Bentley Systems, Incorporated

Good morning. Thank you for joining Bentley Systems Q Forum for your 2025 results and 2026 financial outlook. I'm Eric Boyer, Bentley Systems Investor Relations Officer. On the webcast today, we have Bentley Systems Executive Chair Greg Bentley, Chief Executive Officer Nicholas Cummins, and Chief Financial Officer Bernard Andre. This webcast includes forward-looking statements made as of February 26, 2026, regarding the future results of operations and financial position, business strategy, and objectives for future operations of Bentley Systems Incorporated. All such statements made in or contained during this webcast have been statements of historical fact or forward-looking statements. This webcast will be available for reply on Bentley Systems' Investor Relations website at investors.bentley.com on February 26, 2026. After our presentation, we'll conclude with Q&A. And with that, let me introduce the Executive Chair of Bentley Systems, Greg Bentley.

Thanks to each of you for your interest and attention. Nicholas will review the factors behind our stalwart 2025 operating results, and Werner will then provide our consistent 2026 outlook, so I'll take a longer-term perspective. First, as I hope we'll be welcoming some new investors, I'll begin with an update on Bentley Systems' financial fundamentals. With 2025 results, I can extend my previous review of our first five years as a public company to now focus on the years since pandemic disruptions. Our business model prioritizes durability and visibility. Our key metric, annual constant currency ARR growth, has been reliably sustained in the low double digits since 2022. This business performance measure excludes the ARR onboarded with our major platform acquisitions, Sequent and Powerline systems. In 2025, the portion of this growth from smaller programmatic acquisitions was at a low of under 40 basis points. During the earlier of these years, Rates of inflation, as shown here for the U.S., were significantly higher, so in ex-inflation real terms, our ARR growth has been more than maintained. Reflecting our standing commitment to annually improve profitability as we gain efficiencies, especially from our 94% direct sales motion, our adjusted operating income grows faster than revenue. As we regard stock-based compensation as fungible with cash, our key profit measure is AOI less SBC. Adding institutionalized annual improvement of about 100 basis points in margin, since 2022 we have compounded AOS less SBC dollars at over 16% per year. Our straightforward revenue recognition, primarily ratable and almost never for multiple years, and annually prepaid subscriptions make free cash flow also predictable, though subject to variations in working capital, taxes, and interest. With such factors having been favorable in 2025, our free cash flow margin reached 35%. However, cash flow isn't truly free to the extent it must be allocated to offset share dilution from stock-based compensation. our truly free cash flow margin, that is, less SVC, reached 30% in 2025. For valuation benchmarking, one must reckon per share. Our fully diluted share count has been substantially constant, including putative dilution from the convertible debt that funded our platform acquisitions. But last month, we retired the maturing 2026 convertible debt as will presumably occur again next year, reducing our fully diluted share count by about 3%. And having reached a satisfactory target range of about 2x, we have completed de-levering since the platform acquisitions and can now allocate more of our cash flow generation towards scaled-up programmatic acquisitions. The consistent 2026 financial outlook Werner will present reflects our confidence in both our robust end markets and in sustaining our execution fundamentals. But market-perceived risks of AI interloping seem to have discounted our value thereafter to nearly terminal. In fact, for Bentley Systems, AI is not a risk to be countered, but an unprecedented opportunity. Distinctive fundamentals of infrastructure engineering serve substantially in our favor. As the industry's established and trusted digital quartermaster, we are best positioned to catalyze with infrastructure engineering organizations the value to be realized by taking full advantage of AI's potential to transform the substance of their work. Over 42 years, our key advantage has been providing continuity across technology generations, something highly valued for long-lived infrastructure projects, assets, and engineering careers. Based on our actual experience over these decades, enabling and then encouraging progress from CAD to BIM to digital twins, the faster AI and its integration improves, the better for Bentley Systems. The deliberate pace of technology adoption in infrastructure engineering is rooted in legitimate prudence. Each of our lives and much of their quality depends on vital infrastructure meeting standards for safety, resilience, and fitness for purpose. This is why, specific to public infrastructure, regulatory regimes variously require a licensed professional engineer to personally seal project deliverables vouching under penalty of law and of liability that they supervise the work. This requirement cannot be met by casually adopted, unproven AI tools. Institutionally and contractually, project collaborators across engineering disciplines must adhere to formally structured interactions and data formats. Owner-operators and engineering enterprises mandate strictly approved tool sets for interoperability and quality assurance. In this world, do-it-yourself AI tools, without years of vetting, would confine an engineer to trivial work at their own risk. From a practical standpoint, the nature of our applications is unlike the administrative software now suspected to be vulnerable to AI replacement. Like other professionals, infrastructure engineers do use administrative software, but not from Bentley Systems. Our applications are virtually devoid of the forms, transactions, and text that characterize administrative work. The screen captures you see here include, by the way, a data center site as typically construction modeled by DPR Construction, a world leader in virtual design and construction. Infrastructure engineering is performed through immersive, interactive, 3D geospatial modeling experiences like these. With almost all projects juxtaposed within real-world brownfield environments, their design requires all context, all the time, while orchestrating complex algorithms and simulations. And while engineering is a creative profession, Unlike other 3D creators, an engineer cannot be satisfied with the notional abstractions of mere visualization. Often what can't be seen is most important. Precision is paramount, with zero tolerance for approximation, let alone hallucinations. Beyond the confidentiality required for physical and cybersecurity of essential infrastructure, their designs constitute