BSY - Earnings call transcript Q2 2024 | Bentley Systems, Incorporated

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Eric Boyer

Good morning, and thank you for joining Bentley Systems' Q2 2024 Results Webcast. I'm Eric Boyer, Bentley's Investor Relations Officer.

On the webcast today, we have Bentley Systems' Executive Chair, Greg Bentley; Chief Executive Officer, Nicholas Cumins; and Chief Financial Officer, Werner Andre. This webcast includes forward-looking statements made as of August 6, 2024, regarding the future results of operations and financial position, business strategy and plans and objectives for future operations of Bentley Systems Inc. All such statements made in or contained during this webcast, other than statements of historical fact, are forward-looking statements. This webcast will be available for replay on Bentley Systems' Investor Relations website at investors.bentley.comon August 6, 2024. will Executive Q&A. And Greg Chair we me that, Bentley. presentation, the introduce of our conclude with with let After Bentley Systems,

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Nicholas Cumins

infrastructure but the infrastructure retrofit jobs of to Thank of opportunities my aging my resilient, Infrastructure greatly the the the Bentley's month world projects today more pandemic lie you, Greg. want CEO, be done for make from Having effects that and the benefited mitigating infrastructure role remains ahead climate by to in change massive many capital closing I prepared start to more gap much engineering enthusiasm of have my from and us. resources. for in in remarks and first sectors as reiterating in to completed investments post

will collective determine to Our challenges come. those for the to generations ability quality of overcome life

AI reshaping Fortunately, productivity with the software market increase major of in better is firms a own of performance landscape. improve assets. to understand the and operators the condition a and our to are helping is generating driver their going business engineering forward, services traction be infrastructure partnership significant in way we roads, to the incurred The moving solutions phase towers. life the the analytics, asset asset operations is our monitor us. With worth we The connection are for the water for cycle, AI-based represents of majority telecommunications can vast transform of growth which analytics bridges, dams, a the of and organizations opportunity networks costs during noting. their

are for As quarters, is roadway adoption increased maintenance referenced our also cell previous our globally. for we AI-based and of seeing towers in offering AI-based up Greg solution ramping

broader builds data enriching it life, of our strategy digital Of all on reusing bringing it, to it, course, through this twins. federating

successful positioned it because call uniquely the firms paradigm operators help resilient shifts and cloud, saw to were Bentley decades be answer to company first last the foundation come. will The a Our a we opportunity more twins has to ensures X personal we computer, AI. there as and and decades years success digital over to to for the world's X the owner in infrastructure for to now engineering for the

Now operational market and strong to performance our performance quarter. across was very broad-based business quarter QX another end and was the momentum. geographies. with ARR industries for positive

Maximo for the performance Our respect Cohesive, contributors continues as in the integrator EXXX delivered half XXXX, our Cohesive digital with IBM management. our to profitability revenues. flow. X Virtuosity particular to China, next we the overall services uptake of and very impacted generation enterprise strong Throughout to to of cash and initiatives headwinds first be continued professional growth well. be continue by and business to slow of The strong for be asset ARR

growth. ARR to Moving

performance remained which of including metric this business negligible. In at QX, contributions programmatic become key from Our year-over-year. acquisitions, XX%, have

ceilings to We of expect year end impact growth explained based the EXXX significant towards and last on renewals quarter. as benefit ARR of the the from floors

impact the XX.X%. China total of ARR our Excluding X.X% was represents China, growth ARR. only of now

growth our to by commercial models. Moving

application select from cross-sell, Our upsell existing EXXX program program EXXX an mix and or remains the a of accounts conversions with subscription major with accretion, continued growth driver accounts.

to less points we add logos accounts, for we least SMB continue the ARR X sixth row. classify In our second new growth year, a of and quarter in per terms X contributed to than as logos QX, $XXX,XXX the In a strong of accounts for points ARR which consecutive at percentage pace. percentage at quarter new

QX, XXX at primarily than continued to quarter strong store, targeted through subscriptions, new the of Virtuosity online a of logos Our logos. in add number straight SMBs tenth new more

from sectors their to now. firms the the They XX across Moving dynamics, regarding the main continue robust. expect U.S. industry engineering quarterly which engineering U.S. design overall survey, own to ACC most firm's economy, be themes sector express continue. In and backlogs to outlook also higher months optimism the recent for the continue finances.

was performance works the main by is infrastructure benefit continue again Growth our Seequent. we company the water grid. Civil global for investments at modest infrastructure with our in strong utilities to in Public QX. sectors also sector, Looking electric in utilities, driver once largest as the spending and commercial and transportation, growth resources sector the growth across facility new Seequent strengthening position mine The industrial had solid despite subdued. mining, for remained largest driver growth. its from remaining

was on by Moving The North the America. fastest-growing Americas led to again region, regions.

