Bentley Systems, Incorporated

Good morning, everyone, and thank you for joining us for Bentley Systems Q4 2020 and full year 2020 earnings webcast. I'm Kerry Mann, Bentley's VP of Investor Relations. On the webcast today, we have Bentley Systems Chief Executive Officer Greg Bentley and Chief Financial Officer David Hollister. Before we begin, allow me to provide a disclaimer regarding forward-looking statements. This webcast, including the question and answer portion of the webcast, may include forward-looking statements related to the expected future results for our company and are therefore forward-looking statements. Our actual results may differ materially from our projections due to a number of risks and uncertainties. The risk and uncertainties that forward-looking statements are subject to are described in our earnings release and other SEC filings. Today's remark will also include references to non-GAAP financial measures Additional information, including reconciliation between non-GAAP financial information to the GAAP financial information, is provided in the press release and supplemental slide presentation. This webcast will be available for replay on Bentley Systems' investor relations website at investors.bentley.com. Today, Greg will begin by reviewing business developments and our progress over the last quarter and in 2020. David will then take you through a review of the financial results and our outlook for 2021. And with that, I'll turn the call over to Greg.

Greetings and thanks to each of you for your attention. We were together for this purpose for the first time in mid-November last year, and I began then by reprising our roadshow introduction from our September IPO and subsequent follow-on equity offerings. We have since then been back in the capital markets yet again for our convertible debt offerings last month. So I certainly don't need to spend our time today as we did last time on introductions to BSY. Also, when last we met on November 11th, our annual year in infrastructure conference had just concluded. So I fully described that at the time. Our 2020 infrastructure yearbook had just been published. and I highly recommend that you visit our website to review the work of our users in advancing infrastructure by going digital. We would also be glad to send you a physical yearbook on request to our investor relations. The yearbook brings together hundreds of what are effectively case studies organized by categories of users' nominations and includes for each the playbook of Bentley Systems software which enabled their advancements. Along with the winners and finalists selected by the juries, there are special recognition awards including for digital twin distinction and for exemplary sustainability. Among other purposes, this would especially inform your likely interest in Bentley Systems' handprint for what I call ESDG, Enabling Sustainable Development Goals. So first, by way of corporate developments, we issued convertible debt maturing in five years, which met with a satisfactory reception in the capital markets. The offering was upsized from $500 million to $600 million, in addition to which the 15% over allotment was promptly exercised for gross proceeds of $690 million. We secured a coupon of one-eighth percent for a conversion price of initially $64.13 per share. And we entered into a cap call, which cost about $15 million, so that effectively the exercise price becomes $72.98 to reduce overhanging dilution for our stockholders. And at the same time, we updated and expanded our bank credit facility. Now, David will cover the impacts on our balance sheet subsequently to what we have filed as of year end. But I think that the combination of the convertible offering and the expanded bank credit facility, taking advantage of unprecedented favorable market conditions in both cases, is much in the interest of our common stockholders as follows. Recall that our IPO was unusual in offering only secondary shares, so generated no proceeds to the company, which however bore the costs. Then our follow-on offering did raise almost $300 million through the sale of primary shares, but this was applied to pay down the bank debt incurred to finance the almost $400 million extraordinary dividend that we paid last summer before the IPO. So the purpose of the convertible capital raise, along with our expanded credit facility, is to create, at historically low cost of leverage, capacity for us to take further advantage of potential acquisition opportunities. Indeed, as a public company, we have been reasonably asked if our pace of growth from acquisitions, which have added about 1.5% of revenue annually in recent years on average, can increase. The cash required for this traditional programmatic pace of acquisitions and by our dividend fits well within our rate of operating cash generation, leaving excess cash flow to be applied towards stock repurchases over the long term. As a public company, we are now seeing a greater flow of potential deals. We remain differentiated as an acquirer by being willing and able to do the hard work of consummating smaller deals to fill white space. But at the same time, The historically high valuation multiples which pertain presently are inducing potential sellers, including private equity funds, to test the waters with prospective strategic acquirers. By virtue of our capital races, while we will retain our discipline, we now have the wherewithal to consider deals which would be both substantial and accretive. However, no promises. And speaking of acquisitions, since last we were together, Late last year, Cohesive Companies, our main captive digital integrator, acquired SRO Solutions, headquartered in Manchester, UK. This adds geographic and industry scope to our retinue of consulting and cloud services around IBM's Maximo Enterprise Asset Management System, which