UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


(Mark One)
☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the quarterly period ended ~~September 30, 2023~~March 31, 2024
OR
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from to

Commission File Number: 001-39548

BENTLEY SYSTEMS, INCORPORATED

(Exact name of registrant as specified in its charter)


Delaware						95-3936623
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

685 Stockton Drive
Exton, Pennsylvania						19341
(Address of principal executive offices)						(Zip Code)

Registrant’s telephone number, including area code: (610) 458-5000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Class B Common Stock, ~~par value~~ $0.01 ~~per share~~Par Value

BSY

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S‑T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non‑accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act.


Large accelerated filer ☒			Accelerated filer ☐
Non-accelerated filer ☐			Smaller reporting company ☐
			Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes ☐ No ☒

As of ~~October 31, 2023,~~April 30, 2024, the registrant had ~~11,567,627~~11,537,627 shares of Class A and ~~284,354,543~~288,462,583 shares of Class B ~~Common Stock~~common stock outstanding.

BENTLEY SYSTEMS, INCORPORATED

FORM 10-Q

TABLE OF CONTENTS


						Page
~~Cautionary Note Regarding Forward-Looking Statements~~						3

PART I. FINANCIAL INFORMATION
Item 1. Unaudited Consolidated Financial Statements
Consolidated Balance Sheets						4
Consolidated Statements of Operations						5
Consolidated Statements of Comprehensive Income						6
Consolidated Statements of Stockholders’ Equity						7
Consolidated Statements of Cash Flows						98
Notes to Consolidated Financial Statements						1110
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations						3529
Item 3. Quantitative and Qualitative Disclosures About Market Risk						4941
Item 4. Controls and Procedures						4942

PART II. OTHER INFORMATION
Item 1. Legal Proceedings						5043
Item 1A. Risk Factors						5043

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds ~~and Issuer Purchases of Equity Securities~~						5043
Item 5. Other Information						5044
Item 6. Exhibits						5144

SIGNATURE						5245

EXPLANATORY NOTE

This Quarterly Report on Form 10‑Q is for the three months ended March 31, 2024. This Quarterly Report on Form 10‑Q modifies and supersedes documents filed before it. The United States (“U.S.”) Securities and Exchange Commission (“SEC”) allows us to “incorporate by reference” information that we file with it, which means that we can disclose important information to you by referring you directly to those documents. Information incorporated by reference is considered to be part of this Quarterly Report on Form 10‑Q. In addition, information that we file with the SEC in the future will automatically update and supersede information contained in this Quarterly Report on Form 10‑Q.

Unless indicated otherwise, throughout this Quarterly Report on Form 10‑Q, we refer to Bentley Systems, Incorporated and its consolidated subsidiaries, as “Bentley Systems,” “Bentley,” the “Company,” “we,” “us,” and “our.”

This Quarterly Report on Form 10‑Q contains trademarks, service marks, brands, or product names owned by us, as well as those owned by others.

Numerical information in this report is presented on a rounded basis using actual amounts. Minor differences in totals and percentage calculations may exist due to rounding.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This ~~report~~Quarterly Report on Form 10‑Q includes forward‑looking statements. All statements contained in this ~~report~~Quarterly Report on Form 10‑Q other than statements of historical facts, including statements regarding our future results of operations and financial position, our business strategy, and plans and our objectives for future operations, are forward‑looking statements. The words “believe,” “may,” “will,” “could,” “would,” “seeks,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” and similar expressions, as well as statements regarding our focus for the future, 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, including those described in the section titled “Risk Factors.” Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward‑looking statements we may make. In light of these risks, uncertainties, and assumptions, the future events and trends discussed in this ~~report~~Quarterly Report on Form 10‑Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward‑looking statements. The forward‑looking statements, as well as our ~~report~~Quarterly Report on Form 10‑Q as a whole, are subject to risks and uncertainties.

These statements are only current predictions and are subject to known and unknown risks, uncertainties, and other factors that may cause our or our industry’s actual results, levels of activity, performance, or achievements to be materially different from those anticipated by the forward‑looking statements. We discuss many of these risks in this ~~report~~Quarterly Report on Form 10‑Q in greater detail in the section titled “Risk Factors” and elsewhere in this ~~report.~~Quarterly Report on Form 10‑Q. You should not rely upon forward‑looking statements as predictions of future events.

Although we believe that the expectations reflected in the forward‑looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, achievements, events, or circumstances reflected in the forward‑looking statements will occur. Except as required by law, we undertake no obligation to update any of these forward‑looking statements after the date of this ~~report~~Quarterly Report on Form 10‑Q to conform these statements to actual results or revised expectations.

PART I. FINANCIAL INFORMATION

Item 1. Unaudited Consolidated Financial Statements

BENTLEY SYSTEMS, INCORPORATED

Consolidated Balance Sheets

(in thousands, except share and per share data)

(unaudited)


			September 30, 2023		December 31, 2022
		March 31, 2024						March 31, 2024	December 31, 2023
Assets	Assets
Current assets:	Current assets:
Current assets:
Current assets:
Cash and cash equivalents
Cash and cash equivalents
Cash and cash equivalents	Cash and cash equivalents		$	66,963	$	71,684
Accounts receivable	Accounts receivable		243,488		296,376
Allowance for doubtful accounts	Allowance for doubtful accounts		(8,312)		(9,303)
Prepaid income taxes	Prepaid income taxes		25,972		18,406
Prepaid and other current assets	Prepaid and other current assets		46,128		38,732
Total current assets	Total current assets		374,239		415,895
Property and equipment, net	Property and equipment, net		38,309		32,251
Operating lease right-of-use assets	Operating lease right-of-use assets		41,434		40,249
Intangible assets, net	Intangible assets, net		259,979		292,271
Goodwill	Goodwill		2,251,312		2,237,184
Investments	Investments		30,332		22,270
Deferred income taxes	Deferred income taxes		61,664		52,636
Other assets	Other assets		77,574		72,249
Total assets	Total assets		$	3,134,843	$	3,165,005
Liabilities and Stockholders’ Equity	Liabilities and Stockholders’ Equity
Current liabilities:	Current liabilities:
Current liabilities:
Current liabilities:
Accounts payable
Accounts payable
Accounts payable	Accounts payable		$	26,389	$	15,176
Accruals and other current liabilities	Accruals and other current liabilities		403,428		362,048
Deferred revenues	Deferred revenues		211,815		226,955
Operating lease liabilities	Operating lease liabilities		11,430		14,672
Income taxes payable	Income taxes payable		18,879		4,507
Current portion of long-term debt	Current portion of long-term debt		8,750		5,000
Total current liabilities	Total current liabilities		680,691		628,358
Long-term debt	Long-term debt		1,580,752		1,775,696
Deferred compensation plan liabilities	Deferred compensation plan liabilities		79,537		77,014
Long-term operating lease liabilities	Long-term operating lease liabilities		31,355		27,670
Deferred revenues	Deferred revenues		15,189		16,118
Deferred income taxes	Deferred income taxes		43,530		51,235
Income taxes payable	Income taxes payable		7,317		8,105
Other liabilities	Other liabilities		4,311		7,355
Total liabilities	Total liabilities		2,442,682		2,591,551
Commitments and contingencies (Note 18)	Commitments and contingencies (Note 18)						Commitments and contingencies (Note 18)
Stockholders’ equity:	Stockholders’ equity:
Preferred stock, $0.01 par value, authorized 100,000,000 shares; none issued or outstanding as of September 30, 2023 and December 31, 2022			—		—
Class A Common Stock, $0.01 par value, authorized 100,000,000 shares; issued and outstanding 11,567,627 and 11,601,757 shares as of September 30, 2023 and December 31, 2022, respectively, and Class B Common Stock, $0.01 par value, authorized 1,800,000,000 shares; issued and outstanding 283,676,579 and 277,412,730 shares as of September 30, 2023 and December 31, 2022, respectively			2,952		2,890
Preferred stock, $0.01 par value, authorized 100,000,000 shares; none issued or outstanding as of March 31, 2024 and December 31, 2023
Preferred stock, $0.01 par value, authorized 100,000,000 shares; none issued or outstanding as of March 31, 2024 and December 31, 2023
Preferred stock, $0.01 par value, authorized 100,000,000 shares; none issued or outstanding as of March 31, 2024 and December 31, 2023
Class A common stock, $0.01 par value, authorized 100,000,000 shares; issued and outstanding 11,537,627 and 11,537,627 shares as of March 31, 2024 and December 31, 2023, respectively
Class B common stock, $0.01 par value, authorized 1,800,000,000 shares; issued and outstanding 286,477,055 and 284,728,210 shares as of March 31, 2024 and December 31, 2023, respectively
Additional paid-in capital	Additional paid-in capital		1,108,816		1,030,466
Accumulated other comprehensive loss	Accumulated other comprehensive loss		(95,128)		(89,740)
Accumulated deficit	Accumulated deficit		(325,183)		(370,866)
Non-controlling interest	Non-controlling interest		704		704
Total stockholders’ equity	Total stockholders’ equity		692,161		573,454
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity		$	3,134,843	$	3,165,005

See accompanying notes to consolidated financial statements.

BENTLEY SYSTEMS, INCORPORATED

Consolidated Statements of Operations

(in thousands, except share and per share data)

(unaudited)


		Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2023			2022			2023		2022
					Three Months Ended
					Three Months Ended
					Three Months Ended
				March 31,								March 31,
							2024						2024	2023
Revenues:	Revenues:
Subscriptions
Subscriptions
Subscriptions	Subscriptions	$	270,751		$	235,307		$	807,839	$	708,731
Perpetual licenses	Perpetual licenses	11,887			9,460			33,152		31,213
Subscriptions and licenses	Subscriptions and licenses	282,638			244,767			840,991		739,944
Services	Services	23,974			23,565			76,781		72,190
Total revenues	Total revenues	306,612			268,332			917,772		812,134
Cost of revenues:	Cost of revenues:
Cost of subscriptions and licenses	Cost of subscriptions and licenses	42,088			37,371			124,175		107,904
Cost of subscriptions and licenses
Cost of subscriptions and licenses
Cost of services	Cost of services	22,588			21,812			74,111		66,758
Total cost of revenues	Total cost of revenues	64,676			59,183			198,286		174,662
Gross profit	Gross profit	241,936			209,149			719,486		637,472
Operating expense (income):
Operating expenses:
Research and development
Research and development
Research and development	Research and development	65,465			63,827			203,382		189,966
Selling and marketing	Selling and marketing	53,757			46,114			160,262		141,676
General and administrative	General and administrative	42,678			37,794			128,743		128,981
Deferred compensation plan	Deferred compensation plan	(3,160)			(4,576)			4,763		(21,873)
Amortization of purchased intangibles	Amortization of purchased intangibles	9,517			10,446			29,567		30,869
Total operating expenses	Total operating expenses	168,257			153,605			526,717		469,619
Income from operations	Income from operations	73,679			55,544			192,769		167,853
Interest expense, net	Interest expense, net	(10,047)			(9,134)			(30,623)		(23,521)
Other income, net	Other income, net	5,953			932			7,207		14,793
Income before income taxes	Income before income taxes	69,585			47,342			169,353		159,125
Provision for income taxes	Provision for income taxes	(16,514)			(9,664)			(22,107)		(8,221)
Loss from investments accounted for using the equity method, net of tax		(44)			(681)			(44)		(1,846)
Equity in net income of investees, net of tax
Net income	Net income	$	53,027		$	36,997		$	147,202	$	149,058
Per share information:	Per share information:
Net income per share, basic
Net income per share, basic
Net income per share, basic	Net income per share, basic	$	0.17		$	0.12		$	0.47	$	0.48
Net income per share, diluted	Net income per share, diluted	$	0.16		$	0.12		$	0.46	$	0.46
Weighted average shares, basic	Weighted average shares, basic	313,069,132			310,116,104			311,915,808		308,959,801
Weighted average shares, diluted	Weighted average shares, diluted	332,825,186			325,170,383			332,144,893		332,077,834

See accompanying notes to consolidated financial statements.

BENTLEY SYSTEMS, INCORPORATED

Consolidated Statements of Comprehensive Income

(in thousands)

(unaudited)


			Three Months Ended				Nine Months Ended
			September 30,				September 30,
			2023		2022		2023		2022
		Three Months Ended										Three Months Ended
		March 31,										March 31,
		2024									2024		2023
Net income	Net income		$	53,027	$	36,997	$	147,202	$	149,058
Other comprehensive loss, net of taxes:
Other comprehensive (loss) income, net of taxes:
Foreign currency translation adjustments	Foreign currency translation adjustments		(7,294)		(12,809)		(5,416)		(10,192)
Actuarial (loss) gain on retirement plan, net of tax effect of $(8), $(5), $(15), and $(15), respectively			(6)		11		28		37
Total other comprehensive loss, net of taxes			(7,300)		(12,798)		(5,388)		(10,155)
Foreign currency translation adjustments
Foreign currency translation adjustments
Actuarial gain on retirement plan, net of tax effect of $(28) and $(6), respectively
Total other comprehensive (loss) income, net of taxes
Comprehensive income	Comprehensive income		$	45,727	$	24,199	$	141,814	$	138,903

See accompanying notes to consolidated financial statements.

BENTLEY SYSTEMS, INCORPORATED

Consolidated Statements of Stockholders’ Equity

(in thousands, except share data)

(unaudited)


		Three Months Ended September 30, 2023
								Accumulated
		Class A and Class B			Additional			Other				Non-		Total
		Common Stock			Paid-In			Comprehensive		Accumulated		Controlling		Stockholders’
		Shares	Par Value		Capital			Loss		Deficit		Interest		Equity
Balance, June 30, 2023		294,712,983	$	2,947	$	1,085,066		$	(87,828)	$	(357,117)	$	704	$	643,772
	Three Months Ended March 31, 2024																								Three Months Ended March 31, 2024
							Accumulated
		Class A and Class B
		Class A and Class B
		Class A and Class B																	Additional		Other						Non-			Total
	Common Stock																Common Stock					Paid-In		Comprehensive		Accumulated			Controlling			Stockholders’
	Shares															Shares		Par Value		Capital			Loss		Deficit			Interest			Equity
Balance, December 31, 2023
Net income	Net income	—	—		—			—		53,027		—		53,027
Other comprehensive loss	Other comprehensive loss	—	—		—			(7,300)		—		—		(7,300)
Dividends declared	Dividends declared	—	—		—			—		(14,768)		—		(14,768)
Shares issued in connection with deferred compensation plan, net		63,267	—		—			—		(2,127)		—		(2,127)
Shares issued in connection with deferred compensation plan
Deferred compensation plan elective participant deferrals	Deferred compensation plan elective participant deferrals	—	—		61			—		—		—		61
Shares issued in connection with executive bonus plan, net		34,313	—		3,251			—		(1,430)		—		1,821
Shares issued and repurchased in connection with employee stock purchase plan, net		162,459	2		5,429			—		(623)		—		4,808
Shares issued in connection with executive bonus plan
Shares issued in connection with employee stock purchase plan, net
Stock option exercises, net	Stock option exercises, net	185,255	2		888			—		(419)		—		471

Stock-based compensation expense	Stock-based compensation expense	—	—		14,122			—		—		—		14,122
Stock-based compensation expense
Stock-based compensation expense
Shares related to restricted stock, net	Shares related to restricted stock, net	85,929	1		(1)			—		(1,726)		—		(1,726)
Repurchases of Class B common stock under approved program

Balance, September 30, 2023		295,244,206	$	2,952	$	1,108,816		$	(95,128)	$	(325,183)	$	704	$	692,161
Balance, March 31, 2024
Balance, March 31, 2024
Balance, March 31, 2024


		Nine Months Ended September 30, 2023
								Accumulated
		Class A and Class B			Additional			Other				Non-		Total
		Common Stock			Paid-In			Comprehensive		Accumulated		Controlling		Stockholders’
		Shares	Par Value		Capital			Loss		Deficit		Interest		Equity
	Three Months Ended March 31, 2023																								Three Months Ended March 31, 2023
							Accumulated
		Class A and Class B
		Class A and Class B
		Class A and Class B																	Additional		Other						Non-			Total
	Common Stock																Common Stock					Paid-In		Comprehensive		Accumulated			Controlling			Stockholders’
	Shares															Shares		Par Value		Capital			Loss		Deficit			Interest			Equity
Balance, December 31, 2022	Balance, December 31, 2022	289,014,487	$	2,890	$	1,030,466		$	(89,740)	$	(370,866)	$	704	$	573,454
Net income	Net income	—	—		—			—		147,202		—		147,202
Other comprehensive loss		—	—		—			(5,388)		—		—		(5,388)
Other comprehensive income
Dividends declared	Dividends declared	—	—		—			—		(43,992)		—		(43,992)
Shares issued in connection with deferred compensation plan, net	Shares issued in connection with deferred compensation plan, net	2,845,448	28		(28)			—		(38,456)		—		(38,456)
Deferred compensation plan elective participant deferrals	Deferred compensation plan elective participant deferrals	—	—		1,712			—		—		—		1,712
Shares issued in connection with executive bonus plan, net	Shares issued in connection with executive bonus plan, net	171,510	2		13,055			—		(5,756)		—		7,301
Shares issued in connection with employee stock purchase plan, net	Shares issued in connection with employee stock purchase plan, net	315,840	3		9,985			—		(845)		—		9,143
Stock option exercises, net	Stock option exercises, net	2,422,082	24		10,566			—		(6,408)		—		4,182
Shares issued for stock grants, net		12,639	—		600			—		—		—		600

Stock-based compensation expense
Stock-based compensation expense
Stock-based compensation expense	Stock-based compensation expense	—	—		42,465			—		—		—		42,465
Shares related to restricted stock, net	Shares related to restricted stock, net	462,200	5		(5)			—		(6,062)		—		(6,062)

Balance, September 30, 2023		295,244,206	$	2,952	$	1,108,816		$	(95,128)	$	(325,183)	$	704	$	692,161
Balance, March 31, 2023

Balance, March 31, 2023

Balance, March 31, 2023

See accompanying notes to consolidated financial statements.

