prior
definition for the applicable periods so that investors and
potential investors that have analyzed these non-GAAP financial
measures historically using our prior definitions can compare our
historical results to our current results with respect to these
non-GAAP financial measures using the prior definitions. Refer to
the section titled “Reconciliation of GAAP to Non‑GAAP Financial
Measures” for reconciliations of constant currency non‑GAAP
financial measures to their most directly comparable GAAP financial
measures under the current and prior definitions.
Forward-Looking Statements
This press release includes forward-looking statements regarding
the future results of operations and financial condition, business
strategy, and plans and objectives for future operations of Bentley
Systems, Incorporated (the “Company,” “we,” “us,” and words of
similar import). All such statements contained in this press
release, other than statements of historical facts, are
forward-looking statements. The words “believe,” “may,” “will,”
“estimate,” “continue,” “anticipate,” “intend,” “expect,” and
similar expressions are intended to identify forward-looking
statements. We have based these forward-looking statements largely
on our current expectations, projections, and assumptions about
future events and financial trends that we believe may affect our
financial condition, results of operations, business strategy,
short-term and long-term business operations and objectives, and
financial needs. These forward-looking statements are subject to a
number of risks, uncertainties and assumptions, and there are a
significant number of factors that could cause actual results to
differ materially from statements made in this press release
including: adverse changes in global economic and/or political
conditions; the impact of current and future sanctions, embargoes
and other similar laws at the state and/or federal level that
impose restrictions on our counterparties or upon our ability to
operate our business within the subject jurisdictions; political,
economic, regulatory and public health and safety risks and
uncertainties in the countries and regions in which we operate;
failure to retain personnel necessary for the operation of our
business or those that we acquire; changes in the industries in
which our accounts operate; the competitive environment in which we
operate; the quality of our products; our ability to develop and
market new products to address our accounts’ rapidly changing
technological needs; changes in capital markets and our ability to
access financing on terms satisfactory to us or at all; the impact
of changing or uncertain interest rates on us and on the industries
we serve; our ability to integrate acquired businesses
successfully; and our ability to identify and consummate future
investments on terms satisfactory to us or at all.
Further information on potential factors that could affect the
financial results of the Company are included in the Company’s Form
10‑K and subsequent Form 10‑Qs, which are on file with the SEC. The
Company disclaims any obligation to update the forward-looking
statements provided to reflect events that occur or circumstances
that exist after the date on which they were made.
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, mining, and industrial facilities. Our
offerings, powered by the iTwin Platform for infrastructure digital
twins, include MicroStation and Bentley Open applications for
modeling and simulation, Seequent’s software for geoprofessionals,
and Bentley Infrastructure Cloud encompassing ProjectWise for
project delivery, SYNCHRO for construction management, and
AssetWise for asset operations. Bentley Systems’ 5,200 colleagues
generate annual revenues of more than $1 billion in 194
countries.
www.bentley.com
© 2024 Bentley Systems, Incorporated. Bentley, the Bentley logo,
AssetWise, Bentley Infrastructure Cloud, Bentley Open, Blyncsy,
iTwin, MicroStation, OpenTower, ProjectWise, Seequent, SYNCHRO, and
Virtuosity are either registered or unregistered trademarks or
service marks of Bentley Systems, Incorporated or one of its direct
or indirect wholly owned subsidiaries. All other brands and product
names are trademarks of their respective owners.