we are working to advance to infrastructure digital twins. SRO is a global leader in maritime and industrial applications of Maximo and has developed specialized product offerings for remote environments, which are challenged by inconsistent network connectivity and stringent regulatory requirements for safe opex in places such as offshore oil and gas platforms, shipping, and Antarctica. We have just announced the acquisition of Australia-based E7, a leader there in software for the heavy civil construction workface. The integration of this proven technology will extend our synchro 4D construction modeling portfolio to include site and equipment logistics in progress capture. Our Digital Construction Works joint venture with Topcon will help to further globalize its reach. We are acting upon our vision for construction digital twins, which advance 3D designs to 4D models of time, space, and cost, rather than competitive alternatives, which for actual construction performance tend to dumb down 3D to digital 2D. Heavy civil construction performance contractors can immediately apply our advancements, accelerated by the virtualizing lessons of 2020. Back to operating results. Even though 2020's fourth quarter is our subject today, We have already presented some aspects back to you. Some have presented some aspects to you back in mid-November. We're also here to provide you today our first full year financial outlook. Though I think we all look forward to future normal years where greater visibility can be expected than this year. After I offer my qualitative observations about 2020 and some plans and expectations for 2021, David Hollister will go through all the financial numbers, and then there will be ample time for your questions. My own objective for these sessions is to share my understanding and interpretation of what's behind the operating results numbers themselves. As of last quarter, we had seen a notable shift in the pattern and trends of usage of our applications, which could have been belied by just focusing on the overall totals. So I went to great lengths and into great detail to explain and quantify the changes from the first half of 2020, which had entirely to do then with the primary geographic progression of the pandemic, into the second half, where the secondary impacts diverging across infrastructure sectors became prevalent. I reported the actual degrees of usage impact by sector. and called out in particular the sudden downturn in the engineering workload of the industrial centered engineering procurement construction contractors, EPCs, among our accounts, which correlated with dislocations in the fossil energy markets. Now, the bulk of our revenues in ARR are associated with annually reset contracts paid in advance and thus not sensitive to short term usage fluctuations. So in general, we remained resilient throughout the year, even though overall application usage had, in Q3, declined from year-earlier levels. However, it happens that the EPCs tend to be large global accounts who were early takers of our E365 commercial program, where we charge per application per day, so their relatively large proportion of the usage decline have suppressed our revenues, our ARR, and thus net revenue retention somewhat. The almost offsetting gains in other sectors and accounts, being less concentrated in the E365 program, did not similarly flow into these operating results. Now we favor the E365 program because it virtually embeds our success force of subject matter experts to help our accounts with their priorities to instill digital workflows. and thus to increase usage of our software. This has tended to lead to more or less steady growth in ARR and revenue from E365 accounts in normal times. So we have pressed on with the incremental upgrade of our existing enterprise subscriptions to E365, including throughout 2020's fourth quarter. An attraction of our program versus the enterprise agreements of our principal competitor Autodesk is that the commitments Autodesk requires are use it or lose it. So especially in times like these, accounts naturally prefer our contrasting economics where they pay for only what they actually use. Nevertheless, having observed the case in point of our new cyclical vulnerability from the EPCs, we are now preferring to agree with many new E365 accounts that a collar Symmetric and negotiable, but typically say 10% up or down, will pertain from each year of an E365 contract to the next. That way, we still have the right healthy incentives, which drive our opportunity to grow substantially, while at the same time being protected on the downside from too much portfolio volatility exposure to macro trends. Going back to reporting by infrastructure sector, I'm going to cover only a very brief update for each rather than all that previous detail. This is because from Q3 to Q4, and frankly foreseeably, all of the sector directional trends that I explained last time have generally continued. I will just highlight anything new. Now, getting on to specifics. The EPC drag has only become somewhat more pronounced. I do not believe we can expect the workloads of these accounts to recover until they have updated their own project mix to work more so on energy transitions, and that will probably take at least multiple quarters. However, and now finally to get to the more current tone of business, I am glad to report that the global green shoots that we sniffed in November have continued and by the end of 2020, the overall rate of application usage had grown back to surpass the pre-pandemic levels of a year earlier. Obviously, the year-over-year comparisons now get easier throughout 2021, and I don't anticipate that application usage will continue to warrant such a minute focus. But to close out the comparison by sector, recall that in the pandemic, that's commercial facilities infrastructure