having for the see We XX% transportation. from only continue date tailwinds overall announced of funding the to with primarily and IIJA been to

estimated themselves at benefiting We by bridges for from XX% and groups year. trade state the are increased spending also this highways by

permitting. development Committee, to in in the bill, nuclear the bill, recently bipartisan Advance biggest bipartisan federal a positive President proposed the reform Senate the Act, Natural U.S., years. Energy permitting a signed to just into believe U.S. will ease and energy law critical permitting change Resources processes passed and As restrictions. representing The another And infrastructure of water election and infrastructure this streamlined We November. the improvements for outcomes delivers which Water regardless bipartisan in the resources Development support Resources continue in the Act House

and performance by a EMEA. work municipalities resources. driven public utilities quarter QX mining. Middle to had was East Moving particularly and by steady, strong driven The

infrastructure monitoring We believe in be at but this for developments implications political we will the point, do priorities. not are major recent there Europe,

growth performance slowdown the across standing strong New driver Zealand had given despite with growth a continues solid with sectors, a to and be Pacific Australia the Asia out. India expected elections.

quarters. March We which the record and state-owned was software. growth intensifying a from economic tensions to spending version infrastructure performance remain perpetual consistent the earlier the rest in licenses in with Modi's to for geopolitical is financial year India $XXX The second ending by in foresees the unchanged XXXX. of preferences resume the soft same local shift infrastructure with solid keen projects. budget, in and remains accounts term its expect in reaccelerate half President and as recent The growth. China's region experienced headwinds government funding third the government still conditions an enterprise billion published

Moving going efforts to highlights. DOTs on digital. operational our quarters, help previous we have talked State another in to In about U.S.

exemplifies hosted Pennsylvania. executive home to leaders, a our and in had look the top legislative this recent team, Open our of CEOs Earlier outreach to to our design we data the quarter, want I highlight This upgraded to support This within engineering XD the roadway, example firm for commonwealth drainage, partners. PennDOT to geotechnical headquarters project-wise discuss and DOT management delivery. already ecosystem state at bridge, of we year, PennDOT's traffic campus digital product software state Bentley's do Road engineering.

of entering momentum where In in our also supply which the During more both through parts broaden year smaller scope to chain. product the to QX, another given chain by us become project-wise, results. logos. To civil with other inclusive and Infrastructure and supply to us pleased our to the experience, we broader new business delivery consultants. constraints smaller DOT track opportunity use strong with advance the digital This time, puts potential to same expanded to of for SYNCHRO as on PennDOT established XD Ben of deliver platform engineering the an have second reach expand construction SMB to am the strong modeling and than largely transitioning firms, firms for of DOTs [indiscernible] opens half operational design I consistent Cloud. At PennDOT capacity is quarter these their conclude, half, up of states

to around our it hard want turn colleagues I the for thank achieving Werner, and work world to you, dedication in I Werner. to continued quarter. Over over a their successful Before very

Werner Andre

you, Thank Nicholas.

revenues, 'XX a grew strong renewals quarter. our revenue XX% year-over-year degree X% in QX, basis. recognition more EXXX the XX% grew revenues We million, are subscription with revenues quarter our lower total throughout constant-currency up of up expansion XX% total on consumption-based revenues revenue upfront of the ratable and reported second historically quarter the reported pleased in with quarters has for in proportion and were when to another and due a currency particularly of constant other continued program but constant consistent representing any Year-to-date from recognition, XX% revenues and contract compared $XXX to for quarter currency. benefit been QX. QX lowest and the year our QX. Subscription yields year-over-year Total of XX% in

on constant and For half, normalized revenues the XX% first basis. mix and subscription more currency for timing, reported a grew

revenue be for million, remain contributors to up revenues SMB and revenues $XX $X license subscription our Perpetual were Perpetual recurring to our total to down of relative X% continue only solid EXXX and small million sales Our year-over-year. license will quarter revenues. growth. the make initiatives

professional as declined XX% down third our likely to revenues constant the IBM through in million, to Bentley integrator quarter delays of the increase of driven fourth quarter cohesive. now by work related continue continued and to software upgrade within to Maximo expected before currency, professional the XX% positive the our services services is note, modestly digital in projects the upgrade primarily related Our expected. XXXX. grow delays during for implementation On expected Such by $X year-over-year quarter are pace or a

performance. revenue Moving on to our recurring

Our revenues constant in XX% reported represent months XX XX% last last and XX our total by revenues. of recurring year-over-year currency increased XX% in and months

constant QX at and ended SMB remaining ARR drivers. XXX%. We our continued account rates model currency was with with initiatives retention commercial is billion to our consumption-based led commercial growth key growth EXXX and spot our our $X.XX ARR was EXXX where net rate currency the constant by accretion recurring quarter retention model. within XX%, subject erosion China, rate months Ex from our revenues, changes, XX last NRR and XXX%, Our was of

where represents ARR, Our headwinds. of ARR from our constant ago. The now excluding rate our continue growth ARR a experience XX% currency was is year X.X% rate contribution XX.X%, down programmatic to or year-over-year ARR growth acquisition year-over-year we negligible. from China, China currently to X%