BENTLEY SYSTEMS,
INCORPORATED
Consolidated Balance
Sheets
(in thousands)
(unaudited)
December 31,
2023
2022
Assets
Current assets:
Cash and cash equivalents
$
68,412
$
71,684
Accounts receivable
302,501
296,376
Allowance for doubtful accounts
(8,965
)
(9,303
)
Prepaid income taxes
12,812
18,406
Prepaid and other current assets
44,797
38,732
Total current assets
419,557
415,895
Property and equipment, net
40,100
32,251
Operating lease right-of-use assets
38,476
40,249
Intangible assets, net
248,787
292,271
Goodwill
2,269,336
2,237,184
Investments
23,480
22,270
Deferred income taxes
212,831
52,636
Other assets
67,283
72,249
Total assets
$
3,319,850
$
3,165,005
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
18,094
$
15,176
Accruals and other current liabilities
457,348
362,048
Deferred revenues
253,785
226,955
Operating lease liabilities
11,645
14,672
Income taxes payable
9,491
4,507
Current portion of long-term debt
10,000
5,000
Total current liabilities
760,363
628,358
Long-term debt
1,518,403
1,775,696
Deferred compensation plan liabilities
88,181
77,014
Long-term operating lease liabilities
30,626
27,670
Deferred revenues
15,862
16,118
Deferred income taxes
9,718
51,235
Income taxes payable
7,337
8,105
Other liabilities
5,378
7,355
Total liabilities
2,435,868
2,591,551
Stockholders’ equity:
Common stock
2,963
2,890
Additional paid-in capital
1,127,234
1,030,466
Accumulated other comprehensive loss
(84,987
)
(89,740
)
Accumulated deficit
(161,932
)
(370,866
)
Non-controlling interest
704
704
Total stockholders’ equity
883,982
573,454
Total liabilities and stockholders’
equity
$
3,319,850
$
3,165,005
BENTLEY SYSTEMS,
INCORPORATED
Consolidated Statements of
Operations
(in thousands, except share
and per share data)
(unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
2023
2022
2023
2022
Revenues:
Subscriptions
$
272,468
$
251,489
$
1,080,307
$
960,220
Perpetual licenses
12,886
12,164
46,038
43,377
Subscriptions and licenses
285,354
263,653
1,126,345
1,003,597
Services
25,287
23,295
102,068
95,485
Total revenues
310,641
286,948
1,228,413
1,099,082
Cost of revenues:
Cost of subscriptions and licenses
45,231
39,674
169,406
147,578
Cost of services
22,566
22,677
96,677
89,435
Total cost of revenues
67,797
62,351
266,083
237,013
Gross profit
242,844
224,597
962,330
862,069
Operating expense (income):
Research and development
71,237
67,890
274,619
257,856
Selling and marketing
64,074
53,946
224,336
195,622
General and administrative
51,995
45,666
180,738
174,647
Deferred compensation plan
8,817
6,091
13,580
(15,782
)
Amortization of purchased intangibles
8,948
10,245
38,515
41,114
Total operating expenses
205,071
183,838
731,788
653,457
Income from operations
37,773
40,759
230,542
208,612
Interest expense, net
(9,170
)
(11,114
)
(39,793
)
(34,635
)
Other (expense) income, net
(14,429
)
9,505
(7,222
)
24,298
Income before income taxes
14,174
39,150
183,527
198,275
Benefit (provision) for income taxes
165,348
(13,062
)
143,241
(21,283
)
Gain (loss) from investments accounted for
using the equity method, net of tax
63
(366
)
19
(2,212
)
Net income
$
179,585
$
25,722
$
326,787
$
174,780
Per share information:
Net income per share, basic
$
0.57
$
0.08
$
1.05
$
0.57
Net income per share, diluted
$
0.54
$
0.08
$
1.00
$
0.55
Weighted average shares, basic
313,526,604
310,025,480
312,358,823
309,226,677
Weighted average shares, diluted
333,418,588
323,916,511
332,503,633
331,765,158
BENTLEY SYSTEMS,
INCORPORATED
Consolidated Statements of
Cash Flows
(in thousands)
(unaudited)
Year Ended
December 31,
2023
2022
Cash flows from operating activities:
Net income
$
326,787
$
174,780
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, amortization, and
impairment
71,861
71,537
Deferred income taxes
(198,878
)
(5,126
)
Stock-based compensation expense
72,972
75,206
Deferred compensation plan
13,580
(15,782
)
Amortization and write-off of deferred
debt issuance costs
7,291
7,291
Change in fair value of derivative
5,038
(27,083
)
Foreign currency remeasurement (gain)
loss
(452
)
6,000
