Bentley Systems, Incorporated (NASDAQ:BSY) reported strong first quarter 2024 results, demonstrating the company's ability to consistently execute and deliver value to its customers. The infrastructure engineering software provider reported annual revenue of $1,228,413,000 and annual net income of $326,787,000 in 2023, along with impressive annual operating cash flow of $416,696,000 and free cash flow of $391,694,000.

Financials

In the first quarter of 2024, Bentley Systems reported total revenues of $337,763,000, up 7.4% year-over-year. Subscription revenues, which accounted for 91% of total revenues, grew 10.5% to $307,089,000. The company's annualized recurring revenue (ARR) reached $1,186,456,000 as of March 31, 2024, representing a constant currency growth rate of 11.0% year-over-year. Bentley's last twelve-month recurring revenues dollar-based net retention rate stood at 108% as of the end of the first quarter.

The strong subscription revenue growth was driven by continued expansion within existing accounts, as well as a 4% contribution from new accounts, particularly in the small- and medium-sized business (SMB) segment. Bentley's Virtuoso Subscriptions offering, targeted at the SMB market, added over 600 new logos for 8 consecutive quarters, with the cumulative number of Virtuoso Subscription accounts now exceeding 9,000.

Geographical Performance

Geographically, the Americas region, which includes the U.S., Canada, and Latin America, saw a 9.4% increase in revenues, driven by strong subscription growth in the U.S. The EMEA region grew 2.0%, while the Asia-Pacific region, led by India, saw a 10.6% revenue increase.

Profitability

On the profitability front, Bentley Systems reported adjusted operating income with stock-based compensation expense of $112,345,000 for the first quarter, up 24% year-over-year, with a margin of 33.3%, an expansion of 450 basis points. The company's operating cash flow for the quarter was $204,969,000, up 16% compared to the same period in the prior year.

Recent Developments

Bentley's Chief Executive Officer, Nicholas Cumins, who was recently promoted from Chief Operating Officer, highlighted the continued strong demand for the company's solutions, driven by the ongoing engineering resources capacity gap and the need for digital transformation in the infrastructure sector. Cumins noted that the company's focus on digital project delivery, leveraging its Bentley Infrastructure Cloud platform, is resonating with customers and driving increased adoption of its SYNCHRO solution for construction management.

The company's new Executive Chair, Greg Bentley, who is transitioning from the CEO role, emphasized Bentley's strategic initiatives, including the expansion of its asset analytics business, which is expected to contribute to the company's growth throughout 2024. The asset analytics offering provides instant-on digital twin solutions for various infrastructure asset types, monetized on a per-asset basis.

Outlook

Looking ahead, Bentley Systems maintained its full-year 2024 guidance, with an expected ARR growth rate of 10.5% to 13% on a constant currency basis. The company also highlighted the continued strength in its SMB segment and the potential upside from its asset analytics initiatives as key drivers for the remainder of the year.

Conclusion

Overall, Bentley Systems' first quarter results demonstrate the company's ability to consistently execute and deliver value to its customers, even in the face of macroeconomic uncertainties. The company's focus on subscription-based recurring revenue, its successful SMB strategy, and its strategic investments in areas like asset analytics position Bentley Systems well for continued growth and success in the infrastructure engineering software market.