EXTON, PA — Bentley Systems, Incorporated (Nasdaq: BSY) recently announced operating results for its fourth quarter and full year that ended December 31, 2022, and its financial outlook for 2023.
Fourth Quarter 2022 Financial Results
- Total revenues were $286.9 million, up 7.2% or 12.7% on a constant currency basis, year-over-year;
- Subscriptions revenues were $251.5 million, up 12.7% or 18.3% on a constant currency basis, year-over-year;
- Annualized Recurring Revenues (“ARR”) was $1,036.5 million as of December 31, 2022, representing a constant currency ARR growth rate of 15% from December 31, 2021, or 12.5% ARR growth from business performance, excluding acquired ARR from the Company’s 22Q1 platform acquisition of Power Line Systems;
- Last twelve-month recurring revenues dollar-based net retention rate was 110%, consistent with the preceding quarter;
- Operating income was $40.8 million, compared to $43.3 million for the same period last year;
- Adjusted operating income was $88.1 million, compared to $83.3 million for the same period last year;
- Net income was $25.7 million, compared to $38.6 million for the same period last year. Net income per diluted share was $0.08, compared to $0.12 for the same period last year; Net income margin was 9.0%, compared to 14.4% for the same period last year;
- Adjusted net income was $59.7 million, compared to $72.2 million for the same period last year. Adjusted net income per diluted share (“Adjusted EPS”) was $0.19 compared to $0.22 for the same period last year;
- Adjusted EBITDA was $92.6 million, compared to $88.2 million for the same period last year. Adjusted EBITDA margin was 32.3%, compared to 32.9% for the same period last year; and
- Cash flow from operations was $36.1 million, compared to $80.6 million for the same period last year, with the decrease mainly due to the timing of renewals and associated billings of certain annual contracts, and the timing of certain vendor payments.
Full Year 2022 Financial Results
- Total revenues were $1,099.1 million, up 13.9% or 19.8% on a constant currency basis over 2021;
- Subscriptions revenues were $960.2 million, up 18.1% or 24.3% on a constant currency basis over 2021;
- Operating income was $208.6 million, compared to $94.6 million for 2021. Operating income for 2021 includes a one-time compensation charge of $90.7 million resulting from a modification of the Company’s deferred compensation plan;
- Adjusted operating income was $348.5 million, compared to $306.2 million for 2021;
- Adjusted operating income inclusive of stock-based compensation (“Adjusted OI w/SBC”) was $273.9 million, compared to $258.0 million for 2021;
- Net income was $174.8 million, compared to $93.2 million for 2021. Net income per diluted share was $0.55, compared to $0.30 for 2021. Net income for 2021 includes a one-time compensation charge of $83.4 million, net of tax, resulting from a modification of the Company’s deferred compensation plan. Net income margin was 15.9%, compared to 9.7% for 2021;
- Adjusted net income was $274.5 million, compared to $267.9 million for 2021. Adjusted EPS was $0.85 compared to $0.83 for 2021;
- Adjusted EBITDA was $366.4 million, compared to $324.9 million for 2021. Adjusted EBITDA margin was 33.3%, compared to 33.7% for 2021; and
- Cash flow from operations was $274.3 million, compared to $288.0 million for 2021, with the decrease primarily due to the timing of renewals and associated billings of certain annual contracts, and increased interest payments.
Definitions of the non‑GAAP financial measures used in this press release and reconciliations of such measures to the most comparable GAAP financial measures are included below under the heading “Use and Reconciliation of Non‑GAAP Financial Measures.”
CEO Greg Bentley said, “The fourth quarter and thus full-year 2022 operating results quite successfully met the expectations we maintained throughout the year, notwithstanding the loss of Russia and pandemic-compounded headwinds in China. Our operating team colleagues, led by COO Nicholas Cumins, delivered what I consider our best year ever, operationally and financially. Our E365 and SMB growth initiatives hit a new stride, our Seequent and Power Line Systems platform acquisitions continued their breakout new business velocity, and every region throughout the world, other than China, continues to perform and grow at full pace. The stage is set for relatively favorable visibility into comparable growth during 2023, as our accounts and prospects are necessarily prioritizing going digital in order to meet accelerated demand for infrastructure engineering.