BENTLEY SYSTEMS, INCORPORATED

Consolidated Statements of ~~Stockholders’ Equity~~Cash Flows

(in ~~thousands, except share data)~~thousands)

(unaudited)

Three Months Ended September 30, 2022
Accumulated
Class A and Class B Additional Other Total
Common Stock Paid-In Comprehensive Accumulated Stockholders’
Shares Par Value Capital Loss Deficit Equity
Balance, June 30, 2022 288,154,159 $ 2,882 $ 981,203 $ (89,131) $ (397,961) $ 496,993
Net income — — — — 36,997 36,997
Other comprehensive loss — — — (12,798) — (12,798)
Dividends declared — — — — (8,592) (8,592)
Shares issued in connection with deferred compensation plan 97,591 1 (1) — — —
Deferred compensation plan elective participant deferrals — — 1,586 — — 1,586
Shares issued in connection with executive bonus plan, net 125,195 1 4,416 — — 4,417
Shares issued in connection with employee stock purchase plan, net 197,657 2 5,722 — (152) 5,572
Stock option exercises, net 218,018 2 992 — (59) 935
Stock-based compensation expense — — 11,158 — — 11,158
Shares related to restricted stock, net 58,270 — (1) — (1,060) (1,061)
Repurchases of Class B Common Stock under approved program (433,125) (4) — — (15,004) (15,008)
Balance, September 30, 2022 288,417,765 $ 2,884 $ 1,005,075 $ (101,929) $ (385,831) $ 520,199

Nine Months Ended September 30, 2022
Accumulated
Class A and Class B Additional Other Total
Common Stock Paid-In Comprehensive Accumulated Stockholders’
Shares Par Value Capital Loss Deficit Equity
Balance, December 31, 2021 282,526,719 $ 2,825 $ 937,805 $ (91,774) $ (439,634) $ 409,222
Net income — — — — 149,058 149,058
Other comprehensive loss — — — (10,155) — (10,155)
Dividends declared — — — — (25,623) (25,623)
Shares issued in connection with deferred compensation plan, net 3,523,386 35 (27) — (24,254) (24,246)
Deferred compensation plan elective participant deferrals — — 4,694 — — 4,694
Shares issued in connection with executive bonus plan, net 284,992 3 16,307 — (5,197) 11,113
Shares issued in connection with employee stock purchase plan, net 307,406 3 10,332 — (273) 10,062
Stock option exercises, net 2,272,603 23 6,832 — (8,459) (1,604)
Acquisition option exercises, net 185,178 2 (2) — — —
Shares issued for stock grants, net 13,632 — 450 — — 450
Stock-based compensation expense — — 28,687 — — 28,687
Shares related to restricted stock, net 199,975 2 (3) — (3,208) (3,209)
Repurchases of Class B Common Stock under approved program (896,126) (9) — — (28,241) (28,250)
Balance, September 30, 2022 288,417,765 $ 2,884 $ 1,005,075 $ (101,929) $ (385,831) $ 520,199

~~See accompanying notes to consolidated financial statements.~~


	Three Months Ended
	March 31,
	2024		2023
Cash flows from operating activities:
Net income	$	70,310	$	45,490
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	16,385		18,057
Deferred income taxes	5,302		(4,178)
Stock-based compensation expense	19,658		19,484
Deferred compensation plan	5,799		4,146
Amortization of deferred debt issuance costs	1,823		1,823
Change in fair value of derivative	(2,790)		4,489
Foreign currency remeasurement (gain) loss	(1,744)		1,018
Other	1,099		(4,411)
Changes in assets and liabilities, net of effect from acquisitions:
Accounts receivable	14,508		15,420
Prepaid and other assets	(5,321)		12,137
Accounts payable, accruals, and other liabilities	85,071		53,127
Deferred revenues	(9,257)		1,942
Income taxes payable, net of prepaid income taxes	4,126		7,679
Net cash provided by operating activities	204,969		176,223
Cash flows from investing activities:
Purchases of property and equipment and investment in capitalized software	(3,599)		(4,284)
Acquisitions, net of cash acquired	—		(10,299)
Purchases of investments	(250)		(6,178)

Net cash used in investing activities	(3,849)		(20,761)
Cash flows from financing activities:
Proceeds from credit facilities	39,838		117,139
Payments of credit facilities	(131,866)		(223,124)





Repayments of term loan	(2,500)		(1,250)
Payments of contingent and non-contingent consideration	(451)		(249)
Payments of dividends	(17,871)		(14,522)
Proceeds from stock purchases under employee stock purchase plan	5,560		4,557
Proceeds from exercise of stock options	4,007		4,202
Payments for shares acquired including shares withheld for taxes	(8,099)		(20,948)
Repurchases of Class B common stock under approved program	(15,006)		—
Other	(47)		(46)
Net cash used in financing activities	(126,435)		(134,241)
Effect of exchange rate changes on cash and cash equivalents	(1,496)		662
Increase in cash and cash equivalents	73,189		21,883
Cash and cash equivalents, beginning of year	68,412		71,684
Cash and cash equivalents, end of period	$	141,601	$	93,567

BENTLEY SYSTEMS, INCORPORATED

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Nine Months Ended
September 30,
2023 2022
Cash flows from operating activities:
Net income $ 147,202 $ 149,058
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 52,787 53,644
Deferred income taxes (14,632) (13,670)
Stock-based compensation expense 56,092 51,359
Deferred compensation plan 4,763 (21,873)
Amortization of deferred debt issuance costs 5,469 5,468
Change in fair value of derivative (4,102) (29,318)
Foreign currency remeasurement loss 3,198 14,445
Other 2,464 4,193
Changes in assets and liabilities, net of effect from acquisitions:
Accounts receivable 56,065 12,550
Prepaid and other assets (1,246) 7,779
Accounts payable, accruals, and other liabilities 33,437 28,765
Deferred revenues (17,688) (26,725)
Income taxes payable, net of prepaid income taxes 5,834 2,523
Net cash provided by operating activities 329,643 238,198
Cash flows from investing activities:
Purchases of property and equipment and investment in capitalized software (18,906) (12,982)
Proceeds from sale of aircraft — 2,380
Acquisitions, net of cash acquired (23,110) (719,539)
Purchases of investments (11,352) (10,304)
Proceeds from investments 2,123 —
Net cash used in investing activities (51,245) (740,445)
Cash flows from financing activities:
Proceeds from credit facilities 442,566 753,376
Payments of credit facilities (634,718) (408,714)
Repayments of term loan (3,750) (3,750)
Payments of contingent and non-contingent consideration (3,039) (6,996)
Payments of dividends (43,992) (25,828)
Proceeds from stock purchases under employee stock purchase plan 9,988 10,335
Proceeds from exercise of stock options 10,590 6,855
Payments for shares acquired including shares withheld for taxes (57,527) (42,213)
Repurchases of Class B Common Stock under approved program — (28,250)
Other (137) (123)
Net cash (used in) provided by financing activities (280,019) 254,692
Effect of exchange rate changes on cash and cash equivalents (3,100) (8,926)
Decrease in cash and cash equivalents (4,721) (256,481)
Cash and cash equivalents, beginning of year 71,684 329,337
Cash and cash equivalents, end of period $ 66,963 $ 72,856

~~BENTLEY SYSTEMS, INCORPORATED~~

~~Consolidated Statements of Cash Flows~~

~~(in thousands)~~

~~(unaudited)~~

Nine Months Ended

September 30,

2023

2022

Three Months Ended

March 31,

2024

2023

Supplemental information:

Cash paid for income taxes

29,467

20,696

Income tax refunds

764

2,194

Interest paid

29,370

17,647

Non-cash investing and financing activities:

Cost method investment

3,500

6,022

Cost method investment

Deferred, non-contingent consideration, net

525

157

Deferred, non-contingent consideration, net

Share-settled executive bonus plan awards

13,057

16,310

Share-settled executive bonus plan awards

Deferred compensation plan elective participant deferrals

1,712

4,694

See accompanying notes to consolidated financial statements.

109

BENTLEY SYSTEMS, INCORPORATED

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

(unaudited)

Note 1: Basis of Presentation

The accompanying unaudited consolidated financial statements include the accounts of ~~Bentley Systems, Incorporated~~the Company and its ~~wholly-owned subsidiaries (“Bentley Systems, Incorporated” or the “Company”), and~~consolidated subsidiaries. The accompanying unaudited consolidated financial statements have been prepared in U.S. dollars, and in accordance with ~~United States~~U.S. generally accepted accounting principles (“~~U.S.~~ GAAP”) and ~~in accordance with~~ the rules and regulations of the ~~United States Securities and Exchange Commission (“SEC”)~~SEC regarding interim financial reporting. Accordingly, they do not include all the information and notes required by ~~U.S.~~ GAAP for annual financial statements. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s ~~2022~~2023 Annual Report on Form 10‑K. In management’s opinion, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal, recurring and non-recurring adjustments) that were considered necessary for the fair statement of the Company’s financial position, results of operations, and cash flows as of the dates and for the periods indicated. The preparation of financial statements in conformity with ~~U.S.~~ GAAP requires management to make estimates and assumptions that affect reported amounts in the financial statements and accompanying notes. Actual results could differ materially from those estimates. The December 31, ~~2022~~2023 consolidated balance sheet included herein is derived from the Company’s audited consolidated financial statements.

Certain reclassifications of prior period amounts have been made to conform to the current period presentation. For the three and nine months ended September 30, 2023, payments related to the Company’s interest rate swap were recognized in ~~Other income (expense), net~~ ~~in the consolidated statements of operations and the corresponding prior period amounts, which were previously recognized in~~ ~~Interest expense, net, were reclassified to conform to the current period presentation. For the three and nine months ended September 30, 2022, the amounts reclassified were not material, and~~ ~~Income before income taxes~~ ~~and~~ ~~Net income~~ ~~in the consolidated statements of operations did not change as a result of these reclassifications.~~

Note 2: Recent Accounting Pronouncements

~~Recently Adopted Accounting Guidance~~In March 2024, the SEC adopted the final rule under SEC Release No. 33‑11275, The Enhancement and Standardization of Climate‑Related Disclosures for Investors.The final rule requires registrants to disclose certain climate‑related information in registration statements and annual reports. The final rule disclosure requirements will begin phasing in prospectively for the Company’s fiscal year beginning January 1, 2025. Subsequent to issuance, the final rule became the subject of litigation and the SEC issued a stay to allow the legal process to proceed. The Company is currently evaluating the impact of the final rule on its disclosures.

In ~~March 2020,~~December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. ~~2020‑04,~~2023‑09, ~~Reference Rate Reform~~Income Taxes (Topic ~~848)~~740): ~~Facilitation~~Improvements to Income Tax Disclosures (“ASU 2023‑09”), which expands disclosures in an entity’s income tax rate reconciliation table and regarding cash taxes paid both in the U.S. and foreign jurisdictions. ASU 2023‑09 is effective for the Company for the annual reporting period beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of the ~~Effects~~adoption of ~~Reference Rate Reform~~ASU 2023‑09 on ~~Financial Reporting~~ ~~(“ASU 2020‑04”), which provides optional expedients~~its consolidated financial statements and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. ASU 2020‑04 applies only to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform between March 12, 2020 and December 31, 2022. related disclosures.

In ~~December 2022,~~November 2023, the FASB issued ASU No. ~~2022‑06,~~2023‑07, ~~Reference Rate Reform~~Segment Reporting (Topic ~~848)~~280): ~~Deferral~~Improvements to Reportable Segment Disclosures (“ASU 2023‑07”), which expands disclosures about a public entity’s reportable segments and requires more enhanced information about a reportable segment’s expenses, interim segment profit or loss, and how the Company’s chief operating decision maker (“CODM”) uses reported segment profit or loss information in assessing segment performance and allocating resources. ASU 2023‑07 is effective for the Company for the annual reporting period beginning after December 15, 2023, and interim periods beginning after December 15, 2024. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the impact of the ~~Sunset Date~~adoption of ~~Topic 848, which provides optional guidance to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform~~ASU 2023‑07 on financial reporting by extending the sunset date of Topic 848 to December 31, 2024. The expedients and exceptions provided by these ASUs do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2024, except for hedging relationships existing as of December 31, 2024, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The Company adopted these ASUs during the second quarter of 2023 (see Note 10) and the adoption did not have a material impact on the Company’sits consolidated financial ~~statements.~~statements and related disclosures.

1110

Note 3: Revenue from Contracts with Customers

Disaggregation of Revenues

The Company’s revenues consist of the following:


		Three Months Ended				Nine Months Ended
		September 30,				September 30,
		2023		2022		2023		2022
	Three Months Ended										Three Months Ended
	March 31,										March 31,
	2024									2024		2023
Subscriptions:	Subscriptions:
Enterprise subscriptions (1)
Enterprise subscriptions (1)
Enterprise subscriptions (1)	Enterprise subscriptions (1)	$	111,318	$	89,041	$	318,896	$	252,461
SELECT subscriptions	SELECT subscriptions	63,406		63,609		190,834		196,786
Term license subscriptions	Term license subscriptions	96,027		82,657		298,109		259,484
Subscriptions	Subscriptions	270,751		235,307		807,839		708,731
Perpetual licenses	Perpetual licenses	11,887		9,460		33,152		31,213
Subscriptions and licenses	Subscriptions and licenses	282,638		244,767		840,991		739,944
Services:	Services:
Recurring	Recurring	3,606		4,557		12,733		13,431
Recurring
Recurring
Other	Other	20,368		19,008		64,048		58,759
Services	Services	23,974		23,565		76,781		72,190
Total revenues	Total revenues	$	306,612	$	268,332	$	917,772	$	812,134

(1)Enterprise subscriptions includes revenue attributable to Enterprise 365 (“E365”) subscriptions of ~~$107,681~~$123,036 and ~~$80,298~~$94,331 for the three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022, respectively, and $301,260 and $221,801 for the nine months ended September 30, 2023 and 2022,~~ respectively.

The Company recognizes perpetual licenses and the term license component of subscriptions as revenue when either the licenses are delivered or at the start of the subscription term. For the three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ the Company recognized ~~$147,340~~$176,309 and ~~$125,140~~$158,024 of license related revenues, respectively, of which ~~$135,453~~$166,797 and ~~$115,680,~~$148,477, respectively, were attributable to the term license component of the Company’s ~~subscription‑based commercial offerings recorded in~~ ~~Subscriptions~~ in the consolidated statements of operations. For the nine months ended September 30, 2023 and 2022, the Company recognized $444,186 and $380,237 of license related revenues, respectively, of which $411,034 and $349,024, respectively, were attributable to the term license component of the Company’s subscription‑subscription based commercial offerings recorded in Subscriptions in the consolidated statements of operations.

The Company derived ~~8% and~~ 7% of its total revenues through channel partners for the three months ended ~~September 30, 2023~~March 31, 2024 and ~~2022, respectively, and 7% of its total revenues through channel partners for the nine months ended September 30, 2023 and 2022.~~2023.

Revenue from external customers is attributed to individual countries based upon the location of the customer. Revenues by geographic region are as follows:


		Three Months Ended				Nine Months Ended
		September 30,				September 30,
		2023		2022		2023		2022
	Three Months Ended										Three Months Ended
	March 31,										March 31,
	2024									2024		2023
Americas (1)	Americas (1)	$	162,367	$	141,599	$	489,548	$	440,218
Europe, the Middle East, and Africa (“EMEA”)	Europe, the Middle East, and Africa (“EMEA”)	86,956		75,416		263,232		227,696
Asia-Pacific (“APAC”)	Asia-Pacific (“APAC”)	57,289		51,317		164,992		144,220
Total revenues	Total revenues	$	306,612	$	268,332	$	917,772	$	812,134

(1)Americas includes the ~~United States (“~~U.S.”), Canada, and Latin America (including the Caribbean). Revenue attributable to the U.S. totaled ~~$129,510~~$138,252 and ~~$122,372~~$127,450 for the three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022, respectively, and $384,807 and $346,961 for the nine months ended September 30, 2023 and 2022,~~ respectively.

Unbilled Revenues

Unbilled revenues represent revenues that have not yet been billed to customers due to timing differences in usage and billing cycles, and are included in Accounts receivable in the consolidated balance sheets. As of March 31, 2024 and December 31, 2023, unbilled revenues were $142,361 and $129,494, respectively.

Contract ~~Assets and Contract Liabilities~~

September 30, 2023 December 31, 2022
Contract assets $ 472 $ 575
Deferred revenues 227,004 243,073
Balances

As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, the Company’s contract assets relate to performance obligations completed in advance of the right to invoice and are included in Prepaid and other current assets in the consolidated balance sheets. Contract assets were not ~~impaired~~material as of ~~September 30, 2023~~March 31, 2024 or December 31, ~~2022.~~2023.

Deferred revenues consist of billings made or payments received in advance of revenue recognition from subscriptions and services. The timing of revenue recognition may differ from the timing of billings to users. As of March 31, 2024 and December 31, 2023, total deferred revenues on the consolidated balance sheets were $257,243 and $269,647, respectively.

For the ~~nine~~three months ended ~~September 30,~~March 31, 2024, $105,678 of revenues that were included in the December 31, 2023 ~~$183,335~~deferred revenues balance were recognized. There were additional deferrals of $96,617 for the three months ended March 31, 2024, which were primarily related to new billings. For the three months ended March 31, 2023, $95,979 of revenues that were included in the December 31, 2022 deferred revenues balance were recognized. There were additional deferrals of ~~$169,368~~$101,577 for the ~~nine~~three months ended ~~September 30,~~March 31, 2023, which were primarily related to new billings and acquisitions. For the nine months ended September 30, 2022, $174,194 of revenues that were included in the December 31, 2021 deferred revenues balance were recognized. There were additional deferrals of $158,125 for the nine months ended September 30, 2022, which were primarily related to new billings and acquisitions.

As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, the Company has deferred ~~$17,873~~$18,323 and ~~$17,338,~~$18,269, respectively, related to portfolio balancing exchange rights which is included in Deferred revenues in the consolidated balance sheets.

Remaining Performance Obligations

The Company’s contracts with customers include amounts allocated to performance obligations that will be satisfied at a later date. As of ~~September 30, 2023,~~March 31, 2024, amounts allocated to these remaining performance obligations are ~~$227,004,~~$257,243, of which the Company expects to recognize approximately ~~93%~~94% over the next 12 months with the remaining amount thereafter.

Note 4: Acquisitions

The aggregate details of the Company’s acquisition activity are as follows:


	Acquisitions Completed During						Acquisitions Completed During
	Three Months Ended March 31,						Three Months Ended March 31,
	2024					2024		2023
Number of acquisitions
Cash paid at closing
		Acquisitions Completed during
		Nine Months Ended
		September 30,
		2023		2022

Number of acquisitions		2		4
Cash paid at closing (1)		$	23,375	$	738,810
Cash acquired		(265)		(19,271)
Net cash paid	Net cash paid	$	23,110	$	719,539
Net cash paid
Net cash paid

~~(1)~~Of the cash paid at closing for the nine months ended September 30, 2023 and 2022, $1,000 and $3,000, respectively, was deposited into an escrow account to secure any potential indemnification and other obligations of the seller.

On January 31, 2022, the Company completed the acquisition of Power Line Systems (“PLS”), a leader in software for the design of overhead electric power transmission lines and their structures, for $695,968 in cash, net of cash acquired. The operating results of the acquired businesses were not material, individually or in the aggregate, to the Company’s consolidated statements of operations.

~~The fair value of the contingent consideration from acquisitions is included in the consolidated balance sheets as follows:~~

September 30, 2023 December 31, 2022
Accruals and other current liabilities $ 3 $ 1,196
Contingent consideration from acquisitions $ 3 $ 1,196

The fair value of non-contingent consideration from acquisitions is included in the consolidated balance sheets as follows:


	March 31, 2024					March 31, 2024	December 31, 2023
Accruals and other current liabilities
		September 30, 2023		December 31, 2022

Accruals and other current liabilities		$	3,966	$	2,434
Other liabilities		—		2,977
Non-contingent consideration from acquisitions	Non-contingent consideration from acquisitions	$	3,966	$	5,411
Non-contingent consideration from acquisitions
Non-contingent consideration from acquisitions

The operating results of the acquired businesses are included in the Company’s consolidated financial statements from the closing date of each respective acquisition. The purchase price for each acquisition has been allocated to the net tangible and intangible assets and liabilities based on their estimated fair values at the respective acquisition date.

The Company is in the process of finalizing the purchase accounting for ~~one acquisition completed during the nine months ended September 30, 2023 and one acquisition~~two acquisitions completed during the year ended December 31, ~~2022.~~2023. Identifiable assets acquired and liabilities assumed were provisionally recorded at their estimated fair values on the respective acquisition date. The initial accounting for these business combinations is not complete because the evaluation necessary to assess the fair values of certain net assets acquired is still in process. The provisional amounts are subject to revision until the evaluations are completed to the extent that additional information is obtained about the facts and circumstances that existed as of the acquisition date. The allocation of the purchase price may be modified from the date of the acquisition as more information is obtained about the fair values of assets acquired and liabilities assumed, however, such measurement period cannot exceed one year.