lagged the most. with industrial resources infrastructure, not much better, while public works and utilities infrastructure remained most resilient in terms of application usage. Also, recall that we have a central proportion of products and accounts that are not specific to an infrastructure sector because they're applicable or participate in all sectors, consisting of applications for general modeling, including MicroStation, for general project delivery, including ProjectWise, and for the structural and geotechnical disciplines. In our experience, these applications tend to be applied in the same proportions to projects within particular infrastructure sectors as the proportions pertaining to our products and accounts that are sector specific. I bring this to your attention because I want to highlight the particular brands among our many here, which grew most notably in the relatively prosaic year of 2020. where run rate is defined as ARR including annualized term licenses plus last 12 months of license sales were applicable and by growing notably in run rate, I mean by millions of dollars and by double digit percentages. Among the products used across all sectors, I would call out for notable run rate growth project-wise which came into its own for virtualizing infrastructure engineering during 2020 primarily as an Azure cloud service. Now, incidentally, we don't count project-wise within application usage as it is typically used along with an application, either ours or Autodesk's. I'd also call out Plexus, our flagship brand for geotechnical engineering. The analysis of surface foundations could be called the infrastructure of the infrastructure. and our continued and increased investments in geotechnical are resulting in a greater proportion of geotechnical engineers' work being done through 3D digital twins, reducing project and asset risk and increasing environmental resilience. Turning now to the particular infrastructure sectors, after the third quarter, commercial facilities had been the most impacted by application usage decline from a year earlier. But in the fourth quarter, commercial facilities improved somewhat to be down only by mid-single digit percentages from the fourth quarter of 2019. And in fact, among our applications, open buildings achieved notable run rate growth during 2020. In the industrial resources sector, the year-over-year decline in application usage intensified to reach double digit percentages below the fourth quarter of 2019. However, among our Simulation application brands, Sachs and Moses, which we regard as particular to the industrial resources sector as they're used for offshore structural and wave motion analysis, achieved notable run rate growth during 2020. This is by virtue of their widespread and we consider market leading application, including in China, to offshore wind structures and now for floating as well as fixed offshore platforms. This is also an example of the energy transition I mentioned earlier from these products being used previously or in the main for offshore oil and gas production facilities. And to conclude with our mainstay in the public works and utilities infrastructure sector for accounts and products, respectively, application days increased from the fourth quarter of 2019 by low and mid single digit percentages. and among application brands particular to public works and utilities, notable increases in run rate were achieved by OpenRoads and OpenRail, which we consider to be the global market leaders in their respective domains, and by OpenSite and OpenBridge. Finally, for iTwin cloud services, which introduced Digital Twin's functionality for any user or account, we did reach our 2020 goal to end the year with ARR in eight figures above $10 million. Today, we're reporting 2020's actual growth in revenue, ARR, and run rate, which obviously exceed these flattish trends in daily usage of our applications. Of course, almost a third of our revenues are from project-wise and asset-wise for cloud services that grow faster than our traditional on-premise applications. And again, we don't include them in the application days I've been quantifying. But I would like to highlight a driver of our revenue growth, which for 2020 we measured for the first time. When we quantify application usage, it's an aggregate. We're counting a day of any application as equivalent to any other for this purpose. But among our application universe, some are much more specialized, better fit for purpose, More valuable and thus more expensive per application day than those that are more generally purposed, such as at the extreme, MicroStation, where they all began. So a constant source of new business growth for us is the upsell of a particular user to a more specialized product for greater fitness for purpose to their infrastructure engineering project work. A long-standing example would be users advancing from MicroStation to OpenRoads. A newer example would be advancement to open wind power. Again, that's just been introduced in the past year for energy transitions. Most of this application mix accretion, to give it a term, still lies ahead of us. So, focusing on the makeup of our new business growth, this application upsell phenomenon results in apparent attrition from the incumbent product but more than offset net by the accretion in the incremental product. We have previously not been able to quantify this growth rate factor that I've vaguely referred to as increasing specialization. For 2020, application mix accretion accounts for about 2.5% of our applications revenue growth. Now, speaking of new business growth, it is an explicitly defined measure in our company. The formulation of which is shared in the incentives for every quota carrier and every territory executive and every operating and corporate executive. As I suppose every company does, we weight our