Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Bentley Systems Announces Operating Results for the Third Quarter of 2023 By: Bentley Systems, Incorporated via Business Wire November 07, 2023 at 07:00 AM EST Bentley Systems, Incorporated (Nasdaq: BSY), the infrastructure engineering software company, today announced operating results for its third quarter and nine months ended September 30, 2023. Third Quarter 2023 Operating Results Total revenues were $306.6 million, up 14.3% or 11.0% on a constant currency basis, year-over-year; Subscriptions revenues were $270.8 million, up 15.1% or 11.7% on a constant currency basis, year-over-year; Annualized Recurring Revenues (“ARR”) was $1,124.8 million as of September 30, 2023, compared to $983.7 million as of September 30, 2022, representing a constant currency ARR growth rate of 12.5%; Last twelve-month recurring revenues dollar-based net retention rate was 110%, consistent with the same period last year; Operating income margin was 24.0%, compared to 20.7% for the same period last year; Adjusted operating income inclusive of stock-based compensation expense (“Adjusted OI w/SBC”) margin was 28.2%, compared to 24.9% for the same period last year; Net income per diluted share was $0.16, compared to $0.12 for the same period last year; Adjusted net income per diluted share (“Adjusted EPS”) was $0.22, compared to $0.19 for the same period last year; and Cash flow from operations was $72.8 million, compared to $69.5 million for the same period last year. Nine Months Ended September 30, 2023 Operating Results Total revenues were $917.8 million, up 13.0% or 12.8% on a constant currency basis, year-over-year; Subscriptions revenues were $807.8 million, up 14.0% or 13.6% on a constant currency basis, year-over-year; Operating income margin was 21.0%, compared to 20.7% for the same period last year; Adjusted OI w/SBC margin was 27.2%, compared to 25.8% for the same period last year; Net income per diluted share was $0.46, consistent with the same period last year; Adjusted EPS was $0.72, compared to $0.66 for the same period last year; and Cash flow from operations was $329.6 million, compared to $238.2 million for the same period last year. CEO Greg Bentley said, “Our operating results this quarter demonstrate the sustainability of our more broadly balanced growth contributors. Year-over-year ARR growth (business performance in constant currency) remained strong at 12.5% despite fewer calendar workdays and an upsurge in perpetual license purchases. Continuing growth drivers include the Infrastructure Investment and Jobs Act in the U.S., expansion of E365 as our enterprise accounts accelerate going digital, and Virtuosity’s momentum in penetrating small and medium-sized business prospects. “At our Year in Infrastructure Conference in Singapore last month, Going Digital Award finalists showcased advancements that enabled a reported median of 18% in project engineering savings. This reinforces our sustaining opportunity to help our accounts surmount the increasing capacity gap in infrastructure engineering resources, both through more specialized modeling and simulation applications and through iTwin-powered Bentley Infrastructure Cloud, to compound for them the ‘infrastructure intelligence’ value of their data.” COO Nicholas Cumins commented, “Our 23Q3 operating results reflect continued strong performance, with trends generally in line with the previous quarter. ARR growth by sector was once again led by Public Works / Utilities; Resources remained above the company average, including Seequent despite the slowdown in new mine exploration projects, while Industrial was somewhat below average; and Commercial / Facilities remained flat. ARR growth by region was led by Americas, followed by Asia Pacific, then EMEA. In particular, we are pleased by the momentum we are seeing with the US DOTs and their ecosystem.” CFO Werner Andre said, “In 23Q3 BSY’s financial results met or surpassed our expectations in revenues, recurring revenues dollar-based net retention rate, Adjusted operating income inclusive of stock-based compensation expense margin, and operating cash flows. Our constant currency ARR growth momentum and seasonality reflects the E365 consumption impact from this quarter’s fewer working days when compared to historic norm, and the increasing preferences for perpetual licenses especially in China. After de facto share repurchases, and this year’s higher dividends, we have primarily applied our strong operating cash flows to de-lever by 1.0x on a net debt to Adjusted EBITDA basis since the beginning of the year, and will look to further de-lever in the coming quarters as conditions permit in order to provide increasing capital structure strength and flexibility.” Operating Results Call Details Bentley Systems will host a live Zoom video webinar on November 7, 2023 at 8:15 a.m. EST to discuss operating results for its third quarter ended September 30, 2023. Those wishing to participate should access the live Zoom video webinar of the event through a direct registration link at https://us06web.zoom.us/webinar/register/WN_VO5w_MjXT8CLW7nrIClg3A#/registration. Alternatively, the event can be accessed from the Events & Presentations page on Bentley Systems’ Investor Relations website at https://investors.bentley.com. In addition, a replay and transcript will be available after the conclusion of the live event on Bentley Systems’ Investor Relations website for one year. Non-GAAP Financial Measures In this operating results press release, we sometimes refer to financial measures that are not presented in accordance with U.S. generally accepted accounting principles (“GAAP”). Certain of these measures are considered non-GAAP financial measures under the United States Securities and Exchange Commission (“SEC”) regulations. Those rules require the supplemental explanations and reconciliations that are in Bentley Systems’ Form 8-K (Quarterly Earnings Release) furnished to the SEC. Forward-Looking Statements This press release includes forward-looking statements regarding the future results of operations and financial position, business strategy, and plans and objectives for future operations of Bentley Systems, Incorporated (the “Company,” “we,” “us,” and words of similar import). All such statements contained in this press release, other than statements of historical facts, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations, projections, and assumptions about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, and there are a significant number of factors that could cause actual results to differ materially from statements made in this press release including: adverse changes in global economic and/or political conditions; the impact of current and future sanctions, embargoes and other similar laws at the state and/or federal level that impose restrictions on our counterparties or upon our ability to operate our business within the subject jurisdictions; political, economic, regulatory and public health and safety risks and uncertainties in the countries and regions in which we operate; failure to retain personnel necessary for the operation of our business or those that we acquire; changes in the industries in which our accounts operate; the competitive environment in which we operate; the quality of our products; our ability to develop and market new products to address our accounts’ rapidly changing technological needs; changes in capital markets and our ability to access financing on terms satisfactory to us or at all; the impact of changing or uncertain interest rates on us and on the industries we serve; our ability to integrate acquired businesses successfully; and our ability to identify and consummate future investments on terms satisfactory to us or at all. Further information on potential factors that could affect the financial results of the Company are included in the Company’s Form 10‑K and subsequent Form 10‑Qs, which are on file with the SEC. The Company disclaims any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made. About Bentley Systems Bentley Systems (Nasdaq: BSY) is the infrastructure engineering software company. We provide innovative software to advance the world’s infrastructure – sustaining both the global economy and environment. Our industry-leading software solutions are used by professionals, and organizations of every size, for the design, construction, and operations of roads and bridges, rail and transit, water and wastewater, public works and utilities, buildings and campuses, mining, and industrial facilities. Our offerings, powered by the iTwin Platform for infrastructure digital twins, include MicroStation and Bentley Open applications for modeling and simulation, Seequent’s software for geoprofessionals, and Bentley Infrastructure Cloud encompassing ProjectWise for project delivery, SYNCHRO for construction management, and AssetWise for asset operations. Bentley Systems’ 5,000 colleagues generate annual revenues of more than $1 billion in 194 countries. www.bentley.com © 2023 Bentley Systems, Incorporated. Bentley, the Bentley logo, AssetWise, Bentley Infrastructure Cloud, Bentley Open, iTwin, MicroStation, ProjectWise, Seequent, SYNCHRO, and Virtuosity are either registered or unregistered trademarks or service marks of Bentley Systems, Incorporated or one of its direct or indirect wholly owned subsidiaries. All other brands and product names are trademarks of their respective owners. BENTLEY SYSTEMS, INCORPORATED Consolidated Balance Sheets (in thousands) (unaudited) September 30, 2023 December 31, 2022 Assets Current assets: Cash and cash equivalents $ 66,963 $ 71,684 Accounts receivable 