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    Bentley Systems Inc (BSY)

    Q2 2024 Earnings Summary

    Reported on Apr 26, 2025 (Before Market Open)
    Pre-Earnings Price$44.79Last close (Aug 5, 2024)
    Post-Earnings Price$46.88Open (Aug 6, 2024)
    Price Change
    $2.09(+4.67%)
    • Durable ARR Growth: Executives emphasized strong ARR prospects driven by scheduled renewals for the E365 platform—particularly a boost expected in Q4—combined with robust new logo additions (4% year-to-date in SMB accounts) that underpin a consistent ARR growth trajectory.
    • AI and Digital Twin Innovation: The leadership highlighted significant traction in AI-based asset analytics—with solutions like OpenTower IQ and Blyncsy already generating rapid insights—and a clear roadmap for evolving digital twin applications, which together present incremental, high-margin revenue opportunities.
    • Stable Demand from Supportive Infrastructure Spending: With infrastructure recognized as a bipartisan priority—exemplified by expanded engagements with state DOTs such as PennDOT—there is sustained, resilient demand from public works and utilities that supports a robust, long-term growth outlook.
    • China weakness: The contraction of China’s ARR contribution from 3% to 2.5% reflects ongoing geopolitical headwinds that could continue to dampen overall ARR growth.
    • Delayed renewals and extended deal cycles: The extended selling cycles—evidenced by pilots lasting around 3 months for initiatives like asset analytics and E365 renewals—could delay revenue recognition and put pressure on near-term ARR performance.
    • Reliance on permitting reforms and public spending: Dependence on public infrastructure investments, where permitting reforms (with environmental reviews taking up to 2 years) are expected to drive revenue, creates uncertainty if these reforms are delayed.
    1. ARR Growth Guidance
      Q: What drives the high-end ARR guidance?
      A: Management explained they widened the ARR range thanks to asset analytics’ upside—anticipating 8-digit ARR growth from these initiatives along with large procurements—to support robust year‐end figures.

    2. ARR Growth Durability
      Q: Is double-digit ARR growth sustainable?
      A: Leaders are confident that the consumption model and strong, recurring revenue from renewals will sustain double-digit growth despite modest NRR figures, underpinned by consistent demand.

    3. E365 Renewals
      Q: How confident are you about E365 renewals?
      A: Management highlighted that renewals, particularly in Q4 with the E365 program, are on track and will significantly boost ARR due to favorable consumption dynamics.

    4. H2 Growth Drivers
      Q: What powers growth in H2?
      A: They underscored that renewals, pricing escalators, and stable application mix—combined with strong new logo additions—are expected to accelerate ARR growth in the back half.

    5. AI Monetization
      Q: How will AI impact the traditional portfolio?
      A: Executives noted that AI-driven asset analytics is already adding incremental revenue by enhancing efficiency and enabling new monetization models, especially in tower and maintenance analytics.

    6. Infrastructure Spending
      Q: How does IIJA funding affect enterprise deals?
      A: Management observed that extended project timelines and steady IIJA investments provide time to engage enterprise accounts, supporting gradual and sustainable infrastructure demand.

    7. Permitting Reform
      Q: What is the impact of permitting reform on PLS?
      A: They mentioned that although full benefits await regulatory clearances over the next two years, strong initial demand signals signal that permitting reform will unlock significant growth in PLS usage.

    8. Roadway Maintenance
      Q: What is the sales cycle for roadway maintenance?
      A: The team indicated that sales cycles for roadway maintenance remain lengthy due to pilot programs and implementation complexities, with revenue ramps materializing over several quarters.

    9. Phase 2 Digital Twin
      Q: What’s the status of Phase 2 digital twin?
      A: Management clarified that Phase II leverages iTwin capabilities within current products like MicroStation, with commercial impact expected as native digital twin applications evolve.

    10. SMB Retention
      Q: How is SMB retention trending?
      A: Executives affirmed that retention in SMB accounts has exceeded initial expectations, supported by ongoing improvements in automation and digital experience, helping drive consistent subscription renewals.