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    BSY
    Earnings call· Dec 2025(Q4 FY25)

    BENTLEY SYSTEMS Q4 FY25 earnings call BSY

    Feb 26, 2026 Source

    Executive summary

    Bentley Systems Q4 FY25 — Strong Financials and AI Opportunity

    Bentley Systems concluded Q4 FY25 with robust financial results, emphasizing its strong business fundamentals and strategic positioning for AI. The company views AI as an unprecedented opportunity, particularly in asset analytics and optimizing infrastructure engineering workflows, rather than a risk. Management highlighted its commitment to data stewardship and a phased monetization approach for AI, focusing on adoption in design while driving revenue growth in asset analytics. The outlook for FY26 reflects continued confidence in durable ARR growth and annual margin expansion.

    Highlights

    5

    • Annual constant currency ARR growth reliably sustained in low-double digits since 2022, with Q4 FY25 at 11.5% YoY.

    • Adjusted operating income less stock-based compensation (AOI less SBC) compounded at over 16% per year since 2022, with a 28.6% margin for FY25.

    • Free cash flow margin reached 35% in 2025, with truly free cash flow margin (less SBC) at 30%.

    • Net debt leverage reduced to a healthy 2.1x at year-end, a 4-year low, providing capacity for up to $400M in programmatic acquisitions annually.

    • Asset Analytics business reached a $50 million run rate milestone in 2025, driven by AI and strategic acquisitions.

    Concerns

    5

    • China, representing approximately 2% of ARR, continued to be impacted by economic and geopolitical headwinds in Q4 FY25, expected to persist through 2026.

    • UK market was softer in Q4 FY25, reflecting the tail end of project pauses from earlier in the year.

    • Variability in Q4 free cash flow collections can occur due to it being the largest renewal quarter.

    • A weakening U.S. dollar can create a headwind to reported margin percentage, though it provides greater stability to absolute profit dollars.

    • Repaying 2026 convertible notes will result in an approximate $30 million cash interest outflow in 2026 compared to a negligible amount in 2025.

    Guidance & targets

    12
    CategoryTargetConfidence
    Total revenues constant currency growth
    11%-13%
    high materiality
    High
    Total revenues
    $1.685B-$1.750B
    high materiality
    High
    Subscription revenues constant currency growth
    11%-13%
    medium materiality
    High
    Service revenues constant currency growth
    15%-20%
    medium materiality
    High
    Perpetual license revenues
    relatively flat
    low materiality
    High
    Constant currency ARR growth
    10.5%-12.5%
    high materiality
    High
    Adjusted operating income less operating stock-based compensation
    $495M-$510M
    high materiality
    High
    Effective tax rate
    ~21%
    low materiality
    High
    Free cash flow
    $500M-$570M
    high materiality
    High
    Free cash flow generation
    45%-50%
    low materiality
    High
    Operating expenses weighting
    more weighted towards the first half
    low materiality
    High
    Programmatic acquisitions capacity
    up to $400M annually
    medium materiality
    High

    Segment performance

    5
    SegmentRevenueYoYQoQMargin
    Resources
    Growth driven by Seequent, expanding addressable market into critical resources (mining, new energy, groundwater). Seequent's business model is resilient, embedded in operational workflows rather than cyclical capital projects.
    		—fastest-growing sector——
    Public Works Utilities
    Largest sector, driven by sustained global infrastructure investment and standout performance of Bentley Asset Analytics. Power Line Systems also a key growth driver.
    		—strong growth——
    Industrial
    Solid growth in the industrial sector.
    		—solid growth——
    Commercial facilities
    Commercial facilities sector remained relatively flat.
    		—relatively flat——
    Americas
    Largest region, driven by favorable macro backdrop for infrastructure investment. U.S. market healthy with stable public funding and large private sector investments in data centers.
    		—strong growth——

    Operational metrics

    28
    Annual constant currency ARR growth (historical)
    low-double digitsreliably sustained
    since 2022

    Excludes ARR onboarded with major platform acquisitions.

    Programmatic acquisitions contribution to ARR growth
    <40
    2025

    Portion of growth from smaller programmatic acquisitions.

    AOI less SBC dollars compounded growth
    >16
    per year since 2022

    AOI less SBC is the key profit measure, regarding stock-based compensation as fungible with cash.

    AOI less SBC margin improvement
    ~100
    annually since 2022

    Institutionalized annual improvement.

    Truly free cash flow margin (less SBC)
    30
    2025

    Cash flow allocated to offset share dilution from stock-based compensation.