Acquisition costs are expensed as incurred and are recorded in General and administrative in the consolidated statements of operations. For the three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ the Company’s acquisition ~~expenses~~costs were ~~insignificant,~~$198 and ~~for the nine months ended September 30, 2023 and 2022 were $5,803 and $10,824,~~$5,185, respectively, which include costs related to legal, accounting, valuation, insurance, ~~general administrative,~~ and other consulting and transaction fees. ~~For the three and nine months ended September 30, 2022, $350 and $10,149, respectively, of the Company’s acquisition expenses related to the acquisition of PLS.~~

The following summarizes the fair values of the assets acquired and liabilities assumed, as well as the weighted average useful lives assigned to acquired intangible assets at the respective date of each acquisition (including contingent consideration):

Acquisitions Completed in
Nine Months Ended Year Ended
September 30, 2023 December 31, 2022
Consideration:
Cash paid at closing $ 23,375 $ 763,228
Contingent consideration — 1,390
Deferred, non-contingent consideration, net 525 749
Other 56 (269)
Total consideration $ 23,956 $ 765,098
Assets acquired and liabilities assumed:
Cash $ 265 $ 20,221
Accounts receivable and other current assets 1,706 8,890
Operating lease right-of-use assets 397 1,237
Property and equipment — 1,316
Deferred income taxes 2,151 —
Other assets 6 7
Software and technology (weighted average useful life of 3 and 5 years, respectively) 2,600 10,608
Customer relationships (weighted average useful life of 6 and 10 years, respectively) 3,900 82,278
Trademarks (weighted average useful life of 5 and 8 years, respectively) 1,000 6,972
Total identifiable assets acquired excluding goodwill 12,025 131,529
Accruals and other current liabilities (584) (4,079)
Deferred revenues (4,599) (14,176)
Operating lease liabilities (397) (1,237)
Deferred income taxes — (5,745)
Total liabilities assumed (5,580) (25,237)
Net identifiable assets acquired excluding goodwill 6,445 106,292
Goodwill 17,511 658,806
Net assets acquired $ 23,956 $ 765,098


	Acquisitions Completed During
	Year Ended
	December 31, 2023
Consideration:
Cash paid at closing	$	26,287


Deferred, non-contingent consideration, net	525
Other	15
Total consideration	$	26,827
Assets acquired and liabilities assumed:
Cash	$	264
Accounts receivable and other current assets	1,742
Operating lease right-of-use assets	397

Deferred income taxes	2,151
Other assets	6
Software and technology (weighted average useful life of 3 years)	3,077
Customer relationships (weighted average useful life of 6 years)	3,900
Trademarks (weighted average useful life of 5 years)	1,000


Total identifiable assets acquired excluding goodwill	12,537
Accruals and other current liabilities	(624)
Deferred revenues	(4,623)
Operating lease liabilities	(397)


Total liabilities assumed	(5,644)
Net identifiable assets acquired excluding goodwill	6,893
Goodwill	19,934
Net assets acquired	$	26,827

~~The fair values of the working capital, other assets (liabilities), and property and equipment approximated their respective carrying values as of the acquisition date.~~

~~Deferred revenues were determined in accordance with the Company’s revenue recognition policies.~~

The fair values of the intangible assets were primarily determined using the income approach. When applying the income approach, indications of fair values were developed by discounting future net cash flows to their present values at market‑based rates of return. The cash flows were based on estimates used to price the acquisitions and the discount rates applied were benchmarked with reference to the implied rate of return from the Company’s pricing model and the weighted average cost of capital.

Goodwill recorded in connection with the acquisitions was attributable to synergies expected to arise from cost saving opportunities, as well as future expected cash flows. The Company expects $7,289 of the goodwill recorded relating to the 2023 acquisitions will be deductible for income tax purposes.

Note 5: Property and Equipment, Net

Property and equipment, net consist of the following:


		September 30, 2023		December 31, 2022
	March 31, 2024					March 31, 2024	December 31, 2023
Land	Land	$	2,811	$	2,811
Building and improvements	Building and improvements	36,293		35,717
Computer equipment and software	Computer equipment and software	64,639		54,636
Furniture, fixtures, and equipment	Furniture, fixtures, and equipment	14,848		14,600
Aircraft	Aircraft	2,038		2,038
Other	Other	93		156
Property and equipment, at cost	Property and equipment, at cost	120,722		109,958
Less: Accumulated depreciation	Less: Accumulated depreciation	(82,413)		(77,707)
Total property and equipment, net	Total property and equipment, net	$	38,309	$	32,251

Depreciation expense ~~was $3,135 and $2,613~~ for the three months ended ~~September 30,~~March 31, 2024 and 2023 was $3,367 and ~~2022, respectively, and $8,769 and $8,025 for the nine months ended September 30, 2023 and 2022,~~$2,724, respectively.

~~Related Party Equipment Sale~~

In January 2022, the Audit Committee of the Company’s Board of Directors authorized the Company to sell 50% of its interest in the Company’s aircraft at fair market value to an entity controlled by the Company’s Chief Executive Officer. The transaction was completed on February 1, 2022 for $2,380 and resulted in a gain of $2,029, which was recorded in ~~Other income, net~~ in the consolidated statements of operations for the nine months ended September 30, 2022 (see Note 20). Subsequent to the transaction, ongoing operating and fixed costs of the aircraft are shared on a proportional use basis subject to a cost-sharing agreement. Such costs were not material during the nine months ended September 30, 2023 and 2022. The Company determined this transaction was with a related party.

1614

Note 6: Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill are as follows:

Details of intangible assets other than goodwill are as follows:


				September 30, 2023						December 31, 2022
		Estimated Useful Life		Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
			March 31, 2024																	March 31, 2024			December 31, 2023
	Estimated Useful Life															Estimated Useful Life	Gross Carrying Amount	Accumulated Amortization	Net Book Value		Gross Carrying Amount	Accumulated Amortization		Net Book Value
Intangible assets subject to amortization:	Intangible assets subject to amortization:
Software and technology
Software and technology
Software and technology	Software and technology	3-5 years		$	88,675	$	(55,305)	$	33,370	$	92,390	$	(51,938)	$	40,452
Customer relationships	Customer relationships	3-10 years		323,223		(135,237)		187,986		323,164		(114,387)		208,777
Trademarks	Trademarks	3-10 years		70,510		(31,979)		38,531		69,803		(26,904)		42,899
Non-compete agreements	Non-compete agreements	5 years		350		(258)		92		350		(207)		143

Total intangible assets	Total intangible assets			$	482,758	$	(222,779)	$	259,979	$	485,707	$	(193,436)	$	292,271

Total intangible assets

Total intangible assets

The aggregate amortization expense for purchased intangible assets with finite lives was reflected in the Company’s consolidated statements of operations as follows:


		Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2023			2022			2023		2022
					Three Months Ended
					Three Months Ended
					Three Months Ended
				March 31,								March 31,
							2024						2024	2023
Cost of subscriptions and licenses	Cost of subscriptions and licenses	$	3,161		$	3,129		$	9,471	$	9,305
Amortization of purchased intangibles	Amortization of purchased intangibles	9,517			10,446			29,567		30,869
Total amortization expense	Total amortization expense	$	12,678		$	13,575		$	39,038	$	40,174

Note 7: Investments

Investments consist of the following:

September 30, 2023 December 31, 2022
Cost method investments $ 27,957 $ 22,174
Equity method investments 2,375 96
Total investments $ 30,332 $ 22,270


	March 31, 2024		December 31, 2023
Cost method investments	$	21,236	$	21,044
Equity method investments	2,405		2,436
Total investments	$	23,641	$	23,480

Cost Method Investments

~~Through its~~ ~~iTwin Ventures~~ ~~initiative, the~~The Company invests in technology development companies, generally in the form of equity interests or convertible notes. In March 2023, the Company acquired an equity interest in Worldsensing, a leading global connectivity hardware platform company for infrastructure monitoring, via contribution of its sensemetrics’ Thread connectivity device business (the “Thread business”) and cash. The non‑cash contribution of the Thread business resulted in an insignificant gain, which was recorded in Other income, net in the consolidated statements of operations for the ~~nine~~three months ended ~~September 30, 2023 (see Note 20). In July 2022, the Company acquired an equity interest in Teralytics Holdings AG (“Teralytics”), a global platform company for human mobility analysis.~~March 31, 2023.

During the second quarter of 2023, the Company recognized impairment charges of $7,318 to write-down certain cost method investments to their fair value primarily as a result of the investees’ decline in operating performance and the overall decline in the venture investment valuation environment. The impairment charges were recorded in ~~Other income, net~~ ~~in the consolidated statements of operations for the nine months ended September 30, 2023 (see Note 20).~~

~~During the third quarter of 2023, the Company recognized gains on investments of $2,360, which was recorded in~~ ~~Other income, net~~ ~~in the consolidated statements of operations for the three and nine months ended September 30, 2023 (see Note 20).~~

During the ~~nine~~three months ended ~~September 30,~~March 31, 2024, the Company invested a total of $250. During the three months ended March 31, 2023, the Company invested a total of ~~$12,591,~~$9,678, including $8,928 of cash and non-cash for ~~our~~its investment in Worldsensing. ~~During the nine months ended September 30, 2022, the Company invested a total of $14,921, including $11,130 of cash and non-cash for our investment in Teralytics.~~ As of ~~September 30,~~March 31, 2024 and December 31, 2023, ~~our~~the Company’s investment balance in Worldsensing ~~and Teralytics~~ was ~~$8,928 and $7,270, respectively. As of December 31, 2022, our investment balance in Teralytics was $11,130.~~

~~Equity Method Investments~~

~~The Company is party to joint ventures, which are accounted for using the equity method. For the nine months ended September 30, 2023 and 2022, the Company invested $2,261 and $1,700, respectively.~~$8,928.

Note 8: Leases

The Company’s operating leases consist of office facilities, office equipment, and automobiles. As of ~~September 30, 2023,~~March 31, 2024, the Company’s leases have remaining terms of less than one year to ten years, some of which include one or more options to renew, with renewal terms from one year to five years and some of which include options to terminate the leases from less than one year to five years.

The components of operating lease cost reflected in the consolidated statements of operations were as follows:


		Three Months Ended				Nine Months Ended
		September 30,				September 30,
		2023		2022		2023		2022
	Three Months Ended										Three Months Ended
	March 31,										March 31,
	2024									2024		2023
Operating lease cost (1)	Operating lease cost (1)	$	4,312	$	4,703	$	13,474	$	15,651
Variable lease cost	Variable lease cost	1,133		1,115		3,481		3,356
Short-term lease cost		—		6		—		16

Total operating lease cost	Total operating lease cost	$	5,445	$	5,824	$	16,955	$	19,023
Total operating lease cost
Total operating lease cost

(1)Operating lease cost includes rent cost related to operating leases for office facilities of ~~$4,180~~$3,471 and ~~$4,553~~$4,417 for the three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022, respectively, and $12,926 and $15,120 for the nine months ended September 30, 2023 and 2022,~~ respectively.

Supplemental operating cash ~~flow~~flows and other information related to leases was as follows:


		Nine Months Ended
		September 30,
		2023		2022
	Three Months Ended						Three Months Ended
	March 31,						March 31,
	2024					2024		2023
Cash paid for operating leases included in operating cash flows	Cash paid for operating leases included in operating cash flows	$	13,830	$	14,295
Right-of-use assets obtained in exchange for new operating lease liabilities (1)	Right-of-use assets obtained in exchange for new operating lease liabilities (1)	$	14,794	$	7,763

(1)~~Right‑~~For the three months ended March 31, 2023, right‑of‑use assets obtained in exchange for new operating lease liabilities does not include the impact from ~~acquisitions~~an acquisition of ~~$397 and $1,237 for the nine months ended September 30, 2023 and 2022, respectively.~~$345.

The weighted average remaining lease term for operating leases was ~~4.7~~4.5 years and ~~3.9~~4.6 years as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively. The weighted average discount rate was ~~4.6% and 3.4%~~4.8% as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022, respectively.~~2023.

~~As of September 30, 2023, the Company had additional minimum operating lease payments of $961 for executed leases that have not yet commenced, primarily for office locations.~~

Note 9: Accruals and Other Current Liabilities

Accruals and other current liabilities consist of the following:


		September 30, 2023		December 31, 2022
	March 31, 2024					March 31, 2024	December 31, 2023
Cloud Services Subscription (“CSS”) deposits	Cloud Services Subscription (“CSS”) deposits	$	269,047	$	201,082
Accrued benefits	Accrued benefits	36,814		35,493
Accrued compensation	Accrued compensation	34,631		40,296
Due to customers	Due to customers	16,738		13,720
Accrued indirect taxes	Accrued indirect taxes	5,804		9,766
Accrued acquisition stay bonus
Accrued professional fees	Accrued professional fees	4,152		4,984
Non-contingent consideration from acquisitions		3,966		2,434
Accrued acquisition stay bonus		3,765		9,135
Accrued realignment costs
Accrued cloud provisioning costs	Accrued cloud provisioning costs	3,469		4,224
Employee stock purchase plan contributions	Employee stock purchase plan contributions	2,923		5,230
Non-contingent consideration from acquisitions
Deferred compensation plan liabilities	Deferred compensation plan liabilities	2,182		2,067
Contingent consideration from acquisitions		3		1,196

Other accrued and current liabilities
Other accrued and current liabilities
Other accrued and current liabilities	Other accrued and current liabilities	19,934		32,421
Total accruals and other current liabilities	Total accruals and other current liabilities	$	403,428	$	362,048

Note 10: Long-Term Debt

Long‑term debt consists of the following:


		September 30, 2023		December 31, 2022
	March 31, 2024					March 31, 2024	December 31, 2023

Credit facility:	Credit facility:

Credit facility:

Credit facility:
Revolving loan facility due November 2025
Revolving loan facility due November 2025
Revolving loan facility due November 2025	Revolving loan facility due November 2025	$	153,445	$	345,597
Term loan due November 2025	Term loan due November 2025	191,250		195,000
Convertible senior notes due January 2026 (the “2026 Notes”)	Convertible senior notes due January 2026 (the “2026 Notes”)	687,830		687,830
Convertible senior notes due July 2027 (the “2027 Notes”)	Convertible senior notes due July 2027 (the “2027 Notes”)	575,000		575,000
Unamortized debt issuance costs	Unamortized debt issuance costs	(18,023)		(22,731)
Total debt	Total debt	1,589,502		1,780,696
Less: Current portion of long-term debt	Less: Current portion of long-term debt	(8,750)		(5,000)
Long-term debt	Long-term debt	$	1,580,752	$	1,775,696

~~Credit Facility~~

The Company is party to a Credit Agreement dated December 19, 2017 (as amended from time to time), which provides for an $850,000 senior secured revolving loan facility that matures on November 15, 2025 (the “Credit Facility”). The Credit Facility also provides up to $50,000 of letters of credit and other borrowings subject to availability, including an $85,000 U.S. dollar swingline sub‑facility and a $200,000 incremental “accordion” sub‑facility. Debt issuance costs are amortized to interest expense through the maturity date.

Under the Credit Facility, the Company has a $200,000 senior secured term loan with a maturity of November 15, 2025 (the “Term Loan”). The Term Loan requires principal repayment at the end of each calendar quarter. Beginning with March 31, 2022 and ending with December 31, 2023, the Company is required to repay $1,250 per quarter. Beginning with March 31, 2024 and ending with the last such date prior to the maturity date, the Company is required to repay $2,500 per quarter.

The Company had $150 of letters of credit and surety bonds outstanding as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023 under ~~the Credit Facility.~~its amended and restated credit agreement, entered into on December 19, 2017 (the “Credit Facility”). As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, the Company had ~~$696,405~~$849,850 and ~~$504,253,~~$757,822, respectively, available under the Credit Facility.

~~Effective June 23, 2023, the Company amended the Credit Facility to replace the referenced interest rate based on LIBOR with the Secured Overnight Financing Rate (“SOFR”).~~

Revolving loan borrowings under the Credit Facility bear interest at variable rates that reset every one, three, or six months depending on the period selected by the Company. Under the Term SOFR elections, revolving loan borrowings bear an interest rate of the applicable term SOFR rate plus 10 basis points (“bps”), plus a spread ranging from 125 bps to 225 bps as determined by the Company’s net leverage ratio. Under the non‑Term SOFR elections, revolving loan borrowings bear a base interest rate of the highest of (i) the prime rate, (ii) the overnight bank funding effective rate plus 50 bps, or (iii) the applicable term SOFR rate plus 10 bps, plus a spread ranging from 25 bps to 125 bps as determined by the Company’s net leverage ratio.

Swingline borrowings under the Credit Facility bear interest that resets daily. Interest on U.S. dollar swingline borrowings bear an interest rate of the daily simple SOFR rate plus 3.5 bps, plus a spread ranging from 125 bps to 225 bps as determined by the Company’s net leverage ratio. The Company cannot make optional currency swingline borrowings without the consent of the applicable swingline lender.

Term loan borrowings under the Credit Facility bear interest at variable rates that reset every one, three, or six months depending on the period selected by the Company. Under the Term SOFR elections, term loan borrowings bear an interest rate of the applicable term SOFR rate plus 10 bps, plus a spread ranging from 100 bps to 200 bps as determined by the Company’s net leverage ratio. Under the non‑Term SOFR elections, term loan borrowings bear a base interest rate of the highest of (i) the prime rate, (ii) the overnight bank funding effective rate plus 50 bps, or (iii) the applicable term SOFR rate plus 10 bps, plus a spread ranging from 0 bps to 100 bps as determined by the Company’s net leverage ratio.

~~In addition, a commitment fee for the unused Credit Facility ranges from 20 bps to 30 bps as determined by the Company’s net leverage ratio.~~

Borrowings under the Credit Facility are guaranteed by all of the Company’s material first tier domestic subsidiaries and are secured by a first priority security interest in substantially all of the Company’s and the guarantors’ U.S. assets and 65% of the stock of their directly owned foreign subsidiaries.

The agreement governing the Credit Facility contains customary positive and negative covenants, including restrictions on our ability to pay dividends and make other restricted payments, as well as events of default, including, without limitation, payment defaults, breaches of representations and warranties, covenants defaults, cross-defaults to certain other indebtedness in excess of $50,000, certain events of bankruptcy and insolvency, judgment defaults in excess of $10,000, failure of any security document supporting the Credit Facility to be in full force and effect, and a change of control. The Credit Facility also contains customary financial covenants, including maximum net leverage ratio. As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, the Company was in compliance with all debt covenants ~~in its Credit Facility.~~

Voluntary prepayments of amounts outstanding under the Credit Facility, in whole or in part, are permitted at any time, so long as the Company gives notice as required by the Credit Facility. However, if prepayment is made with respect to a SOFR‑based loan and the prepayment is made on a date other than an interest payment date, the Company is subject to customary breakage costs.

~~Convertible Senior Notes~~

~~As of September 30, 2023 and December 31, 2022, the Company was in compliance with all covenants in the 2026 Notes and 2027 Notes,~~ and none of the conditions of the 2026 Notes or 2027 Notes to early convert had been met.

~~Derivative Arrangements~~

The Company records derivative instruments as an asset or liability measured at fair value and depending on the nature of the hedge, the corresponding changes in the fair value of these instruments are recorded in the consolidated statements of operations or comprehensive income. If the derivative is determined to be a hedge, changes in the fair value of the derivative are offset against the change in the fair value of the hedged assets or liabilities through the consolidated statements of operations or recognized in ~~Other comprehensive income (loss), net of taxes~~ until the hedged item is recognized in the consolidated statements of operations. The ineffective portion of a derivative’s change in fair value is recognized in earnings. Also, changes in the entire fair value of a derivative that is not designated as a hedge are recognized in earnings.

Effective on April 2, 2020, the Company entered into an interest rate swap with a notional amount of $200,000 and a ten‑year term to reduce the interest rate risk associated with the Credit Facility. Effective on June 26, 2023, the Company amended the interest rate swap agreement to replace the LIBOR rate to SOFR under the ISDA Fallback Protocols included within the agreement. Subsequent to the amendment, the Company will continue to pay a fixed interest rate of 72.9 bps, and will receive a floating interest rate equal to daily SOFR plus an ARRC spread adjustment of 11.448 bps. The interest rate swap is not designated as a hedging instrument for accounting purposes. The Company accounts for the interest rate swap as either an asset or a liability on the consolidated balance sheets and carries the derivative at fair value (see Note 17). Gain (loss) from the change in fair value and payments related to the interest rate swap are recognized in ~~Other income (expense), net~~ in the consolidated statements of operations (see Note 20). The bank counterparty to the derivative potentially exposes the Company to credit-related losses in the event of nonperformance. To mitigate that risk, the Company only contracts with counterparties who meet the Company’s minimum requirements under its counterparty risk assessment process. The Company monitors counterparty risk on at least a quarterly basis and adjusts its exposure as necessary. The Company does not enter into derivative instrument transactions for trading or speculative purposes.