X.X% period, the rate constant onboarded basis, X%. ago ARR fully quarterly in in year our of ARR sequential While in with was acquisitions programmatic from expectations. our was On currency growth a contributed the line range and

ceilings, EXXX timing, more in to accretion which Based on have on consumption heavily our with to ARR weighted ARR increased our of growth our the first ARR XXXX. discussed the an our half call, year, our ARR the an we contract during floors is solid we last align towards XX.X% related As of XX% of accounts quarter's to range impacts for outlook renewal portion position the of increasing percentage within QX. EXXX and growth seasonality and performance tends detail which in we a are our for consumption

Now moving to profitability performance.

operating income and second the GAAP million Our year-to-date. $XXX for $XX was million quarter

impact the revaluations discussed previously liability on deferred our acquisition from plan purchased operating GAAP amortization intangibles, have compensation We and results of expenses.

and points. operating compensation Moving XX% for compensation with operating the Adjusted million primary measure. on up a with margin to adjusted stock-based performance a XX.X%, million, expense, quarter, up with basis margin of income up was $XX expense profitability income income XX.X%, stock-based our Year-to-date, compensation was operating with up with XXX $XXX year-over-year margin XXX points. of expense adjusted basis stock-based XX%

quarter continues reflect with which to of Our during realignment savings we run the fourth the initiated strategic rate profitability associated XXXX. program,

of rate and run completed realignment towards actions into at to the and continue we savings as were these investment AI XXXX, most areas development priority such product fully reinvesting the marketing. beginning of While ramp

services total the in margin mix represented lower quarter, XX% shift operating X% the from of up which to higher-margin also revenues, benefited margin subscription from year-over-year. revenues the professional revenues Our

we will trending for year-to-date. Based to of XXX not undertake to full points in And benefit structure on the the remind of year, deliver revenues with second larger our $XXX discussed, do work. want And gross our promotional weighted was more position million our OpEx second services short-term pay half towards flow year. With our and heavily while our for profitability. higher we to quarter first cost year, to races margin also leads annual for operating profitability. each in million instead we cash intended annual this higher we of strong from concentrated occurring basis quarter strong delivery of puts to While This in these declined margin prioritize our attention event-related longer-term costs April as our is during adjust volatility liquidity, and initiatives. I the improvement, by for respect which and to XXXX the close the further services on planned. X developments, to a investing of half to our you of $XX maximize for reasons half us the over episodic compounded the margin services the seasonality, benefited profitability and the than is

capital million continue term of our remainder of cash of $XXX initiatives. to reduction, with the to at quarter, the adjusted outstanding will the $XX deployed operations our to sale million we debt expect regards reducing of first of XXXX, that $XXX during For year, bank million We gravitate flow the from growth our for range. With our along the second end rate EBITDA allocation, providing repayments sufficiently XX% during the which includes the conversion towards loan to towards quarter. debt half of

million share from offset dilution to in $XX paid to We dividends applied stock-based fully further repurchases $XX and million compensation.

our And our As rates we sheet debt million increase was all net XXXX. swap profile, adjusted in our senior M&A have interest convertible exposure of our year XXXX and to protected perspective, low full rising high $XXX either cash interest very and flow leverage X.Xx debt from fixed of notes rate our is our rate remaining in debt or generation year-to-date strong coupon convertible a was expiring our through interest XXXX strength of our leverage stat, balance notes flexibility. From net the free including delivered end QX, X.Xx. With EBITDA X.Xx.

annual with of maturities have the with solid in outlook for QX our our of leverage, of position from performance regards to finally, structure a range comfortable operations. sufficient are believe We we flow growth, facility. And year, flexibility outlook in terms especially us financial exposure our interest our renewal deliver within ARR our and to put profitability and upcoming the capital credit the and cash for rate for

while our related However, due below outlook upgrade maximum services nonrecurring delays in and range our work. weakness expectations Total professional revenues midpoint implementation are subscription the revenues to by year-to-date. revenues recurring exceed trending of within caused

we seasonality, ARR modeling the expect weakened EXXX first For to in half year-over-year the around the relative accelerate floors dollar rates regards ceilings. consumption to exchange growth has to second timing and the XXXX renewal for due U.S. exchange slightly assumed GAAP QX and than With the annual to foreign on of dynamics resulting incremental particularly in the and in half revenues of relative rates, assumed would rates XXXX, expect exchange prevail of revenues end $X outlook, from less our in the we rates remainder significant in throughout year, would financial impact outlook. a our to XXXX financial million not of FX exchange then July only currency. If

