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    BSY
    Earnings call· Jun 2026(Q2 FY26)

    BENTLEY SYSTEMS Q2 FY26 earnings call BSY

    Aug 6, 2026 Source

    Executive summary

    Bentley Systems Q2 FY26 — Strong ARR Growth and AI Monetization Strategy

    Bentley Systems delivered a strong Q2 FY26, marked by accelerating ARR growth and robust recurring revenue performance, driven by sustained infrastructure investment and strong renewals. The company is strategically advancing its hybrid AI initiative, focusing on adoption and validation with monetization planned for next year, while maintaining disciplined capital allocation through share repurchases and debt management.

    Highlights

    5

    • Year-over-year ARR growth accelerated to 12% in constant currency.

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

    • Last 12 months recurring revenues increased 13.5% to $1.486 billion.

    • Free cash flow for the last 12 months reached $498 million, up 15%.

    • Repurchased 3.1 million shares during Q2, leveraging an accretive stock price.

    Concerns

    5

    • First half free cash flow was impacted by tougher year-over-year comparison due to strong collections in late 2025 and weighted operating investments in H1.

    • Perpetual license revenues were down $0.5 million year-over-year to $10 million.

    • FX headwinds are expected to negatively impact H2 revenues by an incremental $8 million to $10 million.

    • Deployment of Germany's EUR 500 billion infrastructure fund has been slow, delaying impact on new projects.

    • China, representing 2% of ARR, continues to face economic and geopolitical headwinds.

    Guidance & targets

    2
    CategoryTargetConfidence
    Free cash flow
    $500 million to $570 million
    high materiality
    High
    AI monetization
    start next year
    high materiality
    High

    Segment performance

    7
    SegmentRevenueYoYQoQMargin
    Resources
    Fundamental drivers are macroeconomic and long-term, prioritizing self-sufficiency and critical minerals for electrification and AI data centers.
    Driven by miningStrength across geographic regions
    		—fastest-growing sector——
    Public Works and Utilities
    Benefits from strong global demand for grid transmission, capacity expansion, and resiliency.
    Driven by sustained infrastructure investment worldwidePower Line Systems (PLS) primary driver of growth in electric grid business
    		—strong quarter——
    Industrial
    Growth continued to be solid.
    		—solid——
    Commercial Facilities
    Performance remained relatively flat.
    		—relatively flat——
    Americas
    U.S. fundamentals strong with double-digit backlogs, bullish outlook driven by transportation, water, power, and data centers. Public funding robust, supplemented by private capital. Latin America led by mining and transportation.
    U.S. delivered strong growthLatin America delivered very strong quarter
    		—strong growth——
    EMEA
    Overall region well invested. Germany's EUR 500 billion infrastructure fund deployment slow. Middle East consumption rebounded despite conflict.
    Strong renewals at large accountsLarge ongoing natural infrastructure programs in U.K.
    		—solid quarter——
    Asia Pacific
    Performance bounced back strongly. Rail is a massive long-term opportunity. Offshore oil and gas is an investment priority. China (2% of ARR) faces economic and geopolitical headwinds.
    Australia leading the wayFollowed closely by India
    		—strong growth——

    Operational metrics

    17
    Total Revenues
    $411 million12.8% year-over-year
    Q2 FY26

    For the first half of the year, total revenues increased 13.6% or 12.1% in constant currency.

    Subscription Revenues
    92%13.6% year-over-year
    Q2 FY26

    Reflecting continued strength across both E365 and SMB initiatives.

    Perpetual License Revenues
    $10 milliondown roughly $0.5 million year-over-year
    Q2 FY26

    Remains a very small part of the business.

    Last 12 Months Recurring Revenues
    $1.486 billion13.5% year-over-year
    LTM Q2 FY26

    Combination of high retention rates and new business momentum gives confidence in durability of recurring revenue growth.

    Constant Currency Account Retention Rate
    99%consistent
    LTM Q2 FY26

    Remained consistent.

    GAAP Operating Income
    $89 million
    Q2 FY26

    Can be impacted by deferred compensation plan revaluations and other acquisition-related items.

    AOI less Operating SBC
    $116 million
    Q2 FY26

    Performance was in line with expectations, with first half margin trailing prior year due to weighted operating investments. Absorbed costs from new enterprise-wide finance and Quote-to-Cash platforms.

    Net Debt Reduction
    $32 million
    H1 FY26

    Reduced net debt during the first half of the year.

    Share Repurchases
    $155 millionup meaningfully from the prior year
    H1 FY26

    Returned capital to shareholders. Enabled by reduced debt leverage.

    Dividends Paid
    $42 million
    H1 FY26

    Returned capital to shareholders.

    Capacity under Credit Facility
    $1.2 billion
    Q2 FY26

    At quarter end.

    Net Debt Leverage
    1.9xconsistent with the prior quarter
    Q2 FY26

    Consistent with prior quarter.

    Fully Diluted Share Count
    319 million sharesdown to
    Q2 FY26

    Reduced by redemption of 2026 convertible debt in Q1 FY26.

    New Logos Added
    over 600
    Q2 FY26

    Added through Virtuoso, the flagship commercial program for SMB accounts.

