Bentley reports solid, “straightforward” Q2
Many signs are positive for AEC companies right now. Public spending on infrastructure is up, there’s a renewed interest in oil and gas exploration and extraction, and we seem to have figured out how to do business even with shutdowns and sanctions — leading AEC software vendors to report good Q2 results foreshadow optimism for the rest of 2022. Bentley, arguably the most diverse AEC software supplier, is seeing solid traction across its businesses and geos.
- Total revenue was $268 million, up 20% as reported and up 26% in constant currencies (cc). Recall that Bentley has been acquiring companies, some with meaningful revenue; the company doesn’t disclose acquired revenue, but we can expect it to be a pretty big contributor to reported revenue growth. CFO Werner Andre said that the Seequent and Power Line Systems acquisition had “meaningful post-acquisition growth”
- Revenue from subscriptions was $232 million, up 25% (up 31% cc). Mr. Andre said that the E365 subscriptions and the Virtuosity SMB offerings were also “solid contributors to our business performance.”
- Revenue from perpetual licenses was $12 million, basically flat with Q2 a year ago (up 9% cc)
- Services revenue fell 6% to $25 million, down 6% (down 2% cc)
- Not surprising given that Bentley has been acquiring companies selling into utilities, so that sector was the biggest contributor of new business in Q2
- By geo, revenue from the Americas was $144 million, up 28%. From EMEA, revenue was $75 million, up 8%, and from Asia, total revenue was $49 million, up 17%
- COO Nicholas Cumins said that business in China “stabilized” in Q2. Earlier this year, the government began instituting policies to drive users to in-country solutions. Bentley said at the time that it was partnering and adding local content to meet these requirements — and navigating COVID shutdowns. Mr. Bentley reminded us that China accounts for 5% of ARR; “when you consider the news of the past week and the government tensions, it doesn’t seem like we could count on China one way or the other.” He seems confident that Bentley can make up any potential shortfall from other geos
- More broadly, business was good in India, Southeast Asia, and the Middle East. Mr. Cumins said that India continues to accelerate because Bentley has strong connections with engineering and construction firms, with industrial and resources projects up year over year.
- Mr. Cumins said, sales pipelines are strong and continue to grow. “Construction firms have healthy backlogs, pressure is still on projects to deliver, and firms continue to invest in technology that boosts efficiency, and improve workflows, enabling them to do more with less.”
- Bentley changed how it reports end-industry revenue, but it appears that oil and gas accounts for slightly less than 20% of its total business. Mr. Bentley said that that sector had declined as capital expenditures went down from 2019 to 2022, but “it’s now headed back in the right direction — slowly.”
My biggest takeaways from the call? Business is good — and stable for the first time in a while. Mr. Bentley said that Q2 was straightforward –which I take to mean no shocks from wars and shutdowns– while Mr. Andre noted that Bentley’s “quota carriers everywhere report infrastructure engineering activity and prospects [are] at relatively full capacity.”
The other interesting thing is how Bentley is flexing its muscle with small investments in future technologies. Chief Investment Officer David Hollister highlighted initiatives in infrastructure IoT, with the acquisitions of sensemetrics, Vista Data Vision and eagle.io; this matters because (though small), Bentleys’ “Infrastructure IoT business [is] growing at about a 30% clip. eagle.io is also a particularly relevant and prominent solution for environmental compliance, further bolstering our ES(D)G priorities.” Lots going on at BSY Investments!
That leads to outlook: No real change after adding in acquisitions and subtracting out the business in Russia (small). The only changes are dues to the strengthening US Dollar. Per the company’s earlier forecasts, in constant currencies, revenue is expected to be up 17% to 21% to around $1.1 billion.