Bentley surpasses $700 million

[Note: I’m traveling and so wrote this based on advance materials provided by Bentley. They are hosting a conference call today and I’ll update, if warranted, when I can listen to the replay. The report I reference is now available for you to download. Go to Bentley’s website, here , scroll to the bottom of the page and, under the “Publications” heading, click on the link to the Advancements Update. It will automatically download.]

Bentley is an unusual company: privately-held, yet with partial ownership by Siemens, a publicly-traded company. Acquisitive, yet secretive about the prices it pays. Subscription-based long before that was fashionable. Active in a boatload of end-industries (including marine, get it??), with both standard and open-source solutions. Innovative commercial options that serve up a menu of application choices.

That results in a lot of moving parts. Once a year, right about now, Bentley offers an update on the business, major market trends and its direction. So, what did they say about 2018?

• Bentley’s annual revenue run-rate surpassed $700 million in 2018. Revenue is the money earned by sales of software and services; run-rate takes a period (say a quarter) and multiplies that out (say by 4) to get to an annual total. For comparison, in the company’s 2015’s Annual Report Bentley said it had revenue in 2014 of $625 million, when the US Dollar was weak — that complicates the comparison to 2018’s run-rate, which was likely calculated to dampen the effect of currency fluctuations
• Organic revenue grew 6.5% in constant currencies in 2018 — that’s pretty good when we consider that much of Bentley’s revenue (though not all) comes from subscriptions
• Looked at another way, the constant currency revenue run-rate had a compound annual growth rate of 7.2% between 2103 and 2018. Last year, Bentley said that its average annual growth rate was 7.5% for the years from 2013 to 2017, so this seems to be on par with prior years
• By geo, 47.5% of revenue came from the Americas, 33.5% from EMEA and 19% from Asia. That’s pretty much the same as last year
• The company made 7 acquisitions in 2018, all of which were funded by cash from operations
• 83% of the annual revenue run-rate is recurring revenue, same as last year. That means that the vast majority of revenue is locked in before a year even starts and it also means that rocket-pace growth is extremely hard to create
• 98% of subscriptions were renewed — a measure of how happy customers are with Bentley’s offering
• Run-rate growth exceeded 20% in Greater China and also
• Exceeded 20% for AssetWise, ContextCapture, OpenRoads and other brands

Last year, CFO David Hollister told me that Bentley chose these metrics to show that Bentley is “healthy, growing, prudently profitable and well capitalized for growth. We’ve never claimed to be high growth….we are steady growth, predictable, no drama.” That’s certainly true again with this report.

My take? Same as Mr. Hollister but with a slight addition: By being privately-held and choosing what numbers to disclose, Bentley can take a very long view. It doesn’t need to report crazy growth or switch customers to the license flavor-of-the-month. It can dip its toes into open source to how that feels. In other words, it can try things public companies may not be able to.

Do I know what Bentley’s revenue was in 2018? No. But I’m pretty sure that Siemens and other shareholders do know and I’ve heard nothing to indicate that they’re at all unhappy about Bentley’s revenue, profitability and other metrics. Siemens, in fact, just gushed about Bentley at its investor event last week; had there been agita, I think we would have noticed.

It seems, as last year, that the company is growing revenue, keeping customers and shareholders happy, continuing to expand its product line and into key geos, all without destabilizing a good thing.

More if warranted, after I listen to the call replay.