Bentley Systems Announces Fourth Quarter and Full Year 2020 Results

Bentley Systems

EXTON, PA — Bentley Systems, Incorporated (Nasdaq: BSY), the infrastructure engineering software company, recently announced operating results for its fourth quarter and full year ended December 31, 2020, and 2021 financial outlook.

Fourth Quarter 2020 Financial Results:

  • Total revenues were $219.6 million, up 8.2% year-over-year;
  • Subscriptions revenues were $178.3 million, up 9.4% year-over-year;
  • Last twelve-month recurring revenues were $696.7 million, up 10.4% year-over-year;
  • Last twelve-month recurring revenues dollar-based net retention rate calculated under Topic 605 was 108%, the same as for the same period last year;
  • Last twelve-month account retention rate was 98% (calculated under Topics 606 and 605 for comparability), compared to 98% (calculated under Topic 605) for the same period last year;
  • Annualized Recurring Revenue (“ARR”) was $752.7 million as of December 31, 2020, representing a constant currency ARR growth rate of 8% from December 31, 2019;
  • GAAP operating income was $54.3 million, compared to $42.7 million for the same period last year;
  • GAAP net income was $51.9 million, compared to $36.3 million for the same period last year. GAAP net income per diluted share was $0.17, compared to $0.13 for the same period last year;
  • Adjusted Net Income was $52.1 million, compared to $35.8 million for the same period last year. Adjusted Net Income per diluted share was $0.17 compared to $0.12 for the same period last year;
  • Adjusted EBITDA was $77.1 million, compared to $56.0 million for the same period last year. Adjusted EBITDA margin was 35.1%, compared to 27.6% for the same period last year;
  • Cash flow from operations was $82.3 million, compared to $52.5 million for the same period last year.

Full Year 2020 Financial Results:

  • Total revenues were $801.5 million, up 8.8% year-over-year;
  • Subscriptions revenues were $679.3 million, up 11.7% year-over-year;
  • GAAP operating income was $150.2 million, compared to $141.9 million for the same period last year;
  • GAAP net income was $126.5 million, compared to $103.1 million for the same period last year. GAAP net income per diluted share was $0.42, compared to $0.35 for the same period last year;
  • Adjusted Net Income was $192.7 million, compared to $135.0 million for the same period last year. Adjusted Net Income per diluted share was $0.64 compared to $0.46 for the same period last year;
  • Adjusted EBITDA was $266.2 million, compared to $188.1 million for the same period last year. Adjusted EBITDA margin was 33.2%, compared to 25.5% for the same period last year;
  • Cash flow from operations was $258.3 million, compared to $170.8 million for the same period last year.
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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.”

“The fourth quarter and full-year 2020 concluded to our general satisfaction, given the enduring pandemic conditions in most of the world. Our overall application usage and new business generation essentially rebounded by year end to pre-pandemic levels, and our growth in ARR and especially recurring revenues underscore our long-term momentum and predictability. The commercial / facilities and industrial / resources sectors remain weaker, but on balance we believe we are well positioned, by our diversification and market-leading emphasis on public works / utilities, for 2021’s broadly anticipated infrastructure investment resurgence,” said Greg Bentley, CEO.

Mr. Bentley continued, “While we expect that 2020’s evident acceleration in “going digital” for infrastructure engineering will continue, our first-ever annual financial outlook naturally reflects conservative assumptions about the timing of cyclical economic recovery. While we are prepared and inclined to invest resolutely in the “generational” opportunity for infrastructure digital twins, our 2021 plans and outlook nevertheless give appropriate precedence to our commitment and ability to steadily improve our sustainable operating margins, indefinitely.”

Fourth Quarter 2020 Financial Developments:

  • In November 2020, Bentley Systems completed its follow‑on public offering of 11.5 million shares of its Class B Common Stock at a price of $32.00 per share (the “Follow-On Offering”). The Company sold 9.6 million shares of Class B Common Stock (inclusive of 1.5 million shares sold upon the exercise by the underwriters of their option to purchase additional shares of the Company’s Class B Common Stock). The selling stockholders sold 1.9 million shares of Class B Common Stock. The Company received net proceeds of $294.4 million after deducting expenses of $12.9 million. The Company did not receive any of the proceeds from the sale of the Class B Common Stock sold by the selling stockholders.
  • For the three months and year ended December 31, 2020, the Company reported an effective tax rate of 23.7% and 23.0% respectively.
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Recent Financial Developments:

  • In January 2021, Bentley Systems entered into an amended and restated credit agreement, which matures on November 15, 2025 (the “New Credit Facility”). Upon entry into the New Credit Facility, the Company obtained a $850.0 million senior secured revolving facility and refinanced all indebtedness outstanding under its former Credit Facility.
  • In January 2021, Bentley Systems completed an offering of $690.0 million of 0.125% convertible senior notes due 2026 (the “2026 Notes”). Interest will accrue from January 26, 2021 and will be payable twice a year with the first payment due on July 15, 2021. The Company used $25.5 million of the net proceeds from the sale of the 2026 Notes to pay the cost of the capped call transactions and approximately $250.5 million to repay outstanding indebtedness under the former Credit Facility and to pay related fees and expenses. The Company intends to use the remainder of the net proceeds from the sale of the 2026 Notes for general corporate purposes, which may include funding future acquisitions. The Company may apply all or a portion of the net proceeds for the acquisition of businesses, software solutions, and technologies that the Company believes are complementary to its own, although the Company has no agreements, commitments, or understandings with respect to any specific material acquisition at this time. The Company has not allocated any specific portion of the net proceeds to any particular purpose and its management will have the discretion to allocate the proceeds as it determines. The Company incurred $18.0 million of expenses in connection with the 2026 Notes offering consisting of the payment of underwriting discounts and commissions, professional fees, and other expenses.

2021 Financial Outlook

The Company is providing the following outlook for the year ending December 31, 2021. The 2021 guidance herein is premised on COVID-19 pandemic-related business impacts generally abating gradually by year end, however, the ultimate impacts of COVID-19 on the Company’s financial outlook remain uncertain.

  • Total revenues in the range of $895 million to $920 million, representing growth of 11.7% to 14.8%;
  • Constant currency ARR growth rate of 8% to 10%;
  • Adjusted EBITDA in the range of $285 million to $295 million, representing growth of 7.1% to 10.8%, and Adjusted EBITDA margin of approximately 32%;
  • Its effective tax rate to be approximately 20%.
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The Company does not provide quarterly guidance, but will update its full-year financial outlook when announcing quarterly operating results during 2021 to the extent expectations materially change.

The 2021 outlook information provided above includes Constant currency ARR growth rate, Adjusted EBITDA, and Adjusted EBITDA margin guidance, which are non-GAAP financial measures management uses in measuring performance. 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 capitalized software costs and 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 2021 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 its outlook. The Company uses these forward-looking measures to evaluate its ongoing operations and for internal planning and forecasting purposes.

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