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    BSY
    Earnings call· Mar 2026(Q1 FY26)

    BENTLEY SYSTEMS Q1 FY26 earnings call BSY

    May 7, 2026 Source

    Executive summary

    Bentley Systems Q1 FY26 — Strong Start Driven by AI Initiatives and Resources Sector Growth

    Bentley Systems delivered a strong Q1 FY26, driven by robust performance in its core subscription business and accelerated growth in the resources sector. The company is actively pursuing AI monetization strategies, focusing on API consumption for its engineering applications and Bentley Asset Analytics, while maintaining a principled approach to data ownership. Management reiterated its full-year financial outlook, confident in continued durable recurring revenue growth and strategic capital allocation.

    Highlights

    5

    • Year-over-year ARR growth was 11.5% in constant currency, in line with expectations.

    • Net revenue retention rate remained strong at 109%, consistent with previous quarters.

    • The Resources sector was the fastest-growing, now accounting for over 20% of sector attributable ARR.

    • Last 12 months free cash flow was $492 million, up 13% year-over-year.

    • Net debt leverage reduced from 2.1x to 1.9x adjusted EBITDA during the quarter.

    Concerns

    3

    • Perpetual license revenues decreased 18% in constant currency, remaining a small and less predictable part of the revenue mix.

    • Q1 free cash flow faced a tougher year-over-year comparison due to strong collections in Q4 2025 and operating expenses weighted to the first half of 2026.

    • Persistent headwinds in China, which represents approximately 2% of ARR, continue to be navigated.

    Guidance & targets

    5
    CategoryTargetConfidence
    Full year free cash flow outlook
    $500 million to $570 million
    high materiality
    High
    2026 financial outlook range
    comfortable with our 2026 financial outlook range
    high materiality
    High
    Q2-Q4 GAAP revenues FX impact
    negatively impacted by approximately $3 million
    medium materiality
    High
    Organic year-over-year ARR growth rates
    relatively stable during the year
    high materiality
    High
    Seequent growth
    assume the same level of growth that we've seen towards the end of 2025
    medium materiality
    High

    Segment performance

    6
    SegmentRevenueYoYQoQMargin
    Resources
    Expected another strong year for Seequent, bolstered by improving mining fundamentals. Seequent's subsurface ARR in civil infrastructure grew by a factor of 4 since acquisition. Technology pivotal for new energy sources (geothermal) and water management.
    Accounted for >20% of sector attributable ARR
    		—fastest-growing sector——
    Public Works Utilities
    Driven by robust global infrastructure investments. Power Line System benefited from increasing demand for grid resiliency and new power generation. Adoption of Seequent applications also supported growth.
    		—solid quarter——
    Industrial
    Growth continued to be solid.
    		—solid——
    Commercial Facilities
    Remained relatively flat.
    		—relatively flat——
    EMEA
    Strong performance despite conflict in Middle East (project delays, consumption shift), offset by strength elsewhere. U.K. growth accelerated. Robust growth in Africa driven by increased mining spending.
    		—fastest-growing region——
    Asia Pacific
    India leading the way, Australia showing improved momentum. Persistent headwinds in China (approx. 2% of ARR) compensated by strength elsewhere.
    		—solid growth——

    Operational metrics

    33
    Annual Revenue Run Rate (Bentley Asset Analytics)
    $50 million
    Q1 FY26

    Exceeding $50 million in annual revenue run rate.

    Revenue from accounts spending >$1M/year
    45%
    Q1 FY26

    45% of our revenue comes from 220 accounts, which each spend over $1 million per year with us.

    Revenue from accounts spending >$250K/year
    2/3
    Q1 FY26

    Almost 2/3 of our revenue comes from 824 accounts, which each spend over $250,000 per year with us.

    Global top design firms design billings
    $280 billion
    2025

    For 2025, these 639 global top design firms generated $280 billion of design billings.

    Global top design firms ex China design billings
    $212 billion
    2025

    The top global design firms ex China consists of 614 top firms generating design billings of $212 billion.

    BSY accounts among top global design firms ex China
    470
    2025

    Of these, 470 are BSY accounts, together accounting for $198 billion in design billings, 93% of the ex China total.

    BSY ARR from top design firms
    $414 million
    Q1 FY26

    With our ARR across these BSY accounts totaling $414 million or about 28% of our overall ARR, top design firms are our largest constituency.

    BSY ARR spend per $1M design billings
    $2,000
    Q1 FY26

    Per $1 million of their design billings, they spent on average about $2,000 in BSY ARR.

    Average BSY brands used by top design firms
    4
    Q1 FY26

    On average, each uses about 4 among BSY's top brands plus several other lesser brands.

