Bentley Systems Announces Operating Results for the Third Quarter of 2021

We encourage investors and others to review our financial information in its entirety, not to rely on any single financial measure, and to view these non-GAAP financial measures in conjunction with the related GAAP financial measures. During the third quarter of 2021, the Company modified its definitions of Adjusted EBITDA and Adjusted Net Income to adjust for expense (income) relating to deferred compensation plan liabilities and amounts for all periods herein reflect application of the modified definition.

Forward-Looking Statements

This press release includes forward-looking statements regarding the future results of operations and financial position, business strategy, and plans and objectives for future operations of Bentley Systems, Incorporated (the “Company,” “we,” “us,” and words of similar import). All such statements contained in this press release, other than statements of historical facts, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations, projections, and assumptions about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, and there are a significant number of factors that could cause actual results to differ materially from statements made in this press release including: current and potential future impacts of the COVID-19 pandemic on the global economy and our business, and consolidated financial statements; adverse changes in global economic and/or political conditions; political, economic, regulatory and public health and safety risks and uncertainties in the countries and regions in which we operate; failure to retain personnel necessary for the operation of our business or those that we acquire; changes in the industries in which our accounts operate; the competitive environment in which we operate; the quality of our products; our ability to develop and market new products to address our accounts’ rapidly changing technological needs; changes in capital markets and our ability to access financing on terms satisfactory to us or at all; and our ability to integrate acquired businesses successfully.

Further information on potential factors that could affect the financial results of the Company are included in the Company’s Form 10-K and subsequent Forms 10-Q, which are on file with the United States Securities and Exchange Commission. The Company disclaims any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.

About Bentley Systems

Bentley Systems (Nasdaq: BSY) is the infrastructure engineering software company. We provide innovative software to advance the world’s infrastructure – sustaining both the global economy and environment. Our industry-leading software solutions are used by professionals, and organizations of every size, for the design, construction, and operations of roads and bridges, rail and transit, water and wastewater, public works and utilities, buildings and campuses, mining, and industrial facilities. Our offerings include MicroStation-based applications for modeling and simulation, ProjectWise for project delivery, AssetWise for asset and network performance, Seequent’s leading geosciences software portfolio, and the iTwin platform for infrastructure digital twins. Bentley Systems employs more than 4,000 colleagues and generates annual revenues of more than $800 million in 172 countries.

www.bentley.com

© 2021 Bentley Systems, Incorporated. Bentley, the Bentley logo, AssetWise, iTwin, MicroStation, ProjectWise, and Seequent are either registered or unregistered trademarks or service marks of Bentley Systems, Incorporated or one of its direct or indirect wholly owned subsidiaries. All other brands and product names are trademarks of their respective owners.

BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands)

(unaudited)

         

 

 

September 30, 2021

 

December 31, 2020

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

155,755

 

 

$

122,006

 

Accounts receivable

 

194,682

 

 

195,782

 

Allowance for doubtful accounts

 

(6,355

)

 

(5,759

)

Prepaid income taxes

 

20,958

 

 

3,535

 

Prepaid and other current assets

 

35,062

 

 

24,694

 

Total current assets

 

400,102

 

 

340,258

 

Property and equipment, net

 

31,103

 

 

28,414

 

Operating lease right-of-use assets

 

48,642

 

 

46,128

 

Intangible assets, net

 

251,467

 

 

45,627

 

Goodwill

 

1,592,399

 

 

581,174

 

Investments

 

5,429

 

 

5,691

 

Deferred income taxes

 

77,418

 

 

39,224

 

Other assets

 

47,523

 

 

39,519

 

Total assets

 

$

2,454,083

 

 

$

1,126,035

 

Liabilities and Stockholders’ Equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

12,502

 

 

$

16,492

 

Accruals and other current liabilities

 

317,271

 

 

226,793

 

Deferred revenues

 

189,683

 

 

202,294

 

Operating lease liabilities

 

18,003

 

 

16,610

 

Income taxes payable

 

11,974

 

 