Interest Expense, Net

Interest expense, net consists of the following:


		Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2023			2022			2023		2022
					Three Months Ended
					Three Months Ended
					Three Months Ended
				March 31,								March 31,
							2024						2024	2023
Contractual interest expense	Contractual interest expense	$	(8,678)		$	(7,345)		$	(27,352)	$	(17,092)
Amortization of deferred debt issuance costs	Amortization of deferred debt issuance costs	(1,823)			(1,822)			(5,469)		(5,468)
Other interest (expense) income		(47)			(76)			958		(1,234)
Other interest expense
Interest income	Interest income	501			109			1,240		273
Interest expense, net	Interest expense, net	$	(10,047)		$	(9,134)		$	(30,623)	$	(23,521)

The weighted average interest rate on borrowings under the Credit Facility were ~~7.44%~~7.46% and ~~4.34%~~6.67% for the three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022, respectively, and 7.04% and 3.20% for the nine months ended September 30, 2023 and 2022,~~ respectively.

Note 11: Executive Bonus Plan

For the three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ the incentive compensation, including cash payments, election to receive shares of fully vested Class B ~~Common Stock,~~common stock, and deferred compensation to plan participants, recognized under the amended and restated Bentley Systems, Incorporated Bonus Pool Plan (the “Bonus Plan”) (net of all applicable holdbacks) was ~~$5,081~~$7,031 and ~~$8,454, respectively, and $17,326 and $24,984 for the nine months ended September 30, 2023 and 2022,~~$7,948, respectively.

Note 12: Retirement Plans

Deferred Compensation Plan

Deferred compensation plan ~~(income)~~ expense was ~~$(3,160)~~$5,799 and ~~$(4,576)~~$4,146 for the three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022, respectively, and $4,763 and $(21,873) for the nine months ended September 30, 2023 and 2022,~~ respectively.

For the three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ elective participant deferrals into the Company’s unfunded amended and restated Bentley Systems, Incorporated Nonqualified Deferred Compensation Plan (the “DCP”) were ~~$61~~$58 and ~~$1,586, respectively, and $1,712 and $4,694 for the nine months ended September 30, 2023 and 2022,~~$1,533, respectively. No discretionary contributions were made to the DCP during the three ~~and nine~~ months ended ~~September 30, 2023~~March 31, 2024 and ~~2022.~~2023. As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, 16,847,673 and 17,364,980 phantom shares of the Company’s Class B ~~Common Stock issuable by~~common stock were distributable under the DCP, respectively. As of March 31, 2024, shares of Class B common stock available for future issuance under the DCP were ~~17,911,610 and 21,587,831, respectively.~~4,401,185.

The total liabilities related to the DCP is included in the consolidated balance sheets as follows:


		September 30, 2023		December 31, 2022

	March 31, 2024					March 31, 2024	December 31, 2023
Accruals and other current liabilities	Accruals and other current liabilities	$	2,182	$	2,067
Deferred compensation plan liabilities	Deferred compensation plan liabilities	79,537		77,014
Total DCP liabilities	Total DCP liabilities	$	81,719	$	79,081

Note 13: Common Stock

BSY Stock Repurchase Program

OnIn May ~~11,~~ 2022, the Company announced that its Board of Directors approved the BSY Stock Repurchase Program (the “Repurchase Program”) authorizing the Company to repurchase up to $200,000 of the Company’s Class B ~~Common Stock~~common stock through June 30, 2024. OnIn December ~~14,~~ 2022, the Company’s Board of Directors amended the Repurchase Program to allow the Company also to repurchase its outstanding convertible senior notes. This additional authorization did not increase the overall dollar limit of the Repurchase Program. Effective July 1, 2024, the Company’s Board of Directors extended the Repurchase Program, authorizing the Company to repurchase from such date up to $200,000 of the Company’s Class B common stock and/or convertible senior notes through June 30, 2026. The Company’s current authorization under the Repurchase Program expires on June 30, 2024.

The shares and convertible senior notes proposed to be acquired in the Repurchase Program may be repurchased from time to time in open market transactions, through privately negotiated transactions, or by other means in accordance with federal securities laws. The Company intends to fund repurchases from available working capital and cash provided by operating activities. The timing, as well as the number and value of shares and/or convertible senior notes repurchased under the Repurchase Program, will be determined by the Company at its discretion and will depend on a variety of factors, including management’s assessment of the intrinsic value of the Company’s shares, the market price of the Company’s Class B ~~Common Stock~~common stock and outstanding convertible senior notes, general market and economic conditions, available liquidity, compliance with the Company’s debt and other agreements, and applicable legal requirements. The exact number of shares and/or convertible senior notes to be repurchased by the Company is not guaranteed, and the Repurchase Program may be suspended, modified, or discontinued at any time without prior notice.

During the three months ended March 31, 2024, the Company repurchased 302,598 shares for $15,006 under the Repurchase Program. The Company did not repurchase shares under the Repurchase Program for the ~~nine~~three months ended ~~September 30,~~March 31, 2023. ~~For the nine months ended September 30, 2022, the Company repurchased 896,126 shares for $28,250 under the Repurchase Program.~~ As of ~~September 30, 2023, $169,752~~March 31, 2024, $154,752 was available under the Company’s Board of Directors authorization for future repurchases of Class B ~~Common Stock~~common stock and/or outstanding convertible senior notes under the Repurchase Program.

Common Stock Issuances, Sales, and Repurchases

~~For~~During the ~~nine~~three months ended ~~September 30,~~March 31, 2024, the Company issued 537,745 shares of Class B common stock to DCP participants in connection with distributions from the plan. There were no shares sold back to the Company as they were issued on a gross basis during the three months ended March 31, 2024. During the three months ended March 31, 2023, the Company issued ~~2,422,082~~1,052,738 shares of Class B ~~Common Stock~~common stock to ~~colleagues who exercised their stock options,~~DCP participants in connection with distributions from the plan, net of ~~234,472~~368,733 shares ~~withheld at exercise~~which were sold back to the Company in the same period to pay for ~~the cost of the stock options, as well as for $6,408 of~~ applicable income tax ~~withholdings. The Company received $10,590 in proceeds from~~withholdings of $13,626.

During the ~~exercise of stock options. For the nine~~three months ended ~~September 30, 2022,~~March 31, 2024, the Company issued ~~2,272,603~~65,939 shares of Class B ~~Common Stock~~common stock in connection with Bonus Plan incentive compensation. There were no shares sold back to ~~colleagues who exercised their stock options, net of 362,826 shares withheld at exercise to pay for~~ the ~~cost of~~Company as they were issued on a gross basis during the ~~stock options, as well as for $8,459 of applicable income tax withholdings. The Company received $6,855 in proceeds from the exercise of stock options.~~

~~For the nine~~three months ended ~~September 30, 2022,~~March 31, 2024. During the three months ended March 31, 2023, the Company issued ~~185,178~~79,804 shares of Class B Common Stock related to the exercise of acquisition options, net of 714,822 shares withheld at exercise to pay for the cost of the options. The Company did not receive any proceeds from the exercise of these options.

~~For the nine months ended September 30, 2023 and 2022, the Company issued 171,510 and 284,992 shares of Class B Common Stock, respectively,~~common stock in connection with Bonus Plan incentive compensation, net of ~~shares withheld. Of the total 306,824 shares awarded for the nine months ended September 30, 2023, 135,314~~63,310 shares were sold back to the Company in the same period to pay for applicable income tax withholdings of ~~$5,756. Of~~$2,425.

During the ~~total 409,108 shares awarded for the nine~~three months ended ~~September 30, 2022, 124,116 shares were sold back to the Company in the same period to pay for applicable income tax withholdings of $5,197.~~

~~For the nine months ended September 30, 2023 and 2022,~~March 31, 2024, the Company issued ~~2,845,448 and 3,523,386~~844,283 shares of Class B ~~Common Stock, respectively,~~common stock to ~~DCP participants in connection with distributions from the plan. The distribution in~~colleagues who exercised their stock options, net of 67,146 shares ~~for the nine months ended September 30, 2023 totaled 3,781,387 shares of which 935,939 shares were sold back to the Company in the same period~~withheld at exercise to pay for the cost of the stock options, as well as for $2,195 of applicable income tax ~~withholdings~~withholdings. The Company received $4,007 in cash proceeds from the exercise of ~~$38,456. The distribution in shares for~~stock options. For the ~~nine~~three months ended ~~September 30, 2022 totaled 4,023,718~~March 31, 2023, the Company issued 928,300 shares of ~~which 500,332~~Class B common stock to colleagues who exercised their stock options, net of 73,822 shares ~~were sold back to the Company in the same period~~withheld at exercise to pay for the cost of the stock options, as well as for $1,701 of applicable income tax ~~withholdings~~withholdings. The Company received $4,202 in cash proceeds from the exercise of ~~$24,246.~~stock options.

Dividends

The Company declared cash dividends during the periods presented as follows:

Dividend
Per Share Amount
2023:
Third quarter $ 0.05 $ 14,768
Second quarter 0.05 14,702
First quarter 0.05 14,522
2022:
Third quarter $ 0.03 $ 8,592
Second quarter 0.03 8,678
First quarter 0.03 8,353


	Dividend
	Per Share		Amount
2024:


First quarter	$	0.06	$	17,871
2023:


First quarter	$	0.05	$	14,522

Global Employee Stock Purchase Plan

During the ~~nine~~three months ended ~~September 30, 2023,~~March 31, 2024, colleagues who elected to participate in the Bentley Systems, Incorporated Global Employee Stock Purchase Plan (the “ESPP”) purchased a total of ~~315,840~~122,020 shares of Class B ~~Common Stock,~~common stock, net of shares withheld, resulting in cash proceeds to the Company of ~~$9,988.~~$5,560. Of the total ~~333,324~~125,374 shares purchased, ~~17,484~~3,354 shares were sold back to the Company to pay for applicable income tax withholdings of ~~$845.~~$175. During the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, colleagues who elected to participate in the ESPP purchased a total of ~~307,406~~153,381 shares of Class B ~~Common Stock,~~common stock, net of shares withheld, resulting in cash proceeds to the Company of ~~$10,335.~~$4,557. Of the total ~~314,471~~159,377 shares purchased, ~~7,065~~5,996 shares were sold back to the Company to pay for applicable income tax withholdings of ~~$273.~~$222. As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022, $2,923~~2023, $2,959 and ~~$5,230~~$5,790 of ESPP withholdings via colleague payroll deduction were recorded in Accruals and other current liabilities in the consolidated balance sheets, respectively. As of ~~September 30, 2023,~~March 31, 2024, shares of Class B ~~Common Stock~~common stock available for future issuance under the ESPP were ~~24,272,038.~~24,150,018.

Note 14: Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss consists of the following during the three months ended ~~September 30, 2023~~March 31, 2024 and ~~2022:~~2023:

Foreign Actuarial (Loss)
Currency Gain on
Translation Retirement Plan Total
Balance, June 30, 2023 $ (87,530) $ (298) $ (87,828)
Other comprehensive (loss) income, before taxes (7,294) 2 (7,292)
Tax expense — (8) (8)
Other comprehensive loss, net of taxes (7,294) (6) (7,300)
Balance, September 30, 2023 $ (94,824) $ (304) $ (95,128)


	Foreign		Actuarial (Loss)
	Currency		Gain on
	Translation		Retirement Plan		Total
Balance, December 31, 2023	$	(84,634)	$	(353)	$	(84,987)
Other comprehensive (loss) income, before taxes	(7,733)		129		(7,604)
Tax expense	—		(28)		(28)
Other comprehensive (loss) income, net of taxes	(7,733)		101		(7,632)
Balance, March 31, 2024	$	(92,367)	$	(252)	$	(92,619)

Foreign Actuarial (Loss)
Currency Gain on
Translation Retirement Plan Total
Balance, June 30, 2022 $ (88,250) $ (881) $ (89,131)
Other comprehensive (loss) income, before taxes (12,809) 16 (12,793)
Tax expense — (5) (5)
Other comprehensive (loss) income, net of taxes (12,809) 11 (12,798)
Balance, September 30, 2022 $ (101,059) $ (870) $ (101,929)


	Foreign		Actuarial (Loss)
	Currency		Gain on
	Translation		Retirement Plan		Total
Balance, December 31, 2022	$	(89,408)	$	(332)	$	(89,740)
Other comprehensive income, before taxes	340		32		372
Tax expense	—		(6)		(6)
Other comprehensive income, net of taxes	340		26		366
Balance, March 31, 2023	$	(89,068)	$	(306)	$	(89,374)

2520

~~Accumulated other comprehensive loss consists of the following during the nine months ended September 30, 2023 and 2022:~~

Foreign Actuarial (Loss)
Currency Gain on
Translation Retirement Plan Total
Balance, December 31, 2022 $ (89,408) $ (332) $ (89,740)
Other comprehensive (loss) income, before taxes (5,416) 43 (5,373)
Tax expense — (15) (15)
Other comprehensive (loss) income, net of taxes (5,416) 28 (5,388)
Balance, September 30, 2023 $ (94,824) $ (304) $ (95,128)

Foreign Actuarial (Loss)
Currency Gain on
Translation Retirement Plan Total
Balance, December 31, 2021 $ (90,867) $ (907) $ (91,774)
Other comprehensive (loss) income, before taxes (10,192) 52 (10,140)
Tax expense — (15) (15)
Other comprehensive (loss) income, net of taxes (10,192) 37 (10,155)
Balance, September 30, 2022 $ (101,059) $ (870) $ (101,929)

Note 15: Stock-Based Compensation

Total stock‑based compensation expense consists of the following:


		Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2023			2022			2023		2022
					Three Months Ended
					Three Months Ended
					Three Months Ended
				March 31,								March 31,
							2024						2024	2023
Restricted stock and restricted stock units (“RSUs”) expense	Restricted stock and restricted stock units (“RSUs”) expense	$	13,988		$	10,441		$	41,441	$	25,003
Bonus Plan expense (see Note 11)	Bonus Plan expense (see Note 11)	3,847			7,305			11,729		21,444
ESPP expense (see Note 13)	ESPP expense (see Note 13)	634			565			1,809		2,394
Stock grants expense		—			—			600		450

Stock option expense
Stock option expense
Stock option expense	Stock option expense	—			395			343		1,762
DCP elective participant deferrals expense (1) (see Note 12)	DCP elective participant deferrals expense (1) (see Note 12)	35			85			170		306
Total stock-based compensation expense (2)	Total stock-based compensation expense (2)	$	18,504		$	18,791		$	56,092	$	51,359

(1)DCP elective participant deferrals expense excludes deferred incentive bonus payable pursuant to the Bonus Plan.

(2)As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022, $4,656~~2023, $6,300 and ~~$7,300~~$4,043 remained in Accruals and other current liabilities in the consolidated balance sheets, respectively.

Total stock‑based compensation expense is included in the consolidated statements of operations as follows:


		Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2023			2022			2023		2022
					Three Months Ended
					Three Months Ended
					Three Months Ended
				March 31,								March 31,
							2024						2024	2023
Cost of subscriptions and licenses	Cost of subscriptions and licenses	$	1,254		$	757		$	3,420	$	1,927
Cost of services	Cost of services	671			460			2,385		1,407
Research and development	Research and development	4,977			6,754			14,687		17,693
Selling and marketing	Selling and marketing	3,244			2,014			9,057		5,657
General and administrative	General and administrative	8,358			8,806			26,543		24,675
Total stock-based compensation expense	Total stock-based compensation expense	$	18,504		$	18,791		$	56,092	$	51,359

Stock‑based compensation expense is measured at the grant date fair value of the award and is recognized ratably over the requisite service period, which is generally the vesting period. Specifically for performance‑based RSUs, stock‑based compensation expense is measured at the grant date fair value of the award and is recognized ratably over the requisite service period based on the number of awards expected to vest at each reporting date. The Company accounts for forfeitures of equity awards as those forfeitures occur.

~~Stock Options~~Bentley Systems, Incorporated 2020 Omnibus Incentive Plan

The ~~following is a summary~~Bentley Systems, Incorporated 2020 Omnibus Incentive Plan (the “2020 Plan”) provides for the granting of stock, ~~option activity~~stock options, restricted stock, RSUs, and ~~related information~~other stock‑based or performance‑based awards to certain directors, officers, colleagues, consultants, and advisors of the Company, and terminates in September 2030. The 2020 Plan provides that 25,000,000 shares of Class B common stock may be issued for equity awards. Equity awards that are expired, canceled, forfeited, or terminated for any reason will be available for future grant under the ~~Company’s applicable equity incentive plans:~~

Weighted
Weighted Average
Average Remaining Aggregate
Stock Exercise Price Contractual Intrinsic
Options Per Share Life (in years) Value
Outstanding, December 31, 2022 3,794,515 $ 5.57
Exercised (2,656,554) 5.50
Forfeited and expired (17,500) 5.68
Outstanding, September 30, 2023 1,120,461 $ 5.74 0.5 $ 49,771
Exercisable, September 30, 2023 1,120,461 $ 5.74 0.5 $ 49,771

For the nine months ended September 30, 2023 and 2022, the Company received cash proceeds of $10,590 and $6,855, respectively, related to the exercise of stock options. The total intrinsic value of stock options exercised for the nine months ended September 30, 2023 and 2022 was $102,667 and $89,532, respectively.

2020 Plan. As of ~~September 30, 2023, there was no remaining unrecognized compensation expense related to unvested stock options.~~March 31, 2024, equity awards available for future grants under the 2020 Plan were 20,273,484.

Restricted Stock and RSUs

Under the equity incentive plans, the Company may grant both time‑based and performance‑based shares of restricted Class B ~~Common Stock~~common stock and RSUs to eligible colleagues. Time‑based awards generally vest ratably on each of the first four anniversaries of the grant date. Performance‑based awards vesting is determined by the achievement of certain business ~~profitability and~~ growth targets, ~~including~~which include growth in annualized recurring revenues (“ARR”), ~~and~~as well as actual bookings for perpetual licenses and non‑recurring ~~services, among others.~~services. Performance targets are generally set for performance periods of one year to three years.

The following is a summary of unvested restricted stock and RSU activity and related information under the Company’s applicable equity incentive plans:

Time-

Performance-

Based

Time-

Weighted

Total

Based

Average

Restricted

Performance-

Grant Date

Stock

Based

Fair Value

and RSUs

RSUs

Per Share

Unvested, December 31, 2022

3,068,851

2,706,078

(3)

362,773

(4)

36.67

38.21

Time-

Performance-

Based

Time-

Weighted

Total

Based

Average

Restricted

Performance-

Grant Date

Stock

Based

Fair Value

and RSUs

RSUs

Per Share

Unvested, December 31, 2023

Granted

1,199,644

(1)

1,003,180

196,464

(5)

41.17

39.03

Granted

830,534

(1)

670,560

159,974

(5)

51.36

48.60

Vested

(780,084)

(622,924)

(157,160)

33.46

38.20

Forfeited and canceled

(180,944)

(143,620)

(37,324)

33.16

33.41

Unvested, September 30, 2023

3,307,467

(2)

2,942,714

364,753

39.06

39.15

Unvested, March 31, 2024

(1)For the ~~nine~~three months ended ~~September 30, 2023,~~March 31, 2024, the Company only granted RSUs.

(2)Includes ~~59,089~~51,638 RSUs which are expected to be settled in cash.

(3)Includes 199,076 time‑based RSUs granted during the three months ended March 31, 2022 to certain officers and key employees, which cliff vest on January 31, 2025.

(4)Primarily relates to the ~~2022~~2023 annual performance period, except for 185,186 performance‑based RSUs granted during the year ended December 31, 2022 with extraordinary terms, which are described below.

