Business Wire | Nov 10, 2020 07:00AM EST

Bentley Systems Announces Operating Results for Third Quarter 2020

Nov. 10, 2020

EXTON, Pa.--(BUSINESS WIRE)--Nov. 10, 2020--Bentley Systems, Incorporated (Nasdaq: BSY) ("Bentley Systems" or the "Company"), the infrastructure engineering software company, today announced operating results for its quarter ended September 30, 2020.

Third Quarter 2020 Financial Results:

* Total revenues were $203.0 million, up 8.8% year-over-year; * Subscriptions revenues were $173.2 million, up 11.6% year-over-year; * Last twelve-month recurring revenues were $682.7 million, up 11.0% year-over-year; * Last twelve-month recurring revenues dollar-based net retention rate was 110%, compared to 107% for the same period last year; * Last twelve-month account retention rate was 98%, consistent with the same period last year; * Annualized Recurring Revenue ("ARR") was $715.3 million as of September 30, 2020, representing Constant currency growth in ARR of 9% over September 30, 2019; * GAAP operating income was $5.3 million, compared to $41.4 million for the same period last year; * GAAP net income was $5.8 million, compared to $20.4 million for the same period last year. GAAP net income per diluted share was $0.02, compared to $0.07 for the same period last year; * Adjusted Net Income was $51.4 million, compared to $39.3 million for the same period last year. Adjusted Net Income per diluted share was $0.17 compared to $0.14 for the same period last year; * Adjusted EBITDA was $73.6 million, compared to $52.8 million for the same period last year. Adjusted EBITDA margin was 36.3%, compared to 28.3% for the same period last year; * Cash flow from operations was $39.8 million, compared to $35.5 million for the same period last year.

Definitions of the non-GAAP financial measures used in this press release and reconciliations of such measures to their nearest GAAP equivalents are included below under the heading "Use and Reconciliation of Non-GAAP Financial Measures."

"Our encouraging operating results for the third quarter of 2020 continue to reinforce the relative resilience of infrastructure engineering, and the priority placed by our user organizations this year on going digital, as they have resourcefully 'virtualized' their mission-critical work," said Greg Bentley, CEO. "2020's inflection in their digital advancement is evidenced by the burgeoning use cases for infrastructure digital twins which our users and accounts showcased at our just-completed Year in Infrastructure 2020 Conference."

Mr. Bentley continued, "Although infrastructure investment at large-- and our predictable business model-- continues to demonstrate resilience, we have now discerned a change within our application usage trends. During the first half of 2020 we could see waves of pandemic-related lockdowns adversely impacting our days of usage by a few percent, and then abating progressively by region. Beginning in the third quarter, we've been observing global usage impacts that instead are primarily a function of infrastructure sector -- with the commercial / facilities sector most affected, and our mainstay public works and utilities sector least affected. In the industrial / resources sector, capital projects activity has now perceptibly declined, reducing consumption of our applications by those affected ('EPC' engineering / procurement / construction firms). EPC accounts tend to have been early adopters of our consumption-based E365 commercial model, so our ARR and revenue growth are being somewhat attenuated. Our usual visibility into ARR momentum is likely to remain obscured to this degree."

"Overall, we are nonetheless confident about promising returns on the purposeful reinvestment of our significant 2020 cost savings. Our new Chief Product Officer (Nicholas Cumins), inaugural Chief Success Officer (Katriona Lord-Levins), and new Chief Marketing Officer (Chris Bradshaw) bring us world-class public company experience in succession to many of our 'foundation pillar' executives whose retirements, upon our IPO after 36 years, have been anticipated. While maintaining our commitment to annual improvement in operating efficiency and margins, we are enthusiastically investing to accelerate accretion in our existing accounts, to better reach more small and mid-market prospects, to further enable our applications and systems through our iTwins Platform, and to develop our ecosystem of digital integrators to curate infrastructure digital twins."