    Fully diluted share count reduction
    ~3
    after 2026 convertible debt retirement

    Reduced by retiring maturing 2026 convertible debt.

    Net debt leverage
    2.14-year low
    year-end

    Reduced to a healthy level.

    Total revenues growth
    1210% in constant currency
    Q4 FY25

    For the fourth quarter.

    Subscription revenues as % of total revenues
    92up 2 percentage points from 2024
    Q4 FY25

    Represents the proportion of total revenues.

    E365 as % of subscription revenues
    45increase from 42% in 2024
    Q4 FY25

    E365 performance remained steady.

    Perpetual license revenues
    essentially flat
    Q4 & FY25

    Smaller and less predictable revenue stream.

    Services revenues decline
    6% reported, 7% in constant currency
    FY25

    Consistent with expectations for the full year.

    Services revenues increase
    4% reported, 2% in constant currency
    Q4 FY25

    Modest increase for the fourth quarter.

    Last 12 months recurring revenues as % of total revenues
    93up 2 percentage points year-over-year
    LTM Q4 FY25

    Reflects the proportion of total revenues.

    Adjusted operating income less stock-based compensation
    $94M
    Q4 FY25

    For the quarter.

    Adjusted operating income less stock-based compensation margin
    24.1
    Q4 FY25

    Strong quarterly margin expansion in line with OpEx seasonality.

    Acquisitions investment
    $93M
    2025

    Investment in acquisitions during 2025.

    Bank debt paid down
    $135M
    2025

    Strengthening the balance sheet.

    Convertible notes repurchased
    $10M
    2025

    Repurchase of convertible notes.

    Share repurchases
    $157M
    2025

    Substantial returns of capital.

    Dividends paid
    $85M
    2025

    Substantial returns of capital.

    Revolver capacity
    $1.3Bundrawn
    year-end

    Balance sheet provides significant strategic flexibility.

    2026 convertible notes retirement
    ~$600M
    subsequent to year-end

    Utilized available cash on hand and approximately $600 million from revolver.

    Cash interest outflow increase (2026 vs 2025)
    ~$30M
    2026

    Compared to a negligible amount in 2025, due to repaying 2026 notes.

    US distribution poles
    180 million
    current

    Potential for digital twin inspection and simulation, leveraging SPIDA simulation software.

    Talon asset consumption revenue per digital twin inspection
    low-double digits
    per inspection

    For each digital twin inspection and simulation of distribution poles.

    ProjectWise active projects migrated to Connect
    ~50
    Q4 FY25

    Migration from older ProjectWise 365 to Connect.

    China ARR as % of total
    ~2
    Q4 FY25

    Impacted by economic and geopolitical headwinds.

    Industry KPIs

    9
    MetricValueDetails
    Revenue growth$1.502BUSD
    Arr net new arr$1.462BUSD
    Bookings billings$1.462BUSD
    Customer account countat least 600logos
    Large deal new logo metricsat least 600logos
    Gross retention renewal rate99%%
    Operating FCF margin rule of 4028.6%%
    Ai product adoption monetization$50MUSD
    Net revenue net dollar retention109%%

    Orderbook & backlog

    1
    ARR$1.462BQ4 FY25

    11.5% YoY constant currency

    Sequential quarterly growth of 4%; 300 bps of ARR growth from new logos.

    Product announcements

    5
    ProductTypeDetails
    Python assistant for MicroStationupdate
    Automated drawing annotations for OpenRoadsupdate
    Site layout optimization in OpenSite+update
    Connect (new packaging for ProjectWise)launch
    Infrastructure.ai co-innovation initiativelaunch

    Deals & partnerships

    2
    PointivoAcquisition of assets, R&D, and patent portfolio to extend asset analytics platform.

    Pointivo software broadly applied for advanced AI-based point cloud processing, automated measurement, condition analysis, and inspection workflows.

    Talon AnalyticsAcquisition of a leader in asset analytics for telecom and utilities.

    Capabilities proven at the level of 8-figure contracts. Talon originated drone capture for wireless structures and evolved AI-based software to expedite construction completions and ongoing maintenance. Relied on iTwin Capture for engineering-grade digital twins.

    Risks & headwinds

    6
    Market perceived risks of AI interlopinglong-term

    discounted value thereafter to nearly terminal

    Mitigation: Bentley Systems views AI as an unprecedented opportunity, not a risk, due to distinctive fundamentals of infrastructure engineering and its position as a digital quartermaster.

