Bentley Systems Announces Operating Results for the Third

Bentley Systems Announces Operating Results for the Third Quarter of 2022

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; the impact of current and future sanctions, embargoes and other similar laws at the state and/or federal level that impose restrictions on our counterparties or upon our ability to operate our business within the subject jurisdictions; 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 geoprofessional software portfolio, and the iTwin platform for infrastructure digital twins. Bentley Systems employs more than 4,500 colleagues and generates annual revenues of approximately $1 billion in 186 countries.
www.bentley.com

© 2022 Bentley Systems, Incorporated. Bentley, the Bentley logo, AssetWise, iTwin, MicroStation, Power Line Systems, 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, 2022			December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	72,856		$	329,337
Accounts receivable		214,459			241,807
Allowance for doubtful accounts		(10,802	)		(6,541	)
Prepaid income taxes		17,414			16,880
Prepaid and other current assets		32,224			34,348
Total current assets		326,151			615,831
Property and equipment, net		30,753			31,823
Operating lease right-of-use assets		41,499			50,818
Intangible assets, net		301,173			245,834
Goodwill		2,193,053			1,588,477
Investments		21,690			6,438
Deferred income taxes		52,751			71,376
Other assets		74,367			48,646
Total assets	$	3,041,437		$	2,659,243
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	16,860		$	16,483
Accruals and other current liabilities		337,442			323,603
Deferred revenues		186,358			224,610
Operating lease liabilities		15,078			17,482
Income taxes payable		8,405			6,696
Current portion of long-term debt		5,000			5,000
Total current liabilities		569,143			593,874
Long-term debt		1,776,610			1,430,992
Deferred compensation plan liabilities		71,013			94,890
Long-term operating lease liabilities		28,776			35,274
Deferred revenues		15,252			7,983
Deferred income taxes		43,817			65,014
Income taxes payable		8,893			7,725
Other liabilities		7,734			14,269
Total liabilities		2,521,238			2,250,021
Stockholders’ equity:
Common stock		2,884			2,825
Additional paid-in capital		1,005,075			937,805
Accumulated other comprehensive loss		(101,929	)		(91,774	)
Accumulated deficit		(385,831	)		(439,634	)
Total stockholders’ equity		520,199			409,222
Total liabilities and stockholders’ equity	$	3,041,437		$	2,659,243

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,
		2022			2021			2022			2021
Revenues:
Subscriptions	$	235,307		$	215,135		$	708,731		$	589,702
Perpetual licenses		9,460			11,866			31,213			33,373
Subscriptions and licenses		244,767			227,001			739,944			623,075
Services		23,565			24,387			72,190			74,239
Total revenues		268,332			251,388			812,134			697,314
Cost of revenues:
Cost of subscriptions and licenses		37,371			31,056			107,904			89,882
Cost of services		21,812			23,176			66,758			67,090
Total cost of revenues		59,183			54,232			174,662			156,972
Gross profit		209,149			197,156			637,472			540,342
Operating expense (income):
Research and development		63,827			57,334			189,966			157,913
Selling and marketing		46,114			44,392			141,676			114,846
General and administrative		37,794			35,329			128,981			110,233
Deferred compensation plan		(4,576	)		88,965			(21,873	)		89,327
Amortization of purchased intangibles		10,446			8,676			30,869			16,703
Total operating expenses		153,605			234,696			469,619			489,022
Income (loss) from operations		55,544			(37,540	)		167,853			51,320
Interest expense, net		(8,382	)		(3,836	)		(23,046	)		(8,608	)
Other income (expense), net		180			(957	)		14,318			9,748
Income (loss) before income taxes		47,342			(42,333	)		159,125			52,460
(Provision) benefit for income taxes		(9,664	)		(5,025	)		(8,221	)		5,090
Loss from investment accounted for using the equity method, net of tax		(681	)		(664	)		(1,846	)		(2,939	)
Net income (loss)		36,997			(48,022	)		149,058			54,611
Less: Net income (loss) attributable to participating securities		(11	)		(3	)		(31	)		(6	)
Net income (loss) attributable to Class A and Class B common stockholders	$	36,986		$	(48,025	)	$	149,027		$	54,605
Per share information:
Net income (loss) per share, basic	$	0.12		$	(0.16	)	$	0.48		$	0.18
Net income (loss) per share, diluted	$	0.12		$	(0.16	)	$	0.46		$	0.17
Weighted average shares, basic		310,116,104			308,195,379			308,959,801			305,119,985
Weighted average shares, diluted		325,170,383			308,195,379			332,077,834			314,658,136

BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIES Consolidated Statements of Cash Flows (in thousands) (unaudited)

	Nine Months Ended
	September 30,
		2022			2021
Cash flows from operating activities:
Net income	$	149,058		$	54,611
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		53,644			35,946
Bad debt allowance		5,199			466
Deferred income taxes		(13,670	)		(17,788	)
Stock-based compensation expense		51,359			32,853
Deferred compensation plan		(21,873	)		89,327
Amortization and write-off of deferred debt issuance costs		5,468			4,160
Change in fair value of derivative		(29,318	)		(9,198	)
Foreign currency remeasurement loss		14,445			103
Other non-cash items, net		(1,006	)		2,939
Changes in assets and liabilities, net of effect from acquisitions:
Accounts receivable		12,550			26,305
Prepaid and other assets		7,779			11,310
Accounts payable, accruals, and other liabilities		28,765			29,047
Deferred revenues		(26,725	)		(40,496	)
Income taxes payable, net of prepaid income taxes		2,523			(12,168	)
Net cash provided by operating activities		238,198			207,417
Cash flows from investing activities:
Purchases of property and equipment and investment in capitalized software		(12,982	)		(11,152	)
Proceeds from sale of aircraft		2,380			—
Acquisitions, net of cash acquired		(719,539	)		(1,033,695	)
Other investing activities		(10,304	)		(3,000	)
Net cash used in investing activities		(740,445	)		(1,047,847	)
Cash flows from financing activities:
Proceeds from credit facilities		753,376			682,083
Payments of credit facilities		(408,714	)		(860,228	)
Proceeds from convertible senior notes, net of discounts and commissions		—			1,233,377
Payments of debt issuance costs		—			(5,643	)
Purchase of capped call options		—			(51,555	)
Repayment of term loan		(3,750	)		—
Payments of financing leases		(123	)		(147	)
Payments of acquisition debt and other consideration		(6,996	)		(741	)
Payments of dividends		(25,828	)		(25,076	)
Proceeds from stock purchases under employee stock purchase plan		10,335			3,846
Proceeds from exercise of stock options		6,855			5,039
Payments for shares acquired including shares withheld for taxes		(42,213	)		(111,306	)
Repurchase of Class B Common Stock under approved program		(28,250	)		—
Net cash provided by financing activities		254,692			869,649
Effect of exchange rate changes on cash and cash equivalents		(8,926	)		4,530
(Decrease) increase in cash and cash equivalents		(256,481	)		33,749
Cash and cash equivalents, beginning of year		329,337			122,006
Cash and cash equivalents, end of period	$	72,856		$	155,755

BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIES Reconciliation of GAAP to Non-GAAP Measures For the Three and Nine Months Ended September 30, 2022 and 2021 (in thousands) (unaudited)

Reconciliation of net income (loss) to Adjusted EBITDA:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
		2022			2021			2022			2021
Net income (loss)	$	36,997		$	(48,022	)	$	149,058		$	54,611
Interest expense, net		8,382			3,836			23,046			8,608
Provision (benefit) for income taxes		9,664			5,025			8,221			(5,090	)
Depreciation and amortization		17,914			16,666			53,644			35,946
Stock-based compensation		18,626			11,588			50,974			32,186
Deferred compensation plan		(4,576	)		88,965			(21,873	)		89,327
Acquisition expenses		3,203			4,789			21,056			27,999
Realignment (income) expenses		(971	)		—			2,223			—
Other (income) expense, net		(180	)		957			(14,318	)		(9,748	)
Loss from investment accounted for using the equity method, net of tax		681			664			1,846			2,939
Adjusted EBITDA	$	89,740		$	84,468		$	273,877		$	236,778