Financial Developments

* In August 2020, Bentley Systems declared a special dividend of $1.50 per share ($392.5 million in the aggregate) and used its bank credit facility to fund the special dividend. * In September 2020, Bentley Systems completed its initial public offering ("IPO") of its Class B common stock at a price of $22.00 per share. Selling stockholders completed the sale of 12.4 million shares, including 1.6 million shares issued pursuant to the full exercise of the underwriters' option to purchase additional shares. The Company did not receive any proceeds from the sale of shares of common stock by the selling stockholders in the IPO. For the three and nine months ended September 30, 2020, the Company recorded in its consolidated statement of operations $26.1 million in expenses associated with its IPO. Expenses associated with the IPO include certain non?recurring costs consisting of underwriting discounts and commissions applicable to the sale of shares by the selling stockholders, professional fees, and other expenses. * During the third quarter of 2020, the Company initiated a strategic realignment program to better align talent resources with the evolving needs of the business. The Company incurred realignment costs related to this program of $10.0 million for the three and nine months ended September 30, 2020, representing termination benefits for colleagues whose positions were eliminated. These realignment activities have been broadly implemented across the company with substantially all actions expected to be completed by the beginning of 2021. * For the three and nine months ended September 30, 2020, the Company reported an effective tax rate of 62.5% and 22.6% respectively. The unusually high effective tax rate, especially in the third quarter, is primarily due to officer compensation limitation provisions resulting from the Company's IPO and the non?deductibility of expenses associated with the Company's IPO, partially offset by increased tax benefits from stock?based compensation.

2020 Financial Outlook

For the full year of 2020, the Company currently expects:

* Total revenues in the range of $790 million to $800 million, representing growth of 7.2% to 8.6%; * Constant currency growth in ARR of 7.5% to 9.0%; * Adjusted EBITDA in the range of $250 million to $265 million, representing growth of 33% to 41%, including the impact of transitioning approximately $7.5 million of quarterly executive compensation from cash-based incentives to stock-based incentives for the fourth quarter of 2020; * Its effective tax rate for 2020 to be 23% to 25%. However, normalized for the unusual IPO-related activity in the third quarter of 2020, the effective tax rate is expected to be approximately 19% to 21%.

Bentley Systems is not providing a quantitative reconciliation of its Non-GAAP financial outlook to the corresponding GAAP information because the GAAP measures that it excludes from its Non-GAAP outlook are not available without unreasonable effort on a forward-looking basis due to their unpredictability, high variability, complexity and low visibility.

Earnings Call Details

Bentley Systems will host a live Zoom Video Webinar on November 10, 2020 at 8:30 a.m. Eastern Time to discuss the financial results for the third quarter of 2020.

Those wishing to participate should access the live Zoom Video Webinar of the event through a direct registration link at https://zoom.us/webinar/register/WN_MIBAJ7xHTN-cmp5KHRA-Fg. Alternatively, the event can be accessed from the Events & Presentations page on Bentley Systems' Investor Relations website at https://investors.bentley.com. A replay and transcript will be available after the conclusion of the live event on Bentley Systems' Investor Relations website.

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, and industrial facilities. Our offerings include MicroStation-based applications for modeling and simulation, ProjectWise for project delivery, AssetWise for asset and network performance, and the iTwin platform for infrastructure digital twins. Bentley Systems employs more than 4,000 colleagues and generates annual revenues of more than $700 million in 172 countries. www.bentley.com.

Forward-Looking Statements

The foregoing forward-looking statements reflect Bentley Systems' expectations as of today's date. Given the number of risk factors, uncertainties and assumptions discussed below, actual results may differ materially.

Any statements made in this earnings release that are not statements of historical fact, including statements about our financial outlook and our beliefs and expectations, are forward-looking statements and should be evaluated as such. Forward-looking statements include information concerning possible or assumed future results of operations, business plans, and strategies. Forward-looking statements are based on Bentley Systems management's beliefs, as well as assumptions made by, and information currently available to, them. Because such statements are based on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected. Factors which may cause actual results to differ materially from current expectations include, but are not limited, to macroeconomic conditions, pandemic consequences, and other factors described under the heading "Risk Factors" in our final prospectus filed with the Securities and Exchange Commission ("SEC") on September 24, 2020, and in the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, and the Company's subsequent filings with the SEC. Copies of each filing may be obtained from the Company or the SEC. All forward-looking statements reflect our beliefs and assumptions only as of the date of this press release. We undertake no obligation to update forward-looking statements to reflect future events or circumstances.