(5)Primarily relates to the ~~2023~~2024 annual performance period, except for ~~13,367~~1,335 additional shares earned based on the achievement of ~~2022~~2023 performance goals for ~~performance‑based~~performance-based RSUs granted during the year ended December 31, ~~2022.~~2023.

During the year ended December 31, 2022, the Company granted 185,186 performance‑based RSUs to certain officers and key employees, which vest subject to the achievement of certain performance goals over a three‑year performance period (the “Performance Period”). For each year of the Performance Period, one‑third of the performance‑based RSUs will be subject to a cliff, whereby no vesting of that portion will occur unless the Company’s applicable margin metrics (which, for 2022 was Adjusted EBITDA margin, and for 2023 was and 2024 will be Adjusted operating income inclusive of stock-based compensation expense (“Adjusted OI w/SBC”) margin, excluding the impact of foreign currency exchange fluctuations) also equals or exceeds the relevant target level for such year. Provided that the applicable margin targets are met, the total number of performance‑based RSUs that will vest is determined by the achievement of growth targets, which include growth in ARR, as well as actual bookings for perpetual licenses and non‑recurring services. Final actual vesting will be determined on January 31, 2025. The 2023 Adjusted OI w/SBC margin target, excluding the impact of foreign currency exchange fluctuations, and the 2022 Adjusted EBITDA margin target for the performance‑based RSUs ~~was~~were met.

In 2016, the Company granted RSUs subject to performance‑based vesting as determined by the achievement of certain business growth targets. Certain colleagues elected to defer delivery of such shares upon vesting. During the nine months ended September 30, 2023 and 2022, 1,562 and 10,888 shares, respectively, were delivered to colleagues, and 28 and 23 additional shares, respectively, were earned as a result of dividends. As of September 30, 2023 and December 31, 2022, 7,829 and 9,363 shares, respectively, of these vested and deferred RSUs remained outstanding.

The weighted average grant date fair values of RSUs granted were ~~$40.82~~$50.83 and ~~$38.68,~~$40.73, for the ~~nine~~three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ respectively.

For the ~~nine~~three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ restricted stock and RSUs were issued net of ~~137,675~~113,790 and ~~81,301~~78,993 shares, respectively, which were sold back to the Company to settle applicable income tax withholdings of ~~$6,062~~$5,729 and ~~$3,208,~~$3,025, respectively.

2822

As of ~~September 30, 2023,~~March 31, 2024, there was ~~$82,609~~$102,848 of unrecognized compensation expense related to unvested time‑based restricted stock and RSUs, which is expected to be recognized over a weighted average period of approximately ~~1.7~~2.0 years. As of ~~September 30, 2023,~~March 31, 2024, there was ~~$5,648~~$9,208 of unrecognized compensation expense related to unvested performance‑based RSUs, which is expected to be recognized over a weighted average period of approximately 0.8 years.

Stock Options

~~Stock Grants~~The following is a summary of stock option activity and related information under the Company’s applicable equity incentive plans:



		Weighted
		Average
	Stock	Exercise Price
	Options	Per Share
Outstanding, December 31, 2023	916,429	$	5.74
Exercised	(911,429)	5.74
Forfeited and expired	(5,000)	5.74
Outstanding, March 31, 2024	—	$	—

For the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 and ~~2022, the Company granted 12,639 and 13,632 fully vested shares of Class B Common Stock, respectively, with a fair value of $600 and $450, respectively.~~

~~Equity Awards Subsequent to September 30, 2023~~

~~In October~~ 2023, the Company ~~granted 265,759 time‑based RSUs, which generally vest ratably on each~~received cash proceeds of $4,007 and $4,202, respectively, related to the ~~first four anniversaries~~exercise of stock options. The total intrinsic value of stock options exercised for the ~~grant date. The~~three months ended March 31, 2024 and 2023 was $40,775 and $35,076, respectively.

As of March 31, 2024, there was no remaining unrecognized compensation expense related to ~~these RSUs is approximately $13,000, which is expected to be recognized over a weighted average period of approximately 4.0 years.~~unvested stock options.

Note 16: Income Taxes

The following is a summary of Income before income taxes, Provision for income taxes, and effective tax rate for the periods presented:


		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2023				2022				2023			2022
						Three Months Ended
						Three Months Ended
						Three Months Ended
					March 31,														March 31,
									2024													2024	2023
Income before income taxes	Income before income taxes	$	69,585			$	47,342			$	169,353		$	159,125
Provision for income taxes	Provision for income taxes	$	16,514			$	9,664			$	22,107		$	8,221
Effective tax rate	Effective tax rate	23.7		%		20.4		%		13.1		%	5.2		%	Effective tax rate	24.0	%		17.3	%

For the three months ended ~~September 30, 2023,~~March 31, 2024, the effective tax rate was higher compared to the same period in the prior year ~~period~~ primarily due to ~~an increase in~~ the forecasted effective tax rate impact of the U.S. Global Intangible Low-Taxed Income (“GILTI”) inclusion due to the mandatory capitalization of research and development expenses for U.S. tax purposes. For the three months ended September 30, 2023 and 2022, the Company recorded discrete tax benefits of $4,428 and $4,280, respectively, primarily associated with windfall tax benefits from stock‑based compensation, net of the impact from officer compensation limitation provisions.

For the nine months ended September 30, 2023, the effective tax rate was higher compared to the prior year period primarily due to an increase in the forecasted effective tax rate impact of the GILTI inclusion due to the mandatory capitalization of research and development expenses for U.S. tax purposes and a decrease in discrete tax benefits recognized in the current year period. For the ~~nine~~three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ the Company recorded discrete tax benefits of ~~$31,895~~$2,138 and ~~$36,032,~~$7,073, respectively, primarily associated with windfall tax benefits from stock‑based compensation, net of the impact from officer compensation limitation provisions.

2923

Note 17: Fair Value of Financial Instruments

A financial asset or liability classification is determined based on the lowest level input that is significant to the fair value measurement. The fair value hierarchy consists of the following three levels:

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument.

Level 3 inputs are unobservable inputs based on management’s own assumptions used to measure assets and liabilities at fair value.

The Company’s financial instruments include cash equivalents, account receivables, certain other assets, accounts payable, accruals, certain other current and long‑term liabilities, and long‑term debt.

Current ~~assets~~Assets and ~~current liabilities~~Current Liabilities — In general, the carrying amounts reported on the Company’s consolidated balance sheets for current assets and current liabilities approximate their fair values due to the short‑term nature of those instruments.

The following methods and assumptions were used by the Company in estimating its fair value measurements for Level 2 and Level 3 financial instruments as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022:~~

~~Acquisition contingent consideration~~ — The fair value of these liabilities is generally determined using a cost or income approach and is measured based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The valuation of contingent consideration uses assumptions the Company believes would be made by a market participant.2023:

Interest ~~rate swap~~Rate Swap — The fair value of the Company’s interest rate swap asset or liability is determined using an income approach and is measured based on the implied forward rates for the remaining term of the interest rate swap. The Company considers these valuation inputs to be Level 2 inputs in the fair value hierarchy.

~~Long-term debt~~Long-Term Debt — The fair value of the Company’s borrowings under its Credit Facility approximated its carrying value based upon discounted cash flows at current market rates for instruments with similar remaining terms. The Company considers these valuation inputs to be Level 2 inputs in the fair value hierarchy. As of ~~September 30,~~March 31, 2024, the estimated fair value of the 2026 Notes and 2027 Notes was $692,789 and $516,419, respectively. As of December 31, 2023, the estimated fair value of the 2026 Notes and 2027 Notes was ~~$671,962~~$684,205 and ~~$492,815, respectively. As of December 31, 2022, the estimated fair value of the 2026 Notes and 2027 Notes was $622,431 and $470,856,~~$516,051, respectively. The estimated fair value of the 2026 Notes and 2027 Notes is based on quoted market prices of the Company’s instrument in markets that are not active and are classified as Level 2 within the fair value hierarchy. Considerable judgment is necessary to interpret the market data and develop estimates of fair values. Accordingly, the estimates presented are not necessarily indicative of the amounts at which these instruments could be purchased, sold, or settled.

Deferred ~~compensation plan liabilities~~Compensation Plan Liabilities — The fair value of deferred compensation plan liabilities, including the liability classified phantom investments in the DCP, are marked to market at the end of each reporting period.

3024

Financial assets and financial liabilities carried at fair value measured on a recurring basis consist of the following:


September 30, 2023		Level 1		Level 2		Level 3		Total
March 31, 2024
March 31, 2024
March 31, 2024										Level 1	Level 2	Total
Assets:	Assets:
Money market funds (1)
Money market funds (1)
Money market funds (1)	Money market funds (1)	$	3,023	$	—	$	—	$	3,023
Interest rate swap (2)	Interest rate swap (2)	—		41,302		—		41,302
Total assets	Total assets	$	3,023	$	41,302	$	—	$	44,325
Liabilities:	Liabilities:
Acquisition contingent consideration (3)		$	—	$	—	$	3	$	3
Deferred compensation plan liabilities (4)		81,719		—		—		81,719
Cash-settled equity awards (3)		715		—		—		715

Deferred compensation plan liabilities (3)

Deferred compensation plan liabilities (3)

Deferred compensation plan liabilities (3)
Cash-settled equity awards (4)
Total liabilities	Total liabilities	$	82,434	$	—	$	3	$	82,437


December 31, 2022		Level 1		Level 2		Level 3		Total
December 31, 2023
December 31, 2023
December 31, 2023										Level 1	Level 2	Total
Assets:	Assets:
Money market funds (1)
Money market funds (1)
Money market funds (1)	Money market funds (1)	$	19	$	—	$	—	$	19
Interest rate swap (2)	Interest rate swap (2)	—		37,200		—		37,200
Total assets	Total assets	$	19	$	37,200	$	—	$	37,219
Liabilities:	Liabilities:
Acquisition contingent consideration (3)		$	—	$	—	$	1,196	$	1,196
Deferred compensation plan liabilities (4)		79,081		—		—		79,081
Cash-settled equity awards (3)		536		—		—		536

Deferred compensation plan liabilities (3)

Deferred compensation plan liabilities (3)

Deferred compensation plan liabilities (3)
Cash-settled equity awards (4)
Total liabilities	Total liabilities	$	79,617	$	—	$	1,196	$	80,813

(1)Included in Cash and cash equivalents in the consolidated balance sheets.

(2)Included in Other assets in the consolidated balance sheets.

(3)Included in ~~Accruals and other current liabilities~~ ~~in the consolidated balance sheets.~~

~~(4)Included in~~ Deferred compensation plan liabilities, except for current liabilities of ~~$2,182~~$2,460 and ~~$2,067~~$2,355 as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively, which are included in Accruals and other current liabilities in the consolidated balance sheets.

~~The following is a reconciliation of the changes~~(4)Included in ~~fair value of the Company’s financial~~Accruals and other current liabilities ~~which have been classified as Level 3~~ in the ~~fair value hierarchy:~~

Nine Months Ended Year Ended
September 30, 2023 December 31, 2022
Balance, beginning of year $ 1,196 $ 6,613
Payments (1,206) (5,261)
Addition — 1,390
Change in fair value — (1,427)
Foreign currency translation adjustments 13 (119)
Balance, end of period $ 3 $ 1,196
consolidated balance sheets.

The Company did not have any transfers between levels within the fair value hierarchy.

Note 18: Commitments and Contingencies

Purchase Commitments —

In the normal course of business, the Company enters into various purchase commitments for goods and services. During the ~~nine months~~year ended ~~September 30,~~December 31, 2023, the Company entered into approximately $158,000 of non‑cancelable future cash purchase commitments for services related to cloud provisioning of the Company’s software solutions and for other software ~~costs through May 2026 and September 2028, respectively.~~costs. As of ~~September 30, 2023, the~~March 31, 2024, total non‑cancelable future cash purchase commitments were approximately ~~$137,000.~~$116,500 to be paid through September 2028. The Company expects to fully consume its contractual commitments in the ordinary course of operations.

Litigation —

From time to time, the Company is involved in certain legal actions arising in the ordinary course of business. In management’s opinion, based upon the advice of counsel, the outcome of such actions is not expected to have a material adverse effect on the Company’s future financial position, results of operations, or cash flows.

Note 19: Geographic Data

Revenues by geographic region are presented in Note 3. Long‑lived assets (other than goodwill), net of depreciation and amortization by geographic region (see Notes 5, 6, and 8) are as follows:


		September 30, 2023		December 31, 2022

	March 31, 2024					March 31, 2024	December 31, 2023
Americas (1)	Americas (1)	$	152,822	$	164,729
EMEA	EMEA	37,103		32,372
APAC	APAC	149,797		167,670
Total long-lived assets	Total long-lived assets	$	339,722	$	364,771

(1)Americas includes the U.S., Canada, and Latin America (including the Caribbean).

Note 20: Other Income, Net

Other income, net consists of the following:


					Three Months Ended
					Three Months Ended
					Three Months Ended
				March 31,								March 31,
							2024						2024	2023
Gain (loss) from:
Change in fair value of interest rate swap (see Note 17)
Change in fair value of interest rate swap (see Note 17)
Change in fair value of interest rate swap (see Note 17)
Foreign exchange (1)

		Three Months Ended						Nine Months Ended
		September 30,						September 30,
Receipts related to interest rate swap
		2023			2022			2023		2022
Gain (loss) from:
Change in fair value of interest rate swap (see Note 17)		$	4,765		$	9,828		$	4,102	$	29,318
Foreign exchange (1)		(3,154)			(11,027)			404		(18,815)
Sale of aircraft (see Note 5)		—			—			—		2,029

Change in fair value of acquisition contingent consideration (see Note 17)		—			506			—		6
Receipts related to interest rate swap	Receipts related to interest rate swap	2,336			752			6,420		475
Other income (expense), net (2)		2,006			873			(3,719)		1,780

Receipts related to interest rate swap
Other (expense) income, net
Total other income, net	Total other income, net	$	5,953		$	932		$	7,207	$	14,793

(1)Foreign exchange ~~(loss)~~ gain is primarily attributable to foreign currency translation derived mainly from U.S. dollar denominated cash and cash equivalents, account receivables, customer deposits, and intercompany balances held by foreign subsidiaries. Intercompany finance transactions primarily denominated in U.S. dollars resulted in unrealized foreign exchange (losses) gains of ~~$(1,574)~~$(394) and ~~$(5,730)~~$861 for the three months ended ~~September 30,~~March 31, 2024 and 2023, respectively.

Note 21: Realignment Costs

During the fourth quarter of 2023, the Company approved a strategic realignment program to better serve the Company’s accounts and ~~2022, respectively, and $684 and $(12,293)~~to better align resources with the strategy of the business, including reinvestment in go-to-market functions, as well as in artificial intelligence product development (the “2023 Program”). The Company incurred realignment costs of $12,579 for the ~~nine months~~year ended ~~September 30,~~December 31, 2023 ~~and 2022, respectively.~~

~~(2)Other income (expense), net includes investment impairment charges~~related to the aforementioned program, which represents termination benefits for colleagues whose roles were impacted. During the first quarter of ~~$(7,318)~~2024, the Company incurred realignment costs of $24 for ~~the nine months ended September 30, 2023, partially offset by gains on investments of $2,360 recorded during~~ the three months ended ~~September 30,~~March 31, 2024 related to the aforementioned program. The 2023 ~~(see Note 7).~~Program activities have been broadly implemented across the Company’s various businesses with the intention that all actions, including payment of the termination benefits, will be substantially complete by the end of the second quarter of 2024.

Realignment costs by expense classification were as follows:


	Three Months Ended
	March 31, 2024
Cost of revenues:
Cost of subscriptions and licenses	$	(80)
Cost of services	31
Total cost of revenues	(49)
Operating expenses:
Research and development	(71)
Selling and marketing	678
General and administrative	(534)
Total operating expenses	73
Total realignment costs	$	24

Accruals and other current liabilities in the consolidated balance sheets included amounts related to the realignment activities as follows:


Balance, December 31, 2023	$	12,459
Realignment costs	24
Payments	(7,517)
Adjustments (1)	(272)
Balance, March 31, 2024	$	4,694

(1)Adjustments include foreign currency translation.

Note ~~21:~~22: Net Income Per Share

The Company issues certain performance-based RSUs determined to be participating securities because holders of such shares have non-forfeitable dividend rights in the event of the Company’s declaration of a dividend for common shares. As of ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ there were ~~364,753~~343,825 and ~~362,773~~387,237 participating securities outstanding, respectively.

Undistributed net income allocated to participating securities are subtracted from net income in determining basic net income attributable to common stockholders. Basic net income per share is computed by dividing basic net income attributable to common stockholders by the weighted average number of shares, inclusive of undistributed shares held in the DCP as phantom shares of the Company’s Class B ~~Common Stock.~~common stock.

For the Company’s diluted net income per share numerator, interest expense, net of tax, attributable to the assumed conversion of the convertible senior notes is added back to basic net income attributable to common stockholders. For the Company’s diluted net income per share denominator, the basic weighted average number of shares is adjusted for the effect of dilutive securities, including awards under the Company’s equity compensation plans and ESPP, and for the dilutive effect of the assumed conversion of the convertible senior notes. Diluted net income per share attributable to common stockholders is computed by dividing diluted net income attributable to common stockholders by the weighted average number of fully diluted common shares.

Except with respect to voting and conversion, the rights of the holders of the Company’s Class A ~~Common Stock~~common stock and the Company’s Class B ~~Common Stock~~common stock are identical. Each class of shares has the same rights to dividends and allocation of income (loss) and, therefore, net income per share would not differ under the two‑class method.

The details of basic and diluted net income per share are as follows:


			Three Months Ended				Nine Months Ended
			September 30,				September 30,
			2023		2022		2023		2022
		Three Months Ended										Three Months Ended
		March 31,										March 31,
		2024									2024		2023
Numerator:	Numerator:
Net income
Net income
Net income	Net income		$	53,027	$	36,997	$	147,202	$	149,058
Less: Net income attributable to participating securities	Less: Net income attributable to participating securities		(18)		(11)		(56)		(31)
Net income attributable to Class A and Class B common stockholders, basic	Net income attributable to Class A and Class B common stockholders, basic		53,009		36,986		147,146		149,027
Add: Interest expense, net of tax, attributable to assumed conversion of convertible senior notes	Add: Interest expense, net of tax, attributable to assumed conversion of convertible senior notes		1,716		832		5,157		5,116
Net income attributable to Class A and Class B common stockholders, diluted	Net income attributable to Class A and Class B common stockholders, diluted		$	54,725	$	37,818	$	152,303	$	154,143

Denominator:	Denominator:
Denominator:
Denominator:
Weighted average shares, basic
Weighted average shares, basic
Weighted average shares, basic	Weighted average shares, basic		313,069,132		310,116,104		311,915,808		308,959,801
Dilutive effect of stock options, restricted stock, and RSUs	Dilutive effect of stock options, restricted stock, and RSUs		2,115,802		4,126,936		2,534,773		5,278,839
Dilutive effect of ESPP	Dilutive effect of ESPP		6,466		168,518		60,526		171,571
Dilutive effect of assumed conversion of convertible senior notes	Dilutive effect of assumed conversion of convertible senior notes		17,633,786		10,758,825		17,633,786		17,667,623
Weighted average shares, diluted	Weighted average shares, diluted		332,825,186		325,170,383		332,144,893		332,077,834

Net income per share, basic	Net income per share, basic		$	0.17	$	0.12	$	0.47	$	0.48
Net income per share, basic
Net income per share, basic
Net income per share, diluted	Net income per share, diluted		$	0.16	$	0.12	$	0.46	$	0.46

The following potential common shares were excluded from the calculation of diluted net income per share attributable to common stockholders because their effect would have been anti‑dilutive for the periods presented:


	Three Months Ended						Three Months Ended
	March 31,						March 31,
	2024					2024		2023
RSUs

		Three Months Ended		Nine Months Ended
Total anti-dilutive securities
		September 30,		September 30,
Total anti-dilutive securities
		2023	2022	2023	2022
RSUs		—	297,789	—	279,789

Convertible senior notes		—	6,908,798	—	—
Total anti-dilutive securities	Total anti-dilutive securities	—	7,206,587	—	279,789

3428

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our unaudited consolidated financial statements and notes thereto appearing in Part I, Item 1 of this Quarterly Report on Form 10‑Q and with our audited consolidated financial statements and notes thereto included in our ~~2022~~2023 Annual Report on Form 10‑K.