Other
21,047
2,593
Changes in assets and liabilities, net of
effect from acquisitions:
Accounts receivable
(5,180
)
(60,938
)
Prepaid and other assets
4,112
14,053
Accounts payable, accruals, and other
liabilities
68,733
29,181
Deferred revenues
19,933
2,292
Income taxes payable, net of prepaid
income taxes
9,852
320
Net cash provided by operating
activities
416,696
274,324
Cash flows from investing activities:
Purchases of property and equipment and
investment in capitalized software
(25,002
)
(18,546
)
Proceeds from sale of aircraft
—
2,380
Acquisitions, net of cash acquired
(26,023
)
(743,007
)
Purchases of investments
(11,602
)
(10,954
)
Proceeds from investments
2,123
—
Net cash used in investing activities
(60,504
)
(770,127
)
Cash flows from financing activities:
Proceeds from credit facilities
588,154
833,292
Payments of credit facilities
(841,723
)
(487,694
)
Settlement of convertible senior notes
—
(1,998
)
Repayments of term loan
(5,000
)
(5,000
)
Payments of contingent and non-contingent
consideration
(4,324
)
(8,460
)
Payments of dividends
(58,756
)
(34,493
)
Proceeds from stock purchases under
employee stock purchase plan
9,988
10,335
Proceeds from exercise of stock
options
11,715
8,338
Payments for shares acquired including
shares withheld for taxes
(58,937
)
(43,561
)
Repurchases of Class B Common Stock under
approved program
—
(28,250
)
Other
(191
)
525
Net cash (used in) provided by financing
activities
(359,074
)
243,034
Effect of exchange rate changes on cash
and cash equivalents
(390
)
(4,884
)
Decrease in cash and cash equivalents
(3,272
)
(257,653
)
Cash and cash equivalents, beginning of
year
71,684
329,337
Cash and cash equivalents, end of year
$
68,412
$
71,684
BENTLEY SYSTEMS,
INCORPORATED
Reconciliation of GAAP to
Non-GAAP Financial Measures
(in thousands, except share
and per share data)
(unaudited)
Reconciliation of operating income to
Adjusted OI w/SBC and to Adjusted operating income:
Three Months Ended
Year Ended
December 31,
December 31,
2023
2022
2023
2022
Operating income
$
37,773
$
40,759
$
230,542
$
208,612
Amortization of purchased intangibles
12,181
13,418
51,219
53,592
Deferred compensation plan
8,817
6,091
13,580
(15,782
)
Acquisition expenses
2,588
4,342
17,866
25,398
Realignment expenses (income)
13,270
(114
)
11,470
2,109
Adjusted OI w/SBC
74,629
64,496
324,677
273,929
Stock-based compensation expense
16,563
23,592
71,470
74,566
Adjusted operating income
$
91,192
$
88,088
$
396,147
$
348,495
Reconciliation of net income to Adjusted
net income:
Three Months Ended
Year Ended
December 31,
December 31,
2023
2022
2023
2022
$
EPS(1)
$
EPS(1)
$
EPS(1)
$
EPS(1)
Net income
$
179,585
$
0.54
$
25,722
$
0.08
$
326,787
$
1.00
$
174,780
$
0.55
Non-GAAP adjustments, prior to income
taxes:
Amortization of purchased intangibles
12,181
0.04
13,418
0.04
51,219
0.15
53,592
0.16
Stock-based compensation expense
16,563
0.05
23,592
0.07
71,470
0.21
74,566
0.22
Deferred compensation plan
8,817
0.03
6,091
0.02
13,580
0.04
(15,782
)
(0.05
)
Acquisition expenses
2,588
0.01
4,342
0.01
17,866
0.05
25,398
0.08
Realignment expenses (income)
13,270
0.04
(114
)
—
11,470
0.03
2,109
0.01
Other expense (income), net
14,429
0.04
(9,505
)
(0.03
)
7,222
0.02
(24,298
)
(0.07
)
Total non-GAAP adjustments, prior to
income taxes
67,848
0.20
37,824
0.11
172,827
0.52
115,585
0.35
Income tax effect of non-GAAP
adjustments
(12,333
)
(0.04
)
(4,227
)
(0.01
)
(31,636
)
(0.10
)
(18,059
)
(0.05
)
Tax benefit related to internal
restructuring
(170,784
)
(0.51
)
—
—
(170,784
)
(0.51
)
—
—
(Gain) loss from investments accounted for
using the equity method, net of tax
(63
)
—
366
—
(19
)
—
2,212
0.01
Adjusted net income(2)
$
64,253
$
0.20
$
59,685
$
0.19
$
297,175
$
0.91
$
274,518
$
0.85
Adjusted weighted average shares,
diluted(3)
333,418,588
330,825,309
332,503,633
331,765,158
________________________
(1)
Adjusted EPS was computed independently
for each reconciling item presented; therefore, the sum of Adjusted
EPS for each line item may not equal total Adjusted EPS due to
rounding.