Definitions of Certain Key Business Metrics

Definitions of the non-GAAP financial measures used in this earnings release and reconciliations of such measures to their nearest GAAP equivalents are included below under "Use and Reconciliation of Non-GAAP Financial Measures." Certain non-GAAP measures included in our financial outlook are not being reconciled to the comparable GAAP financial measures because the GAAP measures are not accessible on a forward-looking basis. The Company is unable to reconcile these forward looking non-GAAP financial measures to the most directly comparable GAAP measures without unreasonable efforts because the Company is currently unable to predict with a reasonable degree of certainty the type and extent of certain items that would be expected for these periods not to impact the non-GAAP measures, but would impact GAAP measures. Such unavailable information, which could have a significant impact on the Company's GAAP financial results, may include stock-based compensation charges, expenses associated with the IPO, depreciation and amortization of capitalized software costs and of acquired intangible assets, realignment expenses, and other items.

Last twelve-month recurring revenues are calculated as recurring revenues recognized over the preceding twelve-month period. We define recurring revenues as subscription revenues that recur monthly, quarterly, or annually with specific or automatic renewal clauses, and professional services revenues in which the underlying contract is based on a fixed fee and contains automatic annual renewal provisions.

Constant Currency Metrics

In reporting period-over-period results, we calculate the effects of foreign currency fluctuations and constant currency information by translating current period results using prior period average foreign currency exchange rates. Our definition of constant currency may differ from other companies reporting similarly named measures, and these constant currency performance measures should be viewed in addition to, and not as a substitute for, our operating performance measures calculated in accordance with U.S. GAAP.

* Our last twelve-month recurring revenues dollar-based net retention rate is calculated, using the average exchange rates for the prior period, as follows: the recurring revenues for the current period, including any growth or reductions from accounts with recurring revenues in the prior period ("existing accounts"), but excluding recurring revenues from any new accounts added during the current period, divided by the total recurring revenues from all accounts during the prior period. A period is defined as any trailing twelve months. The recurring revenues dollar?based net retention rate is calculated using revenues recognized pursuant to Topic 605 for all periods in order to enhance comparability during our transition to Topic 606 as we do not have all information available to us necessary to present recurring revenues dollar?based net retention rate pursuant to Topic 606 for any period prior to January 1, 2019. * Our last twelve-month account retention rate for any given twelve-month period is calculated using the average currency exchange rates for the prior period, as follows: the prior period recurring revenues from all accounts with recurring revenues in the current and prior period, divided by total recurring revenues from all accounts during the prior period. The account retention rate is calculated using revenues recognized pursuant to Topic 605 for all periods in order to enhance comparability during our transition to Topic 606 as we do not have all information available to us necessary to present account retention rate pursuant to Topic 606 for any period prior to January 1, 2019. * Our Constant currency ARR growth rate is the growth rate of our ARR, measured on a constant currency basis. Our ARR is defined as the sum of the annualized value of our portfolio of contracts that produce recurring revenue as of the last day of the reporting period, and the annualized value of the last three months of recognized revenues for our contractually recurring consumption?based software subscriptions with consumption measurement durations of less than one year.

Use and Reconciliation of Non-GAAP Financial Measures

In addition to our results determined in accordance with GAAP, we have calculated adjusted cost of subscriptions and licenses, adjusted cost of services, adjusted research and development, adjusted selling and marketing, adjusted general and administrative, adjusted income from operations,Adjusted Net Income, Adjusted Net Income per diluted share, Adjusted EBITDA, and Adjusted EBITDA margin, each of which are non-GAAP financial measures. We have provided tabular reconciliations of each of these non-GAAP financial measures to such measure's most directly comparable GAAP financial measure.

