Business Wire | Nov 9, 2021 07:02AM EST

Bentley Systems Announces Operating Results for the Third Quarter of 2021

Nov. 09, 2021

EXTON, Pa.--(BUSINESS WIRE)--Nov. 09, 2021--Bentley Systems, Incorporated (Nasdaq:BSY) ("Bentley Systems" or the "Company"), the infrastructure engineering software company, today announced operating results for its third quarter and nine months ended September 30, 2021.

Third Quarter 2021 Financial Results:

* GAAP total revenues were $248.5 million, and adjusted total revenues were $251.4 million, up 23.7% year-over-year; * GAAP subscriptions revenues were $212.2 million, and adjusted subscriptions revenues were $215.1 million, up 24.0% year-over-year; * Last twelve-month recurring revenues were $786.1 million, up 15.1% year-over-year; * Last twelve-month recurring revenues dollar-based net retention rate was 106% (calculated under Topic 606), compared to 110% (calculated under Topic 605) for the same period last year; * Last twelve-month account retention rate was 98% (calculated under Topic 606), compared to 98% (calculated under Topic 605) for the same period last year; * Annualized Recurring Revenue ("ARR") was $903.8 million as of September 30, 2021, representing a constant currency ARR growth rate of 26% from September 30, 2020; * GAAP operating loss was $40.4 million, compared to GAAP operating income of $5.3 million for the same period last year. The third quarter of 2021 GAAP operating loss was due to a one-time compensation charge of $90.7 million resulting from a modification of our deferred compensation plan; * GAAP net loss was $50.1 million, compared to GAAP net income of $5.8 million for the same period last year. GAAP net loss per diluted share was $0.16, compared to GAAP net income per diluted share of $0.02 for the same period last year. The third quarter of 2021 GAAP net loss was due to a one-time compensation charge of $83.4 million, net of tax, resulting from a modification of our deferred compensation plan; * Adjusted Net Income was $56.3 million, compared to $51.4 million for the same period last year. Adjusted Net Income per diluted share was $0.17 compared to $0.17 for the same period last year; * Adjusted EBITDA was $84.5 million, compared to $73.7 million for the same period last year. Adjusted EBITDA margin was 33.6%, compared to 36.2% for the same period last year; * Cash flow from operations was $58.4 million, compared to $39.8 million for the same period last year.

Nine Months Ended September 30, 2021 Financial Results:

* GAAP total revenues were $693.4 million, and adjusted total revenues were $697.3 million, up 19.7% year-over-year; * GAAP subscriptions revenues were $585.8 million, and adjusted subscriptions revenues were $589.7 million, up 17.6% year-over-year; * GAAP operating income was $47.4 million, compared to $95.9 million for the same period last year. The nine months ended September 30, 2021 GAAP operating income includes a one-time compensation charge of $90.7 million resulting from a modification of our deferred compensation plan; * GAAP net income was $51.8 million, compared to $74.6 million for the same period last year. GAAP net income per diluted share was $0.16, compared to $0.25 for the same period last year. The nine months ended September 30, 2021 GAAP net income includes a one-time compensation charge of $83.4 million, net of tax, resulting from a modification of our deferred compensation plan; * Adjusted Net Income was $195.0 million, compared to $140.5 million for the same period last year. Adjusted Net Income per diluted share was $0.62 compared to $0.47 for the same period last year; * Adjusted EBITDA was $236.8 million, compared to $189.0 million for the same period last year. Adjusted EBITDA margin was 34.0%, compared to 32.4% for the same period last year; * Cash flow from operations was $207.4 million, compared to $176.0 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 the most comparable GAAP financial measures are included below under the heading "Use and Reconciliation of Non-GAAP Financial Measures."

"Our third-quarter operating results continued to track consistently with last quarter's qualitative observations and with the expectations for full-year 2021 presented then. Significantly, BSY's investments since 2020 in our new User Success organization (now numbering about 600 colleagues) and in our Virtuosity inside-sales group (now over 200 colleagues focused on SMB new business), seem to have served effectively to strengthen our underlying growth rate of business performance. While the industrial / resources 'CAPEX' downturn remains an enduring headwind globally, we do begin to discern new business improvement, presumably due to an energy price rebound, in regions dependent on such revenue sources," said CEO Greg Bentley.

