Bentley Systems, Incorporated

Thank you. Thank you. Thank you. All such statements made in or contained during this webcast, other than statements of historical fact, are forward-looking statements. This webcast will be available for replay on Bentley Systems' Investor Relations website at investors.bentley.com on May 7, 2025. After our presentation, we will conclude with Q&A. And with that, let me introduce the Executive Chair of Bentley Systems, Greg Bentley.

Good morning, and as always, thanks for your interest in BSY. Of course, CEO Nicholas and CFO Werner will report in detail Bentley Systems' excellent operating and financial results for the first quarter of 2025. But given the heightened uncertainties in global markets since we last spoke just two months ago, at which time I reviewed BSY's financial compounding over our almost five years since going public, This time, I will highlight our corresponding and intentional progress in the attributes that make our model resilient against macro vulnerabilities and cyclicality. To this end, we have improved our business mix along the dimensions of infrastructure sectors, infrastructure lifecycle, our commercial models, account scale, and geography. We can track this by comparing, over the period, the charts within our introductory debt for investors, which quantify the distribution of our business footprint. Now, our allocation within infrastructure sectors is so distinctively significant that we start our description with this breakdown of our ARR by end market. Scaled an area within each of these pie charts, here's how our ARR growth has developed from its comparable distribution at the beginning of 2020. Among infrastructure sectors, commercial facilities and industrial are by far most subject to both demand and interest rate cyclicality. For us, these sectors' combined proportion of total ARR is now less than one sixth, down by about half from pre-IPO, in favor of much more consistently robust sectors. And our overall business resilience has been proactively enhanced by our 2021 and 2022 platform acquisitions, growing fastest for us and in the most promising infrastructure sectors. First, led by sequence leadership in subsurface environmental modeling, the resources sector and geo-professional disciplines, which were only a single digit proportion pre-IPO, now comprise almost a quarter of our ARR. New applications for civil infrastructure are serving to help offset capital market sensitivity, delaying investment in new mines. Most auspiciously, long-term fundamental shortages of self-sufficient supply for metals and minerals are spurring government priorities to expedite permitting for such essential capital projects. Next, our power line systems platform acquisition has made BSY indispensable for physical investment in the world's electrical transmission and distribution grid, the infrastructure sector poised to benefit even more, and I think even sooner, from permitting reform. The new imperative for data center build-out is just adding to the many years of backlog of new capacity required to maintain and improve the power grid's reliability and security. The world has recently seen the catastrophic impact of failure in overstressed grids. Our own longest-term opportunity relates to infrastructure lifecycle phases. deliberately advancing toward the digital twin future as our business mix gains an ever more resilient balance in sustaining asset performance. Since IPO, our steadily growing lifecycle information management offerings have coalesced within the Bentley infrastructure cloud, now powered at a platform level by iTwin and Cesium. AI will forever now be compounding within each of our accounts the reuse value of their own accumulated data across project-wise, synchro, and asset-wise. And a compelling use case for digital twins is to leverage our leading simulation software portfolio, now having grown to about a quarter of our ARR, for continuous reuse over an infrastructure assets operating life cycle, to quality assure as operated performance and resilience, and to maintain fitness for evolving purposes. Enhancing such opportunities for diversification on the part of BSY between project and asset life cycles and reflecting our years of prioritizing investments and capabilities for operations and maintenance since 2009, our ARR directly from infrastructure owner-operators has now reached parity with our ARR from their project supply chain of engineering and construction contractors. With infrastructure operations always essential and thus evergreen compared to more discretionary project decisions, this has all succeeded in purposefully reducing our