(2)
Adjusted EPS numerator includes $1,717 and
$1,695 for the three months ended December 31, 2023 and 2022,
respectively, and $6,874 and $6,810 for the years ended December
31, 2023 and 2022, respectively, related to interest expense, net
of tax, attributable to the convertible senior notes using the
if‑converted method.
(3)
Adjusted weighted average shares, diluted
includes incremental shares, which were considered anti-dilutive on
a GAAP basis, of 6,908,798 shares for the three months ended
December 31, 2022 related to the dilutive effect of convertible
senior notes using the if‑converted method.
Reconciliation of cash flow from
operations to Adjusted EBITDA:
Three Months Ended
Year Ended
December 31,
December 31,
2023
2022
2023
2022
Cash flow from operations
$
87,053
$
36,126
$
416,696
$
274,324
Cash interest
8,019
8,934
37,389
26,581
Cash taxes
13,728
7,388
42,431
25,890
Cash deferred compensation plan
distributions
—
—
2,125
7,336
Cash acquisition expenses
1,632
2,999
21,409
26,168
Changes in operating assets and
liabilities
(9,964
)
38,588
(94,458
)
8,088
Other(1)
(2,383
)
(1,472
)
(8,803
)
(1,947
)
Adjusted EBITDA
$
98,085
$
92,563
$
416,789
$
366,440
________________________
(1)
Includes receipts related to interest rate
swap.
Reconciliation of total revenues and
subscription revenues to total revenues and subscription revenues
in constant currency under the current and prior definitions:
Current
definition:
Three Months Ended December
31, 2023
Three Months Ended December
31, 2022
Actual
Impact of Foreign Exchange at
2022 Rates
Constant Currency
Actual
Impact of Foreign Exchange at
2022 Rates
Constant Currency
Total revenues
$
310,641
$
(2,549)
$
308,092
$
286,948
$
274
$
287,222
Subscriptions revenues
$
272,468
$
(2,147)
$
270,321
$
251,489
$
278
$
251,767
Year Ended December 31,
2023
Year Ended December 31,
2022
Actual
Impact of Foreign Exchange at
2022 Rates
Constant Currency
Actual
Impact of Foreign Exchange at
2022 Rates
Constant Currency
Total revenues
$
1,228,413
$
2,486
$
1,230,899
$
1,099,082
$
981
$
1,100,063
Subscriptions revenues
$
1,080,307
$
1,239
$
1,081,546
$
960,220
$
809
$
961,029
Prior
definition:
Three Months Ended December
31, 2023
Year Ended December 31,
2023
Actual
Impact of Foreign
Exchange
Constant Currency
Actual
Impact of Foreign
Exchange
Constant Currency
Total revenues
$
310,641
$
(5,723)
$
304,918
$
1,228,413
$
(7,664)
$
1,220,749
Subscriptions revenues
$
272,468
$
(5,107)
$
267,361
$
1,080,307
$
(8,095)
$
1,072,212
Comparison of total revenues and
subscription revenues growth rates to total revenues and
subscription revenues constant currency growth rates under the
current and prior definitions:
Current
definition:
Three Months Ended
% Change
Year Ended
% Change
December 31,
2022 to 2023
December 31,
2022 to 2023
2023
2022
%
Constant
Currency
%
2023
2022
%
Constant
Currency
%
Total revenues
$
310,641
$
286,948
8.3%
7.3%
$
1,228,413
$
1,099,082
11.8%
11.9%
Subscriptions revenues
$
272,468
$
251,489
8.3%
7.4%
$
1,080,307
$
960,220
12.5%
12.5%
Prior
definition:
Three Months Ended
% Change
Year Ended
% Change
December 31,
2022 to 2023
December 31,
2022 to 2023
2023
2022
%
Constant
Currency
%
2023
2022
%
Constant
Currency
%
Total revenues
$
310,641
$
286,948
8.3%
6.3%
$
1,228,413
$
1,099,082
11.8%
11.1%
Subscriptions revenues
$
272,468
$
251,489
8.3%
6.3%
$
1,080,307
$
960,220
12.5%
11.7%
Explanation of Non-GAAP and Other Financial Measures
Constant currency
Constant currency and constant currency growth rates are
non-GAAP financial measures that present our results of operations
excluding the estimated effects of foreign currency exchange rate
fluctuations. A significant amount of our operations is conducted
in foreign currencies. As a result, the comparability of the
financial results reported in U.S. dollars is affected by changes
in foreign currency exchange rates. We use constant currency and
constant currency growth rates to evaluate the underlying
performance of the business, and we believe it is helpful for
investors to present operating results on a comparable basis period
over period to evaluate its underlying performance.
