Bentley’s second quarter results met Wall Street’s revenue expectations but drew a negative market response, with management pointing to sector-specific dynamics and evolving customer demand. CEO Nicholas Cumins highlighted continued strength in infrastructure investment, particularly in public works and utilities, but noted ongoing challenges like capacity constraints in engineering talent. The company saw consistent demand across both large enterprise and SMB segments, while growth in professional services and perpetual license revenues remained subdued. Cumins stated, “There’s really no problem with the demand, there’s a problem with the capacity. They just don’t have enough engineers.”
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Bentley (BSY) Q2 CY2025 Highlights:
- Revenue: $364.1 million vs analyst estimates of $363.4 million (10.2% year-on-year growth, in line)
- Adjusted EPS: $0.32 vs analyst estimates of $0.29 (12% beat)
- Adjusted Operating Income: $124.5 million vs analyst estimates of $121.5 million (34.2% margin, 2.5% beat)
- Operating Margin: 23.2%, down from 24.3% in the same quarter last year
- Net Revenue Retention Rate: 109%, down from 110% in the previous quarter
- Annual Recurring Revenue: $1.38 billion vs analyst estimates of $1.35 billion (13.4% year-on-year growth, 2.3% beat)
- Billings: $368.3 million at quarter end, up 13.3% year on year
- Market Capitalization: $16.47 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Bentley’s Q2 Earnings Call
- Matthew George Hedberg (RBC): Asked about macro demand trends post-tariff uncertainty. CEO Nicholas Cumins responded that demand remains consistent, driven by infrastructure investment, but capacity constraints in engineering talent persist.
- Joseph D. Vruwink (Robert Baird): Questioned Bentley’s ability to reach engineers at lower price points. Cumins explained that MicroStation serves as an accessible entry product, with the SMB segment showing sustained growth and acting as a funnel for upselling.
- Kristen Owen (Oppenheimer): Inquired about the data center opportunity and partnerships with hyperscalers. CEO Greg Bentley and Cumins described data centers as “mini-cities,” highlighting software’s role in designing and integrating supporting infrastructure, and mentioned active collaborations with hyperscalers.
- Ivan Radojicic (Wolfe Research): Sought clarification on the slight net revenue retention downtick. CFO Werner Andre explained that the change was minor and within the historical 9-10% range, with China remaining a small factor.
- Sitikantha Panigrahi (Mizuho Securities): Asked about agentic AI and its impact. Cumins detailed ongoing development of AI-native applications and anticipated that AI-driven productivity will drive business model evolution and customer value capture.
Catalysts in Upcoming Quarters
Our analyst team will be closely monitoring (1) the pace of AI integration across Bentley’s core product lines, particularly the rollout and customer adoption of OpenSite+ and Cesium platform enhancements; (2) expansion of asset analytics into new sectors, with a focus on reducing revenue volatility through larger owner-operator contracts; and (3) legislative and regulatory developments related to infrastructure funding and permitting reform in the U.S., U.K., and EU. Execution on these priorities will provide key indicators of Bentley’s ability to sustain growth and adapt to evolving industry needs.
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