243,488 296,376 Allowance for doubtful accounts (8,312 ) (9,303 ) Prepaid income taxes 25,972 18,406 Prepaid and other current assets 46,128 38,732 Total current assets 374,239 415,895 Property and equipment, net 38,309 32,251 Operating lease right-of-use assets 41,434 40,249 Intangible assets, net 259,979 292,271 Goodwill 2,251,312 2,237,184 Investments 30,332 22,270 Deferred income taxes 61,664 52,636 Other assets 77,574 72,249 Total assets $ 3,134,843 $ 3,165,005 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 26,389 $ 15,176 Accruals and other current liabilities 403,428 362,048 Deferred revenues 211,815 226,955 Operating lease liabilities 11,430 14,672 Income taxes payable 18,879 4,507 Current portion of long-term debt 8,750 5,000 Total current liabilities 680,691 628,358 Long-term debt 1,580,752 1,775,696 Deferred compensation plan liabilities 79,537 77,014 Long-term operating lease liabilities 31,355 27,670 Deferred revenues 15,189 16,118 Deferred income taxes 43,530 51,235 Income taxes payable 7,317 8,105 Other liabilities 4,311 7,355 Total liabilities 2,442,682 2,591,551 Stockholders’ equity: Common stock 2,952 2,890 Additional paid-in capital 1,108,816 1,030,466 Accumulated other comprehensive loss (95,128 ) (89,740 ) Accumulated deficit (325,183 ) (370,866 ) Non-controlling interest 704 704 Total stockholders’ equity 692,161 573,454 Total liabilities and stockholders’ equity $ 3,134,843 $ 3,165,005 BENTLEY SYSTEMS, INCORPORATED Consolidated Statements of Operations (in thousands, except share and per share data) (unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Revenues: Subscriptions $ 270,751 $ 235,307 $ 807,839 $ 708,731 Perpetual licenses 11,887 9,460 33,152 31,213 Subscriptions and licenses 282,638 244,767 840,991 739,944 Services 23,974 23,565 76,781 72,190 Total revenues 306,612 268,332 917,772 812,134 Cost of revenues: Cost of subscriptions and licenses 42,088 37,371 124,175 107,904 Cost of services 22,588 21,812 74,111 66,758 Total cost of revenues 64,676 59,183 198,286 174,662 Gross profit 241,936 209,149 719,486 637,472 Operating expense (income): Research and development 65,465 63,827 203,382 189,966 Selling and marketing 53,757 46,114 160,262 141,676 General and administrative 42,678 37,794 128,743 128,981 Deferred compensation plan (3,160 ) (4,576 ) 4,763 (21,873 ) Amortization of purchased intangibles 9,517 10,446 29,567 30,869 Total operating expenses 168,257 153,605 526,717 469,619 Income from operations 73,679 55,544 192,769 167,853 Interest expense, net (10,047 ) (9,134 ) (30,623 ) (23,521 ) Other income, net 5,953 932 7,207 14,793 Income before income taxes 69,585 47,342 169,353 159,125 Provision for income taxes (16,514 ) (9,664 ) (22,107 ) (8,221 ) Loss from investments accounted for using the equity method, net of tax (44 ) (681 ) (44 ) (1,846 ) Net income $ 53,027 $ 36,997 $ 147,202 $ 149,058 Per share information: Net income per share, basic $ 0.17 $ 0.12 $ 0.47 $ 0.48 Net income per share, diluted $ 0.16 $ 0.12 $ 0.46 $ 0.46 Weighted average shares, basic 313,069,132 310,116,104 311,915,808 308,959,801 Weighted average shares, diluted 332,825,186 325,170,383 332,144,893 332,077,834 BENTLEY SYSTEMS, INCORPORATED Consolidated Statements of Cash Flows (in thousands) (unaudited) Nine Months Ended September 30, 2023 2022 Cash flows from operating activities: Net income $ 147,202 $ 149,058 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 52,787 53,644 Deferred income taxes (14,632 ) (13,670 ) Stock-based compensation expense 56,092 51,359 Deferred compensation plan 4,763 (21,873 ) Amortization of deferred debt issuance costs 5,469 5,468 Change in fair value of derivative (4,102 ) (29,318 ) Foreign currency remeasurement loss 3,198 14,445 Other 2,464 4,193 Changes in assets and liabilities, net of effect from acquisitions: Accounts receivable 56,065 12,550 Prepaid and other assets (1,246 ) 7,779 Accounts payable, accruals, and other liabilities 33,437 28,765 Deferred revenues (17,688 ) (26,725 ) Income taxes payable, net of prepaid income taxes 5,834 2,523 Net cash provided by operating activities 329,643 238,198 Cash flows from investing activities: Purchases of property and equipment and investment in capitalized software (18,906 ) (12,982 ) Proceeds from sale of aircraft — 2,380 Acquisitions, net of cash acquired (23,110 ) (719,539 ) Purchases of investments (11,352 ) (10,304 ) Proceeds from investments 2,123 — Net cash used in investing activities (51,245 ) (740,445 ) Cash flows from financing activities: Proceeds from credit facilities 442,566 753,376 Payments of credit facilities (634,718 ) (408,714 ) Repayments of term loan (3,750 ) (3,750 ) Payments of contingent and non-contingent consideration (3,039 ) (6,996 ) Payments of dividends (43,992 ) (25,828 ) Proceeds from stock purchases under employee stock purchase plan 9,988 10,335 Proceeds from exercise of stock options 10,590 6,855 Payments for shares acquired including shares withheld for taxes (57,527 ) (42,213 ) Repurchases of Class B Common Stock under approved program — (28,250 ) Other (137 ) (123 ) Net cash (used in) provided by financing activities (280,019 ) 254,692 Effect of exchange rate changes on cash and cash equivalents (3,100 ) (8,926 ) Decrease in cash and cash equivalents (4,721 ) (256,481 ) Cash and cash equivalents, beginning of year 71,684 329,337 Cash and cash equivalents, end of period $ 66,963 $ 72,856 BENTLEY SYSTEMS, INCORPORATED Reconciliation of GAAP to Non-GAAP Measures (in thousands, except share and per share data) (unaudited) Reconciliation of operating income to Adjusted OI w/SBC and to Adjusted operating income: Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Operating income $ 73,679 $ 55,544 $ 192,769 $ 167,853 Amortization of purchased intangibles 12,678 13,575 39,038 40,174 Deferred compensation plan (3,160 ) (4,576 ) 4,763 (21,873 ) Acquisition expenses 2,980 3,203 15,278 21,056 Realignment expenses (income) 150 (971 ) (1,800 ) 2,223 Adjusted OI w/SBC 86,327 66,775 250,048 209,433 Stock-based compensation expense 18,039 18,626 54,907 50,974 Adjusted operating income $ 104,366 $ 85,401 $ 304,955 $ 260,407 Reconciliation of net income to Adjusted net income: Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 $ EPS(1) $ EPS(1) $ EPS(1) $ EPS(1) Net income $ 53,027 $ 0.16 $ 36,997 $ 0.12 $ 147,202 $ 0.46 $ 149,058 $ 0.46 Non-GAAP adjustments, prior to income taxes: Amortization of purchased intangibles 12,678 0.04 13,575 0.04 39,038 0.12 40,174 0.12 Stock-based compensation expense 18,039 0.05 18,626 0.06 54,907 0.17 50,974 0.15 Deferred compensation plan (3,160 ) (0.01 ) (4,576 ) (0.01 ) 4,763 0.01 (21,873 ) (0.07 ) Acquisition expenses 2,980 0.01 3,203 0.01 15,278 0.05 21,056 0.06 Realignment expenses (income) 150 — (971 ) — (1,800 ) (0.01 ) 2,223 0.01 Other income, net (5,953 ) (0.02 ) (932 ) — (7,207 ) (0.02 ) (14,793 ) (0.04 ) Total non-GAAP adjustments, prior to income taxes 24,734 0.07 28,925 0.09 104,979 0.32 77,761 0.23 Income tax effect of non-GAAP adjustments (5,306 ) (0.02 ) (5,342 ) (0.02 ) (19,303 ) (0.06 ) (13,832 ) (0.04 ) Loss from investments accounted for using the equity method, net of tax 44 — 681 — 44 — 1,846 0.01 Adjusted net income(2) $ 72,499 $ 0.22 $ 61,261 $ 0.19 $ 232,922 $ 0.72 $ 214,833 $ 0.66 Adjusted weighted average shares, diluted(3) 332,825,186 332,079,181 332,144,893 332,077,834 ________________________ (1) Adjusted EPS was computed independently for each reconciling item presented; therefore, the sum of Adjusted EPS for each line item may not equal total Adjusted EPS due to rounding. (2) Adjusted EPS numerator includes $1,716 for both the three months ended September 30, 2023 and 2022, and $5,157 and $5,116 for the nine months ended September 30, 2023 and 2022, respectively, related to interest expense, net of tax, attributable to the convertible senior notes using the if‑converted method. (3) Adjusted weighted average shares, diluted includes incremental shares, which were considered anti-dilutive on a GAAP basis, of 6,908,798 shares for the three months ended September 30, 2022 related to the dilutive effect of convertible senior notes using the if‑converted method. Reconciliation of cash flow from operations to Adjusted EBITDA: Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Cash flow from operations $ 72,824 $ 69,468 $ 329,643 $ 238,198 Cash interest 9,988 7,119 29,370 17,647 Cash taxes 10,704 7,972 28,703 18,502 Cash deferred compensation plan distributions — — 2,125 7,336 Cash acquisition expenses 4,487 420 19,777 23,169 Changes in operating assets and liabilities 13,504 5,513 (84,494 ) (30,500 ) Other(1) (2,336 ) (752 ) (6,420 ) (475 ) Adjusted EBITDA $ 109,171 $ 89,740 $ 318,704 $ 273,877 ________________________ (1) Includes receipts related to interest rate swap. Explanation of Non-GAAP and Other Financial Measures Constant currency Constant currency and constant currency growth rates are non-GAAP financial measures that present our results of operations excluding the estimated effects of foreign currency exchange rate fluctuations. We have operations outside the United States that are conducted in local currencies. As a result, the comparability of the financial results reported in U.S. dollars is affected by changes in foreign currency exchange rates. We use constant currency and constant currency growth rates to evaluate the underlying performance of the business, and we believe it is helpful for investors to present operating results on a comparable basis period over period to evaluate its underlying performance. In reporting period‑over‑period results, we calculate the effects of foreign currency fluctuations and constant currency information by translating current period