Q&A. for Over Eric. Thank that, ready you. are with to we And

Eric Boyer

Thanks, Werner.

want X just that we remind I get you your to begin, to we can limit Before so questions to please everybody.

question of from Hedberg First RBC. Matt comes

Matthew Hedberg

Yes, Yes. to we was I still go. here. go. okay. One there we -- get There video my trying question,

-- now. I more could half about that it's second full it think on are -- uneasy good it's thinking I about weighted. signatures. second hear bit Nicholas, ARR but feels renewals And is seems companies EXXX to target. -- broader year like delivering deal hearing you about environment a guys us talking to other Let's talk were like results, Obviously, elongated guess, like of about you We're deals? so it I sounds XQ the great you talk extra half, around cycles see think macro the confidence the some some those

half the obviously which predicates through guide. of the year base second us full of and renewal level sort of sort the kind walk confidence Just in EXXX

Werner Andre

But not to -- of just among most our atomically are capacity, a that going And but engineering let -- sentiment the of remember the be observations organizations point. and I'm Their ARR the engineering of course, consumption the a matter, a growth matters, It's Yes. ground. structurally, consumption. should and demand, at this and sentiment occurs Nicholas organizations. is strong backlogs enterprise our is on of concern throughput is visibility course. long comes infrastructure of But consumption their matter their about it from in talk the factor software matter decisions. production of not as a is infrastructure

procurements matter that line asset-wise implementations Now a is [indiscernible]. diluted for ARR cases, we competitive of do new of the and have subject going project-wise many and you do RSPs decisions are for our in that's priority about. our are portion talking digital asset line, are a and occur to some very growth project But

much you better decisions we there not structurally, saying, capacity ground. on I'm about end do So sentiment about speak not to enterprise market rely able -- even demand. Nicholas, the and observations is concerned is our in much But are the on

Nicholas Cumins

in are they resources just than there us, resources, from opportunity, is is is The right? high. they The which The them utilities, for to our challenge enough still works that is right sentiment engineering have. very in from already changed has accounts a getting that demand biggest productivity fantastic the We markets with that more business busier don't have help our Nothing is are ever. indeed very positive. of The public bulk standpoint.

So the way, market the going Werner momentum to sentiment and the this, have program, is confident which range. EXXX based AR by within SMB, is solidly with are positive. on also be has we that our we're And and with own shared, we what our

Eric Boyer

comes from question from Joe Robert Next Baird. Vruwink

Joseph Vruwink

grow wondering can future is appreciated some project maybe noted since way, starts good in I flavor to have still bit software leading that vendor there? decisions as around with strategize you a you ahead, which, uneven and at a the this have funding in ironic to well step-up to on provide improvement. also making, the very if it's Does to a infrastructure of an been key a maybe I'm Bentley that still but better said, topic, PennDOT date. earlier, time so yourselves time you you early, like is And for spend the as think of bit and and engage Staying line, explains opportunity you of a opportunities enterprise they're IIJA get accounts this extended

Werner Andre

consensus And guess that maybe up longer spending it's but they also. higher think Nicholas, Well, I interesting the is U.S., you their states for commentary are in that. on more stepping the have

Nicholas Cumins

just Yes, seen to momentum It's from going the IIJA that to does mean last just is last. it indeed going longer. we've

most this It's momentum sustained So is has that funding in It from sense. has been been for the IIJA. positive transportation. is that announced that true of

on we better themselves grants. And to a The So But with is They solid whether I are more DOTs. apply -- think typically experience those equipped. a the this have or have engineering DOTs. the for which supply it's those we funding time to are with that and execute DOTs their position grants time. supply chain able are being be the to for over fact that over I actually, good is on whole funding deliver news to is capacity, guess, DOT struggling announced chain, the with

Eric Boyer

next comes Jason from So from question KeyBanc. Celino

Jason Celino

quite about The I performance that wanted XX% talked to continues in previously. be I update know to retention strong. an segment? how SMB is get retention in on you've

it's how been curious trending? Just

Werner Andre

add? the new on quantitative That's But what Nicholas, to people that's more year with. so it's we quantify well, the as on that allocating Well, update so to we're each working that more digital forth, We're quarter, experimenting have within the and mix think. we of versus and now don't working a do of anything resources that. on capital I but more and and subscriptions we're we'll tracking. the upgrades -- spend between with how experience happy automating it

