Infrastructure design software provider Bentley Systems (NASDAQ:BSY) reported Q1 CY2025 results beating Wall Street’s revenue expectations, with sales up 9.7% year on year to $370.5 million. Its non-GAAP profit of $0.35 per share was 16.6% above analysts’ consensus estimates.
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Bentley (BSY) Q1 CY2025 Highlights:
- Revenue: $370.5 million vs analyst estimates of $365.4 million (9.7% year-on-year growth, 1.4% beat)
- Adjusted EPS: $0.35 vs analyst estimates of $0.30 (16.6% beat)
- Adjusted Operating Income: $143.5 million vs analyst estimates of $130.7 million (38.7% margin, 9.8% beat)
- Operating Margin: 31.1%, up from 27.2% in the same quarter last year
- Net Revenue Retention Rate: 110%, in line with the previous quarter
- Annual Recurring Revenue: $1.32 billion at quarter end, up 11.2% year on year
- Market Capitalization: $15.13 billion
StockStory’s Take
Bentley Systems’ first quarter results reflected momentum in expanding its recurring revenue base and demand for its infrastructure design software. Management attributed the quarter’s performance to continued strength in government-funded infrastructure sectors and effective diversification away from more cyclical segments like commercial facilities. CEO Nicholas Cumins highlighted how Bentley’s E365 enterprise subscription program and small- and medium-sized business (SMB) digital channels drove net new accounts and high retention rates, noting, “We added more than 600 new logos through our line store for the 13th straight quarter.” Regional growth remained solid, with public utilities and transportation infrastructure fueling activity in the Americas and India standing out in Asia-Pacific. Meanwhile, recurring revenue now makes up 92% of total revenues, enhancing the company’s business resilience.
Looking ahead, management’s guidance is shaped by ongoing public infrastructure investment, the growing role of artificial intelligence (AI) in product development, and the expansion of asset analytics offerings. CEO Nicholas Cumins emphasized the strong demand backdrop, citing a “critical need for better and more resilient infrastructure” and a persistent shortage of engineers, which supports demand for productivity-enhancing software. The company is focused on capturing opportunities from permitting reforms, especially in the U.S., and leveraging its partnerships with Google and recent acquisitions to broaden its reach in asset operations and analytics. Management remains mindful of macroeconomic uncertainties but believes its diversified business model and backlog position Bentley to deliver consistent results through 2025.
Key Insights from Management’s Remarks
Management attributed first quarter growth to strong demand in government infrastructure, product innovation in asset analytics, and a continued shift to high-visibility subscription revenues.
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Subscription model expansion: Bentley’s E365 enterprise subscription program continued to drive recurring revenue, with nearly all new large accounts adopting contracts with multi-year floors and ceilings on usage. This structure increases visibility and predictability for both Bentley and its customers.
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Diversification away from cyclical segments: The company further reduced exposure to commercial facilities and industrial sectors, which are more sensitive to economic cycles, now representing less than one-sixth of annual recurring revenue (ARR). Growth was instead concentrated in public utilities, transportation, and resources.
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Growth in asset analytics: Management spotlighted progress in asset analytics, particularly through the Blyncsy road network solution, which now integrates Google’s Street View imagery and Vertex AI. Recent wins with state Departments of Transportation (DOTs) and expanded use cases are expected to increase win rates and geographic reach.
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Global and regional trends: Solid results in the Americas and EMEA (Europe, Middle East, and Africa) were supported by continued public investment. India emerged as the main growth driver in Asia-Pacific, benefiting from both local infrastructure spending and global engineering outsourcing.
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AI and automation initiatives: Product updates now incorporate AI to automate routine engineering tasks, such as creating 2D drawings from 3D models, aiming to address chronic labor shortages in the sector. Internally, Bentley is using AI to boost developer productivity, particularly in repetitive coding and documentation tasks.
Drivers of Future Performance
Management expects ongoing public infrastructure funding, product enhancements, and AI integration to drive growth, while acknowledging macroeconomic uncertainties and seasonal renewal patterns.
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Infrastructure funding tailwinds: Public spending in the U.S. and Europe, including multi-year government programs and permitting reforms, is expected to sustain demand for Bentley’s solutions. Management highlighted the continued rollout of U.S. infrastructure bills and major European investment plans as positive indicators for both new and existing projects.
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Expansion of asset analytics and AI: The integration of Google technologies into Bentley’s asset analytics offerings is anticipated to improve product capabilities and win rates, especially in road and network management. Management sees AI-driven automation as a key lever to address engineering talent shortages and enhance the productivity of both customers and internal teams.
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Seasonal and macroeconomic factors: Seasonality remains important, with contract renewals and deal timing leading to stronger results expected in later quarters. Management also noted potential headwinds from changes in global economic conditions but believes the company’s diversified customer base and recurring revenue model provide resilience.
Catalysts in Upcoming Quarters
In upcoming quarters, the StockStory team will monitor (1) further adoption of Bentley’s AI-enabled asset analytics and road network products, (2) the impact of permitting reforms and government funding on infrastructure project pipelines in the U.S. and Europe, and (3) continued growth in SMB and enterprise subscription renewals. Additionally, execution on new product integrations with partners like Google and expansion into asset operations will be critical for sustaining momentum.
Bentley currently trades at a forward price-to-sales ratio of 10.5×. At this valuation, is it a buy or sell post earnings? Find out in our full research report (it’s free).
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