results using prior period average foreign currency exchange rates. Recurring revenues Recurring revenues are the basis for our other revenue-related key business metrics. We believe this measure is useful in evaluating our ability to consistently retain and grow our revenues from accounts with revenues in the prior period (“existing accounts”). Recurring revenues are subscriptions revenues that recur monthly, quarterly, or annually with specific or automatic renewal clauses and professional services revenues in which the underlying contract is based on a fixed fee and contains automatic annual renewal provisions. Annualized recurring revenues (“ARR”) ARR is a key business metric that we believe is useful in evaluating the scale and growth of our business as well as to assist in the evaluation of underlying trends in our business. Furthermore, we believe ARR, considered in connection with our last twelve‑month recurring revenues dollar‑based net retention rate, is a leading indicator of revenue growth. ARR is defined as the sum of the annualized value of our portfolio of contracts that produce recurring revenues as of the last day of the reporting period, and the annualized value of the last three months of recognized revenues for our contractually recurring consumption‑based software subscriptions with consumption measurement durations of less than one year, calculated using the spot foreign exchange rates. We believe that the last three months of recognized revenues, on an annualized basis, for our recurring software subscriptions with consumption measurement period durations of less than one year is a reasonable estimate of the annual revenues, given our consistently high retention rate and stability of usage under such subscriptions. Constant currency ARR growth rate is the growth rate of ARR measured on a constant currency basis. Constant currency ARR growth rate from business performance excludes the ARR onboarding of our platform acquisitions and includes the impact from the ARR onboarding of programmatic acquisitions, which generally are immaterial, individually and in the aggregate. We believe these ARR growth rates are important metrics indicating the scale and growth of our business. Last twelve‑month recurring revenues dollar‑based net retention rate Last twelve‑month recurring revenues dollar‑based net retention rate is a key business metric that we believe is useful in evaluating our ability to consistently retain and grow our recurring revenues. Last twelve‑month recurring revenues dollar‑based net retention rate is calculated, using the average exchange rates for the prior period, as follows: the recurring revenues for the current period, including any growth or reductions from existing accounts, but excluding recurring revenues from any new accounts added during the current period, divided by the total recurring revenues from all accounts during the prior period. A period is defined as any trailing twelve months. Related to our platform acquisitions, recurring revenues into new accounts will be captured as existing accounts starting with the second anniversary of the acquisition when such data conforms to the calculation methodology. This may cause variability in the comparison. Adjusted operating income inclusive of stock-based compensation expense (“Adjusted OI w/SBC”) Adjusted OI w/SBC is a non-GAAP financial measure and is used to measure the operational strength and performance of our business, as well as to assist in the evaluation of underlying trends in our business. Adjusted OI w/SBC is our primary performance measure, which excludes certain expenses and charges, including the non-cash amortization expense resulting from the acquisition of intangible assets, as we believe these may not be indicative of the Company’s core business operating results. We intentionally include stock-based compensation expense in this measure as we believe it better captures the economic costs of our business. Management uses this non-GAAP financial measure to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, to evaluate financial performance, and in our comparison of our financial results to those of other companies. It is also a significant performance measure in certain of our executive incentive compensation programs. Adjusted OI w/SBC is defined as operating income adjusted for the following: amortization of purchased intangibles, expense (income) relating to deferred compensation plan liabilities, acquisition expenses, and realignment expenses (income), for the respective periods. Adjusted OI w/SBC margin is calculated by dividing Adjusted OI w/SBC by total revenues. Adjusted operating income Adjusted operating income is a non-GAAP financial measure that we believe is useful to investors in making comparisons to other companies, although this measure may not be directly comparable to similar measures used by other companies. Adjusted operating income is defined as operating income adjusted for the following: amortization of purchased intangibles, expense (income) relating to deferred compensation plan liabilities, acquisition expenses, realignment expenses (income), and stock‑based compensation expense, for the respective periods. Adjusted net income and Adjusted EPS Adjusted net income and Adjusted EPS are non-GAAP financial measures presenting the earnings generated by our ongoing operations that we believe is useful to investors in making meaningful comparisons to other companies, although these measures may not be directly comparable to similar measures used by other companies, and period-over-period comparisons. Adjusted net income is defined as net income adjusted for the following: amortization of purchased intangibles, stock‑based compensation expense, expense (income) relating to deferred compensation plan liabilities, acquisition expenses, realignment expenses (income), other non‑operating (income) expense, net, the tax effect of the above adjustments to net income, and (income) loss from investments accounted for using the equity method, net of tax, for the respective periods. The income tax effect of non‑GAAP adjustments was determined using the applicable rates in the taxing jurisdictions in which income or expense occurred, and represent both current and deferred income tax expense or benefit based on the nature of the non‑GAAP adjustments, including the tax effects of non‑cash stock‑based compensation expense. Adjusted EPS is calculated as Adjusted net income, less net income attributable to participating securities, plus interest expense, net of tax, attributable to the convertible senior notes using the if‑converted method, if applicable, (numerator) divided by Adjusted weighted average shares, diluted (denominator). Adjusted weighted average shares, diluted is calculated by adding incremental shares related to the dilutive effect of convertible senior notes using the if‑converted method, if applicable, to weighted average shares, diluted. Adjusted EBITDA Adjusted EBITDA is our liquidity measure in the context of conversion of Adjusted EBITDA to cash flow from operations (i.e., the ratio of GAAP cash flow from operations to Adjusted EBITDA). We believe this non-GAAP financial measure provides a meaningful measure of liquidity and a useful basis for assessing our ability to repay debt, make strategic acquisitions and investments, and return capital to investors. Adjusted EBITDA is defined as cash flow from operations adjusted for the following: cash interest, cash taxes, cash deferred compensation plan distributions, cash acquisition expenses, changes in operating assets and liabilities, and other cash items (such as those related to our interest rate swap). From time to time, we may exclude from Adjusted EBITDA the impact of certain cash receipts or payments that affect period-to-period comparability. View source version on businesswire.com: https://www.businesswire.com/news/home/20231107889084/en/Contacts BSY Investor Contact: Eric Boyer Investor Relations Officer ir@bentley.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Bentley Systems Announces Operating Results for the Third Quarter of 2023 By: Bentley Systems, Incorporated via Business Wire November 07, 2023 at 07:00 AM EST Bentley Systems, Incorporated (Nasdaq: BSY), the infrastructure engineering software company, today announced operating results for its third quarter and nine months ended September 30, 2023. Third Quarter 2023 Operating Results Total revenues were $306.6 million, up 14.3% or 11.0% on a constant currency basis, year-over-year; Subscriptions revenues were $270.8 million, up 15.1% or 11.7% on a constant currency basis, year-over-year; Annualized Recurring Revenues (“ARR”) was $1,124.8 million as of September 30, 2023, compared to $983.7 million as of September 30, 2022, representing a constant currency ARR growth rate of 12.5%; Last twelve-month recurring revenues dollar-based net retention rate was 110%, consistent with the same period last year; Operating income margin was 24.0%, compared to 20.7% for the same period last year; Adjusted operating income inclusive of stock-based compensation expense (“Adjusted OI w/SBC”) margin was 28.2%, compared to 24.9% for the same period last year; Net income per diluted share was $0.16, compared to $0.12 for the same period last year; Adjusted net income per diluted share (“Adjusted EPS”) was $0.22, compared to $0.19 for the same period last year; and Cash flow from operations was $72.8 million, compared to $69.5 million for the same period last year. Nine Months Ended September 30, 2023 Operating Results Total revenues were $917.8 million, up 13.0% or 12.8% on a constant currency basis, year-over-year; Subscriptions revenues were $807.8 million, up 14.0% or 13.6% on a constant currency basis, year-over-year; Operating income margin was 21.0%, compared to 20.7% for the same period last year; Adjusted OI w/SBC margin was 27.2%, compared to 25.8% for the same period last year; Net income per diluted share was $0.46, consistent with the same period last year; Adjusted EPS was $0.72, compared to $0.66 for the same period last year; and Cash flow from operations was $329.6 million, compared to $238.2 million for the same period last year. CEO Greg Bentley said, “Our operating results this quarter demonstrate the sustainability of our more broadly balanced growth contributors. Year-over-year ARR growth (business performance in constant currency) remained strong at 12.5% despite fewer calendar workdays and an upsurge in perpetual license purchases. Continuing growth drivers include the Infrastructure Investment and Jobs Act in the U.S., expansion of E365 as our enterprise accounts accelerate going digital, and Virtuosity’s momentum in penetrating small and medium-sized business prospects. “At our Year in Infrastructure Conference in Singapore last month, Going Digital Award finalists showcased advancements that enabled a reported median of 18% in project engineering savings. This reinforces our sustaining opportunity to help our accounts surmount the increasing capacity gap in infrastructure engineering resources, both through more specialized modeling and simulation applications and through iTwin-powered Bentley Infrastructure Cloud, to compound for them the ‘infrastructure intelligence’ value of their data.” COO Nicholas Cumins commented, “Our 23Q3 operating results reflect continued strong performance, with trends generally in line with the previous quarter. ARR growth by sector was once again led by Public Works / Utilities; Resources remained above the company average, including Seequent despite the slowdown in new mine exploration projects, while Industrial was somewhat below average; and Commercial / Facilities remained flat. ARR growth by region was led by Americas, followed by Asia Pacific, then EMEA. In particular, we are pleased by the momentum we are seeing with the US DOTs and their ecosystem.” CFO Werner Andre said, “In 23Q3 BSY’s financial results met or surpassed our expectations in revenues, recurring revenues dollar-based net retention rate, Adjusted operating income inclusive of stock-based compensation expense margin, and operating cash flows. Our constant currency ARR growth momentum and seasonality reflects the E365 consumption impact from this quarter’s fewer working days when compared to historic norm, and the increasing preferences for perpetual licenses especially in China. After de facto share repurchases, and this year’s higher dividends, we have primarily applied our strong operating cash flows to de-lever by 1.0x on a net debt to Adjusted EBITDA basis since the beginning of the year, and will look to further de-lever in the coming quarters as conditions permit in order to provide increasing capital structure strength and flexibility.” Operating Results Call Details Bentley Systems will host a live Zoom video webinar on November 7, 2023 at 8:15 a.m. EST to discuss operating results for its third quarter ended September 30, 2023. Those wishing to participate should access the live Zoom video webinar of the event through a direct registration link at https://us06web.zoom.us/webinar/register/WN_VO5w_MjXT8CLW7nrIClg3A#/registration. Alternatively, the event can be accessed from the Events & Presentations page on Bentley Systems’ Investor Relations website at https://investors.bentley.com. In addition, a replay and transcript will be available after the conclusion of the live event on Bentley Systems’ Investor Relations website for one year. Non-GAAP Financial Measures In this operating results press release, we sometimes refer to financial measures that are not presented in accordance with U.S. generally accepted accounting principles (“GAAP”). Certain of these measures are considered non-GAAP financial measures under the United States Securities and Exchange Commission (“SEC”) regulations. Those rules require the supplemental explanations and reconciliations that are in Bentley Systems’ Form 8-K (Quarterly Earnings Release) furnished to the SEC. Forward-Looking Statements This press release includes forward-looking statements regarding the future results of operations and financial position, business strategy, and plans and objectives for future operations of Bentley Systems, Incorporated (the “Company,” “we,” “us,” and words of similar import). All such statements contained in this press release, other than statements of historical facts, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations, projections, and assumptions about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, and there are a significant number of factors that could cause actual results to differ materially from statements made in this press release including: adverse changes in global economic and/or political conditions; the impact of current and future sanctions, embargoes and other similar laws at the state and/or federal level that impose restrictions on our counterparties or upon our ability to operate our business within the subject jurisdictions; political, economic, regulatory and public health and safety risks and uncertainties in the countries and regions in which we operate; failure to retain personnel necessary for the operation of our business or those that we acquire; changes in the industries in which our accounts operate; the competitive environment in which we operate; the quality of our products; our ability to develop and market new products to address our accounts’ rapidly changing technological needs; changes in capital markets and our ability to access financing on terms satisfactory to us or at all; the impact of changing or uncertain interest rates on us and on the industries we serve; our ability to integrate acquired businesses successfully; and our ability to identify and consummate future investments on terms satisfactory to us or at all. Further information on potential factors that could affect the financial results of the Company are included in the Company’s Form 10‑K and subsequent Form 10‑Qs, which are on file with the SEC. The Company disclaims any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made. About Bentley Systems Bentley Systems (Nasdaq: BSY) is the infrastructure engineering software company. We provide innovative software to advance the world’s infrastructure – sustaining both the global economy and environment. Our industry-leading software solutions are used by professionals, and organizations of every size, for the design, construction, and operations of roads and bridges, rail and transit, water and wastewater, public works and utilities, buildings and campuses, mining, and industrial facilities. Our offerings, powered by the iTwin Platform for infrastructure digital twins, include MicroStation and Bentley Open applications for modeling and simulation, Seequent’s software for geoprofessionals, and Bentley Infrastructure Cloud encompassing ProjectWise for project delivery, SYNCHRO for construction management, and AssetWise for asset operations. Bentley Systems’ 5,000 colleagues generate annual revenues of more than $1 billion in 194 countries. www.bentley.com © 2023 Bentley Systems, Incorporated. Bentley, the Bentley logo, AssetWise, Bentley Infrastructure Cloud, Bentley Open, iTwin, MicroStation, ProjectWise, Seequent, SYNCHRO, and Virtuosity are either registered or unregistered trademarks or service marks of Bentley Systems, Incorporated or one of its direct or indirect wholly owned subsidiaries. All other brands and product names are trademarks of their respective owners. BENTLEY SYSTEMS, INCORPORATED Consolidated Balance Sheets (in thousands) (unaudited) September 30, 2023 December 31, 2022 Assets Current assets: Cash and cash equivalents $ 66,963 $ 71,684 Accounts receivable 243,488 296,376 Allowance for doubtful accounts (8,312 ) (9,303 ) Prepaid income taxes 25,972 18,406 Prepaid and other current assets 46,128 38,732 Total current assets 374,239 415,895 Property and equipment, net 38,309 32,251 Operating lease right-of-use assets 41,434 40,249 Intangible assets, net 259,979 292,271 Goodwill 2,251,312 2,237,184 Investments 30,332 22,270 Deferred income taxes 61,664 52,636 Other assets 77,574 72,249 Total assets $ 3,134,843 $ 3,165,005 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 26,389 $ 15,176 Accruals and other current liabilities 403,428 362,048 Deferred revenues 211,815 226,955 Operating lease liabilities 11,430 14,672 Income taxes payable 18,879 4,507 Current portion of long-term debt 8,750 5,000 Total current liabilities 680,691 628,358 Long-term debt 1,580,752 1,775,696 Deferred compensation plan liabilities 79,537 77,014 Long-term operating lease liabilities 31,355 27,670 Deferred revenues 15,189 16,118 Deferred income taxes 43,530 51,235 Income taxes payable 7,317 8,105 Other liabilities 4,311 7,355 Total liabilities 2,442,682 2,591,551 Stockholders’ equity: Common stock 2,952 2,890 Additional paid-in capital 1,108,816 1,030,466 Accumulated other comprehensive loss (95,128 ) (89,740 ) Accumulated deficit (325,183 ) (370,866 ) Non-controlling interest 704 704 Total stockholders’ equity 692,161 573,454 Total liabilities and stockholders’ equity $ 3,134,843 $ 3,165,005 BENTLEY SYSTEMS, INCORPORATED Consolidated Statements of Operations (in thousands, except share and per share data) (unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Revenues: Subscriptions $ 270,751 $ 235,307 $ 807,839 $ 708,731 Perpetual licenses 11,887 9,460 