Nicholas Cumins

a years really But software we're the many I I growth seeing Yes, by when around so in prepared the the It that, than the it's software with is the here That's mentioned beyond a is maybe see is is year market we the the of X use the beyond call the a the new existing high use started within is the remarks, project already, or for they that where retention we overall, mentioned were accounts. expecting what but the to term ago. their higher the retention last across a general, subscription, The in -- and start initiative way. it in goes would project they accounts. projects. is the the potentially with we in SMB actually SMB use because software in firms the it's is term, what company, for world, definitely no, also what which that

Eric Boyer

Clarke from Sandler. Piper Jeffries comes question Next from

Clarke Jeffries

that over I will to the mention the stood being of of be operating of on talk to importance there company. off traditional Could traditional rethinking out than sooner AI that to this Are later? me what term that asset based rather portfolio things you monetization effect was analytics from -- could increased about opportunities? increasing you one thing Nicholas, the out the you think you [indiscernible] portfolio nearest port the Are stand the disposition?

Nicholas Cumins

now. digital one this of X, AI right U.S. what I AI twins solution around a is we're which and are IQ analytics market ready quite was towers asset in scale, say, the commenting for That's OpenTower analytics. traction at technology asset areas of that is the believe on, that with There to generating solutions. twin digital account let's usage quite U.S. we unprecedented. The in AI-based of investments It's use it's create bit X was and of thousands the one of for tens and saying that And just in our there globally,

around called And year of business the around of did right? Now other the a because towers we're We which be extent across is in of roadway length can the network. solution geographies, getting can the is we DOTs for and with completely U.S., on our assets transportation be lot the analytics based world to rolling pricing acquisition traction business also or that it our with we're the number core Blyncsy, it to from out the the rolled asset that exploring the see incremental maintenance authorities ago. a to a interest we model see

So the addressable of of all create revenue that engineers them. that forward number all top. and the by is growth on right software total we've top opening it's with around the years, how way, can more we on for all realizing now value going discussing market which we're much been and engineering of was And the

be we great can capture production, the automating are talking less as get Now see right? have, to monetization that more base example, potential a share around and right? The a You CoPilot, capabilities. again, that mundane design. representative those whatever and potentially we're a leveraging which value. truly then the AI, to they have huge accounts, user interesting, getting to if is more we existing to from If simply AI, resources pricing, sure of engineers be be need there's acting we development quite more automation, efficiency is obviously, drawing totally by some right will get gains another area from in allowing This a who that not generate, effective traction of there now, more will adequate, in different from we're fair about from of it's is task be, for

Eric Boyer

The Myers [indiscernible] comes Securities. from from next question Warren

Unknown Analyst

guess, you I deliverables? development? the your status foresee a one what, when is X called and in terms guess, Bentley platform impact What of products of meaningful Just, question. of commercial And I do Phase is

Nicholas Cumins

itself as II will we're digital to -- aware So complement platform. iTwin adoption the for by what was working the digital the our iTwin X not on. those you're across applications are is to referring the in leveraging development of totally applications. twin that be Phase who audience way, of fully Phase twin capabilities portfolio. technology is Phase III, a native existing the

unstructured it. collaboration released So to just -- that promised, new iTwin hoc We just if powered want. a you version of and released include we truly as ad enable does capalities MicroStation actually are it by collaboration,

for as keep So purpose. iterating our we'll it together on users make this in sure fully it fit tech that preview . is then to is and with

can I misleading doing III native annual you the expect leveraging on II application for was YIA conference. be is are site truly at bit truly next-generation launch is to think capability, Now because The to we III. [indiscernible] an will application Phase actually, in this case and it it [indiscernible]. might for we're and which the parallel, But a to, site we're a applications engineering, Phase use [indiscernible] twin, digital investments Phase AI AI-based we're working be engineering our that then the phasing solution. engineering, Actually, year referring at

Christopher Liew

Kristen from Owen Oppenheimer. comes question Next from

Kristen Owen

to back legislation prepared I remarks. come discussed the in that wanted reform the permitting you to Nicholas,

to PLS waiting speak lag today bottlenecks systems to to power there's understand little next when unlock? that I you clear. previously of the is line is for a really we I the those from fundamentals on sitting can and when how how sort assess you would signed of see a pad, legislation you bit opportunity clear. that about permitting think, wondering, talked bottle just You've I'm described it, launch