All amounts presented in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, except share and per share amounts, are presented in thousands. Additionally, many of the amounts and percentages have been rounded for convenience of presentation. Minor differences in totals and percentage calculations may exist due to rounding.

Overview:

~~Overview~~

~~We are a leading global provider of software for~~ Bentley Systems is the infrastructure engineering ~~and enable~~software company. Our purpose is to advance the world’s infrastructure ~~professionals and their organizations, by “going digital” through our software and cloud services offerings,~~for better quality of life. We empower people to ~~better~~ design, build, and operate better ~~infrastructure. Our users engineer, construct,~~ and ~~operate projects~~more resilient infrastructure through the adoption of our intelligent digital twin solutions. We manage our business globally within one reportable segment, the development and ~~assets across~~marketing of computer software and related services, which is consistent with how our CODM reviews and manages our business.

Executive Summary:

•Total revenues were $337,763 for the ~~following infrastructure sectors: public works/utilities, resources, industrial, and commercial/facilities.~~

Our enduring commitment is to develop and support the most comprehensive portfolio of integrated software offerings across professional disciplines, project and asset lifecycles, infrastructure sectors, and geographies. We deliver our solutions via on‑premises, cloud, and hybrid environments. Our software enables digital workflows across engineering disciplines, across distributed project teams, and from officesthree months ended March 31, 2024, up 7.4% or 7.2% on a constant currency basis(1) compared to the ~~field.~~three months ended March 31, 2023;

~~We believe that~~•Subscriptions revenues were $307,089 for the three months ended March 31, 2024, up 10.5% or 10.3% on a constant currency basis(1) compared to the three months ended March 31, 2023;

•ARR(2) was $1,186,456 as of March 31, 2024, compared to $1,070,955 as of March 31, 2023, representing a constant currency(1) ARR growth rate(2) of 11.0%;

•Last twelve-month recurring revenues dollar-based net retention rate(2) was 108% as of March 31, 2024, compared to 110% as of March 31, 2023;

•Operating income was $91,931 for the three months ended March 31, 2024, compared to $65,785 for the three months ended March 31, 2023;

•Adjusted OI w/SBC(1) was $112,345 for the three months ended March 31, 2024, compared to $90,464 for the three months ended March 31, 2023; and

•Cash flows from operations were $204,969 for the three months ended March 31, 2024, compared to $176,223 for the three months ended March 31, 2023.

(1)Constant currency and Adjusted OI w/SBC are non‑GAAP financial measures. Refer to the “Non‑GAAP Financial Measures” section for additional information, including our ~~offerings, in particular~~definitions and our ~~infrastructure digital twin solutions, empower~~uses of constant currency and Adjusted OI w/SBC.

(2)Refer to the ~~achievement~~“Key Business Metrics” section for additional information, including our definitions and our uses of ~~sustainable development goals by helping our users – infrastructure professionals – realize outcomes that are more sustainable~~ARR, ARR growth rate, and ~~resilient.~~recurring revenues dollar-based net retention rate.

3529

Results of ~~Operations~~Operations:

Three Months Ended Nine Months Ended
September 30, September 30,
2023 2022 2023 2022
Revenues:
Subscriptions $ 270,751 $ 235,307 $ 807,839 $ 708,731
Perpetual licenses 11,887 9,460 33,152 31,213
Subscriptions and licenses 282,638 244,767 840,991 739,944
Services 23,974 23,565 76,781 72,190
Total revenues 306,612 268,332 917,772 812,134
Cost of revenues:
Cost of subscriptions and licenses 42,088 37,371 124,175 107,904
Cost of services 22,588 21,812 74,111 66,758
Total cost of revenues 64,676 59,183 198,286 174,662
Gross profit 241,936 209,149 719,486 637,472
Operating expense (income):
Research and development 65,465 63,827 203,382 189,966
Selling and marketing 53,757 46,114 160,262 141,676
General and administrative 42,678 37,794 128,743 128,981
Deferred compensation plan (3,160) (4,576) 4,763 (21,873)
Amortization of purchased intangibles 9,517 10,446 29,567 30,869
Total operating expenses 168,257 153,605 526,717 469,619
Income from operations 73,679 55,544 192,769 167,853
Interest expense, net (10,047) (9,134) (30,623) (23,521)
Other income, net 5,953 932 7,207 14,793
Income before income taxes 69,585 47,342 169,353 159,125
Provision for income taxes (16,514) (9,664) (22,107) (8,221)
Loss from investments accounted for using the equity method, net of tax (44) (681) (44) (1,846)
Net income $ 53,027 $ 36,997 $ 147,202 $ 149,058
Per share information:
Net income per share, basic $ 0.17 $ 0.12 $ 0.47 $ 0.48
Net income per share, diluted $ 0.16 $ 0.12 $ 0.46 $ 0.46
Weighted average shares, basic 313,069,132 310,116,104 311,915,808 308,959,801
Weighted average shares, diluted 332,825,186 325,170,383 332,144,893 332,077,834
Impact of Foreign Currency

Our results of operations have been, and in the future will be, affected by changes in foreign currency exchange rates. Other than the natural hedge attributable to matching revenues and expenses in the same currencies, we do not currently hedge foreign currency exposure.

We identify the effects of foreign currency on our operations and present constant currency growth rates and fluctuations because we believe exchange rates are an important factor in understanding period‑over‑period comparisons and enhance the understanding of our results and evaluation of our performance. Refer to the “Non‑GAAP Financial Measures” section for additional information, including our definition and our use of constant currency.

~~Comparison of the Three and Nine Months Ended September 30, 2023 and 2022~~

Revenues

Comparison
Three Months Ended Constant
September 30, Currency
2023 2022 Amount %
%(1)
Subscriptions $ 270,751 $ 235,307 $ 35,444 15.1 % 11.7 %
Perpetual licenses 11,887 9,460 2,427 25.7 % 23.1 %
Subscriptions and licenses 282,638 244,767 37,871 15.5 % 12.1 %
Services 23,974 23,565 409 1.7 % (0.5 %)
Total revenues $ 306,612 $ 268,332 $ 38,280 14.3 % 11.0 %
Consolidated Revenues


							Comparison
		Nine Months Ended									Constant
		September 30,									Currency
		2023		2022			Amount		%		%(1)
						% Change																												% Change
						2023 to 2024																												2023 to 2024
	Three Months Ended																			Three Months Ended													Constant
	March 31,																			March 31,													Currency
	2024																2024					2023					%					%(1)
Subscriptions	Subscriptions	$	807,839	$	708,731		$	99,108	14.0	%	13.6	%	Subscriptions	$	307,089	$		$	277,845		10.5		10.5		%			10.3		%
Perpetual licenses	Perpetual licenses	33,152		31,213			1,939		6.2	%	6.5	%	Perpetual licenses	9,512		9,547			9,547			(0.4		(0.4		%)			0.8		%
Subscriptions and licenses	Subscriptions and licenses	840,991		739,944			101,047		13.7	%	13.3	%	Subscriptions and licenses	316,601		287,392			287,392			10.2		10.2		%			10.0		%
Services	Services	76,781		72,190			4,591		6.4	%	7.7	%	Services	21,162		27,019			27,019			(21.7		(21.7		%)			(22.4		%)
Total revenues	Total revenues	$	917,772	$	812,134		$	105,638	13.0	%	12.8	%	Total revenues	$	337,763	$		$	314,411		7.4		7.4		%			7.2		%

(1)Constant currency is a non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures” section for additional information, including our definition and our use of constant ~~currency.~~currency, and for a reconciliation of constant currency growth rates.

The increase in total revenues for the three ~~and nine~~ months ended ~~September 30, 2023~~March 31, 2024 was primarily driven by ~~increases~~an increase in subscriptions revenues, ~~and to~~partially offset by a ~~lesser extent, perpetual licenses and~~decrease in services revenues.

Subscriptions. For the three months ended ~~September 30, 2023,~~March 31, 2024, the increase in subscriptions revenues was primarily driven by improvements in our business performance of approximately ~~$35,444~~$29,244 ($~~27,438~~28,625 on a constant currency basis). Our business performance excludes the impact of our platform acquisitions and includes the impact from programmatic acquisitions, which generally are immaterial, individually and in the aggregate.

For the nine months ended September 30, 2023, the increase in subscriptions revenues was primarily driven by improvements in our business performance of approximately $94,807 ($91,790 on a constant currency basis) and the impact from our platform acquisition of approximately $4,301 ($4,330 on a constant currency basis). The platform acquisition impact relates to our acquisition of PLS and is inclusive of PLS’ organic performance.

For the three ~~and nine~~ months ended ~~September 30, 2023,~~March 31, 2024, the improvements in business performance were primarily driven by expansion from accounts with revenues in the same period in the prior ~~period~~year (“existing accounts”), and growth of 3%4% attributable to new accounts, most notably ~~smaller-~~small- and medium-sized accounts. Improvements in business performance for the three ~~and nine~~ months ended ~~September 30, 2023~~March 31, 2024 were led by our ~~civil and structural~~ engineeringapplications, geoprofessionalapplications, and our ~~Enterprise Systems~~Bentley Infrastructure Cloud for project delivery.

Perpetual licenses. For the three ~~and nine~~ months ended ~~September 30, 2023, the increase in~~March 31, 2024, perpetual licenses revenues ~~was driven by improvements~~were flat compared to the same period in ~~business performance of approximately $2,427 ($2,184 on a constant currency basis) and $1,939 ($2,026 on a constant currency basis), respectively.~~

~~For~~ the ~~three and nine months ended September 30, 2023, the improvements in our business performance were primarily driven by growth in new accounts.~~prior year.

Services. For the three months ended ~~September 30, 2023, services revenues increased by approximately $409 (decreased by approximately $107 on a constant currency basis) due to business performance.~~

~~For~~March 31, 2024, the ~~nine months ended September 30, 2023, the increase~~decrease in services revenues was driven by ~~improvements~~decline in our business performance of approximately ~~$4,591~~$5,857 ($~~5,551 on a constant currency basis).~~

For the three and nine months ended September 30, 2023, the improvements in business performance were primarily driven by contributions from Cohesive digital integrator services of approximately $1,168 ($852 on a constant currency basis) and $6,347 ($7,2976,064 on a constant currency basis), ~~respectively.~~driven primarily from weakness in Maximo-related work within our digital integrator, Cohesive.

Revenues by Geographic Region

Revenue from external customers is attributed to individual countries based upon the location of the customer. ~~Revenues by geographic region are as follows:~~

Comparison
Three Months Ended Constant
September 30, Currency
2023 2022 Amount %
%(1)
Americas $ 162,367 $ 141,599 $ 20,768 14.7 % 13.9 %
EMEA 86,956 75,416 11,540 15.3 % 7.3 %
APAC 57,289 51,317 5,972 11.6 % 8.4 %
Total revenues $ 306,612 $ 268,332 $ 38,280 14.3 % 11.0 %


							Comparison
		Nine Months Ended									Constant
		September 30,									Currency
		2023		2022			Amount		%		%(1)
						% Change																												% Change
						2023 to 2024																												2023 to 2024
	Three Months Ended																			Three Months Ended													Constant
	March 31,																			March 31,													Currency
	2024																2024					2023					%					%(1)
Americas	Americas	$	489,548	$	440,218		$	49,330	11.2	%	11.0	%	Americas	$	184,193	$		$	168,345		9.4		9.4		%			9.2		%
EMEA	EMEA	263,232		227,696			35,536		15.6	%	14.6	%	EMEA	94,714		92,832			92,832			2.0		2.0		%			0.5		%
APAC	APAC	164,992		144,220			20,772		14.4	%	15.2	%	APAC	58,856		53,234			53,234			10.6		10.6		%			12.7		%
Total revenues	Total revenues	$	917,772	$	812,134		$	105,638	13.0	%	12.8	%	Total revenues	$	337,763	$		$	314,411		7.4		7.4		%			7.2		%

Americas. For the three months ended ~~September 30, 2023, the increase in revenues from the Americas was driven by improvements in our business performance of approximately $20,768 ($19,690 on a constant currency basis).~~

~~For the nine months ended September 30, 2023,~~March 31, 2024, the increase in revenues from the Americas was primarily driven by improvements in our business performance of approximately ~~$45,640~~$15,848 ($~~44,865~~15,477 on a constant currency basis) ~~and the impact from our platform acquisition of approximately $3,690 ($3,697 on a constant currency basis)~~.

EMEA. For the three ~~and nine~~ months ended ~~September 30, 2023,~~March 31, 2024, the increase in revenues from EMEA was primarily driven by improvements in our business performance of approximately ~~$11,540~~$1,882 ($~~5,529~~427 on a constant currency basis) ~~and $35,087 ($32,694 on a constant currency basis), respectively.~~.

The improvements in business performance for the three ~~and nine~~ months ended ~~September 30, 2023~~March 31, 2024 were primarily due to expansion of our subscriptions revenues from existing accounts in the ~~U.K., the~~ Middle East and ~~to a lesser extent South~~ Africa, and Central Europe, partially offset by ~~reductions~~a decline in ~~Russia due to exiting our operations beginning~~services revenues in ~~the second quarter of 2022.~~EMEA.

APAC. For the three ~~and nine~~ months ended ~~September 30, 2023,~~March 31, 2024, the increase in revenues from APAC was primarily driven by improvements in our business performance of approximately ~~$5,972~~$5,622 ($~~4,294~~6,730 on a constant currency basis) ~~and $20,610 ($21,809 on a constant currency basis), respectively.~~.

~~Revenues~~Total revenues in China for the three ~~and nine~~ months ended ~~September 30, 2023 increased~~March 31, 2024 decreased as compared to the same ~~periods~~period in the prior year, primarily due to a decline in subscriptions revenues from existing accounts, partially offset by the expansion of our perpetual licenses revenues. The future results in China remain uncertain as a result of continued geopolitical challenges, the obstacles there to cloud‑deployed software, and the financial timing impact of the preference there for license sales, rather than ~~subscriptions,~~subscriptions.

Cost of ~~locally-developed solutions based on our platforms.~~

Revenues and Operating Expenses

Cost of Revenues

Comparison
Three Months Ended Constant
September 30, Currency
2023 2022 Amount %
%(1)
Cost of subscriptions and licenses $ 42,088 $ 37,371 $ 4,717 12.6 % 10.7 %
Cost of services 22,588 21,812 776 3.6 % 0.9 %
Total cost of revenues $ 64,676 $ 59,183 $ 5,493 9.3 % 7.1 %


							Comparison
		Nine Months Ended									Constant
		September 30,									Currency
		2023		2022			Amount		%		%(1)
						% Change																												% Change
						2023 to 2024																												2023 to 2024
	Three Months Ended																			Three Months Ended													Constant
	March 31,																			March 31,													Currency
	2024																2024					2023					%					%(1)
Cost of subscriptions and licenses	Cost of subscriptions and licenses	$	124,175	$	107,904		$	16,271	15.1	%	15.6	%	Cost of subscriptions and licenses	$	40,218	$		$	40,931		(1.7		(1.7		%)			(2.0		%)
Cost of services	Cost of services	74,111		66,758			7,353		11.0	%	13.0	%	Cost of services	21,612		26,253			26,253			(17.7		(17.7		%)			(18.7		%)
Total cost of revenues	Total cost of revenues	$	198,286	$	174,662		$	23,624	13.5	%	14.6	%	Total cost of revenues	$	61,830	$		$	67,184		(8.0		(8.0		%)			(8.5		%)

Cost of subscriptions and licenses. For the three months ended ~~September 30, 2023,~~March 31, 2024, on a constant currency basis, cost of subscriptions and licenses ~~increased~~decreased primarily due to ~~an increase in headcount‑related costs of approximately $2,871, mainly due to increases in headcount and annual compensation costs, and an increase~~a decrease in channel partner compensation of approximately ~~$767.~~

~~For the nine months ended September 30, 2023, on~~$840 and a ~~constant currency basis, cost~~decrease in amortization of ~~subscriptions and licenses increased primarily due to an increase~~capitalized costs under our Accelerated Commercial Development Program of approximately $780, partially offset by increases in ~~headcount‑related~~cloud-related costs of approximately $11,103, mainly due to increases in headcount and annual compensation costs, an increase in cloud‑related costs of approximately $2,987, and an increase in channel partner compensation of approximately $1,963.$1,077.

Cost of services. For the three months ended ~~September 30, 2023,~~March 31, 2024, on a constant currency basis, cost of services ~~increased~~decreased primarily due to ~~an increase~~a decrease in ~~headcount-related~~headcount‑related costs of approximately ~~$484,~~$4,995, mainly due to ~~increases~~a reduction in ~~headcount, partially offset by~~third‑party personnel costs, and to a lesser extent, lower acquisition-related retention incentives.

For the nine months ended September 30, 2023, on a constant currency basis, cost of services increased primarily due to an increase in headcount-related costs of approximately $8,790, mainly due to third-party personnel cost, and to a lesser extent, increases in headcount, partially offset by lower acquisition-related retention incentives.

Operating ~~Expense (Income)~~Expenses

Comparison
Three Months Ended Constant
September 30, Currency
2023 2022 Amount %
%(1)
Research and development $ 65,465 $ 63,827 $ 1,638 2.6 % 1.7 %
Selling and marketing 53,757 46,114 7,643 16.6 % 15.0 %
General and administrative 42,678 37,794 4,884 12.9 % 11.3 %
Deferred compensation plan (3,160) (4,576) 1,416 (30.9 %) NM
Amortization of purchased intangibles 9,517 10,446 (929) (8.9 %) (9.7 %)
Total operating expenses $ 168,257 $ 153,605 $ 14,652 9.5 % 8.3 %


							Comparison
		Nine Months Ended									Constant
		September 30,									Currency
		2023		2022			Amount		%		%(1)
						% Change																												% Change
						2023 to 2024																												2023 to 2024
	Three Months Ended																			Three Months Ended													Constant
	March 31,																			March 31,													Currency
	2024																2024					2023					%					%(1)
Research and development	Research and development	$	203,382	$	189,966		$	13,416	7.1	%	8.8	%	Research and development	$	68,371	$		$	67,800		0.8		0.8		%			0.7		%
Selling and marketing	Selling and marketing	160,262		141,676			18,586		13.1	%	14.3	%	Selling and marketing	54,386		52,141			52,141			4.3		4.3		%			4.1		%
General and administrative	General and administrative	128,743		128,981			(238)		(0.2	%)	0.2	%	General and administrative	46,482		46,807			46,807			(0.7		(0.7		%)			(1.0		%)
Deferred compensation plan	Deferred compensation plan	4,763		(21,873)			26,636		NM		NM		Deferred compensation plan	5,799		4,146			4,146			39.9		39.9		%			39.9		%
Amortization of purchased intangibles	Amortization of purchased intangibles	29,567		30,869			(1,302)		(4.2	%)	(3.7	%)	Amortization of purchased intangibles	8,964		10,548			10,548			(15.0		(15.0		%)			(15.2		%)
Total operating expenses	Total operating expenses	$	526,717	$	469,619		$	57,098	12.2	%	13.3	%	Total operating expenses	$	184,002	$		$	181,442		1.4		1.4		%			1.2		%

~~Percentage changes that are considered not meaningful are denoted with NM.~~

Research and development. For the three ~~and nine~~ months ended ~~September 30, 2023,~~March 31, 2024, on a constant currency basis, research and development expenses increased primarily due to an increase in ~~headcount-related~~headcount‑related costs of approximately ~~$1,358 and $16,652, respectively,~~$250, mainly due to ~~increases~~an increase in annual and other compensation costs, ~~and headcount,~~ partially offset by a decrease in stock‑based compensation ~~expense.~~expense, lower acquisition-related retention incentives, and lower travel-related costs.