33,152 31,213 Subscriptions and licenses 282,638 244,767 840,991 739,944 Services 23,974 23,565 76,781 72,190 Total revenues 306,612 268,332 917,772 812,134 Cost of revenues: Cost of subscriptions and licenses 42,088 37,371 124,175 107,904 Cost of services 22,588 21,812 74,111 66,758 Total cost of revenues 64,676 59,183 198,286 174,662 Gross profit 241,936 209,149 719,486 637,472 Operating expense (income): Research and development 65,465 63,827 203,382 189,966 Selling and marketing 53,757 46,114 160,262 141,676 General and administrative 42,678 37,794 128,743 128,981 Deferred compensation plan (3,160 ) (4,576 ) 4,763 (21,873 ) Amortization of purchased intangibles 9,517 10,446 29,567 30,869 Total operating expenses 168,257 153,605 526,717 469,619 Income from operations 73,679 55,544 192,769 167,853 Interest expense, net (10,047 ) (9,134 ) (30,623 ) (23,521 ) Other income, net 5,953 932 7,207 14,793 Income before income taxes 69,585 47,342 169,353 159,125 Provision for income taxes (16,514 ) (9,664 ) (22,107 ) (8,221 ) Loss from investments accounted for using the equity method, net of tax (44 ) (681 ) (44 ) (1,846 ) Net income $ 53,027 $ 36,997 $ 147,202 $ 149,058 Per share information: Net income per share, basic $ 0.17 $ 0.12 $ 0.47 $ 0.48 Net income per share, diluted $ 0.16 $ 0.12 $ 0.46 $ 0.46 Weighted average shares, basic 313,069,132 310,116,104 311,915,808 308,959,801 Weighted average shares, diluted 332,825,186 325,170,383 332,144,893 332,077,834 BENTLEY SYSTEMS, INCORPORATED Consolidated Statements of Cash Flows (in thousands) (unaudited) Nine Months Ended September 30, 2023 2022 Cash flows from operating activities: Net income $ 147,202 $ 149,058 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 52,787 53,644 Deferred income taxes (14,632 ) (13,670 ) Stock-based compensation expense 56,092 51,359 Deferred compensation plan 4,763 (21,873 ) Amortization of deferred debt issuance costs 5,469 5,468 Change in fair value of derivative (4,102 ) (29,318 ) Foreign currency remeasurement loss 3,198 14,445 Other 2,464 4,193 Changes in assets and liabilities, net of effect from acquisitions: Accounts receivable 56,065 12,550 Prepaid and other assets (1,246 ) 7,779 Accounts payable, accruals, and other liabilities 33,437 28,765 Deferred revenues (17,688 ) (26,725 ) Income taxes payable, net of prepaid income taxes 5,834 2,523 Net cash provided by operating activities 329,643 238,198 Cash flows from investing activities: Purchases of property and equipment and investment in capitalized software (18,906 ) (12,982 ) Proceeds from sale of aircraft — 2,380 Acquisitions, net of cash acquired (23,110 ) (719,539 ) Purchases of investments (11,352 ) (10,304 ) Proceeds from investments 2,123 — Net cash used in investing activities (51,245 ) (740,445 ) Cash flows from financing activities: Proceeds from credit facilities 442,566 753,376 Payments of credit facilities (634,718 ) (408,714 ) Repayments of term loan (3,750 ) (3,750 ) Payments of contingent and non-contingent consideration (3,039 ) (6,996 ) Payments of dividends (43,992 ) (25,828 ) Proceeds from stock purchases under employee stock purchase plan 9,988 10,335 Proceeds from exercise of stock options 10,590 6,855 Payments for shares acquired including shares withheld for taxes (57,527 ) (42,213 ) Repurchases of Class B Common Stock under approved program — (28,250 ) Other (137 ) (123 ) Net cash (used in) provided by financing activities (280,019 ) 254,692 Effect of exchange rate changes on cash and cash equivalents (3,100 ) (8,926 ) Decrease in cash and cash equivalents (4,721 ) (256,481 ) Cash and cash equivalents, beginning of year 71,684 329,337 Cash and cash equivalents, end of period $ 66,963 $ 72,856 BENTLEY SYSTEMS, INCORPORATED Reconciliation of GAAP to Non-GAAP Measures (in thousands, except share and per share data) (unaudited) Reconciliation of operating income to Adjusted OI w/SBC and to Adjusted operating income: Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Operating income $ 73,679 $ 55,544 $ 192,769 $ 167,853 Amortization of purchased intangibles 12,678 13,575 39,038 40,174 Deferred compensation plan (3,160 ) (4,576 ) 4,763 (21,873 ) Acquisition expenses 2,980 3,203 15,278 21,056 Realignment expenses (income) 150 (971 ) (1,800 ) 2,223 Adjusted OI w/SBC 86,327 66,775 250,048 209,433 Stock-based compensation expense 18,039 18,626 54,907 50,974 Adjusted operating income $ 104,366 $ 85,401 $ 304,955 $ 260,407 Reconciliation of net income to Adjusted net income: Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 $ EPS(1) $ EPS(1) $ EPS(1) $ EPS(1) Net income $ 53,027 $ 0.16 $ 36,997 $ 0.12 $ 147,202 $ 0.46 $ 149,058 $ 0.46 Non-GAAP adjustments, prior to income taxes: Amortization of purchased intangibles 12,678 0.04 13,575 0.04 39,038 0.12 40,174 0.12 Stock-based compensation expense 18,039 0.05 18,626 0.06 54,907 0.17 50,974 0.15 Deferred compensation plan (3,160 ) (0.01 ) (4,576 ) (0.01 ) 4,763 0.01 (21,873 ) (0.07 ) Acquisition expenses 2,980 0.01 3,203 0.01 15,278 0.05 21,056 0.06 Realignment expenses (income) 150 — (971 ) — (1,800 ) (0.01 ) 2,223 0.01 Other income, net (5,953 ) (0.02 ) (932 ) — (7,207 ) (0.02 ) (14,793 ) (0.04 ) Total non-GAAP adjustments, prior to income taxes 24,734 0.07 28,925 0.09 104,979 0.32 77,761 0.23 Income tax effect of non-GAAP adjustments (5,306 ) (0.02 ) (5,342 ) (0.02 ) (19,303 ) (0.06 ) (13,832 ) (0.04 ) Loss from investments accounted for using the equity method, net of tax 44 — 681 — 44 — 1,846 0.01 Adjusted net income(2) $ 72,499 $ 0.22 $ 61,261 $ 0.19 $ 232,922 $ 0.72 $ 214,833 $ 0.66 Adjusted weighted average shares, diluted(3) 332,825,186 332,079,181 332,144,893 332,077,834 ________________________ (1) Adjusted EPS was computed independently for each reconciling item presented; therefore, the sum of Adjusted EPS for each line item may not equal total Adjusted EPS due to rounding. (2) Adjusted EPS numerator includes $1,716 for both the three months ended September 30, 2023 and 2022, and $5,157 and $5,116 for the nine months ended September 30, 2023 and 2022, respectively, related to interest expense, net of tax, attributable to the convertible senior notes using the if‑converted method. (3) Adjusted weighted average shares, diluted includes incremental shares, which were considered anti-dilutive on a GAAP basis, of 6,908,798 shares for the three months ended September 30, 2022 related to the dilutive effect of convertible senior notes using the if‑converted method. Reconciliation of cash flow from operations to Adjusted EBITDA: Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Cash flow from operations $ 72,824 $ 69,468 $ 329,643 $ 238,198 Cash interest 9,988 7,119 29,370 17,647 Cash taxes 10,704 7,972 28,703 18,502 Cash deferred compensation plan distributions — — 2,125 7,336 Cash acquisition expenses 4,487 420 19,777 23,169 Changes in operating assets and liabilities 13,504 5,513 (84,494 ) (30,500 ) Other(1) (2,336 ) (752 ) (6,420 ) (475 ) Adjusted EBITDA $ 109,171 $ 89,740 $ 318,704 $ 273,877 ________________________ (1) Includes receipts related to interest rate swap. Explanation of Non-GAAP and Other Financial Measures Constant currency Constant currency and constant currency growth rates are non-GAAP financial measures that present our results of operations excluding the estimated effects of foreign currency exchange rate fluctuations. We have operations outside the United States that are conducted in local currencies. As a result, the comparability of the financial results reported in U.S. dollars is affected by changes in foreign currency exchange rates. We use constant currency and constant currency growth rates to evaluate the underlying performance of the business, and we believe it is helpful for investors to present operating results on a comparable basis period over period to evaluate its underlying performance. In reporting period‑over‑period results, we calculate the effects of foreign currency fluctuations and constant currency information by translating current period results using prior period average foreign currency exchange rates. Recurring revenues Recurring revenues are the basis for our other revenue-related key business metrics. We believe this measure is useful in evaluating our ability to consistently retain and grow our revenues from accounts with revenues in the prior period (“existing accounts”). Recurring revenues are subscriptions revenues that recur monthly, quarterly, or annually with specific or automatic renewal clauses and professional services revenues in which the underlying contract is based on a fixed fee and contains automatic annual renewal provisions. Annualized recurring revenues (“ARR”) ARR is a key business metric that we believe is useful in evaluating the scale and growth of our business as well as to assist in the evaluation of underlying trends in our business. Furthermore, we believe ARR, considered in connection with our last twelve‑month recurring revenues dollar‑based net retention rate, is a leading indicator of revenue growth. ARR is defined as the sum of the annualized value of our portfolio of contracts that produce recurring revenues as of the last day of the reporting period, and the annualized value of the last three months of recognized revenues for our contractually recurring consumption‑based software subscriptions with consumption measurement durations of less than one year, calculated using the spot foreign exchange rates. We believe that the last three months of recognized revenues, on an annualized basis, for our recurring software subscriptions with consumption measurement period durations of less than one year is a reasonable estimate of the annual revenues, given our consistently high