Management uses these non-GAAP financial measures to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, and to evaluate financial performance and liquidity. Our non?GAAP financial measures are presented as supplemental disclosure as we believe they provide useful information to investors and others in understanding and evaluating our results, prospects, and liquidity period-over-period without the impact of certain items that do not directly correlate to our operating performance and that may vary significantly from period to period for reasons unrelated to our operating performance, as well as to compare our financial results to those of other companies. Our definitions of these non-GAAP financial measures may differ from similarly titled measures presented by other companies and therefore comparability may be limited. In addition, other companies may not publish these or similar metrics. Thus, our non-GAAP financial measures should be considered in addition to, not as a substitute for, or in isolation from, the financial information prepared in accordance with GAAP, and should be read in conjunction with the financial statements included in our Quarterly Report on Form 10-Q to be filed with the SEC.

We calculate these non-GAAP financial measures as follows:

* Adjusted cost of subscriptions and licenses is determined by adding back to GAAP cost of subscriptions and licenses, amortization of purchased intangibles and developed technologies, equity?based compensation, and realignment expenses, for the respective periods; * Adjusted cost of services is determined by adding back to GAAP cost of services, equity?based compensation, acquisition expenses, and realignment expenses, for the respective periods; * Adjusted research and development is determined by adding back to GAAP research and development, equity?based compensation, acquisition expenses, and realignment expenses, for the respective periods; * Adjusted selling and marketing is determined by adding back to GAAP selling and marketing, equity?based compensation, acquisition expenses, and realignment expenses, for the respective periods; * Adjusted general and administrative is determined by adding back to GAAP general and administrative, equity?based compensation, acquisition expenses, and realignment expenses, for the respective periods; * Adjusted income from operations is determined by adding back to GAAP operating income, amortization of purchased intangibles and developed technologies, equity?based compensation, acquisition expenses, realignment expenses, and expenses associated with IPO for the respective periods; * Adjusted Net Income is defined as net income adjusted for the following: amortization of purchased intangibles and developed technologies, equity?based compensation, acquisition expenses, realignment expenses, expenses associated with IPO, other non?operating income and expense (primarily foreign exchange gain (loss)), net, the tax effect of the above adjustments to net income, non?recurring income tax expense and benefit, and loss from investment accounted for using the equity method, net of tax. The tax effect of adjustments to net income is based on the estimated marginal effective tax rates in the jurisdictions impacted by such adjustments; * Adjusted Net Income per diluted share is determined by dividing adjusted net income by the weighted average diluted shares outstanding; * Adjusted EBITDA is defined as net income adjusted for interest expense, net, provision for income taxes, depreciation and amortization, equity?based compensation, acquisition expenses, realignment expenses, expenses associated with IPO, other non?operating income and expense (primarily foreign exchange gain (loss)), net, and loss from investment accounted for using the equity method, net of tax; * Adjusted EBITDA margin is determined by dividing Adjusted EBITDA by total revenues.

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.

BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIESConsolidated Balance Sheets(in thousands, except share and per share data)(unaudited)

September 30, December 31,

2020 2019

Assets

Current assets:

Cash and cash equivalents $ 137,598 $ 121,101

Accounts receivable 172,600 211,775

Allowance for doubtful accounts (6,492 ) (7,274 )

Prepaid income taxes 7,307 4,543

Prepaid and other current assets 27,897 23,413

Total current assets 338,910 353,558

Property and equipment, net 29,332 29,632

Operating lease right-of-use assets 46,006 -

Intangible assets, net 46,560 46,313

Goodwill 542,239 480,065

Investments 5,218 1,725

Deferred income taxes 44,543 51,068

Other assets 37,689 32,238

Total assets $ 1,090,497 $ 994,599

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable $ 15,086 $ 17,669

Accruals and other current liabilities 212,866 167,517

Deferred revenues 173,578 204,991

Operating lease liabilities 15,629 -

Income taxes payable 5,100 2,236

Total current liabilities 422,259 392,413

Long-term debt 589,583 233,750

Long-term operating lease liabilities 32,555 -

Deferred revenues 6,322 8,154

Deferred income taxes 9,502 8,260

Income taxes payable 7,874 8,140

Other liabilities 15,229 9,263

Total liabilities 1,083,324 659,980

Stockholders' equity:

Common stock 2,622 2,548

Additional paid-in capital 441,723 408,667

Accumulated other comprehensive loss (29,211 ) (23,927 )

Accumulated deficit (407,961 ) (52,669 )

Total stockholders' equity 7,173 334,619

Total liabilities and stockholders' equity $ 1,090,497 $ 994,599

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,

2020

2019

2020

2019

Revenues:

Subscriptions$

173,174

$

155,191

$

501,011

$

445,338

Perpetual licenses

12,827

13,787

36,020

38,255

Subscriptions and licenses186,001

168,978

537,031

483,593

Services

16,996

17,610

44,946

50,139

Total revenues202,997

186,588

581,977

533,732

Cost of revenues:

Cost of subscriptions and licenses23,338

17,370

66,466

48,201

Cost of services

19,290

17,681

50,126

56,048

Total cost of revenues42,628

35,051

116,592

104,249

Gross profit

160,369

151,537

465,385

429,483

Operating expenses:

Research and development

50,217

44,756

139,570

136,617

Selling and marketing41,824

36,721

107,551

111,889

General and administrative

33,006

25,108

85,275

71,415

Amortization of purchased intangibles3,869

3,550

10,984

10,402

Expenses associated with initial public offering

26,130

-

26,130

-

Total operating expenses155,046

110,135

369,510

330,323

Income from operations

5,323

41,402

95,875

99,160

Interest expense, net

(1,934

)

(2,029

)

(4,450

)

(6,503

)

Other income (expense), net

13,741

(12,306

)

6,756

(14,053

)

Income before income taxes17,130

27,067

98,181

78,604

Provision for income taxes

(10,705

)

(6,640

)

(22,145

)

(11,759

)

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

(581

)

-

(1,447

)

-

Net income

5,844

20,427

74,589

66,845

Less: Net income attributable to participating securities

(4

)

(10

)

(4

)

(10

)

Net income attributable to Class A and Class B common stockholders

$

5,840

$

20,417

$

74,585

$

66,835

Per share information:

Net income per share, basic

$

0.02

$

0.07

$

0.26

$

0.23

Net income per share, diluted$

0.02

$

0.07

$

0.25

$

0.23

Weighted average shares outstanding, basic

289,318,391

286,075,323

287,063,892

286,024,263

Weighted average shares outstanding, diluted299,634,961

289,629,555

297,251,349

294,586,354

BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIESConsolidated Statements of Operations(in thousands, except share and per share data)(unaudited)

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Revenues:

Subscriptions $ 173,174 $ 155,191 $ 501,011 $ 445,338

Perpetual 12,827 13,787 36,020 38,255 licenses

Subscriptions 186,001 168,978 537,031 483,593 and licensesServices 16,996 17,610 44,946 50,139

Total revenues 202,997 186,588 581,977 533,732

Cost of revenues:

Cost of 23,338 17,370 66,466 48,201 subscriptionsand licensesCost of 19,290 17,681 50,126 56,048 services

Total cost of 42,628 35,051 116,592 104,249 revenuesGross profit 160,369 151,537 465,385 429,483

Operatingexpenses:

Research and 50,217 44,756 139,570 136,617 development

Selling and 41,824 36,721 107,551 111,889 marketingGeneral and 33,006 25,108 85,275 71,415 administrative

Amortization of 3,869 3,550 10,984 10,402 purchasedintangiblesExpensesassociated with 26,130 - 26,130 - initial publicoffering

Total operating 155,046 110,135 369,510 330,323 expensesIncome from 5,323 41,402 95,875 99,160 operations

Interest (1,934 ) (2,029 ) (4,450 ) (6,503 )expense, net

Other income 13,741 (12,306 ) 6,756 (14,053 )(expense), net

Income before 17,130 27,067 98,181 78,604 income taxesProvision for (10,705 ) (6,640 ) (22,145 ) (11,759 )income taxes

Loss frominvestmentaccounted for (581 ) - (1,447 ) - using theequity method,net of tax