Selling and marketing. For the three ~~and nine~~ months ended ~~September 30, 2023,~~March 31, 2024, on a constant currency basis, selling and marketing expenses increased primarily due to an increase in ~~headcount-related~~headcount‑related costs of approximately ~~$6,094 and $18,716, respectively,~~$3,394, mainly due to ~~increases in headcount and annual compensation costs, and to a lesser extent,~~ an increase in ~~stock‑based~~annual and other compensation ~~expense.~~costs, partially offset by a decrease in promotional costs of $1,344.

General and administrative. For the three months ended ~~September 30, 2023,~~March 31, 2024, on a constant currency basis, general and administrative expenses ~~increased~~decreased primarily due to lower acquisition costs of approximately $4,986. Partially offsetting this decrease was an increase in headcount‑related costs of approximately $962, mainly due to an increase in ~~headcount-related costs of approximately $2,009, mainly due to increases in annual~~stock‑based compensation ~~costs and headcount,~~expense, and to a lesser extent, ~~increases in third-party~~third‑party personnel ~~costs, and higher acquisition expenses of approximately $931.~~

~~For the nine~~costs. The three months ended ~~September 30,~~March 31, 2023 ~~on a constant currency basis, general and administrative expenses increased primarily~~included approximately $1,799 of income recorded due to an increase in headcount-related costs of approximately $13,685, mainly due to increases in headcount and annual compensation costs. Partially offsetting these increases were lower non‑income related taxes of approximately $5,328 and lower acquisition expenses of approximately $4,920. Costs resulting from our decision tothe continued wind down ~~business and exit the~~of our Russian ~~market~~entities since we exited operations beginning in the second quarter of ~~2022 were approximately $2,758 lower in the current year period.~~

2022.

Deferred compensation plan. For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ deferred compensation plan ~~(income)~~ expense was attributable to the marked to market impact on deferred compensation plan liability balances period over period.

Amortization of purchased intangibles. For the three ~~and nine~~ months ended ~~September 30, 2023,~~March 31, 2024, on a constant currency basis, amortization of purchased intangibles decreased primarily due to previously acquired intangible assets that continue to become fully amortized and lower acquisition activity as compared to ~~the~~ prior ~~year.~~periods.

Interest Expense, Net

Three Months Ended Comparison
September 30,
2023 2022 Amount %
Interest expense $ (10,548) $ (9,243) $ (1,305) 14.1 %
Interest income 501 109 392 NM
Interest expense, net $ (10,047) $ (9,134) $ (913) 10.0 %


		Nine Months Ended				Comparison
		September 30,
		2023		2022		Amount		%
	Three Months Ended																Three Months Ended						% Change
	March 31,																March 31,						2023 to
	2024													2024					2023			2024
Interest expense	Interest expense	$	(31,863)	$	(23,794)	$	(8,069)	33.9	%	Interest expense	$	(7,303)	$		$	(11,321)		(35.5		(35.5	%)
Interest income	Interest income	1,240		273		967		NM		Interest income	783		229			229			NM		NM
Interest expense, net	Interest expense, net	$	(30,623)	$	(23,521)	$	(7,102)	30.2	%	Interest expense, net	$	(6,520)	$		$	(11,092)		(41.2		(41.2	%)

Percentage changes that are considered not meaningful are denoted with NM.

For the three ~~and nine~~ months ended ~~September 30, 2023,~~March 31, 2024, interest expense, net ~~increased~~decreased primarily due to ~~a higher weighted average interest rate on borrowings under the revolving loan facility and on the Term Loan, partially offset by~~ lower weighted average debt ~~outstanding.~~outstanding, as compared to the same period in the prior year, primarily related to the pay down of our revolving loan borrowings under the Credit Facility in January 2024.

Other Income, Net


					Three Months Ended
					Three Months Ended
					Three Months Ended
				March 31,								March 31,
							2024						2024	2023
Gain (loss) from:
Change in fair value of interest rate swap
Change in fair value of interest rate swap
Change in fair value of interest rate swap
Foreign exchange (1)

		Three Months Ended						Nine Months Ended
		September 30,						September 30,
Receipts related to interest rate swap
		2023			2022			2023		2022
Gain (loss) from:
Change in fair value of interest rate swap		$	4,765		$	9,828		$	4,102	$	29,318
Foreign exchange (1)		(3,154)			(11,027)			404		(18,815)
Sale of aircraft		—			—			—		2,029

Change in fair value of acquisition contingent consideration		—			506			—		6
Receipts related to interest rate swap	Receipts related to interest rate swap	2,336			752			6,420		475
Other income (expense), net (2)		2,006			873			(3,719)		1,780

Receipts related to interest rate swap
Other (expense) income, net
Total other income, net	Total other income, net	$	5,953		$	932		$	7,207	$	14,793

~~(2)~~Other income (expense), net includes investment impairment charges of $(7,318) for the nine months ended September 30, 2023, partially offset by gains on investments of $2,360 recorded during the three months ended September 30, 2023.

Provision for Income Taxes


		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2023				2022				2023			2022
						Three Months Ended
						Three Months Ended
						Three Months Ended
					March 31,														March 31,
									2024													2024	2023
Income before income taxes	Income before income taxes	$	69,585			$	47,342			$	169,353		$	159,125
Provision for income taxes	Provision for income taxes	$	16,514			$	9,664			$	22,107		$	8,221
Effective tax rate	Effective tax rate	23.7		%		20.4		%		13.1		%	5.2		%	Effective tax rate	24.0	%		17.3	%

For the three months ended ~~September 30, 2023,~~March 31, 2024, the effective tax rate was higher compared to the same period in the prior year ~~period~~ primarily due to ~~an increase~~the decrease in discrete tax benefits recognized in the ~~forecasted effective tax rate impact of the GILTI inclusion due to the mandatory capitalization of research and development expenses for U.S. tax purposes.~~current year period. For the three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ we recorded discrete tax benefits of ~~$4,428~~$2,138 and ~~$4,280,~~$7,073, respectively, primarily associated with windfall tax benefits from stock‑based compensation, net of the impact from officer compensation limitation provisions.

For the nine months ended September 30, 2023, the effective tax rate was higher compared to the prior year period primarily due to an increase in the forecasted effective tax rate impact of the GILTI inclusion due to the mandatory capitalization of research and development expenses for U.S. tax purposes and a decrease in discrete tax benefits recognized in the current year period. For the nine months ended September 30, 2023 and 2022, we recorded discrete tax benefits of $31,895 and $36,032, respectively, primarily associated with windfall tax benefits from stock‑based compensation, net of the impact from officer compensation limitation provisions.

Key Business ~~Metrics~~Metrics:

In addition to our results of operations discussed above, we believe the following presentation of key business metrics provides additional useful information to investors regarding our results of operations. To the extent material, we disclose below the additional purposes, if any, for which our management uses these key business metrics. Our key business metrics may vary significantly from period to period for reasons unrelated to our operating performance and may differ from similarly titled measures presented by other companies.


		September 30,
		2023			2022
	March 31,												March 31,
	2024										2024			2023
ARR	ARR	$	1,124,774		$	983,656
Last twelve-months recurring revenues	Last twelve-months recurring revenues	$	1,076,434		$	950,367
Twelve-months ended constant currency (1):	Twelve-months ended constant currency (1):
ARR growth rate	ARR growth rate	12.5		%	14		%
ARR growth rate
ARR growth rate									11	%		13	%
Account retention rate	Account retention rate	97		%	99		%	Account retention rate	99	%		98	%
Recurring revenues dollar-based net retention rate	Recurring revenues dollar-based net retention rate	110		%	110		%	Recurring revenues dollar-based net retention rate	108	%		110	%

(1)Constant currency is a non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures” section for additional information, including our definition and our use of constant currency.

Recurring ~~revenues~~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 within our 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.

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.

ARR resulting from the annualization of recurring contracts with consumption measurement durations of less than one year, as a percentage of total ARR, was ~~46%~~48% and ~~41%~~44% as of ~~September 30,~~March 31, 2024 and 2023, ~~and 2022, respectively. Within our consumption‑measured ARR, the continued transition to~~respectively, with our E365 subscription offering ~~has increased daily consumption‑measured ARR,~~ representing ~~39%~~42% and ~~33%~~36% of total ARR as of ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ respectively. ~~For the nine months ended September 30, 2022, ARR was reduced by $11,190 due to our decision to exit the Russian market.~~

Constant currency ARR growth rate is the growth rate of ARR measured on a constant currency basis. ~~During the twelve months ended September 30, 2022, our~~In reporting period‑over‑period ARR growth ~~rate was favorably impacted~~rates in constant currency, we calculate constant currency growth rates by ~~2.5% due~~translating current and prior period ARR on a transactional basis to ~~the ARR onboarding from~~ our ~~platform acquisition of PLS.~~reporting currency using current year budget exchange rates. We believe that ARR growth is an important metric indicating the scale and growth of our business.

Last ~~twelve‑months recurring revenues~~Twelve‑Months Recurring Revenues

Last twelve‑month recurring revenues is a key business metric that we believe is useful in evaluating our ability to consistently retain and grow our recurring revenues. We believe that we will continue to experience favorable growth in recurring revenues primarily due to our strong account retention and recurring revenues dollar‑based net retention rates, as well as the addition of new accounts with recurring revenues.

Last twelve‑months recurring revenues is calculated as recurring revenues recognized over the preceding twelve‑month period.

The last twelve‑months recurring revenues for the periods ended ~~September 30, 2023~~March 31, 2024 compared to the last twelve‑months of the comparative twelve‑month period increased by ~~$126,067.~~$111,444. This increase was primarily due to growth in ARR, which is primarily the result of growing our recurring revenues within our existing accounts as expressed in our recurring revenues dollar‑based net retention rate, as well as additional recurring revenues resulting from new accounts and ~~acquisitions, including the favorable impact from our platform acquisition of PLS.~~acquisitions. For the twelve months ended ~~September 30,~~March 31, 2024 and 2023, 90% and ~~2022,~~ 89% ~~and 88%~~, respectively, of our revenues were recurring revenues.

Account ~~retention rate~~Retention Rate

Account retention rate is a key business metric that we believe is useful in evaluating the long‑term value of our account relationships and our ability to retain our account base. We believe that our consistent and high account retention rates illustrate our ability to retain and cultivate long‑term relationships with our accounts.

Account retention rate for any given twelve-month period is calculated using the average foreign currency exchange rates for the prior period, as follows: the prior period recurring revenues from all accounts with recurring revenues in the current and prior period, divided by total recurring revenues from all accounts during the prior period.

~~Our account retention rate as of September 30, 2023 was negatively impacted due to our decision to exit the Russian market by approximately 1%.~~

Recurring ~~revenues dollar‑based net retention rate~~Revenues Dollar‑Based Net Retention Rate

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.

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.

Given that recurring revenues represented 90% and 89% of our total revenues for the twelve months ended ~~September 30,~~March 31, 2024 and 2023, respectively, this metric helps explain our revenue performance ~~excluding the impact from acquisitions,~~ as primarily growth ~~into~~from existing accounts.

Non-GAAP Financial ~~Measures~~Measures:

In addition to our results determined in accordance with GAAP discussed above, we believe the following presentation of financial measures not in accordance with GAAP provides useful information to investors regarding our results of operations. To the extent material, we disclose below the additional purposes, if any, for which our management uses these non‑GAAP financial measures and provide reconciliations between these non‑GAAP financial measures and their most directly comparable GAAP financial measures. Non‑GAAP financial information should be considered in addition to, not as a substitute for, or in isolation from, the financial information prepared in accordance with GAAP, including operating income, or other measures of performance. Our non‑GAAP financial measures may vary significantly from period to period for reasons unrelated to our operating performance and may differ from similarly titled measures presented by other companies.

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~~our 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 ~~operating income~~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.

4536

Reconciliation of operating income to Adjusted OI w/SBC and to Adjusted operating income:


		Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2023			2022			2023		2022
					Three Months Ended
					Three Months Ended
					Three Months Ended
				March 31,								March 31,
							2024						2024	2023
Operating income	Operating income	$	73,679		$	55,544		$	192,769	$	167,853
Amortization of purchased intangibles (1)	Amortization of purchased intangibles (1)	12,678			13,575			39,038		40,174
Deferred compensation plan (2)	Deferred compensation plan (2)	(3,160)			(4,576)			4,763		(21,873)
Acquisition expenses (3)	Acquisition expenses (3)	2,980			3,203			15,278		21,056
Realignment expenses (income) (4)	Realignment expenses (income) (4)	150			(971)			(1,800)		2,223
Adjusted OI w/SBC	Adjusted OI w/SBC	86,327			66,775			250,048		209,433
Stock-based compensation expense (5)	Stock-based compensation expense (5)	18,039			18,626			54,907		50,974
Adjusted operating income	Adjusted operating income	$	104,366		$	85,401		$	304,955	$	260,407

Further explanation of certain of our adjustments in arriving at Adjusted OI w/SBC and Adjusted operating income are as follows:

(1)Amortization of purchased intangibles. Amortization of purchased intangibles varies in amount and frequency and is significantly impacted by the timing and size of our acquisitions. Management finds it useful to exclude these non‑cash charges from our operating expenses to assist in budgeting, planning, and forecasting future periods. The use of intangible assets contributed to our revenues earned during the periods presented and will also contribute to our revenues in future periods. Amortization of purchased intangible assets will recur in future periods.

(2)Deferred compensation plan. We exclude Deferred compensation plan expense (income) when we evaluate our continuing operational performance because it is not reflective of our ongoing business and results of operation. We believe it is useful for investors to understand the effects of this item on our total operating expenses. Deferred compensation plan liabilities are 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.

(3)Acquisition expenses. We incur expenses for professional services rendered in connection with business combinations, which are included in our ~~U.S.~~ GAAP presentation of general and administrative expense ~~(See~~(see Note 4 to our consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10‑Q). Also included in our acquisition expenses are retention incentives paid to executives of the acquired companies. We exclude these acquisition expenses when we evaluate our continuing operational performance as we would not have otherwise incurred these expenses in the periods presented as part of our continuing operations. ~~For the three and nine months ended September 30, 2022, $350 and $10,149, respectively, of our acquisition expenses related to our platform acquisition of PLS.~~

(4)Realignment expenses (income). We exclude these charges and subsequent adjustments to our estimates when we evaluate our continuing operational performance because they are not reflective of our ongoing business and results of operations. We believe it is useful for investors to understand the effects of these items on our total operating expenses. ~~In the ordinary course of operating our business, we incur severance expenses that are not included in this adjustment.~~ For the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2024, Realignment expenses ~~(income)~~ were ~~comprised~~primarily associated with the 2023 Program (see Note 21 to our consolidated financial statements included in Part I, Item 1 of ~~asset impairments and termination benefits as a result~~this Quarterly Report on Form 10‑Q). For the three months ended March 31, 2023, Realignment income was associated with the continued wind down of our ~~decision to wind down business and exit the~~ Russian ~~market~~entities since we exited operations beginning in the second quarter of 2022. ~~For the three and nine months ended September 30, 2023,~~ ~~Realignment expenses (income)~~ ~~primarily relates to the continued wind down of our Russian entities.~~

(5)Stock‑based compensation expense. We exclude non-cash stock‑based compensation expenses from certain of our non‑GAAP measures because we believe this is useful to investors in making comparisons to other companies.

Constant ~~currency~~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. ~~We have~~A significant amount of our operations ~~outside the U.S. that are~~is conducted in ~~local~~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.

In reporting period‑over‑period results, except for ARR as discussed above in “Key Business Metrics” section, we calculate the effects of foreign currency fluctuations and constant currency information by translating current and prior period results on a transactional basis to our reporting currency using prior period average foreign currency exchange ~~rates.~~rates in which the transactions occurred.

Reconciliation of consolidated revenues to consolidated revenues in constant currency:


	Three Months Ended March 31, 2024						Three Months Ended March 31, 2023
	Actual		Impact of Foreign Exchange at 2023 Rates		Constant Currency		Actual		Impact of Foreign Exchange at 2023 Rates		Constant Currency
Subscriptions	$	307,089	$	(761)	$	306,328	$	277,845	$	(142)	$	277,703
Perpetual licenses	9,512		115		9,627		9,547		7		9,554
Subscriptions and licenses	316,601		(646)		315,955		287,392		(135)		287,257
Services	21,162		(197)		20,965		27,019		10		27,029
Total revenues	$	337,763	$	(843)	$	336,920	$	314,411	$	(125)	$	314,286

Reconciliation of revenues by geographic region to revenues by geographic region in constant currency:


	Three Months Ended March 31, 2024						Three Months Ended March 31, 2023
	Actual		Impact of Foreign Exchange at 2023 Rates		Constant Currency		Actual		Impact of Foreign Exchange at 2023 Rates		Constant Currency
Americas	$	184,193	$	(453)	$	183,740	$	168,345	$	(82)	$	168,263
EMEA	94,714		(1,451)		93,263		92,832		4		92,836
APAC	58,856		1,061		59,917		53,234		(47)		53,187
Total revenues	$	337,763	$	(843)	$	336,920	$	314,411	$	(125)	$	314,286

Reconciliation of cost of revenues to cost of revenues in constant currency:


	Three Months Ended March 31, 2024						Three Months Ended March 31, 2023
	Actual		Impact of Foreign Exchange at 2023 Rates		Constant Currency		Actual		Impact of Foreign Exchange at 2023 Rates		Constant Currency
Cost of subscriptions and licenses	$	40,218	$	(89)	$	40,129	$	40,931	$	22	$	40,953
Cost of services	21,612		(249)		21,363		26,253		17		26,270
Total cost of revenues	$	61,830	$	(338)	$	61,492	$	67,184	$	39	$	67,223

Reconciliation of operating expenses to operating expenses in constant currency:


	Three Months Ended March 31, 2024						Three Months Ended March 31, 2023
	Actual		Impact of Foreign Exchange at 2023 Rates		Constant Currency		Actual		Impact of Foreign Exchange at 2023 Rates		Constant Currency
Research and development	$	68,371	$	(96)	$	68,275	$	67,800	$	19	$	67,819
Selling and marketing	54,386		(76)		54,310		52,141		27		52,168
General and administrative	46,482		(115)		46,367		46,807		13		46,820
Deferred compensation plan	5,799		—		5,799		4,146		—		4,146
Amortization of purchased intangibles	8,964		(24)		8,940		10,548		(1)		10,547
Total operating expenses	$	184,002	$	(311)	$	183,691	$	181,442	$	58	$	181,500

Liquidity and Capital ~~Resources~~Resources:

Cash and Cash Equivalents


	March 31, 2024		December 31, 2023
Cash and cash equivalents held domestically	$	52,286	$	3,693
Cash and cash equivalents held by foreign subsidiaries	89,315		64,719
Total cash and cash equivalents	$	141,601	$	68,412

Our primary source of operating cash is from the sale of our subscriptions, perpetual licenses, and services. Our primary use of cash is payment of our operating costs, which consist ~~primarily~~mainly of headcount‑related costs. In addition to operating expenses, we also use cash to service our debt obligations, to pay quarterly dividends, to repurchase our Class B ~~Common Stock~~common stock and convertible debt, and for capital expenditures in support of our operations. We also use cash to fund our acquisitions of software assets and businesses, and other investment ~~activities, including our~~ ~~iTwin Ventures~~ initiative which makes seed, early, and growth stage investments in technology companies with promising and emerging opportunities for infrastructure digital twin solutions potentially relevant to our business.