"With infrastructure spending increases anticipated, including pursuant to legislation finally advancing in the U.S., public works / utility sector, participants everywhere are fully anticipating hiring challenges and are acknowledging that going digital is ever more necessary to sustain growth, and infrastructure resilience and adaptation. The executive promotions that BSY has announced today, along with a carefully considered change to our deferred compensation plan for certain key executives of long standing, reflect our own prioritization of top talent retention and development," he concluded.

Third Quarter 2021 Financial Developments:

In August 2021, our Board of Directors approved an amendment to our unfunded Nonqualified Deferred Compensation Plan (the "DCP"), which offered to certain active executives in the DCP a one-time, short-term election to reallocate a limited portion of their DCP holdings from phantom shares of the Company's Class B Common Stock into other DCP phantom investment funds. This one-time reallocation opportunity was offered only to certain active executives (but not to Directors or Bentley family members) in order to encourage retention, as otherwise these executives could only have materially diversified their investments in Company equity (primarily held in the DCP) by voluntarily terminating employment to trigger DCP distributions. These executives in aggregate accordingly diversified 24% of their phantom shares of the Company's Class B Common Stock. This resulted in a reduction of 1,500,000 shares in both the basic and diluted count of Company shares.

While DCP participants' investments in phantom shares remain equity classified, as they will be settled in shares of Class B Common Stock upon eventual distribution, the amendment and elections resulted in a change to liability classification for the reallocated phantom investments, as they will be settled in cash upon eventual distribution. As a result, during the three and nine months ended September 30, 2021, the Company recognized a one-time compensation charge of $90.7 million to Deferred compensation plan expenses in the consolidated statements of operations and reclassified cumulative compensation cost of $4.7 million from Additional paid-in capital to Accruals and other current liabilities or Deferred compensation plan liabilities in the consolidated balance sheet to record the reallocated deferred compensation plan liabilities at their fair value of $95.5 million.

Subsequent to the one-time reallocation, these diversified deferred compensation plan liabilities will be marked to market at the end of each reporting period, with changes in the liabilities recorded as an expense (income) to Deferred compensation plan in the consolidated statements of operations.

Operating Results Call Details

Bentley Systems will host a live Zoom video webinar on November 9, 2021 at 8:15 a.m. EST to discuss operating results for its third quarter and nine months ended September 30, 2021.

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_m9k8Z07RTJGKt7iv-maurQ. Alternatively, the event can be accessed from the Events & Presentations page on Bentley Systems' Investor Relations website at https://investors.bentley.com. In addition, a replay and transcript will be available after the conclusion of the live event on Bentley Systems' Investor Relations website for one year.

Definitions of Certain Key Business Metrics

Definitions of the non-GAAP financial measures used in this operating results press 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, 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 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. Prior to the year ended December 31, 2020, the recurring revenues dollar-based net retention rate was calculated using revenues recognized pursuant to Topic 605 for all periods in order to enhance comparability during our transition to Topic 606 as we did not have all information that was necessary to calculate account retention rate pursuant to Topic 606 for earlier periods. * 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. Prior to the year ended December 31, 2020, the account retention rate was calculated using revenues recognized pursuant to Topic 605 for all periods in order to enhance comparability during our transition to Topic 606 as we did not have all information that was necessary to calculate account retention rate pursuant to Topic 606 for earlier periods. * 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 total revenues, adjusted subscriptions revenues, 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. 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 and prospects 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 United States Securities and Exchange Commission.