dollars of new business growth, that's all accretion and new sales net of attrition, by coefficients which reflect our assessment of their relative commercial value, generally based on their degree of recurring nature. We fine-tune these factors at the beginning of every year to create what we regard as the appropriate incentives. Here, by way of example, is our new business growth waiting for 2021. The highest coefficients correspond to our priorities. Cloud services for project-wise and for asset and network performance and iTwin, and for virtuosity and E365 subscriptions. So to report on our 2020 new business growth by region, The laggards in terms of a quota of achievement were Middle East and North Africa, presumably because of their energy market exposure, and to a lesser extent, Southern Europe. On the other extreme, while Southeast Asia did not quite achieve its ambitiously set new business growth quota, the region did surpass 2019's new business growth. The UK both exceeded quota and 2019 in new business growth. And the region which led the way in new business growth, surpassing both quota and 2019, was Greater China, thanks to strong performance in the fourth quarter and probably because physical business reopened there earlier than elsewhere. It's worth noting that our company did not set materially lessened new business quotas for 2020, nor reset lower quotas after the pandemic deepened. Our new business growth budget set early in 2020 but after the pandemic outset was very nearly the same as 2019's actual new business growth. I'm pleased to say, summarizing 2020, that we came very near to achieving our new business growth budget for the year thanks to a strong fourth quarter in which we did achieve our budgeted new business growth. While David will shortly review our 2020 revenue growth results, I would like to point out that during the year we improved what I could call the quality of our revenues. Just as in the relative coefficients we applied to weight new business growth for our quota carriers and executives, we all would give preference to growth in recurring revenues. In 2020, as our perpetual license sales declined from 2019, rather surprisingly by only mid single digits, despite what one would have considered an economic environment where accounts would be less likely to make capital purchases. And as our episodic professional services also declined by mid single digits, our recurring revenue proportion indeed correspondingly increased. So turning the page now to 2021, the obvious challenge for this financial outlook is that we can be fairly confident that by the end of the year economic growth prospects will have improved, but we can't be very confident about how soon the turnabout will take effect. So we must rather fully expect to be updating our annual financial outlook after each quarter as this year actually unfolds. In our annual business planning at Bentley Systems, we work out what we can and wish to afford spending in each caption of our discretionary cost and expense in relation to our forward-looking ARR updated monthly. This we call our head cost alignment model. We accordingly manage to what loosely corresponds to our EBITDA margin percentage. Now, we do that at our budgeted constant currency exchange rates throughout the year so we don't zig and zag in our resource commitments just because of something, FX rates, that we can't control. But we are not very vulnerable to changes in the demand environment in this respect because that's constantly reflected in our ARR book on which our head cost alignment discipline is based. So as to our targeted operating margin improvement of 100 basis points per year, it could happen that because of FX volatility, adhering to this at budgeted exchange rates will nonetheless result in a somewhat different indicated improvement at actual FX rates, particularly as our natural currency hedge Our colleagues are approximately distributed in relation to our revenue currencies. That's good, but it's not perfect. But to get to the point, in the year 2020, the sources of margin noise were much larger than foreign exchange rate volatility and include the outsized, favorable, and compounded impacts of decreased spending on travel, physical events, and out of caution, colleagues' raises and incentives. As David will explain, most of 2020's operating margin improvement is of this windfall nature rather than as a consequence of our intended end cost alignment. Hence, we've modeled a normalized 2020 operating margin scenario, as he will show next, from which to base our annual 100 basis points improvement objective for a correspondingly normalized 2021. Put another way, While committed to achieving what amounts to our annual EBITDA improvement goal, we otherwise wish to benefit the future as much as possible through thoughtfully targeted spending, even at the cost of what otherwise could have been yet higher current margins. Considering this, our planning exercise for 2021 has centered around how best to allocate the investments to initiatives which we believe will sustainably improve our organic growth rates as afforded by spending in 2021 just these windfall 2020 points of margin. Incrementally, and outside our financial outlook here, we do also expect to inflect our growth further upward through increased acquisitions, as I mentioned at the outset. Because the majority of our SAM can be achieved through accretion within our existing accounts, The highest priority we have is fully funding our new success advancement group. We did not have this organization, nor most of its functions, a year ago, and it is already at a headcount of 169 positions and growing. It directs our E365 success plans, delivered primarily by our product advancement group's thousand-strong success force of credentialed subject matter experts, through its success managers and support account