Net income 5,844 20,427 74,589 66,845

Less: Netincomeattributable to (4 ) (10 ) (4 ) (10 )participatingsecurities

Net incomeattributable toClass A and $ 5,840 $ 20,417 $ 74,585 $ 66,835 Class B commonstockholders

Per shareinformation:

Net income per $ 0.02 $ 0.07 $ 0.26 $ 0.23 share, basic

Net income per $ 0.02 $ 0.07 $ 0.25 $ 0.23 share, dilutedWeightedaverage shares 289,318,391 286,075,323 287,063,892 286,024,263 outstanding,basic

Weightedaverage shares 299,634,961 289,629,555 297,251,349 294,586,354 outstanding,dilutedBENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIES Consolidated Statements of Cash Flows (in thousands) (unaudited)

Nine Months Ended

September 30,

2020

2019

Cash flows from operating activities:

Net income

$

74,589

$

66,845

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

Depreciation and amortization

25,836

23,334

Provision for accounts receivable allowance

(541

)

2,109

Deferred income taxes

7,853

833

Deferred compensation plan activity

2,487

2,968

Stock-based compensation expense

23,617

6,046

Amortization of deferred debt issuance costs

430

415

Change in fair value of derivative

3,365

159

Change in fair value of contingent consideration

(1,340

)

62

Foreign currency remeasurement (gain) loss

(9,067

)

13,956

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

1,447

-

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

Accounts receivable

46,661

40,847

Prepaid and other assets

8,907

(6,505

)

Accounts payable, accruals and other liabilities

31,486

18,545

Deferred revenues

(35,134

)

(39,655

)

Income taxes payable

(4,571

)

(11,710

)

Net cash provided by operating activities

176,025

118,249

Cash flows from investing activities:

Purchases of property and equipment and investment in capitalized software

(12,805

)

(11,622

)

Capitalization of costs to translate software products into foreign languages

(728

)

(553

)

Acquisitions, net of cash acquired of $2,064 and $980, respectively

(68,920

)

(9,662

)

Other investing activities

(6,355

)

-

Net cash used in investing activities

(88,808

)

(21,837

)

Cash flows from financing activities:

Proceeds from credit facilities

432,375

136,750

Payments of credit facilities

(201,125

)

(147,500

)

Proceeds from term loan

125,000

-

Payments of debt issuance costs

(432

)

-

Payments of financing leases

(141

)

-

Payments of acquisition debt and other consideration

(2,034

)

(9,878

)

Payments of dividends

(412,852

)

(18,830

)

Payments for shares acquired including shares withheld for taxes

(72,476

)

(18,417

)

Proceeds from Common Stock Purchase Agreement

58,349

4,510

Net proceeds from exercise of common stock options and restricted stock

3,206

3,039

Net cash used in financing activities

(70,130

)

(50,326

)

Effect of exchange rate changes on cash and cash equivalents

(590

)

(1,272

)

Increase in cash and cash equivalents

16,497

44,814

Cash and cash equivalents, beginning of year

121,101

81,183

Cash and cash equivalents, end of period

$

137,598

$

125,997

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

Nine Months Ended

September 30,

2020 2019

Cash flows from operating activities:

Net income $ 74,589 $ 66,845

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

Depreciation and amortization 25,836 23,334

Provision for accounts receivable allowance (541 ) 2,109

Deferred income taxes 7,853 833

Deferred compensation plan activity 2,487 2,968

Stock-based compensation expense 23,617 6,046

Amortization of deferred debt issuance costs 430 415

Change in fair value of derivative 3,365 159

Change in fair value of contingent consideration (1,340 ) 62

Foreign currency remeasurement (gain) loss (9,067 ) 13,956

Loss from investment accounted for using the equity 1,447 - method, net of tax

Changes in assets and liabilities, net of effectfrom acquisitions:

Accounts receivable 46,661 40,847

Prepaid and other assets 8,907 (6,505 )

Accounts payable, accruals and other liabilities 31,486 18,545

Deferred revenues (35,134 ) (39,655 )

Income taxes payable (4,571 ) (11,710 )