We calculate these non-GAAP financial measures as follows:

* Adjusted total revenues is determined by adding back to GAAP total revenues the fair value adjustment of acquired deferred revenues for the respective periods; * Adjusted subscriptions revenues is determined by adding back to GAAP subscriptions revenues the fair value adjustment of acquired deferred revenues for the respective periods; * 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, stock-based compensation, and realignment expenses, for the respective periods; * Adjusted cost of services is determined by adding back to GAAP cost of services, stock-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, stock-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, stock-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, stock-based compensation, acquisition expenses, and realignment expenses, for the respective periods; * Adjusted income from operations is determined by adding back to GAAP operating (loss) income, amortization of purchased intangibles and developed technologies, stock-based compensation, expense (income) relating to deferred compensation plan liabilities, acquisition expenses, realignment expenses, and expenses associated with initial public offering ("IPO") for the respective periods; * Adjusted Net Income is defined as net (loss) income adjusted for the following: amortization of purchased intangibles and developed technologies, stock-based compensation, expense (income) relating to deferred compensation plan liabilities, acquisition expenses, realignment expenses, expenses associated with IPO, other non-operating (income) expense, net, the tax effect of the above adjustments to net (loss) income, and (income) loss from investment accounted for using the equity method, net of tax. The tax effect of adjustments to net (loss) 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; * Adjusted EBITDA is defined as net (loss) income adjusted for interest expense, net, provision (benefit) for income taxes, depreciation and amortization, stock-based compensation, expense (income) relating to deferred compensation plan liabilities, acquisition expenses, realignment expenses, expenses associated with IPO, other non-operating (income) expense, net, and (income) loss from investment accounted for using the equity method, net of tax; * Adjusted EBITDA margin is determined by dividing Adjusted EBITDA by adjusted 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. 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

(c) 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, December 31, 2021 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' $ 2,454,083 $ 1,126,035 equity

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 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 11,866 12,827 33,373 36,020 licenses

Subscriptions 224,093 186,001 619,177 537,031 and licenses

Services 24,387 16,996 74,239 44,946

Total revenues 248,480 202,997 693,416 581,977

Cost of revenues:

Cost ofsubscriptions 31,056 23,338 89,882 66,466 and licenses

Cost of 23,176 19,290 67,090 50,126 services

Total cost of 54,232 42,628 156,972 116,592 revenues

Gross profit 194,248 160,369 536,444 465,385

Operatingexpense (income):

Research and 57,334 50,217 157,913 139,570 development

Selling and 44,392 41,824 114,846 107,551 marketing

General and 35,329 32,956 110,233 85,390 administrative

Deferredcompensation 88,965 50 89,327 (115 )plan

Amortization ofpurchased 8,676 3,869 16,703 10,984 intangibles

Expensesassociated with - 26,130 - 26,130 initial public offering

Total operating 234,696 155,046 489,022 369,510 expenses

(Loss) income (40,448 ) 5,323 47,422 95,875 from operations

Interest (3,836 ) (1,934 ) (8,608 ) (4,450 )expense, net

Other (expense) (957 ) 13,741 9,748 6,756 income, net

(Loss) incomebefore income (45,241 ) 17,130 48,562 98,181 taxes

(Provision)benefit for (4,223 ) (10,705 ) 6,165 (22,145 )income taxes

Loss frominvestmentaccounted for (664 ) (581 ) (2,939 ) (1,447 )using the equity method,net of tax

Net (loss) (50,128 ) 5,844 51,788 74,589 income

Less: Net(loss) incomeattributable to (3 ) (4 ) (6 ) (4 )participatingsecurities

Net (loss)incomeattributable to $ (50,131 ) $ 5,840 $ 51,782 $ 74,585 Class A and Class B commonstockholders

Per share information:

Net (loss)income per $ (0.16 ) $ 0.02 $ 0.17 $ 0.26 share, basic

Net (loss)income per $ (0.16 ) $ 0.02 $ 0.16 $ 0.25 share, diluted

Weightedaverage shares, 308,195,379 289,318,391 305,119,985 287,063,892 basic

Weightedaverage shares, 308,195,379 299,634,961 314,658,136 297,251,349 diluted

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

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 4,160 430 costs

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 2,939 1,447 method, net of tax

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 (11,152 ) (13,533 )in capitalized software

Acquisitions, net of cash acquired of $37,837 and (1,033,695 ) (68,920 )$2,064, respectively

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 1,233,377 - discounts and commissions

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 (111,306 ) (72,476 )withheld for taxes

Proceeds from Common Stock Purchase Agreement - 58,349

Proceeds from stock purchases under employee stock 3,846 - purchase plan

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 4,530 (590 )equivalents

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

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 4,223 10,705 (6,165 ) 22,145 income taxes