cyclical exposure. Our resilience has similarly been enhanced by commercial model-driven improvements in the quality of our revenue mix. Since pre-IPO, our recurring revenues have now reached a high watermark of 92% of total. We continue to sell perpetual licenses now primarily to SMB and China, but its proportion of total revenues is down to low single digits. Likewise, contributing to the visibility of recurring revenue, the proportion of elective select maintenance coverage for perpetual licenses has decreased by more than half. Professional services have always been the most volatile among our revenue captions, especially as we've now bundled the recurring success professional services instead within E365. And with revenues from our cohesive digital integrators implementation services for IBM's Maximo having rather precipitously declined, As a proportion of revenues, professional services, which at best generate low margins, are back down below our pre-IPO level. And in preference to such dependencies on the vagaries of third-party enterprise asset management environments, our new AI-driven asset analytics initiatives can provide instant-on entry points for digital twins in operations and maintenance and by way of ARR. Enterprise subscriptions, our ever-growing mainstay, are now almost exclusively through our E365 program. There, we're compensated for embedding our success experts and quarterly blueprints to consistently improve our rates of accretion in each account. Looking now at this breakdown of our ARR as we do each quarter to show the E365 plurality continuously growing, we can also quantify how we have steered the ARR makeup within E365 to mitigate the intrinsic theoretical volatility of its daily consumption charging for our engineering applications. In fact, almost all of E365ARR is now subject to negotiated annual floors and usually and symmetrically ceilings on consumption charges, actually serving to increase the visibility and linearity of our overall ARR growth. And most significantly for resilience, increasingly, we and accounts covering now the majority of E365ARR have mutually agreed to extend these floors and ceilings over multiple years, graduating upwards at each annual renewal. these pre-negotiated annual increments have tended to converge around our current high watermark NRR of 110%, underscoring that these accounts are equally confident in the sustained resilience of their own businesses and in the priority they place on going digital to surmount chronic engineering resource capacity constraints. With our direct sales model, At 94% this past quarter, the increasing scale leverage provided by thriving enterprise account growth supports much of the annual operating margin improvement that underlies our own confidence in resiliently compounding free cash flow. I believe our distribution of revenues by account scale is the hallmark of our qualifications and aspirations as the infrastructure engineering software company. With growth since 2019, the number of accounts within each size tier has at least almost doubled, with now over 180 accounts at over $1 million in ARR. over 500 accounts with ARR between $250K and $1 million, and over 900 accounts with ARR between $100K and $250K. Serving this enterprise account portfolio more deeply and efficiently is the foundation of our distinctive resilience. and a priority since going public has been our opportunity to also reach SMB prospects who need the same engineering applications, primarily through our digital go-to-market investments. So it's gratifying to also quantify our corresponding cumulative success in new logos, as we've increased the number of accounts with ARR under 100K to just over 39,500. And finally, a significant contributor to our stability and predictability is geographic diversification. We have long been fully scaled across the world. And while regional growth rates and, for that matter, exchange rates are always in flux, our plurality proportion of revenues from the US has actually not changed since pre-IPO amid better balance elsewhere throughout the Americas. During this period, our business in Russia has, of course, been zeroed out. And importantly, our exposure to China has been halved to only about 2.5% of revenues, with much more than compensating relative growth elsewhere in Asia Pacific. So with all of these structural improvements in resilience, I conclude that while we are presumably not impervious to disruptions, we have accomplished much to make significant disruptions less likely and then less impactful. I think we're benefiting already. And for reporting on 2025, over to Nicholas and then Werner. Thank you.