    ProjectWise adoption by top design firms
    270
    Q1 FY26

    ProjectWise, in use by 270 of the top firms, together generating $160 billion in design billings, representing 76% of the design billings of the ex China top firms.

    Design software cost per $1M design project
    $10,000
    Q1 FY26

    A representative $1 million design project would consume about $10,000 of design software.

    Other costs per $1M design project
    $890,000
    Q1 FY26

    The cost other than for design software, mostly for engineers labor, must then be $890,000.

    Net profit margin with 20% software cost reduction
    10.2%vs 10%
    Q1 FY26

    Their net profit margin would extensively grow from 10% to 10.2%.

    Net profit margin with AI automation (fixed pricing)
    24%
    Q1 FY26

    The top design firm enterprise by investing in proprietary AI agents to automate and leverage and to API consume trusted modeling and simulation functionality could now generate IP level margins of over 24% on the same engineering inputs.

    New logos contribution to ARR growth
    300 bps
    Q1 FY26

    New logos contributed again, 300 basis points of ARR growth, primarily within the SMB segment.

    New logos added (Virtuoso)
    600
    Q1 FY26

    Through Virtuoso, our flagship commercial program for SMB accounts, we again added over 600 new logos in Q1.

    Total revenues growth
    14.5%YoY
    Q1 FY26

    Total revenues for the first quarter were $424 million, growing 14.5% year-over-year and 11.9% in constant currency.

    Subscription revenues growth
    14.7%
    Q1 FY26

    Subscription revenues, which represent 93% of total revenues and grew 14.7% for the quarter or 12.2% in constant currency.

    Perpetual license revenues growth
    -18%constant currency
    Q1 FY26

    Perpetual license revenues decreased 18% in constant currency.

    Service revenues growth
    25.8%constant currency
    Q1 FY26

    Service revenues increased 25.8% in constant currency.

    Last 12 months recurring revenues
    $1.440 billionup 13.3%
    LTM Q1 FY26

    Last 12 months recurring revenues now stand at $1.440 billion, increased by 13.3% year-over-year or 11.5% in constant currency and represent 93% of total revenues.

    Adjusted operating income less operating SBC
    $141 million
    Q1 FY26

    AOI less operating SBC was $141 million for the quarter with a margin of 33.2%.

    2026 convertible notes repaid
    $678 million
    Q1 FY26

    During the quarter, we repaid at maturity the outstanding balance of $678 million of our 2026 convertible notes.

    Share count reduction from note repayment
    10.6 million3%
    Q1 FY26

    The retirement reduced our fully diluted share count by approximately 10.6 million or 3%.

    Net debt decrease
    $134 million
    Q1 FY26

    In total, our net debt decreased by $134 million in the quarter.

    Share repurchases
    $54 million
    Q1 FY26

    We also returned capital to shareholders, deploying $54 million for share repurchases.

    Dividends paid
    $21 million
    Q1 FY26

    And $21 million for dividends.

    Credit facility capacity
    $756 million
    Q1 FY26

    At quarter end, capacity under our credit facility was $756 million.

    Net debt leverage
    1.9xvs 2.1x
    Q1 FY26

    We reduced our net debt leverage during the quarter from 2.1x to 1.9x adjusted EBITDA.

    New term loan A
    $550 million
    subsequent to Q1 FY26

    Subsequent to quarter end, we closed on a new $550 million term loan A under the accordion feature of our credit facility.

    Total borrowing capacity (post-term loan)
    $1.850 billion
    subsequent to Q1 FY26

    With the term loan in place, total borrowing capacity under our credit facility increased to $1.850 billion.

    Interest rate swap
    $200 million
    expiring 2030

    Our safeguards include the low fixed coupon on our remaining convertible notes and our $200 million interest rate swap expiring in 2030.

    Q1 FX revenue impact
    $2 millionless revenues
    Q1 FY26

    The U.S. dollar has strengthened slightly relative to the exchange rates assumed in our 2026 annual financial outlook, resulting in approximately $2 million less revenues from currency changes.

    Industry KPIs

    7
    MetricValueDetails
    Revenue growth$424 millionUSD
    Arr net new arr$1.495 billionUSD
    Large deal new logo metrics600count
    Gross retention renewal rate99%%
    Operating FCF margin rule of 4033.2%%
    Ai product adoption monetization$50 millionUSD
    Net revenue net dollar retention109%%

    Orderbook & backlog

    1
    ARR$1.495 billionQ1 FY26 quarter end

    11.5% YoY constant currency; 2.5% sequential quarterly organic

    At quarter end spot rates. Sequential growth was all organic and in line with expectations.