    PLS Revenue outside U.S.
    as large as the entire PLS business waswhen acquired in 2022
    Q2 FY26

    Significant international growth leveraging Bentley's global reach.

    U.S. Electric Grid Additional Capacity Need
    35 gigawattsadditional
    by 2030

    Estimated need to bridge the power gap due to electrification and AI data centers.

    FX Impact on H2 Revenues
    $8 million to $10 millionnegative impact
    H2 FY26

    If end of July exchange rates prevail for the remainder of the year, relative to 2026 outlook assumptions.

    Industry KPIs

    10
    MetricValueDetails
    Capacity CAPEX35 gigawattsGW
    Revenue growth$411 millionUSD
    Arr net new arr$1.536 billionUSD
    Pricing model mixshifted
    Customer account count470firms
    Large deal new logo metricsover 600new logos
    Gross retention renewal rate99%%
    Operating FCF margin rule of 4028.3%%
    Ai product adoption monetization5 moreMCP servers
    Net revenue net dollar retention109%%

    Orderbook & backlog

    1
    ARR$1.536 billionQ2 FY26

    12% year-over-year (constant currency)

    Sequential quarterly growth was 2.9%, all organic and in line with expectations.

    Product announcements

    2
    ProductTypeDetails
    MCP servers for PLS productslaunch
    MCP servers across Bentley Open Applicationsexpansion

    Risks & headwinds

    4
    Slow deployment of Germany's EUR 500 billion infrastructure fundongoing

    EUR 500 billion fund

    Mitigation: Early firms are backfilling existing deficits, delaying impact on new projects.

    Economic and geopolitical headwinds in Chinaongoing

    China representing only about 2% of ARR

    FX headwindsH2 FY26

    incremental $8 million to $10 million negative impact on H2 revenues

    Tougher year-over-year comparison for free cash flow in H1H1 FY26

    H1 free cash flows represented approximately 47% of full year outlook

    Mitigation: Due to exceptionally strong collections at year-end 2025 and weighted operating investments early in 2026; timing issue, 50-55% of FCF expected in H2.

    What to watch in Q3 FY26

    5

    AI Monetization

    Next year (FY27)
    CurrentNot monetizing this year
    TargetStart monetization

    Why it matters

    This will validate the commercial model for AI-led consumption and potentially multiply revenue streams.

    We're not planning to monetize this year. We're planning to start monetizing next year.

    Q&A highlights

    6

    What factors will sustain or improve the 12% ARR growth in H2, including asset analytics and macro elements?

    Momentum from resources (mining) and public works/utilities is strong. To reach the upper end of the range, this momentum needs to continue, potentially with an acquisition and big deals in asset analytics, which is a lumpy business.

    “The momentum is definitely there for us to get to the upper part of the range, we will need this momentum to continue, and there's no sign why it will slow down. But we will also need to do an acquisition potentially -- and yes, bringing some big deals with asset analytics, which is a rather lumpy business, as we discussed in previous calls, right, where we depend a lot on big deals.”

    asked by Matthew Hedberg · answered by Nicholas Cumins

    2 min read5 chapters

    Detailed Narrative

    01

    AI Strategy and Monetization

    Bentley Systems is pursuing a hybrid AI strategy, integrating AI advances within its existing software. The company emphasizes an open ecosystem approach, allowing users to integrate Bentley applications with various AI models (e.g., Benicopilots, Anthropic Claude, Google Gemini). The focus is currently on adoption, exploration, and validation of AI capabilities, with monetization expected to begin in FY27. The commercial model for AI-led consumption will likely shift from user-based subscriptions to reflect machine-speed usage and value creation.

    02

    Infrastructure Engineering Demand

    The company highlights a "boundless regeneration of demand" in infrastructure engineering, driven by global investments in resilience, capacity, and self-sufficiency. A key constraint is the limited supply of engineers, making AI-driven productivity a priority. Bentley serves a significant portion of top design firms (470 of 610 ex-China) and infrastructure owner-operators (over 75% of ex-China top owners), managing over $15.5 trillion of net infrastructure assets.

    03

    Power Line Systems (PLS) Outperformance

    PLS, a critical component of Bentley's electric grid portfolio, continues to be a strong growth driver. Its revenue outside the U.S. now equals the entire PLS business at the time of its 2022 acquisition. The software is instrumental in addressing the estimated 35 gigawatts of additional capacity needed in the U.S. by 2030, benefiting from investments in grid resilience and expansion, even without permitting reform.

    04

    Capital Allocation and Share Repurchases

    Bentley has reduced its debt leverage to an optimal range of approximately 2x adjusted EBITDA, enabling more discretionary stock repurchases. During Q2, the company repurchased 3.1 million shares, finding the stock price accretive on financial fundamentals. The company aims to continue acting responsibly on such opportunities, maintaining its share count discipline and avoiding dilution, with fully diluted shares down to 319 million.

    05

    Financial Performance and Outlook

    The company reported strong Q2 results with total revenues up 12.8% YoY (12.2% cc) and subscription revenues up 13.6% YoY (13% cc). Last 12 months recurring revenues reached $1.486 billion, up 13.5%. The company is on track to meet its full-year free cash flow outlook of $500 million to $570 million, despite first-half timing impact📎s from strong prior-year collections and weighted operating expenses.

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