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

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
		2022			2021			2022			2021
Net income (loss)	$	36,997		$	(48,022	)	$	149,058		$	54,611
Non-GAAP adjustments, prior to income taxes:
Amortization of purchased intangibles and developed technologies		13,575			11,539			40,174			22,003
Stock-based compensation		18,626			11,588			50,974			32,186
Deferred compensation plan		(4,576	)		88,965			(21,873	)		89,327
Acquisition expenses		3,203			4,789			21,056			27,999
Realignment (income) expenses		(971	)		—			2,223			—
Other (income) expense, net		(180	)		957			(14,318	)		(9,748	)
Total non-GAAP adjustments, prior to income taxes		29,677			117,838			78,236			161,767
Income tax effect of non-GAAP adjustments		(5,530	)		(14,191	)		(13,951	)		(24,346	)
Loss from investment accounted for using the equity method, net of tax		681			664			1,846			2,939
Adjusted Net Income	$	61,825		$	56,289		$	215,189		$	194,971

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,
		2022			2021			2022			2021
Cost of subscriptions and licenses	$	37,371		$	31,056		$	107,904		$	89,882
Amortization of purchased intangibles and developed technologies		(3,129	)		(2,863	)		(9,305	)		(5,300	)
Stock-based compensation		(752	)		(320	)		(1,913	)		(809	)
Acquisition expenses		(63	)		(7	)		(63	)		(7	)
Realignment expenses		—			—			(39	)		—
Adjusted cost of subscriptions and licenses	$	33,427		$	27,866		$	96,584		$	83,766

Cost of services	$	21,812		$	23,176		$	66,758		$	67,090
Stock-based compensation		(428	)		(227	)		(1,347	)		(615	)
Acquisition expenses		(1,370	)		(1,835	)		(3,987	)		(4,380	)
Realignment expenses		(19	)		—			(52	)		—
Adjusted cost of services	$	19,995		$	21,114		$	61,372		$	62,095

Research and development	$	63,827		$	57,334		$	189,966		$	157,913
Stock-based compensation		(6,703	)		(5,178	)		(17,572	)		(13,893	)
Acquisition expenses		(1,898	)		(1,537	)		(5,094	)		(4,882	)
Adjusted research and development	$	55,226		$	50,619		$	167,300		$	139,138

Selling and marketing	$	46,114		$	44,392		$	141,676		$	114,846
Stock-based compensation		(1,939	)		(1,481	)		(5,470	)		(3,484	)
Acquisition expenses		(276	)		(421	)		(1,021	)		(603	)
Realignment income (expenses)		753			—			(1,196	)		—
Adjusted selling and marketing	$	44,652		$	42,490		$	133,989		$	110,759

General and administrative	$	37,794		$	35,329		$	128,981		$	110,233
Stock-based compensation		(8,804	)		(4,382	)		(24,672	)		(13,385	)
Acquisition expenses		404			(983	)		(10,891	)		(18,101	)
Realignment income (expenses)		237			—			(936	)		—
Adjusted general and administrative	$	29,631		$	29,964		$	92,482		$	78,747

Income (loss) from operations	$	55,544		$	(37,540	)	$	167,853		$	51,320
Amortization of purchased intangibles and developed technologies		13,575			11,539			40,174			22,003
Stock-based compensation		18,626			11,588			50,974			32,186
Deferred compensation plan		(4,576	)		88,965			(21,873	)		89,327
Acquisition expenses		3,203			4,789			21,056			27,999
Realignment (income) expenses		(971	)		—			2,223			—
Adjusted income from operations	$	85,401		$	79,341		$	260,407		$	222,835

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