Depreciation and 16,666 9,172 35,946 25,836 amortization

Stock-based compensation 11,588 19,548 32,186 22,760

Deferred compensation 88,965 50 89,327 (115 )plan

Acquisition expenses 7,697 3,489 31,897 8,498

Realignment expenses - 9,943 - 10,012

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

Other expense (income), 957 (13,741 ) (9,748 ) (6,756 )net

Loss from investmentaccounted for using the 664 581 2,939 1,447 equity method, net of tax

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 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 ofpurchased intangibles 11,539 5,236 22,003 14,694 and developed technologies

Stock-based compensation 11,588 19,548 32,186 22,760

Deferred compensation 88,965 50 89,327 (115 )plan

Acquisition expenses 7,697 3,489 31,897 8,498

Realignment expenses - 9,943 - 10,012

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

Other expense (income), 957 (13,741 ) (9,748 ) (6,756 )net

Total non-GAAPadjustments, prior to 120,746 50,655 165,665 75,223 income taxes

Income tax effect of (14,993 ) (5,656 ) (25,421 ) (10,757 )non-GAAP adjustments

Loss from investmentaccounted for using the 664 581 2,939 1,447 equity method, net of tax

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

Reconciliation of GAAP Financial Statement Line Items to Non-GAAP AdjustedFinancial 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 adjustmentof acquired deferred 2,914 288 3,924 483 revenues

Adjusted total revenues $ 251,394 $ 203,285 $ 697,340 $ 582,460



Subscriptions revenues $ 212,227 $ 173,174 $ 585,804 $ 501,011

Fair value adjustmentof acquired deferred 2,914 288 3,924 483 revenues

Adjusted subscriptions $ 215,141 $ 173,462 $ 589,728 $ 501,494 revenues



Cost of subscriptions $ 31,056 $ 23,338 $ 89,882 $ 66,466 and licenses

Amortization ofpurchased intangibles (2,863 ) (1,367 ) (5,300 ) (3,710 )and developed technologies

Stock-based (320 ) (861 ) (809 ) (908 )compensation

Acquisition expenses (7 ) - (7 ) -

Realignment expenses - (50 ) - (50 )

Adjusted cost ofsubscriptions and $ 27,866 $ 21,060 $ 83,766 $ 61,798 licenses



Cost of services $ 23,176 $ 19,290 $ 67,090 $ 50,126

Stock-based (227 ) (2,526 ) (615 ) (2,701 )compensation

Acquisition expenses (1,835 ) (614 ) (4,380 ) (1,050 )

Realignment expenses - (1,548 ) - (1,548 )

Adjusted cost of $ 21,114 $ 14,602 $ 62,095 $ 44,827 services



Research and $ 57,334 $ 50,217 $ 157,913 $ 139,570 development

Stock-based (5,178 ) (6,661 ) (13,893 ) (7,817 )compensation

Acquisition expenses (1,537 ) (1,969 ) (4,882 ) (5,112 )

Realignment expenses - (841 ) - (910 )

Adjusted research and $ 50,619 $ 40,746 $ 139,138 $ 125,731 development



Selling and marketing $ 44,392 $ 41,824 $ 114,846 $ 107,551

Stock-based (1,481 ) (4,803 ) (3,484 ) (5,607 )compensation

Acquisition expenses (421 ) (86 ) (603 ) (243 )

Realignment expenses - (5,183 ) - (5,183 )

Adjusted selling and $ 42,490 $ 31,752 $ 110,759 $ 96,518 marketing



General and $ 35,329 $ 32,956 $ 110,233 $ 85,390 administrative

Stock-based (4,382 ) (4,697 ) (13,385 ) (5,727 )compensation

Acquisition expenses (983 ) (532 ) (18,101 ) (1,610 )

Realignment expenses - (2,321 ) - (2,321 )

Adjusted general and $ 29,964 $ 25,406 $ 78,747 $ 75,732 administrative

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

View source version on businesswire.com: https://www.businesswire.com/news/home/20211109005628/en/

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

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