What Bentley Systems (BSY) Said on Its Q3 Earnings Call

Key Points

• Growth accelerated: Q3 revenue rose 12.2% year over year to $422 million, and constant-currency ARR grew 13% to $1.583 billion. Bentley raised its 2026 constant-currency ARR growth outlook to 12.5%–13.5%.
• Retention and asset analytics are supporting momentum: Net revenue retention reached a record 110%, while account retention remained 99%. Asset analytics and large customer expansions contributed significantly to ARR growth.
• Portfolio changes affect the outlook: Bentley expects its Cohesive divestiture to lower reported ARR growth by about 100 basis points and Q4 revenue by roughly $12 million; its Eliis acquisition is expected to add about 100 basis points to growth. AI-assisted design monetization is not expected to materially drive growth until after 2027.

Bentley Systems NASDAQ: BSY reported accelerating annual recurring revenue growth in the third quarter of 2026 and raised its full-year growth outlook, citing demand for infrastructure software and large expansions in its asset analytics business.

Revenue rose 12.2% from a year earlier to $422 million, while annual recurring revenue, or ARR, reached $1.583 billion at quarter-end spot exchange rates. On a constant-currency basis, ARR grew 13% year over year, exceeding the high end of the company’s previous full-year outlook.

Chief Executive Officer Nicholas Cumins said growth was broad-based across core sectors and regions. Resources was Bentley’s fastest-growing sector, led by mining demand for its Seequent subsurface software, while public works and utilities also delivered strong growth.

Retention and Asset Analytics Support Growth

Bentley’s constant-currency net revenue retention rate rose to a historical high of 110%, while its account retention rate remained at 99%. New customers contributed about 300 basis points of ARR growth, Cumins said, with more than 600 added through Bentley’s Virtuoso program for small and midsize businesses.

Asset analytics contributed meaningfully to both annual and sequential ARR growth, Chief Financial Officer Werner Andre said. Large contract expansions from existing customers accounted for approximately half of the improvement in sequential growth compared with the third quarter of 2025.

Sequential constant-currency ARR growth was 3.1%, all organic, compared with 2.2% a year earlier. The 13% year-over-year growth rate included about 40 basis points from the Talon acquisition.

Cumins said Bentley secured expansions involving telecommunications tower inspections and road monitoring. The company is already monetizing artificial intelligence through asset analytics, which uses the technology to help infrastructure owners understand the physical condition of their assets, he said.

Acquisition and Divestiture Reshape Outlook

Bentley raised its 2026 constant-currency ARR growth outlook to 12.5% to 13.5%, from 10.5% to 12.5% previously. The updated range excludes the impact of its Cohesive divestiture for comparison with the original forecast but includes approximately 100 basis points of expected growth from its fourth-quarter acquisition of seismic interpretation company Eliis.

Including the Cohesive divestiture, reported ARR growth is expected to be approximately 100 basis points lower than the updated range, Andre said.

Bentley merged Cohesive into U.K.-based Naviam on October 13 in exchange for a significant minority investment. Cohesive accounted for approximately 3.5% of Bentley’s total revenue and about half of its services revenue in the first nine months of the year. Andre said the transaction is expected to reduce fourth-quarter revenue by approximately $12 million, about three-quarters of it in services.

The company updated its full-year revenue outlook to $1.673 billion to $1.703 billion and maintained its adjusted operating income less operating stock-based compensation outlook of $495 million to $510 million. It also maintained its free cash flow forecast of $500 million to $570 million, including higher cash taxes related to the Cohesive transaction.

Eliis, which is joining Seequent, adds seismic interpretation capabilities used historically in oil and gas exploration. Cumins said the acquisition also has potential applications in mining, geothermal energy and civil infrastructure. He described Eliis as accretive to Bentley’s ARR growth rate and roughly in line with the company’s margins.

Profitability Improves as AI Design Monetization Remains Early

Third-quarter GAAP operating income was $123 million. Adjusted operating income less operating stock-based compensation rose to $135 million, with a margin of 32.1%, compared with 28.1% a year earlier. Andre attributed the better-than-expected result partly to a shift toward subscription revenue and disciplined cost control.

Free cash flow was $101 million for the quarter and $353 million for the first nine months, down 8% year over year. Andre cited exceptionally strong collections at the end of 2025 and earlier investment spending in 2026 as factors in the year-to-date decline.

Beyond asset analytics, Bentley is encouraging customers to adopt and test AI-assisted design workflows before pursuing broader monetization. Cumins said the company is preparing technically to begin monetizing AI in design in 2027, but does not expect it to be a material growth driver that year. The timing will depend in part on customers moving from exploration into production and adopting new versions of Bentley’s applications.

“Our focus, again, is all about adoption,” Cumins said. He added that Bentley’s commercial model may eventually need to evolve as customers use its applications at machine speed, rather than primarily paying based on engineers’ time using the software.

About Bentley Systems (NASDAQ:BSY)

Bentley Systems, Incorporated is a software company that develops solutions for the design, construction, and operation of infrastructure. Its customers include engineers, architects, geospatial professionals, construction firms, and infrastructure owner-operators in sectors such as transportation, water, utilities, industrial facilities, and buildings.

The company's product portfolio includes MicroStation for infrastructure design, ProjectWise for project collaboration, AssetWise for asset performance and operations, and SYNCHRO for construction management.

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