Given the $21 per million of net assets earn rate, how much higher can this go, especially with recently acquired IP and Infrastructure Cloud?

The biggest opportunity is in operations and maintenance, optimizing CapEx and O&M through AI-enabled digital twins and asset analytics. This will improve infrastructure quality and economics, leading to increased software spending. “the biggest opportunity is in operations and maintenance and especially for optimizing that to do only what's needed and what works and for AI to help discern that by operating on badly infrastructure cloud and using the as operated inspection and monitoring that's made possible through asset analytics.”

Update on PLS's financial profile, growth, and whether permitting reform has accelerated the business.

PLS has been a consistent growth engine, with international revenue now matching its entire size at acquisition. Growth continues in the U.S. due to existing grid investments, and permitting reform, when it happens, will further accelerate it. “PLS has been a growth engine from -- almost from the time of the acquisition and very consistent. The growth has been both in the U.S. and internationally. You heard in the prepared remarks that now our business with PLS outside of the U.S. is as big as the entire PS business was when we did the acquisition.”

When will AI monetization begin (end of '26 or '27)? How does Bentley differentiate with its open platform approach given other AI interfaces?

Monetization is planned for next year (FY27), not this year, after focusing on adoption and validation. The open approach allows users to integrate with various AI models, with Bentley monetizing the underlying engineering applications and Infrastructure Cloud, not the AI models themselves. “We're not planning to monetize this year. We're planning to start monetizing next year. And you should expect us to monetize in a very reasonable way. What we don't want is a big price tag to become so an obstacle for infrastructure organization to use these capabilities.”

BSY

Bentley Systems (BSY) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Information Technology· Aug 6, 2026

Source: earnings call transcript

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

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

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

Category	Target	Timeline	Confidence
Free cash flow	$500 million to $570 million high materiality	FY26	High
AI monetization	start next year high materiality	FY27	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
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	—	—

BSY operating KPIs by quarter

BSY operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Dec 2025 Q4 FY25	Mar 2026 Q1 FY26	This call Jun 2026 Q2 FY26	Change vs prior quarter
Net revenue retention rate	109% Net revenue retention was stable at 109%. Source: earnings call transcript	109% Our net revenue retention rate remained strong at 109%, consistent with previous quarters and highlighting the stability and growth within our existing accounts. Source: earnings call transcript	109% Our last 12 months constant currency account retention rate remained consistent at 99%, and our constant currency net revenue retention rate remained at 109%, consistent with recent quarters. Source: earnings call transcript	0 pt
Annual recurring revenue (ARR)	$1.462B We ended Q4 with ARR of $1.462 billion at quarter end spot rates. Source: earnings call transcript	$1.495B We ended the first quarter with ARR of $1.495 billion at quarter end spot rates. Source: earnings call transcript	$1.536B We ended the second quarter with ARR of $1.536 billion at quarter end spot rates. Source: earnings call transcript	+2.7%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

ARR $1.536 billion Q2 FY26

12% year-over-year (constant currency)

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

Product announcements

Product	Type	Timeline	Details
MCP servers for PLS products	launch	Q2 FY26
MCP servers across Bentley Open Applications	expansion	Since Q1 FY26

Risks & headwinds

Slow deployment of Germany's EUR 500 billion infrastructure fund ongoing

EUR 500 billion fund

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

Economic and geopolitical headwinds in China ongoing

China representing only about 2% of ARR

FX headwinds H2 FY26

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

Tougher year-over-year comparison for free cash flow in H1 H1 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

AI Monetization

Next year (FY27)

Current Not monetizing this year

Target Start 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.

Find out whether BSY delivers this. Inve re-checks your case every morning.

Q&A highlights

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 read 5 chapters

Detailed narrative

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.

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.

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.

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.

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 impacts from strong prior-year collections and weighted operating expenses.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.