    Product announcements

    2
    ProductTypeDetails
    MCP server for STAADlaunch
    New large-scale User Conferencelaunch

    Risks & headwinds

    4
    Geopolitical tensions inhibiting access to Chinese organizationscurrently

    25% of 2025 global design billings ($280 billion) generated by 25 Chinese organizations are currently inaccessible.

    Mitigation: Strength across other regions more than compensates for headwinds in China (which is ~2% of ARR).

    Conflict in the Middle EastQ1 FY26

    Saw some project delays and a shift in consumption to other regions.

    Mitigation: More than offset by strength elsewhere, particularly EMEA's overall growth.

    Perpetual license revenue unpredictabilityongoing

    Decreased 18% in constant currency in Q1.

    Mitigation: Remains a very small part of the business and less controllable/predictable.

    Churn in Virtuoso SMB baseeach period

    The sheer scale of the Virtuoso base creates a natural churn dollar amount to overcome each period.

    Mitigation: Combination of new logos and existing account expansion continues to deliver strong net growth; overall retention rate remains stable at high double digits.

    What to watch in Q2 FY26

    5

    Resources and mining sector growth

    throughout 2026
    CurrentFastest-growing sector, strong Q1
    TargetContinue strong throughout the year

    Why it matters

    Key driver for achieving the higher end of the full-year ARR growth guidance.

    So for us to get to the, let's say, higher part of the range, we would need both resources and mining, in particular, to continue to go strong throughout the year.

    Q&A highlights

    5

    How Bentley's product efforts will bring the proposition of supporting more revenue by spending on software closer to reality, and what deliverables are needed for customer buy-in.

    Greg Bentley emphasized that API consumption, allowing AI agents to perform more iterations, will lead to better quality designs and enable engineering firms to substantiate fixed-price models to owner-operators. He noted that the more excited firms are about this transformation, the better for Bentley's prospects, as it's a win-win scenario.

    “Well, I think the path to that foreseeably is the API consumption. The notion that agents spun up by the engineers can do more iterations in the same time. It not only will deliver a better quality of design, but the engineering firms will be able to substantiate that to the owner operators to accelerate this transformation to fixed pricing.”

    asked by Joe Vruwink · answered by Gregory Bentley

    2 min read5 chapters

    Detailed Narrative

    01

    AI Strategy and Monetization

    Bentley Systems is positioning itself as a leader in infrastructure AI, leveraging its established incumbency and data stewardship in Bentley Infrastructure Cloud. The company sees AI as a seminal opportunity, focusing on agentic API consumption of its modeling and simulation functionality for design optimization and improved constructability. Bentley Asset Analytics, already exceeding $50 million in annual revenue run rate, is leading the way for instant-on digital twins, commercialized through subscriptions denominated in consumption per asset.

    02

    Customer Engagement and Value Proposition

    The company's business is anchored by stalwart enterprise accounts, with 45% of revenue from 220 accounts spending over $1 million annually. Bentley emphasizes aligned interests with its accounts, particularly top design firms, where software is a necessary factor of production. AI is expected to enable significant productivity gains, potentially transforming commercial models towards fixed pricing and higher profit margins (up to 24%) for engineering firms, while providing better assured and more timely quality of designs for owner-operators.

    03

    Seequent and Resources Sector Expansion

    The resources sector has become Bentley's second-largest, accounting for over 20% of sector-attributable ARR and is its fastest-growing. Seequent, acquired nearly 5 years ago, has grown its subsurface ARR in civil infrastructure by a factor of four and continues strong growth in mining, bolstered by improving fundamentals and increased focus on critical minerals. Its technology is also pivotal for new energy sources like geothermal electricity generation and critical water resource management, mapping aquifers and designing recharge facilities.

    04

    Event Strategy Evolution

    Bentley is decoupling its Year in Infrastructure (YII) Awards from its User Conference to create two distinct world-class events. The YII Awards will now be exclusively focused on the global competition, maintaining its intimate format, and will be held in Singapore from October 6-7. Separately, a new large-scale User Conference dedicated to product learning, best practices, and community networking will be launched in Toronto in April 2027, aiming to allow both events to thrive.

    05

    Data Ownership Principle

    Bentley maintains a principled approach to data ownership, stating that user data in Bentley Infrastructure Cloud is their data and is not used to train Bentley's AI unless explicitly directed by the infrastructure organization. This commitment to data stewardship is highlighted as a differentiator, fostering trust with customers who are increasingly sensitive about how their intellectual property is used, and is seen as a net advantage for the company.

    AI-generated summary of the company’s earnings call. Not investment advice.