the valuable intellectual property of engineering firms and their owner-operator clients. As by far the long-standing primary system of record for infrastructure design, All data managed through ProjectWise within Bentley Infrastructure Cloud is strictly proprietary to the engineering organization. We responsibly steward this complex engineering data for their authorized use only, including for AI training. There is no such credential data publicly accessible to be scraped for such training. In any case, our users' economic incentives to seek alternatives are perhaps surprisingly mild. Though mission critical to produce, capture, and deliver an engineer's work, our software costs on average per user day only about 3% of that user's burdened daily labor cost. This low substitution rate of technology for labor compared to other industries is likely rooted in owner-operators' archaic norm of paying by the hour, and often based on low bid, for engineering services. Perversely, this incenting advances in productivity. Spurred by now chronic shortages of engineering capacity, I believe that AI is poised to transform infrastructure engineering business models to finally compensate not for man-hour inputs, but for better quality outcomes. All votes will be raised, but especially software and computing spending per engineer with AI agents automating design optimization. Engineers could, of course, improve their designs without automation to the extent they would be allowed time to explore more iterations. But with the current technical norm of attended consumption compounded by the current commercial norm of hourly billing, budgets rarely afford such repetitions. AI can break through this bottleneck by enabling an engineer's AI agents to automate the workflow of systematically permuting the engineer's initial design over a many dimensional solution space. For instance, varying geometry, dimensions, materials, capacities, utilization and so forth. As a start for this, we're already providing co-pilot AI for users to create, from natural language, scripts that run against the APIs of some of our applications. Through many more APIs to be instrumented across our portfolio, these automation agents will headlessly invoke our proven modeling and simulation functionality in a heuristic search strategy to converge to qualified superior alternatives for the human in the loop to subjectively assess. But consider that AI could extend design optimization even further. for example, to reuse proven components from past projects, and to minimize construction effort, schedule, and risk. The potential incremental value of such optimization can reach a very significant portion of infrastructure projects' total installed cost, which together is literally in the trillions of dollars annually. Owner-operators will willingly pay more for designs accordingly AI-optimized for quality. Project delivery teams finally will be able to expand beyond the current constraints of engineers' time and will compete to generate value by leveraging their IP in AI agents and in proprietary project and asset data. For our part, Bentley Systems will, in due course, incrementally monetize API consumption on a scale orders of magnitude greater than that of continuing attendant consumption. But a quite immediate opportunity already open for us is to apply AI and digital twins toward optimizing the operations and maintenance lifecycle of assets. This is a committed priority of Bentley Systems' new management generation. Our comparatively small proportion of revenue from asset performance to date in relation to years of investment shows how slow this had been to significantly grow. But more recently, in conjunction with fast-improving reality capture technologies ranging from drones through dashcams, AI has enabled instant-on digital twins. Our asset analytics strategy, accelerated by year-end acquisitions, reached the $50 million run rate milestone for asset consumption revenue in 2025. Our progenitor, OpenTower IQ, continues its leadership with ARR now in eight figures. It exemplifies our winning strategy, uniquely combining market-leading digital twin creation with best-in-class engineering simulations. Blink-See for roadway operations also had a breakthrough 2025 and is now being piloted by many departments of transportation. Hawaii announced a statewide commitment, including providing dash cams to drivers to extend coverage. Alabama is using Blink-See to improve decisions on maintenance and capital project spending. Our two acquisitions were strategically complementary. We acquired the assets of Pointivo, whose R&D and valuable patent portfolio extend our asset analytics platform in new directions. Pointivo software has been broadly applied for advanced AI-based point cloud processing, automated measurement and condition analysis, and inspection workflows. And we acquired Talon Analytics, the leader in asset analytics for telecom and utilities, with capabilities proven at the level of eight-figure contracts. Talon originated drone capture for wireless structures and evolved its AI-based software to expedite construction completions and ongoing maintenance. Talon already relied on our iTwin capture for engineering-grade digital twins. Recently, they collaborated with integrated grid utilities to pioneer AI-based digital twins for electrical distribution poles. To automate the structural analysis for hundreds of thousands of poles, we helped Talon to implement API consumption of our SPIDO simulation software. To gauge the potential for this, The U.S. alone has 180 million distribution poles, and for each digital twin inspection and simulation, our talent asset consumption revenue is in low double digits. By law, distribution pole inspections are required only every five years, which is a reason that classification as ARR is not obvious. The best outcome is for digital twins and AI to make annual monitoring affordable and effective. The next opportunity for our expanded asset analytics platform is to leverage power line systems simulation to improve resilience of electrical transmission tower capacity. That's the infrastructure most needed for AI computing to grow. For API consumption, we are now prioritizing propagation. But I consider that the progression we've just talked about from Talon's seven-figure API usage to our mid-eight figures of asset consumption revenue to be representative of our potential to monetize AI at scale. By virtue of Bentley Systems' majority family ownership, our compass has always been set to benefit the long term. Our solid financial fundamentals and our directly relevant organizational experience equip us to tolerably bear the marginal risks and volatility inevitably associated with these increased AI investments and ambitions. My assessment is that AI transformation for infrastructure engineering augurs better times than ever for Bentley Systems. Here's to 2026 and beyond. And now over to Nicholas.

