Bentley Systems, Incorporated

Bentley Systems, Incorporated provides software for infrastructure engineering. Customers use its products to design, construct and operate assets such as roads, bridges, utilities and industrial facilities. Its Seequent business provides software for understanding the subsurface. The company trades on Nasdaq under BSY and has a December 31 fiscal year-end.

Quarterly financial results

Annualized recurring revenue reached $1.583 billion from $1.405 billion. Its constant-currency growth rate accelerated to 13%, compared with 12% in Q2 and 10.5% a year earlier. Dollar-based net retention, which measures spending by existing customers, was 110% versus 109%.

The preferred non-GAAP profit measure, called AOI less Operating SBC, keeps ordinary operating stock compensation as a cost. It excludes acquired-intangible amortization, deferred-compensation fair-value changes, acquisition-related expenses including retention awards, and specified integration or realignment costs. The comparative figures use the same revised definition. Its quarterly margin rose to 32.1% from 28.1%; GAAP operating margin rose to 29.1% from 22.5%.

GAAP profit benefited from a $6.819 million favorable deferred-compensation comparison and lower amortization of capitalized software, alongside sales growth. The effective tax rate fell to 22.1% from 31.4%, reflecting differences in discrete tax benefits. Diluted shares fell to 317.691 million from 333.277 million; January's convertible-note repayment reduced assumed-conversion dilution as well as buybacks reducing outstanding shares.

Annual outlook and earlier expectations

The November outlook calls for 12.5% to 13.5% constant-currency recurring-revenue growth in 2026, excluding Cohesive and including Eliis. The original February range was 10.5% to 12.5% and included programmatic acquisitions. The portfolio changed between the two forecasts.

February's original annual ranges were $1.685 billion to $1.715 billion of revenue, $495 million to $510 million of the preferred adjusted operating profit, and $500 million to $570 million of free cash flow. In August, management said performance positioned Bentley favorably within its annual outlook. In November, it said revenue excluding Cohesive, preferred adjusted operating profit and free cash flow remained on track within their respective ranges.

Completed October transactions

On October 13, 2026, Bentley contributed Cohesive to Naviam for an equity interest and warrants as the primary consideration. It also received $6.715 million of net cash from closing price adjustments. Cohesive provided IBM Maximo-related implementation and consulting services. It accounted for about 3.5% of total revenue and half of services revenue in the first nine months. Its removal is expected to lower services revenue and costs and improve gross margin through 2027.

Bentley completed its purchase of Eliis on October 29 for approximately €133 million net of acquired cash, subject to working-capital adjustments, plus 437,545 Class B shares. The seismic-interpretation business joins Seequent. Both transactions occurred after the September balance-sheet date and begin affecting subsequent operating results.

Cash, debt and capital returns

Operating cash flow for the first nine months was $374.355 million, versus $396.876 million. After $21.260 million of property, equipment and capitalized-software spending, free cash flow was $353.095 million, compared with $384.040 million. Working capital was a $46.698 million unfavorable comparison, including receivables and cloud-subscription deposits. Trailing-twelve-month free cash flow increased to $489.264 million from $460.125 million.

Bentley spent $135.081 million on buybacks and $63.574 million on dividends in the first nine months. The $500 million repurchase authorization runs through December 31, 2028; $346.558 million remained at September 30.

September cash and equivalents were $150.874 million, excluding $12.464 million classified with assets held for sale. Debt carrying value was $1.162 billion, including $550 million of term-loan principal, $40.253 million drawn on the revolver and $575 million face value of convertible notes, less financing fees. The company had $1.260 billion of undrawn revolving credit capacity, separate from cash.

The convertible notes mature July 1, 2027. They were classified as long-term because Bentley intended and had the capacity to refinance them through its credit arrangements. Only $13.750 million of debt was classified as current at September 30. Operating-lease liabilities and future purchase commitments are separate obligations.

The main developments to follow are recurring-revenue growth after the transactions, profitability as the services mix shrinks, cash collection, Eliis integration and the refinancing of the July 2027 notes.