“Our 2023 annual financial outlook must nonetheless factor in a cautious approach to China, where we are appropriately adapting to improve our long-term prospects under the assumption of continued geopolitical challenges. Our enduring annual commitment to margin improvement is now expressed in terms of Adjusted operating income inclusive of stock-based compensation (rather than Adjusted EBITDA) to align our external reporting with executive incentives that incorporate accountability for the full economic costs of equity awards and of operating capex. We are also announcing further generational management succession, as we round out our expected wave of post‑IPO executive retirements with, characteristically, ‘no drama.’”
CFO Werner Andre said, “In Q4, as throughout 2022, sustained favorable operating momentum enabled us to achieve our strong results despite the year’s challenges in Russia and China. Our Q4 decrease in cash flow from operations stemmed largely from timing and has been fully offset by resulting extraordinary collections in early 2023.
“Our 2023 financial outlook reflects our confidence in continued strong market demand for infrastructure engineering going digital—led by our E365 program, SMB initiatives, and enduring strength of our platform acquisitions—subject to wider uncertainty surrounding potential outcomes in China. Our balanced capital allocation provides sufficiently for programmatic acquisitions and for equity and debt repurchase programs, as well as our 2023 increase to our modest dividend payout.”
Recent Financial Developments
- On November 30, 2022, the Company completed the acquisition of Vetasi, a leading international consultancy specializing in enterprise asset management (EAM) solutions, with a strong focus on IBM Maximo;
- On February 23, 2023, the Company announced it completed the acquisition of EasyPower, a developer of design and analysis software for power systems engineering and an established market leader in arc-flash hazard resilience;
- For the year ended December 31, 2022, to offset dilution from stock-based compensation, the Company spent approximately $43.6 million on de-facto share repurchases associated mainly with deferred compensation plan distributions, and under the BSY Stock Repurchase Program which it announced in the second quarter of 2022 it repurchased 896,126 shares for $28.3 million, and $2.2 million aggregate principal amount of the Company’s outstanding convertible senior notes due 2026 for $2.0 million; and
- On January 25, 2023, the Company announced its board of directors increased its regular quarterly dividend from $0.03 per share to $0.05 per share effective from the first quarter of 2023.
2023 Financial Outlook
The Company is sharing the following financial outlook for the full year 2023:
- Total revenues in the range of $1,205 million to $1,235 million, representing growth of approximately 9.5% to 12.5% (10.5% to 13.5% in constant currency);
- Constant currency ARR growth rate (business performance)(1) of 11.5% to 13.5%;
- Adjusted OI w/SBC margin of approximately 26%;
- Effective tax rate of approximately 20%;
- Cash flow from operations representing a conversion rate from Adjusted EBITDA of approximately 80%; and
- Capital expenditures of approximately $30 million, which includes certain IT investments.
(1) Business performance excludes ARR acquired from platform acquisitions, but includes ARR acquired from programmatic acquisitions, which generally are immaterial, individually and in the aggregate.
The 2023 outlook information provided above includes non-GAAP financial measures management uses in measuring performance and liquidity. The Company is unable to reconcile these forward-looking non-GAAP measures to GAAP without unreasonable efforts because it is not possible to predict with a reasonable degree of certainty the actual impact of certain items and unanticipated events, including stock‑based compensation charges, depreciation and amortization of acquired intangible assets, realignment expenses, and other items, which would be included in GAAP results. The impact of such items and unanticipated events could be potentially significant.
The 2023 outlook is forward-looking, subject to significant business, economic, regulatory, and competitive uncertainties and contingencies, many of which are beyond the control of the Company and its management, and based upon assumptions with respect to future decisions, which are subject to change. Actual results may vary and those variations may be material. As such, the Company’s results may not fall within the ranges contained in this outlook. The Company uses these forward-looking measures to evaluate its ongoing operations and for internal planning and forecasting purposes.
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