Bentley raised its growth target. The business behind it has changed.

Bentley Systems' recurring-revenue growth is accelerating, and more of its sales are turning into operating profit. Its next results will also reflect a business with less consulting and another software acquisition.

The infrastructure-software company raised its annual growth forecast for recurring revenue to 12.5% to 13.5%, measured at constant exchange rates. Its original February range was 10.5% to 12.5%.

Between those forecasts, Bentley completed two October deals: it contributed its Cohesive consulting business to Naviam and bought seismic-software company Eliis. The higher target excludes Cohesive and includes Eliis. It combines stronger momentum with a changed portfolio.

The improvement came before the deals

In the September quarter, annualized recurring revenue grew 13% at constant exchange rates, up from 12% in Q2. That measure estimates the annual value of recurring contracts; it is different from revenue already earned during the quarter.

Actual quarterly revenue rose 12% to $421.5 million. Bentley sells software used to design, build and operate infrastructure, and subscriptions supplied $386.8 million of those sales.

Its preferred adjusted operating-profit measure rose 28% to $135.5 million, lifting the corresponding margin to 32.1% from 28.1%. Unlike many adjusted technology-company measures, this one keeps ordinary operating stock compensation as an expense. It removes items including acquired-intangible amortization, deferred-compensation adjustments and acquisition costs.

Reported operating income also improved, reaching $122.6 million from $84.5 million. Some of that increase came from a favorable deferred-compensation comparison and lower software amortization. Stronger sales were part of the improvement, alongside changes in costs.

Less consulting changes the mix

Cohesive provided implementation and consulting services around IBM's Maximo software. Bentley transferred it to Naviam on October 13, mainly in exchange for an equity interest and warrants.

The business represented about half of Bentley's services revenue in the first nine months, but only about 3.5% of total revenue. Bentley expects its departure to reduce both services sales and services costs through 2027, improving the group's gross margin.

That creates a different comparison for future quarters: a better margin will reflect both operating performance and a smaller consulting component.

Eliis moves the portfolio further toward software. Bentley completed that acquisition on October 29 for about €133 million net of acquired cash, plus 437,545 Class B shares. Eliis' subsurface interpretation software joins the Seequent business. Neither October transaction was part of September-quarter operating results.

Profit and cash moved in different directions

The stronger profit quarter did not produce more cash. Free cash flow, after spending on property, equipment and capitalized software, fell to $101.4 million from $110.7 million a year earlier.

The first-nine-month figure also fell, to $353.1 million from $384 million. Receivables collections and lower cloud-subscription deposits contributed to a less favorable working-capital comparison, partly offsetting higher earnings.

The longer view was stronger: free cash flow over the trailing twelve months rose to $489.3 million from $460.1 million. Chief Financial Officer Werner Andre said revenue excluding Cohesive, the preferred adjusted operating-profit measure and free cash flow remained on track within their annual outlook ranges.

The Bentley Systems company profile tracks those earlier expectations, cash generation and the completed deals. The next useful comparison is how much of the continuing software growth reaches cash flow as the portfolio changes work through the accounts.