3,366

 

Total current liabilities

 

549,433

 

 

465,555

 

Long-term debt

 

1,302,845

 

 

246,000

 

Deferred compensation plan liabilities

 

89,174

 

 

2,422

 

Long-term operating lease liabilities

 

32,583

 

 

31,767

 

Deferred revenues

 

6,614

 

 

7,020

 

Deferred income taxes

 

69,471

 

 

10,849

 

Income taxes payable

 

7,613

 

 

7,883

 

Other liabilities

 

17,352

 

 

12,940

 

Total liabilities

 

2,075,085

 

 

784,436

 

Stockholders’ equity:

 

 

 

 

Common stock

 

2,820

 

 

2,722

 

Additional paid-in capital

 

921,410

 

 

741,113

 

Accumulated other comprehensive loss

 

(81,880

)

 

(26,233

)

Accumulated deficit

 

(463,352

)

 

(376,003

)

Total stockholders’ equity

 

378,998

 

 

341,599

 

Total liabilities and stockholders’ equity

 

$

2,454,083

 

 

$

1,126,035

 

BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIES

Consolidated Statements of Operations

(in thousands, except share and per share data)

(unaudited)

         

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2021

 

2020

 

2021

 

2020

Revenues:

 

 

 

 

 

 

 

 

Subscriptions

 

$

212,227

 

 

$

173,174

 

 

$

585,804

 

 

$

501,011

 

Perpetual licenses

 

11,866

 

 

12,827

 

 

33,373

 

 

36,020

 

Subscriptions and licenses

 

224,093

 

 

186,001

 

 

619,177

 

 

537,031

 

Services

 

24,387

 

 

16,996

 

 

74,239

 

 

44,946

 

Total revenues

 

248,480

 

 

202,997

 

 

693,416

 

 

581,977

 

Cost of revenues:

 

 

 

 

 

 

 

 

Cost of subscriptions and licenses

 

31,056

 

 

23,338

 

 

89,882

 

 

66,466

 

Cost of services

 

23,176

 

 

19,290

 

 

67,090

 

 

50,126

 

Total cost of revenues

 

54,232

 

 

42,628

 

 

156,972

 

 

116,592

 

Gross profit

 

194,248

 

 

160,369

 

 

536,444

 

 

465,385

 

Operating expense (income):

 

 

 

 

 

 

 

 

Research and development

 

57,334

 

 

50,217

 

 

157,913

 

 

139,570

 

Selling and marketing

 

44,392

 

 

41,824

 

 

114,846

 

 

107,551

 

General and administrative

 

35,329

 

 

32,956

 

 

110,233

 

 

85,390

 

Deferred compensation plan

 

88,965

 

 

50

 

 

89,327

 

 

(115

)

Amortization of purchased intangibles

 

8,676

 

 

3,869

 

 

16,703

 

 

10,984

 

Expenses associated with initial public offering

 

 

 

26,130

 

 

 

 

26,130

 

Total operating expenses

 

234,696

 

 

155,046

 

 

489,022

 

 

369,510

 

(Loss) income from operations

 

(40,448

)

 

5,323

 

 

47,422

 

 

95,875

 

Interest expense, net

 

(3,836

)

 

(1,934

)

 

(8,608

)

 

(4,450

)

Other (expense) income, net

 

(957

)

 

13,741

 

 

9,748

 

 

6,756

 

(Loss) income before income taxes

 

(45,241

)

 

17,130

 

 

48,562

 

 

98,181

 

(Provision) benefit for income taxes

 

(4,223

)

 

(10,705

)

 

6,165

 

 

(22,145

)

Loss from investment accounted for using the equity method, net of tax

 

(664

)

 

(581

)

 

(2,939

)

 

(1,447

)

Net (loss) income

 

(50,128

)

 

5,844

 

 

51,788

 

 

74,589

 

Less: Net (loss) income attributable to participating securities

 

(3

)

 

(4

)

 

(6

)

 

(4

)

Net (loss) income attributable to Class A and Class B common stockholders

 