retention rate and stability of usage under such subscriptions. Constant currency ARR growth rate is the growth rate of ARR measured on a constant currency basis. Constant currency ARR growth rate from business performance excludes the ARR onboarding of our platform acquisitions and includes the impact from the ARR onboarding of programmatic acquisitions, which generally are immaterial, individually and in the aggregate. We believe these ARR growth rates are important metrics indicating the scale and growth of our business. Last twelve‑month recurring revenues dollar‑based net retention rate Last twelve‑month recurring revenues dollar‑based net retention rate is a key business metric that we believe is useful in evaluating our ability to consistently retain and grow our recurring revenues. Last twelve‑month recurring revenues dollar‑based net retention rate is calculated, using the average exchange rates for the prior period, as follows: the recurring revenues for the current period, including any growth or reductions from existing accounts, but excluding recurring revenues from any new accounts added during the current period, divided by the total recurring revenues from all accounts during the prior period. A period is defined as any trailing twelve months. Related to our platform acquisitions, recurring revenues into new accounts will be captured as existing accounts starting with the second anniversary of the acquisition when such data conforms to the calculation methodology. This may cause variability in the comparison. Adjusted operating income inclusive of stock-based compensation expense (“Adjusted OI w/SBC”) Adjusted OI w/SBC is a non-GAAP financial measure and is used to measure the operational strength and performance of our business, as well as to assist in the evaluation of underlying trends in our business. Adjusted OI w/SBC is our primary performance measure, which excludes certain expenses and charges, including the non-cash amortization expense resulting from the acquisition of intangible assets, as we believe these may not be indicative of the Company’s core business operating results. We intentionally include stock-based compensation expense in this measure as we believe it better captures the economic costs of our business. Management uses this non-GAAP financial measure to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, to evaluate financial performance, and in our comparison of our financial results to those of other companies. It is also a significant performance measure in certain of our executive incentive compensation programs. Adjusted OI w/SBC is defined as operating income adjusted for the following: amortization of purchased intangibles, expense (income) relating to deferred compensation plan liabilities, acquisition expenses, and realignment expenses (income), for the respective periods. Adjusted OI w/SBC margin is calculated by dividing Adjusted OI w/SBC by total revenues. Adjusted operating income Adjusted operating income is a non-GAAP financial measure that we believe is useful to investors in making comparisons to other companies, although this measure may not be directly comparable to similar measures used by other companies. Adjusted operating income is defined as operating income adjusted for the following: amortization of purchased intangibles, expense (income) relating to deferred compensation plan liabilities, acquisition expenses, realignment expenses (income), and stock‑based compensation expense, for the respective periods. Adjusted net income and Adjusted EPS Adjusted net income and Adjusted EPS are non-GAAP financial measures presenting the earnings generated by our ongoing operations that we believe is useful to investors in making meaningful comparisons to other companies, although these measures may not be directly comparable to similar measures used by other companies, and period-over-period comparisons. Adjusted net income is defined as net income adjusted for the following: amortization of purchased intangibles, stock‑based compensation expense, expense (income) relating to deferred compensation plan liabilities, acquisition expenses, realignment expenses (income), other non‑operating (income) expense, net, the tax effect of the above adjustments to net income, and (income) loss from investments accounted for using the equity method, net of tax, for the respective periods. The income tax effect of non‑GAAP adjustments was determined using the applicable rates in the taxing jurisdictions in which income or expense occurred, and represent both current and deferred income tax expense or benefit based on the nature of the non‑GAAP adjustments, including the tax effects of non‑cash stock‑based compensation expense. Adjusted EPS is calculated as Adjusted net income, less net income attributable to participating securities, plus interest expense, net of tax, attributable to the convertible senior notes using the if‑converted method, if applicable, (numerator) divided by Adjusted weighted average shares, diluted (denominator). Adjusted weighted average shares, diluted is calculated by adding incremental shares related to the dilutive effect of convertible senior notes using the if‑converted method, if applicable, to weighted average shares, diluted. Adjusted EBITDA Adjusted EBITDA is our liquidity measure in the context of conversion of Adjusted EBITDA to cash flow from operations (i.e., the ratio of GAAP cash flow from operations to Adjusted EBITDA). We believe this non-GAAP financial measure provides a meaningful measure of liquidity and a useful basis for assessing our ability to repay debt, make strategic acquisitions and investments, and return capital to investors. Adjusted EBITDA is defined as cash flow from operations adjusted for the following: cash interest, cash taxes, cash deferred compensation plan distributions, cash acquisition expenses, changes in operating assets and liabilities, and other cash items (such as those related to our interest rate swap). From time to time, we may exclude from Adjusted EBITDA the impact of certain cash receipts or payments that affect period-to-period comparability. View source version on businesswire.com: https://www.businesswire.com/news/home/20231107889084/en/Contacts BSY Investor Contact: Eric Boyer Investor Relations Officer ir@bentley.com
Bentley Systems, Incorporated (Nasdaq: BSY), the infrastructure engineering software company, today announced operating results for its third quarter and nine months ended September 30, 2023. Third Quarter 2023 Operating Results Total revenues were $306.6 million, up 14.3% or 11.0% on a constant currency basis, year-over-year; Subscriptions revenues were $270.8 million, up 15.1% or 11.7% on a constant currency basis, year-over-year; Annualized Recurring Revenues (“ARR”) was $1,124.8 million as of September 30, 2023, compared to $983.7 million as of September 30, 2022, representing a constant currency ARR growth rate of 12.5%; Last twelve-month recurring revenues dollar-based net retention rate was 110%, consistent with the same period last year; Operating income margin was 24.0%, compared to 20.7% for the same period last year; Adjusted operating income inclusive of stock-based compensation expense (“Adjusted OI w/SBC”) margin was 28.2%, compared to 24.9% for the same period last year; Net income per diluted share was $0.16, compared to $0.12 for the same period last year; Adjusted net income per diluted share (“Adjusted EPS”) was $0.22, compared to $0.19 for the same period last year; and Cash flow from operations was $72.8 million, compared to $69.5 million for the same period last year. Nine Months Ended September 30, 2023 Operating Results Total revenues were $917.8 million, up 13.0% or 12.8% on a constant currency basis, year-over-year; Subscriptions revenues were $807.8 million, up 14.0% or 13.6% on a constant currency basis, year-over-year; Operating income margin was 21.0%, compared to 20.7% for the same period last year; Adjusted OI w/SBC margin was 27.2%, compared to 25.8% for the same period last year; Net income per diluted share was $0.46, consistent with the same period last year; Adjusted EPS was $0.72, compared to $0.66 for the same period last year; and Cash flow from operations was $329.6 million, compared to $238.2 million for the same period last year. CEO Greg Bentley said, “Our operating results this quarter demonstrate the sustainability of our more broadly balanced growth contributors. Year-over-year ARR growth (business performance in constant currency) remained strong at 12.5% despite fewer calendar workdays and an upsurge in perpetual license purchases. Continuing growth drivers include the Infrastructure Investment and Jobs Act in the U.S., expansion of E365 as our enterprise accounts accelerate going digital, and Virtuosity’s momentum in penetrating small and medium-sized business prospects. “At our Year in Infrastructure Conference in Singapore last month, Going Digital Award finalists showcased advancements that enabled a reported median of 18% in project engineering savings. This reinforces our sustaining opportunity to help our accounts surmount the increasing capacity gap in infrastructure engineering resources, both through more specialized modeling and simulation applications and through iTwin-powered Bentley Infrastructure Cloud, to compound for them the ‘infrastructure intelligence’ value of their data.” COO Nicholas Cumins commented, “Our 23Q3 operating results reflect continued strong performance, with trends generally in line with the previous quarter. ARR growth by sector was once again led by Public Works / Utilities; Resources remained above the company average, including Seequent despite the slowdown