During the fourth quarter of 2023, we changed our definitions of
constant currency and constant currency growth rates. In reporting
period‑over‑period results, we calculate the effects of foreign
currency fluctuations and constant currency information by
translating current period results on a transactional basis to our
reporting currency using prior period average foreign currency
exchange rates in which the transactions occurred. Our prior
definition of constant currency calculated the effects of foreign
currency fluctuations and constant currency information by
translating current period results of our subsidiaries from their
functional currencies to our reporting currency by using prior
period average foreign currency exchange rates in reporting
period‑over‑period results.
We made this modification in order to better align with how we
manage the business, to better reflect our performance during a
reporting period, and to make the effects of foreign currency
fluctuations and constant currency information more easily
comparable on a period‑over‑period basis.
Recurring revenues
Recurring revenues are the basis for our other revenue-related
key business metrics. We believe this measure is useful in
evaluating our ability to consistently retain and grow our revenues
from accounts with revenues in the prior period (“existing
accounts”).
Recurring revenues are subscriptions 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.
Annualized recurring revenues
(“ARR”)
ARR is a key business metric that we believe is useful in
evaluating the scale and growth of our business as well as to
assist in the evaluation of underlying trends in our business.
Furthermore, we believe ARR, considered in connection with our last
twelve‑month recurring revenues dollar‑based net retention rate, is
a leading indicator of revenue growth.
ARR is defined as the sum of the annualized value of our
portfolio of contracts that produce recurring revenues as of the
last day of the reporting period, and the annualized value of the
last three months of recognized revenues for our contractually
recurring consumption‑based software subscriptions with consumption
measurement durations of less than one year, calculated using the
spot foreign currency exchange rates. We believe that the last
three months of recognized revenues, on an annualized basis, for
our recurring software subscriptions with consumption measurement
period durations of less than one year is a reasonable estimate of
the annual revenues, given our consistently high retention rate and
stability of usage under such subscriptions.
Constant currency ARR growth rate is the growth rate of ARR
measured on a constant currency basis. Constant currency ARR growth
rate from business performance excludes the ARR onboarding of our
platform acquisitions and includes the impact from the ARR
onboarding of programmatic acquisitions, which generally are
immaterial, individually and in the aggregate. We believe these ARR
growth rates are important metrics indicating the scale and growth
of our business.
Last twelve‑month recurring revenues
dollar‑based net retention rate
Last twelve‑month recurring revenues dollar‑based net retention
rate is a key business metric that we believe is useful in
evaluating our ability to consistently retain and grow our
recurring revenues.
Last twelve‑month recurring revenues dollar‑based net retention
rate is calculated, using the average exchange rates for the prior
period, as follows: the recurring revenues for the current period,
including any growth or reductions from existing accounts, but
excluding recurring revenues from any new accounts added during the
current period, divided by the total recurring revenues from all
accounts during the prior period. A period is defined as any
trailing twelve months. Related to our platform acquisitions,
recurring revenues into new accounts will be captured as existing
accounts starting with the second anniversary of the acquisition
when such data conforms to the calculation methodology. This may
cause variability in the comparison.
