Book review: Bentley Annual Report

Bentley Systems is an unusual company, in that it’s privately held yet gives an annual update on how the business is doing. The company held a conference call last month (blogged about here) and recently published its Annual Report which provides a bit more detail about 2011. Much of the financial stuff was already covered in the conference call, but here’s a quick recap and further detail from the report:

• Bentley Systems’ revenue in 2011 was $523 million, up 10% from 2010 and now ahead of pre-recession levels.
• In the Report, CEO Greg Bentley says 2011 was “a year in which Bentley colleagues and our user communities around the world, indeed, “worked smarter, together,” to the benefit of all. Bentley endeavors to deliver innovative software to uniquely support information modeling through integrated projects for intelligent infrastructure. Throughout 2011 our users took advantage of this to an unprecedented extent, enabling our company to achieve record revenues and to be now positioned with commensurately unprecedented strength, momentum, and enthusiasm for the opportunities ahead.”
• Bentley continues to invest over 20% of revenue in R&D, and in a slightly upward trendline for the last 3 years. in 2011 spend on R&D and acquisitions was about $165 million. Putting those two factoids together leads me to conclude that the company spent roughly $45 million on acquisitions during the year.
• During 2011, the company acquired Pointools and FormSys. U.K.-based Pointools is a hardware-neutral provider of point cloud software — post-processing, manipulation, analysis and so forth. Bentley is betting heavily on point clouds as a fundamental data type, to be leveraged across many of its products and platforms. In the AEC world, point clouds are a huge topic and area of innovation because they truly represent the as-built asset; most CAD models are out-of-date because of the craft labor involved in assembling a plant or building; it’s not nearly as compliant as factory assembly processes. FormSys created Maxsurf for modeling vessels and floating structures, assessing stability and strength, and predicting motions and extends Bentley’s reach in the offshore energy market.
• The elcoSystem line of software was acquired in 2012, but is noted in the Annual Report because it is a fundamental component of Bentley’s Building Electrical Systems and Raceway and Cable Management offerings.
• Bentley also invested in a couple of companies in 2011: TEEC and SITEOPS. In September 2011, Bentley became a minority investor in TEEC, developer of SpecWave, software that enables AEC user to manage engineering specifications, codes and standards. Bentley also became a minority investor in SITEOPS, provider of site design optimization technology via cloud computing. In February 2012, Bentley increased its minority investment in SITEOPS.
• On a geographic basis, revenue from the Americas was 45% of total, or $235 million; from Asia, 19% or $99 million; an from Europe, 36% or $188 million. The company highlighted performance in Asia, where revenue grew roughly 30%. Interestingly, 39% of the company’s largest orders came from Asia, with more than half from China; bentley says its revenue from “Greater China” have doubled in the last two years. In mainland China, 42% of Bentley’s 2011 license sales were to new accounts.
• 72% of the company’s revenue came from subscriptions.

Bentley’s annual report, like more traditional ones, features a lot of customer and product info. One cool thing they’ve done is integrate “snap tags” that can be scanned with a smart phone for access to more information. That’s a great idea, and one other companies should borrow to encourage readers to investigate product-related and other non-financial content. The report doesn’t say anything about 2012, so we’ll look back at the conference call for that: On March 6, Mr. Bentley said that he sees organic growth of about 6% for 2012, which would bring total revenue to about $550 million. Up to that point, Q1 had been stronger than Q1 2011 and Q1 2011, helping to fuel optimism that the “new normal” will continue.