Nicholas Cumins

impact, the projects right? which logjam of demand which And U.S., is having So one see we strong its increase support the the reason is needs permitting is able all, infrastructure, PLS, reform of is in yet in the the and the be the [ in to of because is of strong expansion reform is permitting well is very strong very without going again, as growth waiting on, because There increase of the still growth this to EMEA. electricity. already all Canada, in ] having impact not potential very but PLS, strong. very And of the before thing existing

fuel companies cleaner incentives -- extremely from the terms way, these particular, data of the which electricity. are consuming the in by being of centers by for to were all move AI, on of And with to the order way, about the U.S., of that in in reshoring support of companies, data with maybe created usage centers, energy we are AI talking fossil the electricity. In AI to generated sources with all

So existing grid, the the right and most it's with see we this making growth PLS is all electric the now. of where about

a still to last X-year I reform to the environmental take well, all and environmental has So used. within be will done I about take and reviews, forward for to the X federal for now it as while, software the and those then was place our will these impact years talked -- be meet right, in see permitting think impact, a to on you take the they the quarter, permitting reviews moving rule, schedule, products to which

So grid support of able be of electric a that PLS growth already means very again grid, electricity. it to -- expansion the we by standpoint, the full the in -- existing increase just the from meeting demand strong

Eric Boyer

of The next question from Funk America. comes from Bank Michael

Michael Funk

A might quick some the you range, the the coming just half that ARR on I maybe focus comments you optimistic had year. But baked year. baked the seasonality end in of guided the that the be about to high for you see scenarios [indiscernible] XXXX? of to. guidance question the the to the what range heard more on for below the driving you within that you're of And growth second Good into in have high end

Unknown Executive

part is and come considerably, very a is But range you the year, that growth so the the on I'm forecasts aspect. is X And far up has of Well, it and true. inflect considerable, and X.X, tier digits procurements, alone, by our in tail, we're one from to points it ARR percentage range or that remind we just hopeful. competition in I but ARR we're analytics [indiscernible] mean to that because the to widened true. X traditional significant of to and I we're incremental asset could -- I'll for to analytics, the think, that this track asset our the from mentioned top opportunity growth sticking large end come that year, of very of

Michael Funk

difficulty, best a And the you don't who timing that is is more that geopolitical do or or on I that? macro Greg the view think, based, is has know Nicholas, more

Unknown Executive

a I a continues regime be the regime but in think to U.K. for think wasn't continues change, the India. infrastructure priority I us. that geopolitical only in electoral of instance, for In exists change, in to countries China priority. be we guess investments -- the

we -- -- anti-American general a concerns. more So with ARR X years China, softness it the for was in was we bit X.X%. down than those ago only And the only say, however, in problem little China word not geocritical that as X%. And for are use It is us [indiscernible]. -- X China, continue to

you. a been overall likely drag ARR [indiscernible]. to -- that's Nicholas, So and There's continue. more is on growth over X.X% hasn't to

Nicholas Cumins

because the want investments nevertheless, infrastructure. remain Modi concerns. is solid, resume was slowdown I of elections clear in in mention which but quite that immediately expected Modi to India, government the they the in Indeed, geopolitical there an QX, of that are President did there -- no

Union in terms we continuity. of So rsula has EU reconfirmed of President U.K., von as level, in that's elections governments There priorities. The governments Leyen major of expect the of at reelected changes France, European in expect the the don't but we implication good. lots the all very Changes were in any Commission. President investment Europe der been of

more political, reasons, So that's the only area, indeed, are China. geopolitical there where country for changes, than only the some

Unknown Executive

we the for U.S. And only to I legislation, word infrastructure has [indiscernible] bit, place in appears not legislation the the attached the a exaggerating but that's up am change. little is think we emphasized been U.S. bipartisan that

Eric Boyer

William Next question comes from Dylan Becker Blair. from

Dylan Becker

certain job A nice here. to extent. Nicholas, theme sticking Maybe, the a reform with energy

around And people in think, as to what think about forward that of some start maybe you guys investment capacity, ecosystem? right, that flowing like for of I can capital pulled how into If the mean the gets infrastructure thinking are opportunities? private broader investments. public opportunity kind

Nicholas Cumins

into maintaining demand providers [indiscernible] in I into this in know beyond know we to if electricity going along expand -- -- that grid this is benefiting chain. needed. and are are away be to software actually to of electric is in able us support it. it supply indeed and grid surprised expand more solar order of The this yes? So to some in is must to but to cetera, be water, the public including supply as needed, go the of there sources think which investment for whole the private geothermal, the where of the far, for example, or a we will all is think grid going you be et private these you typically everyone is grid expansion of boats renewable the rise far and energy, the going to And chain, from you there's think rise or of all if think able We I that know we also the energy electric investments be wouldn't needed, support. way across

Eric Boyer

question next from from Sachs. So the Goldman comes Martino Matt

Matthew Martino

trying Werner especially back well of we as update an get for to in the wanted Just your will from into renewals, prospects algorithm half kind growth understand ARR year. of growth, between just get as year? of growth remainder of the through the on as year we extent Nicholas, just the factor as escalators progresses dynamics half the think your the application of the mix which to of and kind back the accretion pricing the to