Thank you, Greg. Building on the context you provided for AI, I want to start today by outlining our strategy, the significant progress we made in 2025, and how we plan to execute on it going forward. Our approach is twofold. We are not only embedding our own AI capabilities into our products, but also instrumenting our platforms so our users and partners can build their own AI-driven workflows. We're investing in AI across our entire portfolio, But for this conversation, I want to focus on three key areas that are central to our business and represent a comprehensive and principled approach to infrastructure AI. First, in Bentley Open Applications, we're leveraging AI to enhance the work of engineers. This includes leveraging AI to automate interactions with our applications, such as the Python Assistant for MicroStation, automate time-consuming design tasks, like generating drawings annotations for open roads, and even optimize entire designs as seen with the site layout optimization in Open Site Plus. Just as importantly, our applications serve as a critical environment where AI recommendations are not just tested, but continuously optimized. This is not a single pass-fail gate. It is an iterative process where software is used continuously to improve the AI-orchestrated design, ensuring it becomes progressively more sound. This process naturally drives greater consumption of our application's core engineering capabilities, as they become central to the AI-driven design workflow. Second, Bentley Asset Analytics, which Craig spoke about, uses a two-step process. It leverages AI, primarily computer vision, to process imagery and detect features on an asset. It then uses bend-open applications to understand what those features mean from an engineering perspective. For example, can a tire safely take on more load? The output is actionable engineering intelligence. that an AI workflow can then use, for example, to automatically trigger remediation work in a third-party EDM system like IBM Maximo. Third, Venue Infrastructure Cloud serves as the data foundation for AI. This is where the world's leading engineering firms manage the design files for their current and past projects, primarily using ProjectWise. Our iTrain technology provides the capability to access data from countless file formats and systems and map it to our base infrastructure schema, making it ready for AI. This unlocks tremendous potential. It allows engineers to search past project data using natural language. It will enable our users to fine-tune our AI models with their own proprietary data or even train entirely new custom models. We envision a not-so-distant future where Bend Ecopilot, drawing on an organization's past projects stored in Bend Infrastructure Cloud, can proactively recommend the best design components. And crucially, as Bend Infrastructure Cloud maintains a digital thread through operations, it will be able to surface invaluable performance data from the field. This will allow users to understand how designs created before have held up over time, providing a historical, evidence-based foundation to inform and de-risk the next generation of designs. But leveraging historical data is only the first step. The true power of our integrated platforms comes to life when Bentley Copilot itself becomes an optimizer. Imagine it not only recommending that proven component, but then offering to reduce its carbon footprint using actuarial capabilities. refine its foundation with Plaxis, optimize its structure with STAAD, and ensure its constructability with Syncro. That is the unique, compelling power of a truly integrated platform for infrastructure AI. Finally, all of this is built on a principled approach to data. Data ownership is a critical topic in infrastructure. What makes us distinct is our unwavering commitment to data stewardship, a principle we first articulated in 2023. Our users, and only our users, decide if and when their data is used to train AI models. To enforce this, we provide a data agreement registry, where an account can formally grant or revoke its consent to have its data included in AI training sets, ensuring they remain in full control. I want to be clear about our commercial approach to AI. as it is intentionally different across our portfolio. With Bentley Asset Analytics, AI is applied to mature operational needs where it delivers tangible ROI. Our focus there is rightly on driving revenue growth. For the foundational area of AI in design, however, we are playing a longer game. These are still early days for applying AI to mission-critical engineering. Therefore, our immediate priority is to lead the exploration for the highest value AI power workflows, while at the same time building the market and driving their adoption rather than focusing on direct monetization. As the infrastructure engineering software company, we believe it's our responsibility to lead this transition thoughtfully. This means actively engaging across the entire infrastructure ecosystem, From our deep collaborations with engineering firms and owner-operators to policy discussions with government bodies and partnerships with other technology leaders, we are helping to establish the standards and trust necessary for this technology to be adopted safely and effectively. Through these