managers. All accounts, including SMB, small and medium-sized businesses, are served by its frontline success managers and licensing, success communications, and learning content teams. The second new initiative that we're fully funding in 2021 is to sharply increase and to digitally enable our sales resources directed at SMB accounts. As smaller engineering organizations position themselves for increased opportunities in infrastructure, and as they react to Autodesk's aggressive pricing measures, our already competitively stronger products would be favorably considered if we could gain their mindshare. Having a higher profile as a public company has helped to open this door for us, but we have also needed to increase our own mindshare dedicated to SMB. Now, one could say that during 2020, all companies have de facto pivoted to inside sales, but we experimented creatively and successfully, I think. We originated Virtuosity, Inc. as a captive reseller offering a unique virtuoso subscription, primarily for SMB engineering practitioners. The unique offering combines virtually delivered expert assistance with our applications. all available through our first ever e-commerce website. This new business has grown so steadily that for 2021, we have determined to mainstream and globalize these Virtuoso subscriptions and to add to Virtuoso's offering the combination of perpetual licenses and such expert assistance. From startup a year ago, Virtuosity is now up to 90 inside sales colleagues with another 10 currently being recruited. and we are at work on a full program of marketing and self-service systems investments to support them. Beyond virtuosity, throughout every function in Bentley Systems, we are reorganizing to newly focus on this SMB opportunity. The third initiative that we've increasingly prioritized in 2021 is our investment in digital integrators. We think that all infrastructure owner-operators will benefit from and will ultimately apply evergreen digital twins for their projects and assets. But we realize that most will not be self-sufficiently capable of digital twin creation and curation. The requirements for this are to combine OT, ET and IT through continuous surveying, improving the quality of newly opened, previously dark engineering data and introducing newly enabled machine learning and analytics. Long-term, the providers of these digital integration services should be the infrastructure engineering firms. They increasingly realize that their survival depends on evolving to a better business model than their current default of selling services by the hour. And 2020 has driven home that going digital is of the essence for improving their economics. A constantly growing number of the most enlightened firms are working with our iTWIN platform to develop proprietary analytic services. But there do not yet exist commercial templates for digital twin integration services, and we regard that it is too much to expect the engineering firms, which in general are not R&D minded, to discover how to make this business work both technically and economically. As the first mover, we have a lot to gain from accelerating that rather than waiting for these stars to align. Hence our self-help Digital Integrator Program of Captive Trailblazers. Digital Construction Works is our 50-50 joint venture that we co-founded with Topcon Positioning Systems in 2019. Its business plan, including a strong proficiency in applying our Synchro software for advanced work packaging, has been disrupted by the same slowdown in industrial capex, which affects our EPC accounts. So it has pivoted to the heavy civil 4D construction modeling opportunities, which I mentioned in conjunction with our E7 software acquisition. We started digital waterworks from scratch to extend our market-leading OpenFlows water modeling software and our iTWIN platform to operations digital twins for water utilities, which require digital integration within their enterprise environments. Initial projects are now underway, but we will accelerate this in 2021. You likely have seen Autodesk's recently announced acquisition of Innovize for $1 billion to begin to try to catch up. During 2021, we plan to incubate further domain-specific digital integrators, starting with Digital Tower Works to embed our iTwin-powered Open Tower software within the enterprise environments of major communications infrastructure operators, enabling them to expedite their 5G rollout through Telecom Tower Digital Twins. Our cohesive companies' acquisitions enable us to hit the ground running with promising digital integrator skill sets and existing enterprise relationships. Both Cohesive Solutions and SRO, which I reviewed earlier, are leading integrators of IBM's Maximo asset management system, and our aspiration is to enhance each Maximo installation with infrastructure digital twin functionality. PCSG, acquired last fall and now globalizing from the UK, are the thought leaders for digital twin advisory services to owners. And completing the picture, our iTwin Acceleration Ventures Fund seeks to extend the reach of our iTwin platform and of our digital integrator experience curve through minority investments, where we can ultimately benefit as well from investment gains. So this new digital integrator portion of our business consists of the several startups, which of course are initially unprofitable, and these established companies delivering primarily professional services, which even at full maturity are not capable of generating operating margins comparable to our software profitability expectations. Lastly, many of our acquisitions are of earlier stage companies, which necessarily are initially relatively diluted to our ongoing operating margins. In general, we undertake to absorb and offset these dilutions in stride, but acquisitions of greater scale could cause us to somewhat reset