    China economic and geopolitical headwindsthrough 2026

    impacted growth

    Mitigation: Monitoring the situation; China represents approximately 2% of ARR.

    UK market softnessQ4 FY25

    softer in Q4

    Mitigation: Pipeline for design and engineering work is improving significantly for 2026, with new multibillion-pound projects underway.

    Variability in Q4 free cash flow collectionsQ4

    can introduce variability across calendar years

    Mitigation: Acknowledged as a factor due to Q4 being the largest renewal quarter; midpoint of FCF guidance still represents strong operational cash generation.

    FX headwind to reported margin percentageFY26

    50 basis point FX headwind

    Mitigation: While a weakening U.S. dollar can create a headwind, it provides greater stability to margin in absolute dollars. Outlook provided as a dollar range for profitability.

    Increased cash interest outflowFY26

    approximate $30 million cash interest outflow

    Mitigation: Result of repaying 2026 convertible notes; company actively manages interest rate exposure with safeguards like low fixed coupon on remaining notes and interest rate swap.

    What to watch in Q1 FY26

    5

    AI monetization in Asset Analytics

    next quarter and beyond
    Current$50M run rate in 2025
    TargetContinued growth and increasing classification as ARR

    Why it matters

    Asset Analytics is an immediate AI monetization opportunity, and its growth and ARR classification will indicate the success of AI-driven revenue generation.

    Well, AI is contributing now in the form of asset analytics and faster growth in asset analytics than elsewhere. The caveat is it isn't necessarily growth in ARR because we don't yet classify it as annual recurring in all cases.

    Q&A highlights

    7

    What are the most important elements that could push constant currency ARR growth to the higher end of the 2026 range, and is AI one of them?

    AI is contributing now through asset analytics, which is growing faster than other areas. However, not all asset analytics revenue is classified as annual recurring (ARR) yet, as inspections are not always annual regulatory requirements. The goal is to make it annual through automated AI-based analytics, which will take time to fully translate into ARR.

    “AI will goose our asset analytics revenues, it takes time for that to come into ARR per se.”

    asked by Matthew Hedberg · answered by Gregory Bentley

    2 min read5 chapters

    Detailed Narrative

    01

    AI Strategy and Opportunity

    Bentley Systems outlined a two-fold AI strategy: embedding AI capabilities into products and instrumenting platforms for user-built AI workflows. Key focus areas include Bentley Open Applications for enhancing engineering work, Bentley Asset Analytics for processing imagery and detecting features, and Bentley Infrastructure Cloud as the data foundation for AI. The company emphasizes its commitment to data stewardship, ensuring user data remains proprietary and is only used for AI training with explicit consent.

    02

    Asset Analytics Growth and Acquisitions

    The Asset Analytics business achieved a $50 million run rate milestone in 2025, driven by AI and strategic acquisitions. OpenTower iQ, a leader in digital twin creation and engineering simulation, now has an ARR in 8 figures. The company acquired Pointivo for its advanced AI-based point cloud processing and Talon Analytics, a leader in asset analytics for telecom and utilities, to expand its platform and capabilities, particularly for electrical distribution poles and transmission towers.

    03

    Infrastructure Sector and Geographic Performance

    Resources was the fastest-growing sector, benefiting from Seequent's resilience even during a mining slowdown. Public Works Utilities, the largest sector, showed strong growth driven by global infrastructure investment and Asset Analytics. Geographically, the Americas saw strong growth due to a favorable macro backdrop and investments in data centers. EMEA was led by the Middle East, with Europe also strong, while China continued to face economic and geopolitical headwinds🌐, and Australia showed signs of recovery.

    04

    Financial Framework and Capital Allocation

    The company reiterated its long-term financial framework, targeting durable low-double-digit ARR growth, annual operating margin expansion of approximately 100 basis points, and strong free cash flow generation. In 2025, Bentley Systems invested $93 million in acquisitions, paid down $135 million in bank debt, repurchased $10 million in convertible notes, and returned $157 million through share repurchases and $85 million in dividends. Net debt leverage was reduced to 2.1x, providing significant strategic flexibility.

    05

    ProjectWise and Connect Enhancements

    Bentley Systems released new packaging for ProjectWise, related to the introduction of Connect as the entry point to Bentley Infrastructure Cloud. This repackaging aims for simpler, easier-to-consume tiers, with about 50% of active projects in the older ProjectWise 365 already migrated to Connect. The new packaging is resonating with accounts, providing easier access to advanced capabilities like design review and clash detection, which is expected to support future growth.

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