in new mine exploration projects, while Industrial was somewhat below average; and Commercial / Facilities remained flat. ARR growth by region was led by Americas, followed by Asia Pacific, then EMEA. In particular, we are pleased by the momentum we are seeing with the US DOTs and their ecosystem.” CFO Werner Andre said, “In 23Q3 BSY’s financial results met or surpassed our expectations in revenues, recurring revenues dollar-based net retention rate, Adjusted operating income inclusive of stock-based compensation expense margin, and operating cash flows. Our constant currency ARR growth momentum and seasonality reflects the E365 consumption impact from this quarter’s fewer working days when compared to historic norm, and the increasing preferences for perpetual licenses especially in China. After de facto share repurchases, and this year’s higher dividends, we have primarily applied our strong operating cash flows to de-lever by 1.0x on a net debt to Adjusted EBITDA basis since the beginning of the year, and will look to further de-lever in the coming quarters as conditions permit in order to provide increasing capital structure strength and flexibility.” Operating Results Call Details Bentley Systems will host a live Zoom video webinar on November 7, 2023 at 8:15 a.m. EST to discuss operating results for its third quarter ended September 30, 2023. Those wishing to participate should access the live Zoom video webinar of the event through a direct registration link at https://us06web.zoom.us/webinar/register/WN_VO5w_MjXT8CLW7nrIClg3A#/registration. Alternatively, the event can be accessed from the Events & Presentations page on Bentley Systems’ Investor Relations website at https://investors.bentley.com. In addition, a replay and transcript will be available after the conclusion of the live event on Bentley Systems’ Investor Relations website for one year. Non-GAAP Financial Measures In this operating results press release, we sometimes refer to financial measures that are not presented in accordance with U.S. generally accepted accounting principles (“GAAP”). Certain of these measures are considered non-GAAP financial measures under the United States Securities and Exchange Commission (“SEC”) regulations. Those rules require the supplemental explanations and reconciliations that are in Bentley Systems’ Form 8-K (Quarterly Earnings Release) furnished to the SEC. Forward-Looking Statements This press release includes forward-looking statements regarding the future results of operations and financial position, business strategy, and plans and objectives for future operations of Bentley Systems, Incorporated (the “Company,” “we,” “us,” and words of similar import). All such statements contained in this press release, other than statements of historical facts, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations, projections, and assumptions about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, and there are a significant number of factors that could cause actual results to differ materially from statements made in this press release including: adverse changes in global economic and/or political conditions; the impact of current and future sanctions, embargoes and other similar laws at the state and/or federal level that impose restrictions on our counterparties or upon our ability to operate our business within the subject jurisdictions; political, economic, regulatory and public health and safety risks and uncertainties in the countries and regions in which we operate; failure to retain personnel necessary for the operation of our business or those that we acquire; changes in the industries in which our accounts operate; the competitive environment in which we operate; the quality of our products; our ability to develop and market new products to address our accounts’ rapidly changing technological needs; changes in capital markets and our ability to access financing on terms satisfactory to us or at all; the impact of changing or uncertain interest rates on us and on the industries we serve; our ability to integrate acquired businesses successfully; and our ability to identify and consummate future investments on terms satisfactory to us or at all. Further information on potential factors that could affect the financial results of the Company are included in the Company’s Form 10‑K and subsequent Form 10‑Qs, which are on file with the SEC. The Company disclaims any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made. About Bentley Systems Bentley Systems (Nasdaq: BSY) is the infrastructure engineering software company. We provide innovative software to advance the world’s infrastructure – sustaining both the global economy and environment. Our industry-leading software solutions are used by professionals, and organizations of every size, for the design, construction, and operations of roads and bridges, rail and transit, water and wastewater, public works and utilities, buildings and campuses, mining, and industrial facilities. Our offerings, powered by the iTwin Platform for infrastructure digital twins, include MicroStation and Bentley Open applications for modeling and simulation, Seequent’s software for geoprofessionals, and Bentley Infrastructure Cloud encompassing ProjectWise for project delivery, SYNCHRO for construction management, and AssetWise for asset operations. Bentley Systems’ 5,000 colleagues generate annual revenues of more than $1 billion in 194 countries. www.bentley.com © 2023 Bentley Systems, Incorporated. Bentley, the Bentley logo, AssetWise, Bentley Infrastructure Cloud, Bentley Open, iTwin, MicroStation, ProjectWise, Seequent, SYNCHRO, and Virtuosity are either registered or unregistered trademarks or service marks of Bentley Systems, Incorporated or one of its direct or indirect wholly owned subsidiaries. All other brands and product names are trademarks of their respective owners. BENTLEY SYSTEMS, INCORPORATED Consolidated Balance Sheets (in thousands) (unaudited) September 30, 2023 December 31, 2022 Assets Current assets: Cash and cash equivalents $ 66,963 $ 71,684 Accounts receivable 243,488 296,376 Allowance for doubtful accounts (8,312 ) (9,303 ) Prepaid income taxes 25,972 18,406 Prepaid and other current assets 46,128 38,732 Total current assets 374,239 415,895 Property and equipment, net 38,309 32,251 Operating lease right-of-use assets 41,434 40,249 Intangible assets, net 259,979 292,271 Goodwill 2,251,312 2,237,184 Investments 30,332 22,270 Deferred income taxes 61,664 52,636 Other assets 77,574 72,249 Total assets $ 3,134,843 $ 3,165,005 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 26,389 $ 15,176 Accruals and other current liabilities 403,428 362,048 Deferred revenues 211,815 226,955 Operating lease liabilities 11,430 14,672 Income taxes payable 18,879 4,507 Current portion of long-term debt 8,750 5,000 Total current liabilities 680,691 628,358 Long-term debt 1,580,752 1,775,696 Deferred compensation plan liabilities 79,537 77,014 Long-term operating lease liabilities 31,355 27,670 Deferred revenues 15,189 16,118 Deferred income taxes 43,530 51,235 Income taxes payable 7,317 8,105 Other liabilities 4,311 7,355 Total liabilities 2,442,682 2,591,551 Stockholders’ equity: Common stock 2,952 2,890 Additional paid-in capital 1,108,816 1,030,466 Accumulated other comprehensive loss (95,128 ) (89,740 ) Accumulated deficit (325,183 ) (370,866 ) Non-controlling interest 704 704 Total stockholders’ equity 692,161 573,454 Total liabilities and stockholders’ equity $ 3,134,843 $ 3,165,005 BENTLEY SYSTEMS, INCORPORATED Consolidated Statements of Operations (in thousands, except share and per share data) (unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Revenues: Subscriptions $ 270,751 $ 235,307 $ 807,839 $ 708,731 Perpetual licenses 11,887 9,460 33,152 31,213 Subscriptions and licenses 282,638 244,767 840,991 739,944 Services 23,974 23,565 76,781 72,190 Total revenues 306,612 268,332 917,772 812,134 Cost of revenues: Cost of subscriptions and licenses 42,088 37,371 124,175 107,904 Cost of services 22,588 21,812 74,111 66,758 Total cost of revenues 64,676 59,183 198,286 174,662 Gross profit 241,936 209,149 719,486 637,472 Operating expense (income): Research and development 65,465 63,827 203,382 189,966 Selling and marketing 53,757 46,114 160,262 141,676 General and administrative 42,678 37,794 128,743 128,981 Deferred compensation plan (3,160 ) (4,576 ) 4,763 (21,873 ) Amortization of purchased intangibles 9,517 10,446 29,567 30,869 Total operating expenses 168,257 153,605 526,717 469,619 Income from operations 73,679 55,544 192,769 167,853 Interest expense, net (10,047 ) (9,134 ) (30,623 ) (23,521 ) Other income, net 5,953 932 7,207 14,793 Income before income taxes 69,585 47,342 169,353 159,125 Provision for income taxes (16,514 ) (9,664 ) (22,107 ) (8,221 ) Loss from investments accounted for using the equity method, net of tax (44 ) (681 ) (44 ) (1,846 ) Net income $ 53,027 $ 36,997 $ 147,202 $ 149,058 Per share information: Net income per share, basic $ 0.17 $ 0.12 $ 0.47 $ 0.48 Net income per share, diluted $ 0.16 $ 0.12 $ 0.46 $ 0.46 Weighted average shares, basic 313,069,132 310,116,104 311,915,808 308,959,801 Weighted average shares, diluted 332,825,186 325,170,383 332,144,893 332,077,834 BENTLEY SYSTEMS, INCORPORATED Consolidated Statements of Cash Flows (in thousands) (unaudited) Nine Months Ended September 30, 2023 2022 Cash flows from operating activities: Net income $ 147,202 $ 149,058 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 52,787 53,644 Deferred income taxes (14,632 ) (13,670 ) Stock-based compensation expense 56,092 51,359 Deferred compensation plan 4,763 (21,873 ) Amortization of deferred