our point of departure for operating margin improvements. My point in going into detail about these 2021 objectives is to explain our rationale for reinvesting the majority of 2020's windfall operating margins into these initiatives. We're working to generate gains and growth for periods which do include 2021 but range as well into the 2020's future. But I'm grateful that we have a CFO with the track record and the authority to newly solve each year the financial combination which has been the hallmark, I think, of our prudential family stewardship to date. investing as much as we can to benefit the future, while at the same time, by virtue of scale leverage and efficiencies for which we hold ourselves accountable, improving our operating margins steadily and incrementally. Now, before turning over to David to quantify this, unusually for a CEO speaking to investors, in our case at DSY, that includes all of our colleagues. I would like to acknowledge their contributions throughout 2021. We all shared sacrifices in raises and incentives, which, along with the pandemic itself, lasted longer than we expected. I think we have largely managed to make that up already in and for 2021. But it is significantly due to the resilience and resourcefulness of our colleagues that by year-end 2020, we got back to pre-pandemic rates of not only global application usage, but also overall new business growth generation. I consider this an excellent outcome and a springboard for 2021. We can't know when, presumably during this year, the macro demand environment will snap back. In our commercial models, we only get paid for the actual elapsed consumption of our software, not for anticipated growth. So our financial outlook for top line growth reflects a relatively wider range than we would expect for a typical year. I would emphasize our operating margin is not similarly exposed because if pandemic recovery to physical infrastructure activities are delayed, so would be our costs of travel and physical events. But most importantly, with and for recovery, there is every indication that infrastructure engineering will be fully prioritized and that going digital is the key to the improved resilience and adaptation that the world now more fully values. To quantify that and the other details of financial operating results for 2020 and our financial outlook for 2021, over to David Hollister. Thank you.

Thanks, Greg. And good morning, everyone. I'm first going to discuss our fourth quarter and full year 2020 results. and then I'll provide our financial outlook for our full year 2021. I'll also comment briefly on our liquidity and the significant capital structure transactions Greg mentioned. I'll also close with a few thoughts on our long-term financial targets before getting to Q&A. I'll begin with revenue performance. Our fourth quarter revenues grew 8.2% year over year to reach 220 million, bringing total revenues for the year to 801.5 million, growth of 8.8% for the year. Breaking that down further, subscription revenues, which are 85% of our total revenues, grew 9.4% year over year for the fourth quarter and 11.7% for the full year, with strong organic growth across all regions led by the Americas and APAC. Obviously, that growth is stronger for the year than for the fourth quarter, with the impact of E365 consumption-based short-term subscriptions still tempering overall growth, and some momentum there. And again, this is disproportionately manifesting in users with industrial and resources and market exposure. Our perpetual license sales improved during Q4 to be flat to the same quarter last year and bringing total year-to-date license sales to 57.4 million, down 2.4 million or 3.9% for the year. Professional services, while only about 8% of our total revenues, is still our most volatile revenue source. Professional services grew 7.7% during the quarter, but remained down 5.5% for the year. Professional services in particular benefited from the 2020 cohesive solutions acquisition, the PCSG acquisition, and the SRO solutions acquisition. Each of these are professional consulting businesses added to our digital integrator portfolio. Without the benefit of the acquisitions, our professional services declined by 20.8 million. in 2020 relative to 2019. The organic decline is twofold. Firstly, other than our digital integrator businesses, we continue with a concerted effort to migrate episodic professional services from days and rates and fixed fee arrangements and into recurring subscriptions. This migration accounts for approximately half the 2020 organic decline. The remaining organic declines in professional services primarily relate to pandemic-induced cancellations, Deferrals and slowdowns with a disproportionate concentration in our industrial resources and markets. As we previously noted, these episodic professional services revenues are typically for us where we'll feel softness in the face of macro headwinds and cyclicality. To a lesser degree, we'll also see any macro-induced softness manifest in our perpetual license sales and certain of our shorter-term subscriptions, in particular those E365 daily consumption-based subscriptions. As Greg discussed, while we're resilient and growing, we're cautious about the lingering effects of the pandemic, in particular within the industrial resources sectors, which represents about a fourth of our revenues. Public works and utilities sector, our largest end market, representing about two-thirds of our revenues, while it's not unaffected, it still remains relatively robust for us. Our last 12-month recurring revenues, which include primarily our subscription revenues, but also includes certain services revenues delivered under contractually recurring success plans increased by 10.4%. For 2020, this outpaced our net recurring revenue retention rate of 108% due primarily to new account