efforts, we are building the foundation of usage and trust first, confident that monetization will follow as these new AI-powered workflows mature and prove their immense value. So, that is the strategic foundation we're building for our next phase of growth. Now, turning to our results from the fourth quarter, our performance shows the continued strength of our established business today. We delivered a strong finish to the year, and that momentum gives us confidence in our 2026 outlook where we aim to deliver another year of compounding results within our financial framework. I want to thank all of our colleagues for their dedication and hard work, and our users for their continued trust. Q4 ARR increased 11.5% year-over-year, which was a solid increase from Q3, as we expected. Net revenue retention was stable at 109%. E365 performance remained steady, and we added 300 basis points of AR growth from new logos once again, primarily within the SMB segment. For the 16th consecutive quarter, we added at least 600 new SMB logos to our line store, with retention in this segment remaining high. Turning to our tone of business by infrastructure sector, resources was once again our fastest growing sector. The standard growth of Sequent is expanding our addressable market into critical resources, a domain that includes mining, as well as new energy sources and groundwater. The performance of Sequent, even during the recent mining slowdown, demonstrates the resilience of its business model, which is deeply embedded in operational workflows rather than cyclical capital projects. As market conditions in mining continue to improve, We are confident Sequent will remain a key growth engine for us in 2026 and beyond. Our larger sector public works utilities delivered another quarter of strong growth, driven by sustained global infrastructure investment and the standout performance of Bentley Asset Analytics. Power9 Systems also continues to be a key growth driver, benefiting from global demand for grid resilience and increased power generation. Growth in the industrial sector was solid, while commercial facilities remained relatively flat. Turning to our tone of business by geographic region. Our largest region, the Americas, saw another quarter of strong growth. This was driven by a favorable macro backdrop for infrastructure investment that we expect to continue into 2026. The US market remains healthy, with stable public funding ensuring that product backlogs remain large, and engineering services firms, BZ. We also see our accounts already at capacity, capitalizing on the large private sector investments in data centers, driven primarily by demand for AI compute. Even though the core design work is more akin to building design, the immense strain these projects place on the local infrastructure, in particular the power grid and water network, creates a sustained tailwind for a broad portfolio of infrastructure engineering applications. Beyond infrastructure, the U.S. administration's announcements of Product Volt, a $12 billion investment to establish a strategic reserve for critical minerals, is a clear signal of a broader global trend. The imperative to secure domestic resources, which in turn drives the mining activity that benefits Sequin. Growth in EMEA was once again led by the Middle East. We expect this exceptional performance to continue in 2026. as investments there shift towards transportation, utilities and mining, playing to our strength even more. Europe delivered a strong quarter, with infrastructure clearly remaining a top priority for the EU. This was evidenced by several policy initiatives published in Q4 targeting key strategic goals, energy transition, transport connectivity and supply chain security. The UK was softer in Q4, reflecting the tail end of project pauses from earlier in 2025. However, looking ahead into 2026, the pipeline for design and engineering work is improving significantly. For instance, we were very encouraged by last month's green light for Northern Powerhouse Rail. This adds another multi-billion pound project to the design pipeline, alongside massive engineering efforts now underway, such as size we'll see. In Asia-Pacific, India delivered solid growth. The long-term outlook here remains strong. In addition to ongoing investments in transportation and the water infrastructure, the country's 2047 vision calls for massive investment in grid modernization to provide power for all. With Pyrenees Systems as the industry standard for transmission engineering, we are uniquely positioned to help. China, which represents approximately 2% of ARR, continue to be impacted in the quarter by the economic and geopolitical headwinds, which are likely to remain through 2026. Growth in Australia is showing signs of recovery, as headwinds from government changes and a pause in transportation projects subside. We expect stronger growth in 2026, driven by resurgence in the mining sector and new infrastructure projects related to the Olympics. All in all, we are very pleased with the continuous strengths of our business, and we are well positioned with a great foundational strategy to help the infrastructure ecosystem leverage AI to deliver even better outcomes. And now, for a detailed review of our financial results and outlook for 2026, over to you Werner.