Summary of Bentley Systems Q2 2026 Earnings Call

1Key Financial Results and Metrics

Total Revenues: $411 million, up 12.8% year-over-year (12.2% in constant currency).

Subscription Revenues: 92% of total revenues, increased by 13.6% year-over-year.

Annual Recurring Revenue (ARR): $1.536 billion, reflecting a 12% year-over-year growth.

Net Revenue Retention Rate: 109%, indicating strong retention and growth within existing accounts.

GAAP Operating Income: $89 million for Q2; $215 million for the first half.

Adjusted Operating Income (AOI) less Operating SBC: $116 million for Q2, with a margin of 28.3%.

Free Cash Flow: $64 million for Q2, $252 million for the first half; full-year outlook of $500 million to $570 million.

2Strategic Updates and Business Highlights

AI Initiatives: Bentley is focusing on integrating AI into its infrastructure engineering applications, emphasizing a hybrid approach that combines deterministic engineering with probabilistic AI models.

Growth in Key Sectors: Resources (especially mining) and Public Works/Utilities are driving growth, with significant investments in infrastructure and electrification.

Power Line Systems (PLS): PLS continues to be a strong growth driver, with international revenue growth matching its entire business at acquisition.

Enterprise 365 Program: Continued success in renewals and new logo acquisitions, adding over 600 new SMB accounts in Q2.

3Forward Guidance and Outlook

Bentley expects to maintain its double-digit growth trajectory, with ARR growth anticipated to remain stable throughout the year.

The company is optimistic about the potential for AI-driven efficiencies to enhance engineering productivity and is preparing to monetize AI capabilities in 2027.

Free cash flow for the second half of 2026 is expected to increase, with a target of 50% to 55% of annual cash flow generated in this period.

4Bad News, Challenges, or Points of Concern

Geopolitical Risks: Challenges remain in China, where the company has limited exposure (only 2% of ARR) due to economic and geopolitical headwinds.

Market Competition: Increasing competition in the AI space, with new entrants potentially impacting market dynamics. However, Bentley believes its established position and trusted applications mitigate this risk.

Investment Timing: Increased operational expenses in the first half of 2026 may affect profitability metrics compared to previous years.

5Notable Q&A Insights

Sustaining Growth: Management emphasized the need for continued momentum in key sectors and potential acquisitions to maintain growth rates.

AI Monetization: The company plans to start monetizing AI capabilities in 2027, with a focus on ensuring that pricing does not hinder adoption.

Customer Engagement: Bentley is actively engaging with clients to demonstrate the immediate value of AI integrations, countering the noise from competitors.

R&D Investments: Future R&D spending will focus on AI capabilities and enhancing existing applications, with a balanced approach to marketing investments to cut through competitive noise. Overall, Bentley Systems reported a strong quarter with solid revenue growth driven by strategic initiatives in AI and infrastructure sectors, while also navigating challenges related to geopolitical risks and competitive pressures.