Nicholas Cumins

question Werner? that you Is a want to tackle

Werner Andre

Yes, yes, happy to do.

the impact So to more negligible the ARR about prepared second of EXXX and around previously a will ARR have the has be programmatic and are It's will ramp the second year the go is timing that quarter. growth in half. our that of that analytics into from in remarks that we the started mentioned into half deal we traction as tick expect, of currently half year-over-year in discussed, the the deals up we dynamics acquisitions last as positive floors and the It year which of ceilings the in QX, renewal there. discussed we asset there's that, second a pipeline we

more little there's that expect would a also We bit pickup.

will escalations, So this a be escalations annual on factors year, mentioned growth regards we headwind. a little that's of the before, to timing. With like earlier bit for underlying

own our pass software So internal the our collisions on it's use we in compensation, we and year to expect inflation, escalations still to is own colleague come we believe one cloud this and which slightly the around inflation cost, -- are in last very we mid-single-digit below so range forth. inflation is predominantly reasonable about our

[indiscernible] So logos is a a driver range expected. it mix we before, developed as is, that changes significant be the application mentioned between component to key very It I us. new And HX expect is on like growth as we within also, expect. and key application mix for [indiscernible] is continues strong. the pricing We HX don't and then also

quarters And the is been X%. with X for that We have to at has high over year-to-date at historical high It X% a X%. new last logo us. growth --

be as to continue logos new will the forward that year. we expect we contributors so go And strong will

Unknown Executive

per the annual beginning order last we I the It I that's escalation, will occurred on of a the and [indiscernible] Just a previous or and that to percent of quarter, on between -- isn't remind at termination the once you about the it year. set subject that, year. was believe setting lower

Eric Boyer

Panigrahi question from Mizuho. Siti from Next comes

Sitikantha Panigrahi

into roles. and impact want does talk Greg heading I train IIJA and to ask and on rate about and U.S. environment And macro lower congratulations your the could your current the how spending about interest you XXXX? business? Nicholas, potential new election, that

Nicholas Cumins

Greg to Yes, do I'm but start, you or? want happy -- to

Unknown Executive

[indiscernible]

Nicholas Cumins

Okay.

proposed you're the heard a the you political in Infrastructure elections, a comes topic. I And my to what was bipartisan. agrees, U.S. is the is again, prepared infrastructure. think nuclear it very referring to. that Advance is of energy topic everyone, signed this So bipartisan everybody also bill, which a into you new it when Senate which has bipartisan we all a that a Act, remarks, which reconciles President from see need standpoint, to bill -- the when when It invest is

It as utilities. any by The our of of caused really we has to But strong money for parts new it explore investments. impacted And public Remember by capital. don't our maybe raise it There bulk of business firms has been bulk business is mines Q&A So slowdown is the that been business public companies outcome of to very see operate. money, works are mining be rates. ago. that whatever down to this in in was as expect to private public sentiment that to the to bulk yes, be has is [indiscernible] from business mobilize utilities. for part of when our not to may very we works the And that are to yes. Overall, U.S., infrastructure elections this session, market the that slow change is the positive they the we the investments in as where X able our the to high coming there. where years don't just example, raise comes with business our commented earlier this with difficulty impacted is of we need interest

at that Remember step, mean don't doesn't the it take, -- then has Once I that with it and to months, announced it's XX% next -- the also it's point, awarded, IIJA work. only to we're becomes IIJA, that's a that money XX know, to start growth still still, starts receiving announced. then on the [indiscernible] can early it extent in the awarded, from again And the software, IIJA depending X months additional tailwind. then the flow been able to that many... it us. But for it the and standpoint, And on means our is a becomes usage that of respect entity as funding projects. opportunity

Unknown Executive

the at necessity. for just summarize recognized much long-term public. the a for. that have backlog moment, with governments water those the the of world, very structural they think us resilience tone it's priority of public subject led and It's and policy. and than engineers a years resilience discretionary sentiment Really and not perspective grid we've don't it's are X the networks all thing now If that's the I important same. of road been the the more we big consensus aspect or been ever in most rail keeping of could the just a has It's busier responsible become as politics from that even of And to civil a of geopolitical

Eric Boyer

Next question Securities -- Research, comes sorry. Tilton from Wolfe Wolfe from Josh

Joshua Tilton

me? Can you hear

Nicholas Cumins

Yes.