$

(50,131

)

 

$

5,840

 

 

$

51,782

 

 

$

74,585

 

Per share information:

 

 

 

 

 

 

 

 

Net (loss) income per share, basic

 

$

(0.16

)

 

$

0.02

 

 

$

0.17

 

 

$

0.26

 

Net (loss) income per share, diluted

 

$

(0.16

)

 

$

0.02

 

 

$

0.16

 

 

$

0.25

 

Weighted average shares, basic

 

308,195,379

 

 

289,318,391

 

 

305,119,985

 

 

287,063,892

 

Weighted average shares, diluted

 

308,195,379

 

 

299,634,961

 

 

314,658,136

 

 

297,251,349

 

BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

     

 

 

Nine Months Ended

 

 

September 30,

 

 

2021

 

2020

Cash flows from operating activities:

 

 

 

 

Net income

 

$

51,788

 

 

$

74,589

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

35,946

 

 

25,836

 

Bad debt allowance (recovery)

 

466

 

 

(541

)

Deferred income taxes

 

(17,788

)

 

7,853

 

Stock-based compensation expense

 

32,853

 

 

23,617

 

Amortization and write-off of deferred debt issuance costs

 

4,160

 

 

430

 

Change in fair value of derivative

 

(9,198

)

 

3,365

 

Change in fair value of contingent consideration

 

 

 

(1,340

)

Foreign currency remeasurement loss (gain)

 

103

 

 

(9,067

)

Loss from investment accounted for using the equity method, net of tax

 

2,939

 

 

1,447

 

Changes in assets and liabilities, net of effect from acquisitions:

 

 

 

 

Accounts receivable

 

26,305

 

 

46,661

 

Prepaid and other assets

 

11,310

 

 

8,907

 

Accounts payable, accruals, and other liabilities

 

31,766

 

 

31,486

 

Deferred compensation plan liabilities

 

86,608

 

 

2,487

 

Deferred revenues

 

(36,598

)

 

(35,134

)

Income taxes payable, net of prepaid income taxes

 

(13,243

)

 

(4,571

)

Net cash provided by operating activities

 

207,417

 

 

176,025

 

Cash flows from investing activities:

 

 

 

 

Purchases of property and equipment and investment in capitalized software

 

(11,152

)

 

(13,533

)

Acquisitions, net of cash acquired of $37,837 and $2,064, respectively

 

(1,033,695

)

 

(68,920

)

Other investing activities

 

(3,000

)

 

(6,355

)

Net cash used in investing activities

 

(1,047,847

)

 

(88,808

)

Cash flows from financing activities:

 

 

 

 

Proceeds from credit facilities

 

682,083

 

 

432,375

 

Payments of credit facilities

 

(860,228

)

 

(201,125

)

Proceeds from convertible senior notes, net of discounts and commissions

 

1,233,377

 

 

 

Payments of debt issuance costs

 

(5,643

)

 

(432

)

Purchase of capped call options

 

(51,555

)

 

 

Proceeds from term loan

 

 

 

125,000

 

Payments of financing leases

 

(147

)

 

(141

)

Payments of acquisition debt and other consideration

 

(741

)

 

(2,034

)

Payments of dividends

 

(25,076

)

 

(412,852

)

Payments for shares acquired including shares withheld for taxes

 

(111,306

)

 

(72,476

)

Proceeds from Common Stock Purchase Agreement

 

 

 

58,349

 

Proceeds from stock purchases under employee stock purchase plan

 

3,846

 

 

 

Proceeds from exercise of stock options

 

5,039

 

 

3,206

 

Net cash provided by (used in) financing activities

 

869,649

 

 

(70,130

)

Effect of exchange rate changes on cash and cash equivalents

 

4,530

 

 

(590

)

Increase in cash and cash equivalents

 

33,749

 

 

16,497

 

Cash and cash equivalents, beginning of year

 

122,006

 

 

121,101

 

Cash and cash equivalents, end of period

 

$

155,755

 

 

$

137,598

 

BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIES

Reconciliation of GAAP to Non-GAAP Measures

For the Three and Nine Months Ended September 30, 2021 and 2020

(in thousands)

(unaudited)

 

Reconciliation of net (loss) income to Adjusted EBITDA:

         

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2021

 

2020

 

2021

 

2020

Net (loss) income

 

$

(50,128

)

 

$

5,844

 

 

$

51,788

 

 

$

74,589

 

Interest expense, net

 

3,836

 

 

1,934

 

 

8,608

 

 

4,450

 

Provision (benefit) for income taxes

 

4,223

 

 

10,705

 

 

(6,165

)

 

22,145

 

Depreciation and amortization

 

16,666

 

 

9,172

 

 

35,946

 

 

25,836

 

Stock-based compensation

 

11,588

 

 

19,548

 

 

32,186

 

 

22,760

 

Deferred compensation plan

 

88,965

 

 

50

 

 

89,327

 

 

(115

)

Acquisition expenses

 

7,697

 

 

3,489

 

 

31,897

 

 

8,498

 

Realignment expenses

 

 

 

9,943

 

 

 

 

10,012

 

Expenses associated with IPO

 

 

 

26,130

 

 

 

 

26,130

 

Other expense (income), net

 

957

 

 

(13,741

)

 

(9,748

)

 

(6,756

)

Loss from investment accounted for using the equity method, net of tax

 

664

 

 

581

 

 

2,939

 

 

1,447

 

Adjusted EBITDA

 

$

84,468

 

 

$

73,655

 

 

$

236,778

 

 

$

188,996

 

Reconciliation of net (loss) income to Adjusted Net Income:

         

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2021

 

2020

 

2021

 

2020

Net (loss) income

 

$

(50,128

)

 

$

5,844

 

 

$

51,788

 

 

$

74,589

 

Non-GAAP adjustments, prior to income taxes:

 

 

 

 

 

 

 

 

Amortization of purchased intangibles and developed technologies

 

11,539

 

 

5,236

 

 

22,003

 

 

14,694

 

Stock-based compensation

 

11,588

 

 

19,548

 

 

32,186

 

 

22,760

 

Deferred compensation plan

 

88,965

 

 

50

 

 

89,327

 

 

(115

)

Acquisition expenses

 

7,697

 

 

3,489

 

 

31,897

 

 

8,498

 

Realignment expenses

 

 

 

9,943

 

 

 

 

10,012

 

Expenses associated with IPO

 

 

 

26,130

 

 

 

 

26,130

 

Other expense (income), net

 

957

 

 

(13,741

)

 

(9,748

)

 

(6,756

)

Total non-GAAP adjustments, prior to income taxes

 

120,746

 

 

50,655

 

 

165,665

 

 

75,223

 

Income tax effect of non-GAAP adjustments

 

(14,993

)

 

(5,656

)

 

(25,421

)

 

(10,757

)

Loss from investment accounted for using the equity method, net of tax

 

664

 

 

581

 

 

2,939

 

 

1,447

 

Adjusted Net Income

 

$

56,289

 

 

$

51,424

 

 

$

194,971

 

 

$

140,502

 

Reconciliation of GAAP Financial Statement Line Items to Non-GAAP Adjusted Financial Statement Line Items:

         

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2021

 

2020

 

2021

 

2020

Total revenues

 

$

248,480

 

 

$

202,997

 

 

$

693,416

 

 

$

581,977

 

Fair value adjustment of acquired deferred revenues

 

2,914

 

 

288

 

 

3,924

 

 

483

 

Adjusted total revenues

 

$

251,394

 

 

$

203,285

 

 

$

697,340

 

 

$

582,460

 

 

 

 

 

 

 

 

 

 

Subscriptions revenues

 

$

212,227

 

 

$

173,174

 

 

$

585,804

 

 

$

501,011

 

Fair value adjustment of acquired deferred revenues

 

2,914

 

 

288

 

 

3,924

 

 

483

 

Adjusted subscriptions revenues

 