Net cash provided by operating activities 176,025 118,249

Cash flows from investing activities:

Purchases of property and equipment and investment (12,805 ) (11,622 )in capitalized software

Capitalization of costs to translate software (728 ) (553 )products into foreign languages

Acquisitions, net of cash acquired of $2,064 and (68,920 ) (9,662 )$980, respectively

Other investing activities (6,355 ) -

Net cash used in investing activities (88,808 ) (21,837 )

Cash flows from financing activities:

Proceeds from credit facilities 432,375 136,750

Payments of credit facilities (201,125 ) (147,500 )

Proceeds from term loan 125,000 -

Payments of debt issuance costs (432 ) -

Payments of financing leases (141 ) -

Payments of acquisition debt and other (2,034 ) (9,878 )consideration

Payments of dividends (412,852 ) (18,830 )

Payments for shares acquired including shares (72,476 ) (18,417 )withheld for taxes

Proceeds from Common Stock Purchase Agreement 58,349 4,510

Net proceeds from exercise of common stock options 3,206 3,039 and restricted stock

Net cash used in financing activities (70,130 ) (50,326 )

Effect of exchange rate changes on cash and cash (590 ) (1,272 )equivalents

Increase in cash and cash equivalents 16,497 44,814

Cash and cash equivalents, beginning of year 121,101 81,183

Cash and cash equivalents, end of period $ 137,598 $ 125,997

BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIES Reconciliation of GAAP to Non-GAAP Measures For the Three and Nine Months Ended September 30, 2020 and 2019 (in thousands) (unaudited)

Reconciliation of net income to Adjusted EBITDA:

Three Months Ended

Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

Net income

$

5,844

$

20,427

$

74,589

$

66,845

Interest expense, net

1,934

2,029

4,450

6,503

Provision for income taxes

10,705

6,640

22,145

11,759

Depreciation and amortization

9,172

7,968

25,836

23,334

Equity-based compensation

19,548

2,026

22,760

6,051

Acquisition expenses

3,489

1,425

8,498

4,103

Realignment expenses

9,943

(49

)

10,012

(492

)

Expenses associated with IPO

26,130

-

26,130

-

Other (income) expense, net

(13,741

)

12,306

(6,756

)

14,053

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

581

-

1,447

-

Adjusted EBITDA

$

73,605

$

52,772

$

189,111

$

132,156

BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIESReconciliation of GAAP to Non-GAAP MeasuresFor the Three and Nine Months Ended September 30, 2020 and 2019(in thousands)(unaudited)

Reconciliation of net income to Adjusted EBITDA:

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Net income $ 5,844 $ 20,427 $ 74,589 $ 66,845

Interest expense, net 1,934 2,029 4,450 6,503

Provision for income taxes 10,705 6,640 22,145 11,759

Depreciation and 9,172 7,968 25,836 23,334 amortization

Equity-based compensation 19,548 2,026 22,760 6,051

Acquisition expenses 3,489 1,425 8,498 4,103

Realignment expenses 9,943 (49 ) 10,012 (492 )

Expenses associated with 26,130 - 26,130 - IPO

Other (income) expense, net (13,741 ) 12,306 (6,756 ) 14,053

Loss from investmentaccounted for using the 581 - 1,447 - equity method, net of tax

Adjusted EBITDA $ 73,605 $ 52,772 $ 189,111 $ 132,156

Reconciliation of net income to Adjusted Net Income:

Three Months Ended

Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

Net income

$

5,844

$

20,427

$

74,589

$

66,845

Non-GAAP adjustments, prior to income taxes:

Amortization of purchased intangibles and developed technologies

5,236

4,638

14,694

13,699

Equity-based compensation

19,548

2,026

22,760

6,051

Acquisition expenses

3,489

1,425

8,498

4,103

Realignment expenses

9,943

(49

)

10,012

(492

)

Expenses associated with IPO

26,130

-

26,130

-

Other (income) expense, net

(13,741

)

12,306

(6,756

)

14,053

Total non-GAAP adjustments, prior to income taxes

50,605

20,346

75,338

37,414

Income tax effect of non-GAAP adjustments

(5,644

)