We have the right to require that certain equity awardees receive gross or net quantities of shares of our Class B Common Stock, including in connection with share issuances under our Bonus Plan and distributions from the DCP. In the case of a gross issuance or distribution, an awardee is required to reimburse promptly to us the cash required for his or her tax withholding amounts. Conversely, under a net issuance or distribution, shares are withheld in consideration of remitting withholding taxes on behalf of an equity awardee, thereby requiring us to remit cash for the tax withholdings. During the nine months ended September 30, 2023, we allowed impacted equity awardees the option to receive net quantities of shares of our Class B Common Stock. During the nine months ended September 30, 2022, we permitted impacted awardees to elect to receive net quantities of shares of our Class B Common Stock in the first quarter, but exercised our right to require that these awardees receive gross quantities of our Class B Common Stock during the second and third quarters. We will continue to evaluate whether share awards will be required to be received by awardees on a gross basis, or if net settlement may be elected by awardees.

activities.

We believe that cash generated from operations, together with existing ~~domestic and international~~ cash and cash equivalent balances, ~~together with cash generated from operations,~~ and external borrowings including available liquidity under the Credit Facility, will be sufficient to meet our domestic and international working capital and capital expenditure ~~requirements through~~requirements. We regularly review our capital structure and consider a variety of potential financing alternatives and planning strategies to ensure that we have the ~~next twelve months. However,~~proper liquidity available in the locations in which it is needed and to fund our operations and growth investments with cash that has not been permanently reinvested outside the U.S. Our future capital requirements may be materially different than those currently planned in our budgeting and forecasting activities and depend on many factors, including our strategy of regularly acquiring and integrating specialized infrastructure engineering software businesses, our rate of revenue growth, the timing and extent of spending on research and development, the expansion of our sales and marketing activities, the timing of new product introductions, market acceptance of our products, competitive factors, our discretionary payments of dividends or repurchases of our Class B ~~Common Stock~~common stock and convertible debt, fund of our purchase commitments, currency fluctuations, and overall economic conditions, globally. To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing. The sale of additional equity would result in additional dilution to our stockholders, while the incurrence of additional debt financing, including convertible debt, would result in additional debt service obligations. Such debt instruments also could introduce new or modified covenants that might restrict our operations and/or our ability to pay dividends, consummate acquisitions, or otherwise pursue our business strategies. We cannot provide assurance that we could obtain additional financing on favorable terms or at all.

4739

Cash ~~and cash equivalents~~Flows Activity

September 30, 2023 December 31, 2022
Cash and cash equivalents held domestically $ 2,679 $ 3,883
Cash and cash equivalents held by foreign subsidiaries 64,284 67,801
Total cash and cash equivalents $ 66,963 $ 71,684


	Three Months Ended March 31,
	2024		2023
Net cash provided by (used in):
Operating activities	$	204,969	$	176,223
Investing activities	(3,849)		(20,761)
Financing activities	(126,435)		(134,241)

~~Long-term debt~~Operating Activities

September 30, 2023 December 31, 2022
Current portion of long-term debt $ 8,750 $ 5,000
Long-term debt 1,580,752 1,775,696
Total debt $ 1,589,502 $ 1,780,696

~~Comparison of~~For the ~~Nine Months Ended September 30, 2023 and 2022~~

~~Our cash flow activities for the nine~~three months ended ~~September 30, 2023 and 2022 consist of the following:~~

Nine Months Ended September 30,
2023 2022
Net Cash Provided By (Used In):
Operating activities $ 329,643 $ 238,198
Investing activities (51,245) (740,445)
Financing activities (280,019) 254,692

~~Operating activities~~

~~Net cash provided by operating activities was $329,643 for the nine months ended September 30, 2023. Compared~~March 31, 2024, compared to the same period in the prior year, net cash provided by operating activities was higher by ~~$91,445~~$28,746 due to an increase in net income of $24,820 and a net increase in non‑cash adjustments of $5,104, partially offset by a decrease in net cash flows from the change in operating assets and liabilities of ~~$51,510, a net increase in non‑cash adjustments of $41,791, partially offset by a~~$1,178. The decrease ~~in net income of $1,856. The increase~~ in cash flows from the change in operating assets and liabilities was primarily due to a decrease in ~~accounts receivable~~deferred revenues, an increase in other current assets, and the overall timing of tax payments period over ~~period due to the timing of collections from accounts and~~period. Offsetting theses decreases were higher CSS ~~deposits.~~deposits period over period.

~~For~~In addition, we expect to substantially pay the ~~nine months ended September 30, 2022, net cash provided~~remainder of termination benefits to colleagues in connection with our 2023 Program by ~~operating activities was $238,198 resulting from net income~~the end of ~~$149,058, changes~~the second quarter of 2024. See Note 21 to our consolidated financial statements included in ~~operating assets and liabilities~~Part II, Item 8 of ~~$24,892, and non‑cash adjustments of $64,248.~~this Annual Report on Form 10‑K for additional information related to realignment costs.

Investing ~~activities~~Activities

Net cash used in investing activities was ~~$51,245~~lower by $16,912 for the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024, compared to the same period in the prior year, primarily due to ~~$23,110 in~~lower acquisition related payments ~~net~~ of ~~cash acquired,~~$10,299, as no acquisitions were completed in the first quarter of 2024 compared to ~~complete two acquisitions, $18,906 related~~one acquisition in the first quarter of 2023, and to a lesser extent, lower purchases of ~~property and equipment and investment in capitalized software, and $11,352 for purchases~~investments of ~~investments.~~

For the nine months ended September 30, 2022, net cash used in investing activities was $740,445 primarily due to $719,539 in acquisition related payments, net of cash acquired, to complete four acquisitions.

$5,928.

Financing ~~activities~~Activities

Net cash used in financing activities was ~~$280,019~~lower by $7,806 for the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024, compared to the same period in the prior year, primarily due to ~~the~~lower net ~~paydown~~paydowns of the Credit Facility of ~~$195,902, payments for shares acquired of $57,527, and~~$12,707, partially offset by higher dividend payments of ~~dividends of $43,992.~~

~~For the nine months ended September 30, 2022, net cash provided by financing activities was $254,692~~$3,349, primarily due to an increase in ~~net borrowings under the Credit Facility of $340,912, partially offset by net~~our quarterly dividend per share to $0.06 from $0.05, and higher payments for shares acquired of ~~$70,463,~~$2,157, including shares repurchased under the Repurchase Program. Refer to the section titled “Stock Repurchases” below for further detail.

Long-Term Debt


	March 31, 2024		December 31, 2023
Current portion of long-term debt	$	10,000	$	10,000
Long-term debt	1,425,445		1,518,403
Total debt	$	1,435,445	$	1,528,403

As of March 31, 2024, we had $849,850 available under the Credit Facility. We were in compliance with all covenants in its Credit Facility, the 2026 Notes, and the 2027 Notes as of March 31, 2024. Any failure to comply with such covenants under the Credit Facility would prevent us from being able to borrow additional funds under the Credit Facility, and, as with any failure to comply with such covenants under the 2026 Notes and the 2027 Notes, could constitute a default that may cause all amounts outstanding to become due and immediately payable in full.

Stock Repurchases

BSY Stock Repurchase Program

Our Board of Directors has authorized us to repurchase up to $200,000 of our Class B common stock and/or outstanding convertible senior notes through June 30, 2024 under the Repurchase Program. Effective July 1, 2024, our Board of Directors extended the Repurchase Program, authorizing us to repurchase from such date up to $200,000 of our Class B common stock and/or convertible senior notes through June 30, 2026. Our current authorization under the Repurchase Program expires on June 30, 2024. We may use available working capital and ~~payments~~cash provided by operations to make repurchases.

During the three months ended March 31, 2024, we repurchased 302,598 shares for $15,006 under the Repurchase Program. For the three months ended March 31, 2023, we did not repurchase shares under the Repurchase Program.

The timing, as well as the number and value of shares and/or convertible senior notes repurchased under the Repurchase Program, will be determined at our discretion and will depend on a variety of factors, including our assessment of the intrinsic value of our shares, the market price of our Class B common stock and outstanding convertible senior notes, general market and economic conditions, available liquidity, compliance with our debt and other agreements, and applicable legal requirements.

Withholding Taxes on Certain Equity Awards

We have the right to require that certain equity awardees receive gross or net quantities of shares of our Class B common stock, including distributions from the DCP and share issuances under our Bonus Plan. In the case of a gross issuance or distribution, an awardee is required to reimburse promptly to us the cash required for his or her tax withholding amounts. Conversely, under a net issuance or distribution, shares are withheld in consideration of remitting withholding taxes on behalf of an equity awardee, thereby requiring us to remit cash for the tax withholdings. During the three months ended March 31, 2024, we exercised our right to require that impacted equity awardees receive gross quantities of our Class B common stock during the first quarter. During the three months ended March 31, 2023, we allowed impacted awardees the option to receive net quantities of shares of our Class B common stock in the first quarter. We will continue to evaluate whether share awards will be required to be received by awardees on a gross basis, or if net settlement may be elected by awardees.

Dividend Payments

The declaration and payment of dividends is within the discretion of ~~$25,828.~~our Board of Directors. We paid quarterly dividends of $0.06 per share of common stock during the three months ended March 31, 2024 and $0.05 per share of common stock during the three months ended March 31, 2023. While we intend to continue paying quarterly dividends, any future determination will be subject to the discretion of our Board of Directors and will be dependent on a number of factors, including our results of operations, capital requirements, restrictions under Delaware law, and overall financial condition, as well as any other factors our Board of Directors considers relevant. In addition, the terms of the agreement governing the Credit Facility limit the amount of dividends we can pay.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in our market risk exposure as described in Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk in our ~~2022~~2023 Annual Report on Form 10‑K.

Item 4. Controls and Procedures

Evaluation of Effectiveness of Disclosure Controls and Procedures

Our management maintains disclosure controls and procedures as defined in Rules 13a‑15(e) and 15d‑15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is processed, recorded, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial officer, respectively), as appropriate, to allow for timely decisions regarding required disclosure.

We evaluated, under the supervision and with the participation of management, including our principal executive and principal financial officers, the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of ~~September 30, 2023,~~March 31, 2024, our disclosure controls and procedures were effective at the reasonable assurance level.

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within Bentley Systems, Incorporated have been detected.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a or 15d of the Exchange Act that occurred during the quarter ended ~~September 30, 2023~~March 31, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

4942

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are subject from time to time to various legal proceedings and claims which arise in the ordinary course of our business. Although the outcome of these and other claims cannot be predicted with certainty, we do not believe that the ultimate resolution of pending matters will have a material adverse effect on our financial condition, results of operations, or cash flows. We currently believe that we do not have any material litigation pending against us.

Item 1A. Risk Factors

There have been no material changes from the risk factors previously disclosed in Part I, Item 1A. Risk Factors in our ~~2022~~2023 Annual Report on Form 10‑K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds ~~and Issuer Purchases of Equity Securities~~

Recent Sales of Unregistered Equity Securities

From ~~July~~January 1, ~~2023~~2024 to ~~September 30, 2023,~~March 31, 2024, we issued ~~218,438~~537,745 shares of our Class B ~~Common Stock pursuant to the vesting of restricted~~common stock ~~and RSUs.~~

~~From July 1, 2023 to September 30, 2023, we issued 63,267 shares of our Class B Common Stock~~ in connection with distributions from our DCP.

None of the foregoing transactions involved any underwriters, underwriting discounts or commissions, or any public offering. Unless otherwise stated, the sales of the above securities were deemed to be exempt from registration under the Securities Act in reliance on Rule 701 promulgated under Section 3(b) of the Securities Act as transactions by an issuer pursuant to benefit plans and contracts relating to compensation as provided under Rule 701. All recipients had adequate access, through their relationships with us, to information about us. The issuance of these securities were made without any general solicitation or advertising.

Issuer Purchases of Equity Securities

The following table reflects our Class B common stock we repurchased during the three months ended March 31, 2024:


				Total Number of	Approximate Dollar
				Shares Purchased as	Value of Shares that
	Total Number of	Average Price		Part of Publicly	May Yet Be Purchased
Period	Shares Purchased	Paid per Share		Announced Plan (1)	Under the Plan (2)
January 1, 2024 to January 31, 2024	—	$	—	—	$	169,751,743
February 1, 2024 to February 29, 2024	—	—		—	169,751,743
March 1, 2024 to March 31, 2024	302,598	49.57		302,598	154,751,754
	302,598	49.57		302,598

(1)Represents shares purchased in open‑market transactions under the Repurchase Program approved by our Board of Directors.

(2)These amounts correspond to the plan publicly announced and approved by our Board of Directors in May 2022 that authorizes the repurchase up to $200 million of our Class B common stock through June 30, 2024. In December 2022, our Board of Directors amended the plan to allow us also to repurchase our outstanding convertible senior notes. This additional authorization did not increase the overall dollar limit of the plan. Effective July 1, 2024, our Board of Directors extended the plan, authorizing us to repurchase from such date up to $200,000 of our Class B common stock and/or convertible senior notes through June 30, 2026.

Item 5. Other Information

Rule 10b5-1 Trading Plans

On March 1, 2024, Michael M. Campbell, the Company’s Chief Product Officer, adopted a trading plan established pursuant to Rule 10b5‑1 of the Exchange Act, which is intended to satisfy the affirmative defense conditions of Rule 10b5‑1(c). The Company estimates that Mr. Campbell could sell up to an aggregate of 17,000 shares of its Class B common stock under the plan, though the final number of shares sold will depend upon a variety of factors, including applicable tax rates. Mr. Campbell’s plan expires on October 15, 2024.

On March 13, 2024, David R. Shaman, the Company’s Chief Legal Officer and Secretary, terminated a trading plan established pursuant to Rule 10b5‑1 of the Exchange Act, which was intended to satisfy the affirmative defense conditions of Rule 10b5‑1(c) and was adopted effective June 8, 2023 to sell an aggregate of 127,942 shares of our Class B common stock through March 31, 2024. On March 14, 2024, Mr. Shaman adopted a trading plan established pursuant to Rule 10b5‑1 of the Exchange Act, which is intended to satisfy the affirmative defense conditions of Rule 10b5‑1(c), to sell an aggregate of 127,942 shares of our Class B common stock. Mr. Shaman’s plan expires on March 7, 2025.

During the three months ended ~~September 30, 2023, none of the Company’s~~March 31, 2024, there were no other Company directors or executive officers who adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5‑1(c) or any “non-Rule 10b5‑1 trading arrangement.”

Item 6. Exhibits


Exhibit
Number						Description
31.1*						Certification of CEO pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended
31.2*						Certification of CFO pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended
32*						Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS						Inline XBRL Instance Document—the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document
101.SCH						Inline XBRL Taxonomy Extension Schema
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase
104						Cover page formatted as Inline XBRL and contained in Exhibit 101


*			Filed or furnished herewith. The certification attached as Exhibit 32 that accompanies this Quarterly Report on Form 10‑Q is not deemed filed with the ~~U.S. Securities and Exchange Commission~~SEC and is not to be incorporated by reference into any filing of Bentley Systems, Incorporated under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10‑Q, irrespective of any general incorporation language contained in such filing.

5144

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	Bentley Systems, Incorporated

Date: ~~November~~May 7, ~~2023~~2024	By:	/s/ WERNER ANDRE
		Werner Andre
		Chief Financial Officer ~~and Chief Accounting Officer~~
		(Principal Financial ~~Officer and Principal Accounting~~ Officer)

5245


	Three Months Ended September 30, 2022
						Accumulated
	Class A and Class B			Additional		Other				Total
	Common Stock			Paid-In		Comprehensive		Accumulated		Stockholders’
	Shares	Par Value		Capital		Loss		Deficit		Equity
Balance, June 30, 2022	288,154,159	$	2,882	$	981,203	$	(89,131)	$	(397,961)	$	496,993
Net income	—	—		—		—		36,997		36,997
Other comprehensive loss	—	—		—		(12,798)		—		(12,798)
Dividends declared	—	—		—		—		(8,592)		(8,592)
Shares issued in connection with deferred compensation plan	97,591	1		(1)		—		—		—
Deferred compensation plan elective participant deferrals	—	—		1,586		—		—		1,586
Shares issued in connection with executive bonus plan, net	125,195	1		4,416		—		—		4,417
Shares issued in connection with employee stock purchase plan, net	197,657	2		5,722		—		(152)		5,572
Stock option exercises, net	218,018	2		992		—		(59)		935


Stock-based compensation expense	—	—		11,158		—		—		11,158
Shares related to restricted stock, net	58,270	—		(1)		—		(1,060)		(1,061)
Repurchases of Class B Common Stock under approved program	(433,125)	(4)		—		—		(15,004)		(15,008)


Balance, September 30, 2022	288,417,765	$	2,884	$	1,005,075	$	(101,929)	$	(385,831)	$	520,199


	Nine Months Ended September 30, 2022
						Accumulated
	Class A and Class B			Additional		Other				Total
	Common Stock			Paid-In		Comprehensive		Accumulated		Stockholders’
	Shares	Par Value		Capital		Loss		Deficit		Equity
Balance, December 31, 2021	282,526,719	$	2,825	$	937,805	$	(91,774)	$	(439,634)	$	409,222
Net income	—	—		—		—		149,058		149,058
Other comprehensive loss	—	—		—		(10,155)		—		(10,155)
Dividends declared	—	—		—		—		(25,623)		(25,623)
Shares issued in connection with deferred compensation plan, net	3,523,386	35		(27)		—		(24,254)		(24,246)
Deferred compensation plan elective participant deferrals	—	—		4,694		—		—		4,694
Shares issued in connection with executive bonus plan, net	284,992	3		16,307		—		(5,197)		11,113
Shares issued in connection with employee stock purchase plan, net	307,406	3		10,332		—		(273)		10,062
Stock option exercises, net	2,272,603	23		6,832		—		(8,459)		(1,604)
Acquisition option exercises, net	185,178	2		(2)		—		—		—
Shares issued for stock grants, net	13,632	—		450		—		—		450
Stock-based compensation expense	—	—		28,687		—		—		28,687
Shares related to restricted stock, net	199,975	2		(3)		—		(3,208)		(3,209)
Repurchases of Class B Common Stock under approved program	(896,126)	(9)		—		—		(28,241)		(28,250)


Balance, September 30, 2022	288,417,765	$	2,884	$	1,005,075	$	(101,929)	$	(385,831)	$	520,199


	September 30, 2023		December 31, 2022


Contract assets	$	472	$	575
Deferred revenues	227,004		243,073


	Acquisitions Completed in
	Nine Months Ended		Year Ended
	September 30, 2023		December 31, 2022
Consideration:
Cash paid at closing	$	23,375	$	763,228

Contingent consideration	—		1,390
Deferred, non-contingent consideration, net	525		749
Other	56		(269)
Total consideration	$	23,956	$	765,098
Assets acquired and liabilities assumed:
Cash	$	265	$	20,221
Accounts receivable and other current assets	1,706		8,890
Operating lease right-of-use assets	397		1,237
Property and equipment	—		1,316
Deferred income taxes	2,151		—
Other assets	6		7
Software and technology (weighted average useful life of 3 and 5 years, respectively)	2,600		10,608
Customer relationships (weighted average useful life of 6 and 10 years, respectively)	3,900		82,278
Trademarks (weighted average useful life of 5 and 8 years, respectively)	1,000		6,972


Total identifiable assets acquired excluding goodwill	12,025		131,529
Accruals and other current liabilities	(584)		(4,079)
Deferred revenues	(4,599)		(14,176)
Operating lease liabilities	(397)		(1,237)
Deferred income taxes	—		(5,745)

Total liabilities assumed	(5,580)		(25,237)
Net identifiable assets acquired excluding goodwill	6,445		106,292
Goodwill	17,511		658,806
Net assets acquired	$	23,956	$	765,098


	Nine Months Ended September 30,
	2023		2022
Net Cash Provided By (Used In):
Operating activities	$	329,643	$	238,198
Investing activities	(51,245)		(740,445)
Financing activities	(280,019)		254,692

Balance, December 31, ~~2022~~2023

~~2,237,184~~2,269,336

~~Acquisitions~~

~~17,511~~

Foreign currency translation adjustments

~~(3,179)~~(7,585)

Other adjustments

~~(204)~~(561)

Balance, ~~September 30, 2023~~March 31, 2024

~~2,251,312~~2,261,190