Thank you, Greg. We started the year off strong, delivering AR growth, profitability, and free cash flow in line with our Q1 expectations. Our results positioned us well in regard to our financial outlook for the year, consistent with our longer-term framework of low double-digit AR growth, 100 basis points of margin expansion, and strong cash flow generation. We remain confident in our ability to continue to deliver solid results despite global macro uncertainties, given the continued solid demand environment, the backlogs of our accounts, and our resilient business model that Greg highlighted. The most recent ACEC survey released in March showed a very positive outlook from US engineering firms over the next 12 months. Our accounts remain cautiously optimistic following the tariff announcements, as countries continue to prioritize infrastructure funding, some even more than before. The fundamentals of our demand environment remain the same. A critical need for better and more resilient infrastructure. A continued shortage of engineers, with the number of unfilled positions consistently around 9%. and, as a consequence, backlogs extending further out, as reported in the same ACEC survey. All of these factors point to a strong demand backdrop for software to help improve the productivity of existing engineers. Focusing now on Q1 highlights, AR growth was 12% year-over-year and 12.5% excluding the impact of China. Solid growth in the quarter was supported by our net revenue retention remaining at 110%. Our E365 program continues to be a growth driver, in particular from renewals. And we again added 300 basis points of AR growth from new logos, mainly SMB. In fact, we added more than 600 new logos through our online store for the 13th straight quarter. Retention remains high within the segment. We expect renewals to be further supported as we expand our auto renewal process to more countries and continue to automate meaningful touchpoints during the subscription. Our tone of business by infrastructure sector in Q1 remained consistent with previous quarters. Public works utilities was once again the main growth driver as governments around the world continue to fund infrastructure at robust levels. while commercial facilities remain flat. Growth in resources remain solid despite continued softness in new mine investments, while growth in industrial remain modest. Over the coming years, these sectors are likely to benefit from increased investment, in particular in the US, with the administration's drive to increase manufacturing capacity, energy production, and mining. Speaking of mining, during the quarter, we introduced Sequent Evo, a powerful cloud-based platform designed to unlock the full potential of geoscience data. The launch of Evo comes at an opportune time, as the mining industry needs to find new ways to work faster and more efficiently to meet the global demand for minerals. Evo provides a strong foundation for integrated workflows by bringing together geoscience data from both sequence and third-party applications into a single accessible source. It allows teams to generate insights from past projects and collaborate more effectively by working with the most up-to-date data. Looking now at Q1 performance by region, trends remain largely consistent with previous quarters. Growth was solid across Americas, with Latin America standing out. The market outlook in the US remains bright, with IEJ continuing for at least another 18 months, while the administration has also announced priorities favorable to continued infrastructure investment, including the overhaul of the permitting process. States also continue to amplify the federal funding with their own infrastructure budgets, in particular for transportation, with the value of state and local government contract awards in Q1 up 34% year over year. Also in the US, the American Society of Civil Engineers recently released the 2025 edition of its infrastructure report card. Produced every four years, the report card grades the state of US infrastructure. This is therefore the first report since the inflection in infrastructure spending started with IIJ. The overall grade improved a half step from 2021, from a C- to a C. Though modest, the progress shows the positive impact of such investments and serves as encouragement for more. ASC estimates that $9 trillion more are required to reach a state of good repair across all 18 infrastructure categories noted in the report. Moving to EMEA, the region also had solid growth with the Middle East standing out again and continued infrastructure investment in Europe, including the UK. There were a number of major announcements, such as the EU's Rearm Your Plan, which aims to mobilize close to 800 billion euros for defense-related spending, including the upgrade of dual-use transport infrastructure. Germany also announced a special fund of 500 billion euros for investments in infrastructure, including to help the country achieve climate neutrality by 2045. In Asia Pacific, India was once again the main growth driver, with a strong performance of our structural engineering applications, including PNS. China, which represents less than 2.5% of total ARR, performed as we expected, given the ongoing economic and geopolitical headwinds. Finally, I would like to highlight a recent announcement we made at the Google Cloud Next conference. the addition of Google Street View imagery and Vertex AI to our asset analytics offering for the road network. The combination of crowdsourced data, Street View imagery, and AI can greatly improve planning and operations from standard roadway maintenance to disaster recovery, such as obtaining precise insights into the state of infrastructure before and after disasters to help plan and accelerate reconstruction efforts. As a concrete and meaningful use case, through the partnership with Google, we are working with the County of Los Angeles to support their recovery efforts from the Eton fires. Before I turn it over to Werner, I would like to call your attention to two reports we just published. Our 2024 impact report highlights our leadership in sustainability and focus on ethical practices. As I noted in the forward to the impact report, while infrastructure is essential to our quality of life, it also has significant impacts on the natural environment. That is why we focus on empowering our users to design, build, and operate more sustainable and resilient infrastructure. It is also why we work to improve our own sustainability, foster current and future infrastructure professionals, engage in our local communities, and more. Our 2024 Infrastructure Yearbook celebrates the outstanding accomplishments of our users. The yearbook highlights over 260 remarkable projects nominated for the 2024 Going Digital Awards in Infrastructure program. Each project reflects the vision and talent of infrastructure professionals who leverage our software to improve product delivery and asset performance. I encourage everyone to check out these documents. They are both available to download from our website. If you want to order a physical copy of the yearbook, simply ask Eric and we'll be happy to ship one to you. And with that, I will hand off to Werner.