(1,473

)

(10,785

)

(4,981

)

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

581

-

1,447

-

Adjusted Net Income

$

51,386

$

39,300

$

140,589

$

99,278

Reconciliation of net income to Adjusted Net Income:

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Net income $ 5,844 $ 20,427 $ 74,589 $ 66,845

Non-GAAP adjustments, prior to income taxes:

Amortization of purchasedintangibles and developed 5,236 4,638 14,694 13,699 technologies

Equity-based compensation 19,548 2,026 22,760 6,051

Acquisition expenses 3,489 1,425 8,498 4,103

Realignment expenses 9,943 (49 ) 10,012 (492 )

Expenses associated with 26,130 - 26,130 - IPO

Other (income) expense, (13,741 ) 12,306 (6,756 ) 14,053 net

Total non-GAAPadjustments, prior to 50,605 20,346 75,338 37,414 income taxes

Income tax effect of (5,644 ) (1,473 ) (10,785 ) (4,981 )non-GAAP adjustments

Loss from investmentaccounted for using the 581 - 1,447 - equity method, net of tax

Adjusted Net Income $ 51,386 $ 39,300 $ 140,589 $ 99,278

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,

2020

2019

2020

2019

Cost of subscriptions and licenses

$

23,338

$

17,370

$

66,466

$

48,201

Amortization of purchased intangibles and developed technologies

(1,367

)

(1,088

)

(3,710

)

(3,297

)

Equity-based compensation

(861

)

(27

)

(908

)

(60

)

Realignment expenses

(50

)

-

(50

)

51

Adjusted cost of subscriptions and licenses

$

21,060

$

16,255

$

61,798

$

44,895

Cost of services

$

19,290

$

17,681

$

50,126

$

56,048

Equity-based compensation

(2,526

)

(84

)

(2,701

)

(363

)

Acquisition expenses

(615

)

-

(1,050

)

-

Realignment expenses

(1,548

)

12

(1,548

)

185

Adjusted cost of services

$

14,602

$

17,609

$

44,827

$

55,870

Research and development

$

50,217

$

44,756

$

139,570

$

136,617

Equity-based compensation

(6,661

)

(749

)

(7,817

)

(2,306

)

Acquisition expenses

(1,969

)

(1,129

)

(5,113

)

(3,083

)

Realignment expenses

(841

)

37

(910

)

79

Adjusted research and development

$

40,746

$

42,915

$

125,731

$

131,308

Selling and marketing

$

41,824

$

36,721

$

107,551

$

111,889

Equity-based compensation

(4,803

)

(632

)

(5,607

)

(1,757

)

Acquisition expenses

(86

)

(61

)

(243

)

(164

)

Realignment expenses

(5,183

)

-

(5,183

)

263

Adjusted selling and marketing

$

31,752

$

36,027

$

96,518

$

110,231

General and administrative

$

33,006

$

25,108

$

85,275

$

71,415

Equity-based compensation

(4,696

)

(535

)

(5,726

)

(1,565

)

Acquisition expenses

(532

)

(199

)

(1,611

)

(546

)

Realignment expenses

(2,321

)

-

(2,321

)

(86

)

Adjusted general and administrative

$

25,456

$

24,374

$

75,617

$

69,217

Income from operations

$

5,323

$

41,402

$

95,875

$

99,160

Amortization of purchased intangibles and developed technologies

5,236

4,638

14,694

13,699

Equity-based compensation

19,548

2,026

22,760

6,051

Acquisition expenses

3,489

1,425

8,498

4,103

Realignment expenses

9,943

(49

)

10,012

(492

)

Expenses associated with IPO

26,130

-

26,130

-

Adjusted income from operations

$

69,669

$

49,443

$

177,968

$

122,520

View source version on businesswire.com: https://www.businesswire.com/news/home/20201110005412/en/

CONTACT: Investor Contact: Ankit Hira or Ed Yuen Solebury Trout for Bentley Systems ir@bentley.com 1-610-458-2777

CONTACT: Media Contact: Carey Mann carey.mann@bentley.com 1-610-458-3170