growth, both organic and acquired. Our deep and long relationships with our accounts again are proven with our 98% account retention rate and growing and expanding with those accounts continues to be our most significant source of growth and an area where we continue to invest with our user success adoption initiatives as Greg articulated. A significant KPI for us is our annual recurring revenue or ARR. For 2020, our ARR grew by 8% on a constant currency basis and ended the year at 752.7 million at then spot rates. Our gap operating income was 54.3 million for the fourth quarter of 2020 compared to $42.7 million for the same period last year. For the year 2020, our GAAP operating income was $150.2 million compared to $141.9 million the preceding year. In order to understand our GAAP operating results, you have to take the time to understand all the significant and unusual activity we undertook in 2020. I'll highlight the most significant of those here. Firstly, our GAAP results include a charge of $26.1 million for costs directly associated with our IPO in September. Uniquely, our IPO did not include the issuance of any new shares for Bentley Systems. Normally, IPO costs are netted against the proceeds from primary share issuances and don't flow through the issuer's operating results. With no primary shares being issued in our IPO, those same costs were charged to operating expense. Also, during the third quarter of 2020, but in advance of our IPO, we issued a one-time stock bonus award essentially to all Bentley Systems colleagues. These awards vested upon completion of the IPO and resulted in a $15.1 million charge to operating expense. And as mentioned last quarter, during the third quarter of 2020, we initiated and approved a restructuring plan. As a result, we approved and recorded a $10 million charge to operating expenses in the third quarter of 2020. The charge was almost exclusively related to severance benefits. This was not a cost savings-motivated plan. Rather, we aligned resources to support our growth initiatives and reinvested accordingly, as you've heard Greg discuss. Also during 2020, we incurred unrealized foreign exchange gains from intercompany financing transactions of $22.3 million. These transactions are being translated into their functional currencies at the rates in effect on each balance sheet date, and they fully eliminated our consolidation. as do our peers, we exclude foreign exchange gains and losses from our adjusted metrics as they're not reflective of our ongoing business and results of operations. So, for better analysis and understanding of underlying performance, we remove the skewing and non-recurring nature of these transactions by guiding and reporting on adjusted EBITDA, which was 77.1 million for the fourth quarter 2020 and 266 million for all of 2020. An increase of 41% over 2019 and representing an EBITDA margin of 33.2%. Even with this adjusted EBITDA metric, there's still a lot going on inside of 2020 that needs to be understood. So next I want to double click on that and share some further insights. So clearly 2020 was anything but a normal year for us. In addition to everything both Greg and I have discussed so far, I believe there's more to understand about our operating expenses to better understand our margin performance. This analysis is intended to show a normal margin profile for 2020 related back to 2019, which is the best and most recent proxy we have for a normal EBITDA margin year, and show a normalized margin performance for 2019 and 2020, which then informs what we expect for 2021. So in this analysis, I normalize for two circumstances. The first adjustment I make here is to reflect the fact that pre-IPO, certain of our top executives were paid only in cash. Post-IPO, those same top executives will be paid in a combination of cash and stock. Specifically, approximately $30 million per year previously paid in cash will now be paid in stock. This recharacterization as stock becomes an add-back adjustment when arriving at adjusted EBITDA. Again, we're seeking no margin improvement credit for this recharacterization. It's done to better align us to comp structures and margin profiles of our peers and competitors. So, had this recharacterization been in place for all of 2019, and also for the first three quarters of 2020 before the IPO, our EBITDA margins would have been higher by these amounts. The next adjustment I make here is related to expenses not in our cost structure in 2020 that we expect will be in our cost structure in 2021. Significantly, this is related to some fairly substantial pandemic-related cost savings in 2020, which we expect are not sustainable as we anticipate easing into a post-pandemic normal. These savings relate to curtailments in 2020 incentive compensation, travel expenses, and incremental costs associated with promotional activities and live events. To be clear, this is not all of our cost savings in 2020, many of which we've reinvested into our business to stimulate our growth strategies, as we've discussed. Rather, this includes only those savings we expect not to be benefiting our cost structure in 2021. To a much lesser degree, we include in this $42 million normalizing adjustment some incremental public company costs now fully absorbed into our cost run rate and permanently so into the future. Our 2021 margin outlook includes such costs. So normalizing for all this trauma as best we can, I put this here in the context of our long-term history and our continued commitment into the future of targeting careful, methodical, and disciplined margin expansion in the neighborhood of 100 basis points per year. and here showing our first tease into our 2021 outlook, which I'll now discuss. As a reminder, our guidance policy is to provide our financial outlook annually for a full year and update it quarterly as and if our views for the year