Bentley Systems Q2 Earnings Call Highlights

Key Points

• Q2 revenue rose 12.8% year over year to $411 million, while constant-currency ARR growth accelerated to 12% and net revenue retention held at 109%. Subscription revenue accounted for 92% of sales, and adjusted operating margin reached 28.3%.
• Demand remained strong across resources, public works, utilities, and electric-grid markets, with mining, infrastructure modernization, transmission capacity, and data-center activity supporting growth. Bentley’s PLS electric-grid business continued expanding internationally despite limited permitting reform.
• Bentley is expanding AI integrations through model context protocol servers and plans to begin monetizing AI capabilities in 2027, after prioritizing customer adoption in 2026. The company also repurchased $155 million of stock in the first half while reducing net debt by $32 million.

Bentley Systems NASDAQ: BSY reported second-quarter revenue growth of 12.8% year over year, supported by continued demand for infrastructure engineering software across resources, public works and utilities, and electric-grid markets.

Chief Executive Officer Nicholas Cumins said the company’s annual recurring revenue, or ARR, grew 12% year over year on a constant-currency basis, accelerating from the prior quarter. Net revenue retention remained at 109%, while new customer logos contributed 300 basis points to ARR growth, primarily from small and midsize business accounts.

“The world needs more infrastructure and resources, and it needs them faster than they can be delivered,” Cumins said, describing a shortage of engineers as a key industry constraint and a central rationale for Bentley’s artificial-intelligence strategy.

Second-Quarter Financial Results

Chief Financial Officer Werner Andre said second-quarter revenue totaled $411 million, up 12.8% from a year earlier and 12.2% on a constant-currency basis. Subscription revenue, which represented 92% of quarterly revenue, rose 13.6%, or 13% in constant currency.

• Last-12-month recurring revenue was $1.486 billion, up 13.5% year over year.
• ARR ended the quarter at $1.536 billion.
• GAAP operating income was $89 million in the second quarter and $215 million for the first half.
• Adjusted operating income less operating stock-based compensation was $116 million, representing a 28.3% margin.
• Free cash flow was $64 million in the quarter and $252 million in the first half.

Andre said the company remained on track to meet its full-year free-cash-flow outlook of $500 million to $570 million. Last-12-month free cash flow totaled $498 million, up 15% year over year.

The company said first-half cash flow reflected strong collections at the end of 2025, which created a more difficult year-over-year comparison, as well as operating investments weighted toward the first half of 2026. Andre said first-half free cash flow represented about 47% of the company’s full-year outlook, within its guided range of 45% to 50%.

Bentley also said foreign exchange was a headwind. The stronger U.S. dollar reduced first-half revenue by about $5 million compared with the exchange rates assumed in its annual outlook. If end-of-July rates continue through the remainder of the year, second-half revenue could face an additional $8 million to $10 million impact, Andre said.

Infrastructure Demand Supports Sector Growth

Cumins said the resources segment was Bentley’s fastest-growing sector, driven particularly by mining activity across regions. He attributed demand to countries’ focus on self-sufficiency in critical minerals amid geopolitical tensions and supply-chain disruptions, as well as growing demand tied to electrification.

Mining investment has been concentrated primarily in brownfield projects rather than greenfield developments, Cumins said during the question-and-answer session, as operators seek faster returns and lower-risk ways to expand production.

Public works and utilities also posted strong growth, helped by worldwide infrastructure spending. Bentley’s Power Line Systems, or PLS, business remained a principal growth driver in electric-grid software, benefiting from demand for transmission capacity, grid resiliency and modernization.

Cumins said PLS revenue outside the U.S. has grown to equal the size of the entire PLS business when Bentley acquired it in 2022. While permitting reform could provide an additional tailwind for the business, he said PLS has continued growing without it because utilities are investing in existing systems to meet rising power demand and improve resilience against severe weather.

The Americas delivered strong results, with U.S. customer backlogs supported by transportation, water, power and data-center-related activity, according to Cumins. Latin America benefited from mining and transportation demand, while Australia and India led growth in Asia-Pacific. China represented about 2% of ARR and continued to face economic and geopolitical headwinds, he said.

AI Strategy Focuses on Engineering Applications and Open Ecosystems

Bentley is positioning AI as a tool to increase engineering productivity rather than replace established software workflows. Cumins said Bentley’s engineering applications provide deterministic modeling, analysis and simulation capabilities, while AI models contribute natural-language interaction, reasoning and task planning.

The company has expanded its model context protocol, or MCP, server releases. After releasing its first MCP server for STAAD in the prior quarter, Bentley released five more across Bentley Open applications. It also announced three MCP servers for PLS products, including PLS-GRID.

Through MCP servers, Bentley said users can connect AI assistants to engineering applications and engineering data. Cumins said customers may use Bentley Copilot or third-party systems including Anthropic Claude, Google Gemini and OpenAI ChatGPT.

“Our aim is to be the trusted engineering layer beneath all of them,” Cumins said.

The company said it is prioritizing adoption, customer exploration and validation of the AI workflow before monetization. Cumins said Bentley does not plan to monetize these AI capabilities in 2026 and expects to begin monetization next year. He said the company expects a usage model based on application and infrastructure-cloud consumption, rather than relying solely on traditional user-based subscription metrics.

Bentley said it is also investing in asset analytics, which it believes can help infrastructure owners use digital twins in operations and maintenance. The company reported that 153 major infrastructure owner accounts outside China have adopted Bentley Infrastructure Cloud, with most using ProjectWise.

Capital Allocation and Share Repurchases

Andre said Bentley reduced net debt by $32 million during the first half and deployed $155 million on share repurchases, in addition to $42 million in dividends. The company’s net debt leverage stood at 1.9 times adjusted EBITDA at quarter-end, while available capacity under its credit facility totaled $1.2 billion.

During the quarter, Bentley closed a new $550 million term loan A under its credit facility’s accordion feature and used the proceeds to repay revolving-credit borrowings, which Andre said lowered interest costs.

The company repurchased 3.1 million shares in the second quarter. Management said its fully diluted share count was 319 million at the end of the quarter, down about 3% following the redemption of convertible debt maturing in 2026. Bentley expects the remaining convertible debt maturity in 2027 could similarly reduce diluted shares.

About Bentley Systems (NASDAQ:BSY)

Bentley Systems, Inc is a global software provider specializing in infrastructure engineering applications for the design, construction, and operations of roads, bridges, rail and transit systems, water and wastewater networks, power plants and grids, industrial facilities, and communications infrastructure. Founded in 1984 by brothers Keith and Barry Bentley, the company is headquartered in Exton, Pennsylvania, and maintains offices and development centers across North America, Europe, Asia, and Australia.

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