Bentley Accelerates Recurring Revenue Growth as Margins Narrow
Second-quarter revenue rose 12.8% to $410.7 million as constant-currency growth strengthened.
Bentley Systems (BSY), the infrastructure-engineering software maker, accelerated constant-currency annualized recurring revenue growth to 12% in the second quarter, from 11.5% in each of the prior two quarters. ARR reached $1.536 billion, up from $1.495 billion at the end of the first quarter and $1.462 billion at year-end.
The improvement extended a gradual pickup from 10.5% growth in the third quarter of 2024, even as dollar-based net retention held at 109% for a fourth consecutive quarter. Reported revenue growth slowed from 14.5% in the first quarter, while constant-currency growth edged up to 12.2% from 11.9%.
Revenue increased 12.8% from a year earlier and declined 3.2% sequentially from $424.2 million. Diluted earnings rose to $0.25 a share from $0.22, while adjusted earnings increased to $0.35 a share from $0.32. Both measures were below their first-quarter levels.
Subscriptions revenue rose 13.6% to $378.6 million, with constant-currency growth accelerating to 13% from 12.2% in the prior quarter. Resources remained Bentley’s fastest-growing sector for a second consecutive quarter, followed by Public Works and Utilities, as demand tied to the electric grid increased.
Profitability narrowed as operating margin fell to 21.6% from 23.2% a year earlier. Adjusted operating income less operating stock-based compensation margin declined one percentage point to 28.3%, while operating stock-based compensation expense increased 23% to $21.8 million. Bentley also began excluding $1.8 million of acquisition-integration costs from the adjusted measure.
Quarterly operating cash flow rose 17% to $71.5 million, and free cash flow increased 12% to $63.8 million. Through six months, operating cash flow declined to $264.9 million from $280.5 million, while free cash flow fell to $251.7 million from $273.4 million.
Bentley put new enterprise-wide finance and quote-to-cash platforms into operation during the quarter, and implementation costs were absorbed within its existing margin commitment. Net debt leverage improved to 1.9 times from 2.1 times at year-end despite a meaningful increase in first-half share repurchases.