$

215,141

 

 

$

173,462

 

 

$

589,728

 

 

$

501,494

 

 

 

 

 

 

 

 

 

 

Cost of subscriptions and licenses

 

$

31,056

 

 

$

23,338

 

 

$

89,882

 

 

$

66,466

 

Amortization of purchased intangibles and developed technologies

 

(2,863

)

 

(1,367

)

 

(5,300

)

 

(3,710

)

Stock-based compensation

 

(320

)

 

(861

)

 

(809

)

 

(908

)

Acquisition expenses

 

(7

)

 

 

 

(7

)

 

 

Realignment expenses

 

 

 

(50

)

 

 

 

(50

)

Adjusted cost of subscriptions and licenses

 

$

27,866

 

 

$

21,060

 

 

$

83,766

 

 

$

61,798

 

 

 

 

 

 

 

 

 

 

Cost of services

 

$

23,176

 

 

$

19,290

 

 

$

67,090

 

 

$

50,126

 

Stock-based compensation

 

(227

)

 

(2,526

)

 

(615

)

 

(2,701

)

Acquisition expenses

 

(1,835

)

 

(614

)

 

(4,380

)

 

(1,050

)

Realignment expenses

 

 

 

(1,548

)

 

 

 

(1,548

)

Adjusted cost of services

 

$

21,114

 

 

$

14,602

 

 

$

62,095

 

 

$

44,827

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

57,334

 

 

$

50,217

 

 

$

157,913

 

 

$

139,570

 

Stock-based compensation

 

(5,178

)

 

(6,661

)

 

(13,893

)

 

(7,817

)

Acquisition expenses

 

(1,537

)

 

(1,969

)

 

(4,882

)

 

(5,112

)

Realignment expenses

 

 

 

(841

)

 

 

 

(910

)

Adjusted research and development

 

$

50,619

 

 

$

40,746

 

 

$

139,138

 

 

$

125,731

 

 

 

 

 

 

 

 

 

 

Selling and marketing

 

$

44,392

 

 

$

41,824

 

 

$

114,846

 

 

$

107,551

 

Stock-based compensation

 

(1,481

)

 

(4,803

)

 

(3,484

)

 

(5,607

)

Acquisition expenses

 

(421

)

 

(86

)

 

(603

)

 

(243

)

Realignment expenses

 

 

 

(5,183

)

 

 

 

(5,183

)

Adjusted selling and marketing

 

$

42,490

 

 

$

31,752

 

 

$

110,759

 

 

$

96,518

 

 

 

 

 

 

 

 

 

 

General and administrative

 

$

35,329

 

 

$

32,956

 

 

$

110,233

 

 

$

85,390

 

Stock-based compensation

 

(4,382

)

 

(4,697

)

 

(13,385

)

 

(5,727

)

Acquisition expenses

 

(983

)

 

(532

)

 

(18,101

)

 

(1,610

)

Realignment expenses

 

 

 

(2,321

)

 

 

 

(2,321

)

Adjusted general and administrative

 

$

29,964

 

 

$

25,406

 

 

$

78,747

 

 

$

75,732

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2021

 

2020

 

2021

 

2020

(Loss) income from operations

 

$

(40,448

)

 

$

5,323

 

 

$

47,422

 

 

$

95,875

 

Amortization of purchased intangibles and developed technologies

 

11,539

 

 

5,236

 

 

22,003

 

 

14,694

 

Stock-based compensation

 

11,588

 

 

19,548

 

 

32,186

 

 

22,760

 

Deferred compensation plan

 

88,965

 

 

50

 

 

89,327

 

 

(115

)

Acquisition expenses

 

7,697

 

 

3,489

 

 

31,897

 

 

8,498

 

Realignment expenses

 

 

 

9,943

 

 

 

 

10,012

 

Expenses associated with IPO

 

 

 

26,130

 

 

 

 

26,130

 

Adjusted income from operations

 

$

79,341

 

 

$

69,719

 

 

$

222,835

 

 

$

177,854

 


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