Adjusted operating income inclusive of
stock-based compensation expense (“Adjusted OI w/SBC”)
Adjusted OI w/SBC is a non-GAAP financial measure and is used to
measure the operational strength and performance of our business,
as well as to assist in the evaluation of underlying trends in our
business.
Adjusted OI w/SBC is our primary performance measure, which
excludes certain expenses and charges, including the non-cash
amortization expense resulting from the acquisition of intangible
assets, as we believe these may not be indicative of the Company’s
core business operating results. We intentionally include
stock-based compensation expense in this measure as we believe it
better captures the economic costs of our business.
Management uses this non-GAAP financial measure to understand
and compare operating results across accounting periods, for
internal budgeting and forecasting purposes, to evaluate financial
performance, and in our comparison of our financial results to
those of other companies. It is also a significant performance
measure in certain of our executive incentive compensation
programs.
Adjusted OI w/SBC is defined as operating income adjusted for
the following: amortization of purchased intangibles, expense
(income) relating to deferred compensation plan liabilities,
acquisition expenses, and realignment expenses (income), for the
respective periods.
Adjusted OI w/SBC margin is calculated by dividing Adjusted OI
w/SBC by total revenues.
Adjusted operating income
Adjusted operating income is a non-GAAP financial measure that
we believe is useful to investors in making comparisons to other
companies, although this measure may not be directly comparable to
similar measures used by other companies.
Adjusted operating income is defined as operating income
adjusted for the following: amortization of purchased intangibles,
expense (income) relating to deferred compensation plan
liabilities, acquisition expenses, realignment expenses (income),
and stock‑based compensation expense, for the respective
periods.
Adjusted net income and Adjusted
EPS
Adjusted net income and Adjusted EPS are non-GAAP financial
measures presenting the earnings generated by our ongoing
operations that we believe is useful to investors in making
meaningful comparisons to other companies, although these measures
may not be directly comparable to similar measures used by other
companies, and period-over-period comparisons.
Adjusted net income is defined as net income adjusted for the
following: amortization of purchased intangibles, stock‑based
compensation expense, expense (income) relating to deferred
compensation plan liabilities, acquisition expenses, realignment
expenses (income), other non‑operating (income) expense, net, the
tax effect of the above adjustments to net income, and (income)
loss from investments accounted for using the equity method, net of
tax, for the respective periods. The income tax effect of non‑GAAP
adjustments was determined using the applicable rates in the taxing
jurisdictions in which income or expense occurred, and represent
both current and deferred income tax expense or benefit based on
the nature of the non‑GAAP adjustments, including the tax effects
of non‑cash stock‑based compensation expense.
Adjusted EPS is calculated as Adjusted net income, less net
income attributable to participating securities, plus interest
expense, net of tax, attributable to the convertible senior notes
using the if‑converted method, if applicable, (numerator) divided
by Adjusted weighted average shares, diluted (denominator).
Adjusted weighted average shares, diluted is calculated by adding
incremental shares related to the dilutive effect of convertible
senior notes using the if‑converted method, if applicable, to
weighted average shares, diluted.
Adjusted EBITDA
Adjusted EBITDA is our liquidity measure in the context of
conversion of Adjusted EBITDA to cash flow from operations (i.e.,
the ratio of GAAP cash flow from operations to Adjusted EBITDA). We
believe this non-GAAP financial measure provides a meaningful
measure of liquidity and a useful basis for assessing our ability
to repay debt, make strategic acquisitions and investments, and
return capital to investors.
Adjusted EBITDA is defined as cash flow from operations adjusted
for the following: cash interest, cash taxes, cash deferred
compensation plan distributions, cash acquisition expenses, changes
in operating assets and liabilities, and other cash items (such as
those related to our interest rate swap). From time to time, we may
exclude from Adjusted EBITDA the impact of certain cash receipts or
payments that affect period-to-period comparability.
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version on businesswire.com: https://www.businesswire.com/news/home/20240227021083/en/
BSY Investor Contact: Eric Boyer Investor Relations
Officer ir@bentley.com
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