EXTON, Pa.–(BUSINESS WIRE)–Bentley Systems, Incorporated (Nasdaq: BSY) (“Bentley Systems” or the “Company”), the infrastructure engineering software company, today announced operating results for its second quarter and six months ended June 30, 2021.
Second Quarter 2021 Financial Results:
Total revenues were $222.9 million, up 21.0% year-over-year; Subscriptions revenues were $185.5 million, up 17.6% year-over-year; Last twelve-month recurring revenues were $746.2 million, up 12.1% 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 $882.4 million as of June 30, 2021, representing a constant currency ARR growth rate of 23% from June 30, 2020; GAAP operating income was $32.2 million, compared to $44.6 million for the same period last year; GAAP net income was $44.9 million, compared to $39.1 million for the same period last year. GAAP net income per diluted share was $0.14, compared to $0.13 for the same period last year; Adjusted Net Income was $74.3 million, compared to $46.0 million for the same period last year. Adjusted Net Income per diluted share was $0.23 compared to $0.16 for the same period last year; Adjusted EBITDA was $69.1 million, compared to $57.6 million for the same period last year. Adjusted EBITDA margin was 30.9%, compared to 31.2% for the same period last year; Cash flow from operations was $16.2 million, compared to $63.6 million for the same period last year. Six Months Ended June 30, 2021 Financial Results:
Total revenues were $444.9 million, up 17.4% year-over-year; Subscriptions revenues were $373.6 million, up 14.0% year-over-year; GAAP operating income was $87.9 million, compared to $90.6 million for the same period last year; GAAP net income was $101.9 million, compared to $68.7 million for the same period last year. GAAP net income per diluted share was $0.32, compared to $0.23 for the same period last year; Adjusted Net Income was $138.3 million, compared to $89.2 million for the same period last year. Adjusted Net Income per diluted share was $0.43 compared to $0.30 for the same period last year; Adjusted EBITDA was $151.9 million, compared to $115.5 million for the same period last year. Adjusted EBITDA margin was 34.1%, compared to 30.5% for the same period last year; Cash flow from operations was $149.0 million, compared to $136.2 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.”
CEO Greg Bentley said, “Amidst the fits and starts which characterize the global resumption of growth for infrastructure engineering in 2021, going digital has remained an overarching priority that continues to benefit our software users, infrastructure projects and assets, and our operating results. A highlight for us this quarter has been the inclusion of Seequent, and subsurface digital twins, into our company and into our new financial outlook. Somewhat restrained favorable directions continue in the preponderance of our business, with usage growth beyond the pre-pandemic levels of 2019, resulting uptrends in ARR and new business and subscription revenues, and continued upward inflections in SMB subscriptions and resulting business from new accounts. Our growth bottlenecks continue to be ever more localized to industrial and resources ‘capex,’ and to the geographies (especially Middle East and Southeast Asia) most dependent on this sector—with a new concern brought on by unanticipated subscription attrition within mid-size enterprise accounts in greater China, despite an otherwise healthy demand environment in that territory.”
Mr. Bentley continued, “Our updated financial outlook for the full year 2021 contemplates surpassing the milestones of one billion-dollars in revenue (pro forma for the acquisition of Seequent as if it had occurred at the beginning of 2021), double-digit ARR growth even exclusive of Seequent, and, importantly, maintaining our 32% Adjusted EBITDA margin target for 2021 while absorbing at the same time our incremental investments in growth initiatives, our incremental public company operating costs, and our increasing pace of programmatic growth acquisitions, along with the financially material acquisition of Seequent.”
Second Quarter 2021 Financial Developments:
On June 17, 2021, we completed the acquisition of Seequent, a leader in software for geological and geophysical modeling, geotechnical stability, and cloud services for geodata management and collaboration, for $911.0 million in cash, net of cash acquired, plus 3,141,342 shares of our Class B Common Stock. We used readily available cash, including a portion of the net proceeds from the private offering of convertible senior notes due 2026, and borrowings under our Credit Facility to fund the cash component of the transaction. For the six months ended June 30, 2021, we incurred $15.9 million of expenses related to the acquisition of Seequent. For the period from June 17, 2021 through June 30, 2021, Seequent contributed approximately $4.0 million to revenues, $0.5 million to operating income, and $90.6 million to ARR. In June 2021, we completed a private offering of $575.0 million of 0.375% convertible senior notes due 2027 (the “2027 Notes”). We incurred $15.1 million of expenses in connection with the 2027 Notes offering consisting of the payment of initial purchasers’ discounts and commissions, professional fees, and other expenses (“transaction costs”). Transaction costs were recorded as a direct deduction from the related debt liability in the consolidated balance sheet and are amortized to interest expense using the effective interest method over the term of the 2027 Notes. In connection with the pricing of the 2027 Notes, we entered into capped call options with certain of the initial purchasers or their respective affiliates and certain other financial institutions. The capped call options are expected to reduce potential dilution to our Class B Common Stock upon any conversion of 2027 Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted notes, as the case may be, with such reduction and/or offset subject to a cap. We paid premiums of $25.9 million in connection with the capped call options and they have been included as a net reduction to Additional paid-in capital in the consolidated balance sheet. 2021 Financial Outlook:
The Company does not provide quarterly guidance, but we update our full-year financial outlook when announcing quarterly operating results to the extent expectations materially change.
Accordingly, the following update to our outlook for the year ending December 31, 2021, reflects first half performance, current business developments, and notably, the Seequent acquisition. The 2021 guidance herein is premised on COVID-19 pandemic-related business impacts generally abating gradually by year end; however, the ultimate impacts of COVID-19 on our financial outlook remain uncertain.
Initial Outlook
Updated Outlook
Total revenues
$895 – $920 million
$945 – $960 million (1)
Constant currency ARR growth rate
8% – 10%
22% – 24% (2)
Adjusted EBITDA
$285 – $295 million
$305 – $310 million
Effective tax rate
20%