change as we move through the year. Our outlook is obviously informed by what we know about our business and prospects, our reasonable expectations for progression in our growth strategies, Our outlook assumes stability in foreign currency exchange rates, and it does not contemplate any significant acquisitions not already concluded. So, accordingly, we're expecting revenues between $895 to $920 million representing growth over 2020 revenues of 11.7% to 14.8%. This expected growth does benefit from last year's acquisitions as well as a favorable foreign exchange environment, notably a weaker U.S. dollar today than last year. Of course, the opposite is true for our cost and expenses given our fairly extensive natural hedge. Thus, the favorable impact on margins is somewhat negated. We're projecting constant currency ARR growth to be between 8% and 10%. And we're expecting adjusted EBITDA to be between 285 and 295 million, approximating a 32% EBITDA margin. I also include here some additional expectations on interest and taxes, capex, dividends, and outstanding shares. I won't speak to each of those now unless there are questions. I'm just posting them here as a takeaway. Greg previewed several significant transactions which have impacted our capital structure since we reported last quarter, just after our IPO. I'll run through some details on those and show the effect on our capital structure in just a moment. But first, a few comments about cash flow. As you can see here, our GAAP operating cash flows are up 57% in Q4 and 51% for the full year relative to last year. We don't have multi-year contracts so there's no upfront multi-year windfall such as that. It's just really solid operational efficiency and working capital focus. Even if I normalize for the 42 million of windfall savings and net of our $10 million restructuring charge, our operating cash flow is still up over 30% in 2020 relative to the prior year. As Greg mentioned, we hit the market very quickly after our IPO with the first follow-on in November. This was mostly primary shares for the company and raised 294.4 million net of fees and expenses. There was also a modest amount of secondary participation in the follow-up. Then in January 2021, we undertook a pretty substantial overhaul of our debt structure. First, we secured an upsized new $850 million revolving credit facility at very attractive terms. At the same time, we placed 690 million of convertible notes. The notes matured 2026. if not converted earlier, and the conversion strike after giving effect to the capped call which we purchased with the proceeds is $73 per share. Reflecting all of these capital transactions and applying the pro forma effect of the January 2021 financing transactions to our December 31st 2020 capital structure, we would have had $519 million in cash, $690 million in debt, or a net debt position of $171 million. This reflects total debt net leverage of 0.6 times and, of course, no senior secured leverage given the full $850 million senior secured revolving credit facility remains fully available. And lastly, before Q&A, I'll offer some transparency into our thinking and expectations about longer-term financial model targets. We expect our historical revenue growth to inflect towards 10%, representing modest increases for ongoing growth initiatives and a modest increase in patient scale of our normal historical tuck-in buy versus build acquisition cadence. We expect a continuation on average of 100 basis points per year of EBITDA margin expansion. And there's no reason why this won't continue well into the 40%. Some years may reflect more or less than this target based on our then-informed views are where to invest and generate the best returns. I continue to highlight that outside of our pure software business, we're still investing in digital integrators and incubating an ecosystem to stimulate adoption of infrastructure digital twins and ultimately to create incremental pull-through of our software solutions. By design, the digital integrators are service-oriented and lower-margin businesses. Similarly, investments we may make in early-stage businesses or initiatives also are obviously pre-profitability and may be margin diluted. To date, we've absorbed the dilutive effect of these investments into our margin expansion history, but continued and incremental investment here may apply some pressure on margin expansion from time to time, but obviously to the benefit of long-term incremental growth not otherwise contemplated. We'll continue to anticipate a steady state global effective tax rate of approximately 20%, but such may be impacted By any future tax law changes in the U.S. or elsewhere. Of course, we've historically been and expect to be nimble and efficient in our tax planning and strategies to help mitigate any such effects. We expect to remain cash flow efficient and a low capex business. We will remain committed to a modest quarterly dividend, which may increase over time, eventually expected to settle into the one half to one percent dividend yield range. We expect to attenuate dilution from stock-based compensation with periodic stock repurchases. And as for debt levels, we acknowledge the current low levels of leverage, which are well under 1x at year-end and today, and the significant incremental debt capacity afforded by our recent capital structure transactions. We do expect to apply it for continued investment in our business organically and via acquisition. Optimally, were very efficient and comfortable operating in a 2x to 3x and sometimes even 4x net leverage position. As investment opportunities come and go, we may be less leveraged as we are today or more leveraged to accommodate unique opportunities. So with that, I believe we're now at the end of our prepared remarks, so I'll turn it over to the operator to facilitate some Q&A. Thanks. Operator?