Joshua Tilton

and congratulations Greg. either quantitative. guys, congrats quarter, Nicholas my on the Well, is question for you This I of and qualitative and to [indiscernible]

that growth of So a single-digit And that durability ARR NRRs just, about range. -- double-digit of from the coming here is how growth much of in guys lot into of double-digit we, new mentioned, future? customers. love the do kind think so context in and in conviction investors, to from confidence how as we I smaller guess the do growth rate that the the the you tracking see as ability Like you get continue durable

Unknown Executive

What it while the is the for to demand We demand which about of inflation ask to one you cycles. terms have will the reactive me because real assumptions been is is market countercyclical. normalize. is think of future layers that is And growth please even environment what to a public rate, very strictly used arguably in environment say of say, spending Well, inflation. I escalation, tend or about that the on we macro not subject ARR want if make that terms, course, the tell to to to to unit

be is. I because high down already dampened as bit may as a it's that's think now it

future. open public I a about a to definitely new the I are And the U.K. in financing that like earlier in partnerships government finances funding, private labor think greater think is and concerned, of question the public infrastructure, private even lies private government

wouldn't that invited far roadway of as and of Nicholas sentiments whom Cumins in SMB of on sentiment, growth as concern years for smaller our durability for being instance, well, comes projects, mentioned, So already firms highway of more emphasize as is are participate demand rather of for the the -- be with be instance, proven PennDOT. to as reports we and now there, network, to includes percentage multiple as the the it's and we the ARR firm that X engineering growth sustained increasingly

to seems both subject for to higher agree the rather inflation those need reasons do component, the have escalation -- are things on. our for digits, that those I So be to in be perspective. going It we be longer component of seems double to to

Eric Boyer

And question Abernethy last Rosenblatt Securities. comes our from from Blair

Blair Abernethy

your ramp terms take this, timing? this up -- of revenue of a coming cycle get and business. the get How now you the had Bentley? the selling that in pilot you under like follow it belt quarters maintenance to long to Can thing couple you've of with of now what up introduce sort roadway does looking sort Just on for

Unknown Executive

up, most recently state [indiscernible] for months. has with full went come X that a the Well, started that

a was it So [indiscernible].

another. innovation particularly for think now competitive also on closely forth. and subject like one they're but along but birds thing they're and of applicable the maintenance the selling It [indiscernible], eagerly federal transportation, of [indiscernible] the and that, states, and looking to I become hasn't all the of that and They they're [indiscernible] is good their application it's for report So municipal -- the which is at requirement, with instance, matter successes which county the yet also is with feather, at the quarters, a a departments highway not about analytics. to and our so great maintain level not to a it's

of next operations and group analytics -- asset new is it for at executive things way [indiscernible] need generational biggest to is of long be it us can direction -- in me, and of have earlier for So to we ARR year. the is last growth this we AI question year take with analytics. excuse had slope the the exiting significant for that literally the doesn't need asset that And part take in the on, very enthusiasm in a products in steep And been think to rate existing asset said, charging is had Nicholas looking our with off, significant, but kicks platform, -- I analytics as word it to asset accident. folding become this end doesn't with that and AI, are into you? opportunity generally, entirely that we Nicholas Nicholas incremental, by per insight that

Nicholas Cumins

it said, we growth massive way, growth to is tie it's et have engineering by asset usually impact it It's the quickly deploy. very generates because [indiscernible] easy business asset nevertheless, much want, easy maintenance, have you they business, Greg does opportunity recurring have that it because that. help are as show for busy them analytics with their expanding a many to more a dashcam cetera. firms which, the expand very help for happen opportunity It's of do beyond assets, exactly that the exciting and to the Overall, them insights bigger as also want because now, the from them projects, solution the many a of we of they to operators data, with are points we on operations, a right easy to is to them so if serve to or want infrastructure the software business, their owner to very services [indiscernible] of as

levels. hugely growth opportunity many So for us it's exciting at a

Unknown Executive

I quote quarter even well in -- hard say where particular me can is though I just impressed in one opportunity balance, we're growth that. your But question the long the say we in operations especially Maybe do work really term that asset on of TAM forth. is interesting so that's referred about the would and and to get and to visibility, on in to my what this linearity the focus and what that that I terms back next increment really

Now great it's with [indiscernible] our there. in think hands I focusing

we we We otherwise and to what in can return far. will on and long-term have year to futures. that's predictable profitability iterating. analytics, areas increment margins want. we asset basis in some have every a our acquisitions year can we're programmatic that's XXX asset see, everything You ahead the we not had way operations, But points what invest into And this efficiency so want these

Eric Boyer

you call Systems. on our Bentley in that reach further and quarters. time coming we follow-up, your questions interest So in thank in out to Please performance Relations concludes updating you We with to today. Investor for our and forward look

Bentley Systems (BSY) 6 Aug 242024 Q2 Earnings call transcript