debt issuance costs 5,469 5,468 Change in fair value of derivative (4,102 ) (29,318 ) Foreign currency remeasurement loss 3,198 14,445 Other 2,464 4,193 Changes in assets and liabilities, net of effect from acquisitions: Accounts receivable 56,065 12,550 Prepaid and other assets (1,246 ) 7,779 Accounts payable, accruals, and other liabilities 33,437 28,765 Deferred revenues (17,688 ) (26,725 ) Income taxes payable, net of prepaid income taxes 5,834 2,523 Net cash provided by operating activities 329,643 238,198 Cash flows from investing activities: Purchases of property and equipment and investment in capitalized software (18,906 ) (12,982 ) Proceeds from sale of aircraft — 2,380 Acquisitions, net of cash acquired (23,110 ) (719,539 ) Purchases of investments (11,352 ) (10,304 ) Proceeds from investments 2,123 — Net cash used in investing activities (51,245 ) (740,445 ) Cash flows from financing activities: Proceeds from credit facilities 442,566 753,376 Payments of credit facilities (634,718 ) (408,714 ) Repayments of term loan (3,750 ) (3,750 ) Payments of contingent and non-contingent consideration (3,039 ) (6,996 ) Payments of dividends (43,992 ) (25,828 ) Proceeds from stock purchases under employee stock purchase plan 9,988 10,335 Proceeds from exercise of stock options 10,590 6,855 Payments for shares acquired including shares withheld for taxes (57,527 ) (42,213 ) Repurchases of Class B Common Stock under approved program — (28,250 ) Other (137 ) (123 ) Net cash (used in) provided by financing activities (280,019 ) 254,692 Effect of exchange rate changes on cash and cash equivalents (3,100 ) (8,926 ) Decrease in cash and cash equivalents (4,721 ) (256,481 ) Cash and cash equivalents, beginning of year 71,684 329,337 Cash and cash equivalents, end of period $ 66,963 $ 72,856 BENTLEY SYSTEMS, INCORPORATED Reconciliation of GAAP to Non-GAAP Measures (in thousands, except share and per share data) (unaudited) Reconciliation of operating income to Adjusted OI w/SBC and to Adjusted operating income: Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Operating income $ 73,679 $ 55,544 $ 192,769 $ 167,853 Amortization of purchased intangibles 12,678 13,575 39,038 40,174 Deferred compensation plan (3,160 ) (4,576 ) 4,763 (21,873 ) Acquisition expenses 2,980 3,203 15,278 21,056 Realignment expenses (income) 150 (971 ) (1,800 ) 2,223 Adjusted OI w/SBC 86,327 66,775 250,048 209,433 Stock-based compensation expense 18,039 18,626 54,907 50,974 Adjusted operating income $ 104,366 $ 85,401 $ 304,955 $ 260,407 Reconciliation of net income to Adjusted net income: Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 $ EPS(1) $ EPS(1) $ EPS(1) $ EPS(1) Net income $ 53,027 $ 0.16 $ 36,997 $ 0.12 $ 147,202 $ 0.46 $ 149,058 $ 0.46 Non-GAAP adjustments, prior to income taxes: Amortization of purchased intangibles 12,678 0.04 13,575 0.04 39,038 0.12 40,174 0.12 Stock-based compensation expense 18,039 0.05 18,626 0.06 54,907 0.17 50,974 0.15 Deferred compensation plan (3,160 ) (0.01 ) (4,576 ) (0.01 ) 4,763 0.01 (21,873 ) (0.07 ) Acquisition expenses 2,980 0.01 3,203 0.01 15,278 0.05 21,056 0.06 Realignment expenses (income) 150 — (971 ) — (1,800 ) (0.01 ) 2,223 0.01 Other income, net (5,953 ) (0.02 ) (932 ) — (7,207 ) (0.02 ) (14,793 ) (0.04 ) Total non-GAAP adjustments, prior to income taxes 24,734 0.07 28,925 0.09 104,979 0.32 77,761 0.23 Income tax effect of non-GAAP adjustments (5,306 ) (0.02 ) (5,342 ) (0.02 ) (19,303 ) (0.06 ) (13,832 ) (0.04 ) Loss from investments accounted for using the equity method, net of tax 44 — 681 — 44 — 1,846 0.01 Adjusted net income(2) $ 72,499 $ 0.22 $ 61,261 $ 0.19 $ 232,922 $ 0.72 $ 214,833 $ 0.66 Adjusted weighted average shares, diluted(3) 332,825,186 332,079,181 332,144,893 332,077,834 ________________________ (1) Adjusted EPS was computed independently for each reconciling item presented; therefore, the sum of Adjusted EPS for each line item may not equal total Adjusted EPS due to rounding. (2) Adjusted EPS numerator includes $1,716 for both the three months ended September 30, 2023 and 2022, and $5,157 and $5,116 for the nine months ended September 30, 2023 and 2022, respectively, related to interest expense, net of tax, attributable to the convertible senior notes using the if‑converted method. (3) Adjusted weighted average shares, diluted includes incremental shares, which were considered anti-dilutive on a GAAP basis, of 6,908,798 shares for the three months ended September 30, 2022 related to the dilutive effect of convertible senior notes using the if‑converted method. Reconciliation of cash flow from operations to Adjusted EBITDA: Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Cash flow from operations $ 72,824 $ 69,468 $ 329,643 $ 238,198 Cash interest 9,988 7,119 29,370 17,647 Cash taxes 10,704 7,972 28,703 18,502 Cash deferred compensation plan distributions — — 2,125 7,336 Cash acquisition expenses 4,487 420 19,777 23,169 Changes in operating assets and liabilities 13,504 5,513 (84,494 ) (30,500 ) Other(1) (2,336 ) (752 ) (6,420 ) (475 ) Adjusted EBITDA $ 109,171 $ 89,740 $ 318,704 $ 273,877 ________________________ (1) Includes receipts related to interest rate swap. Explanation of Non-GAAP and Other Financial Measures Constant currency Constant currency and constant currency growth rates are non-GAAP financial measures that present our results of operations excluding the estimated effects of foreign currency exchange rate fluctuations. We have operations outside the United States that are conducted in local currencies. As a result, the comparability of the financial results reported in U.S. dollars is affected by changes in foreign currency exchange rates. We use constant currency and constant currency growth rates to evaluate the underlying performance of the business, and we believe it is helpful for investors to present operating results on a comparable basis period over period to evaluate its underlying performance. In reporting period‑over‑period results, we calculate the effects of foreign currency fluctuations and constant currency information by translating current period results using prior period average foreign currency exchange rates. Recurring revenues Recurring revenues are the basis for our other revenue-related key business metrics. We believe this measure is useful in evaluating our ability to consistently retain and grow our revenues from accounts with revenues in the prior period (“existing accounts”). Recurring revenues are subscriptions revenues that recur monthly, quarterly, or annually with specific or automatic renewal clauses and professional services revenues in which the underlying contract is based on a fixed fee and contains automatic annual renewal provisions. Annualized recurring revenues (“ARR”) ARR is a key business metric that we believe is useful in evaluating the scale and growth of our business as well as to assist in the evaluation of underlying trends in our business. Furthermore, we believe ARR, considered in connection with our last twelve‑month recurring revenues dollar‑based net retention rate, is a leading indicator of revenue growth. ARR is defined as the sum of the annualized value of our portfolio of contracts that produce recurring revenues as of the last day of the reporting period, and the annualized value of the last three months of recognized revenues for our contractually recurring consumption‑based software subscriptions with consumption measurement durations of less than one year, calculated using the spot foreign exchange rates. We believe that the last three months of recognized revenues, on an annualized basis, for our recurring software subscriptions with consumption measurement period durations of less than one year is a reasonable estimate of the annual revenues, given our consistently high retention rate and stability of usage under such subscriptions. Constant currency ARR growth rate is the growth rate of ARR measured on a constant currency basis. Constant currency ARR growth rate from business performance excludes the ARR onboarding of our platform acquisitions and includes the impact from the ARR onboarding of programmatic acquisitions, which generally are immaterial, individually and in the aggregate. We believe these ARR growth rates are important metrics indicating the scale and growth of our business. Last twelve‑month recurring revenues dollar‑based net retention rate Last twelve‑month recurring revenues dollar‑based net retention rate is a key business metric that we believe is useful in evaluating our ability to consistently retain and grow our recurring revenues. Last twelve‑month recurring revenues dollar‑based net retention rate is calculated, using the average exchange rates for the prior period, as follows: the recurring revenues for the current period, including any growth or reductions from existing accounts, but excluding recurring revenues from any new accounts added during the current period, divided by the total recurring revenues from all accounts during the prior period. A period is defined as any trailing twelve months. Related to our platform acquisitions, recurring revenues into new accounts will be captured as existing accounts starting with the second anniversary of the acquisition when such data conforms to the calculation methodology. This may cause variability in the comparison. Adjusted operating income inclusive of stock-based compensation expense (“Adjusted OI w/SBC”) Adjusted OI w/SBC is a non-GAAP financial measure and is used to measure the operational strength and performance of our business, as well as to assist in the evaluation of underlying trends in our business. Adjusted OI w/SBC is our primary performance measure, which excludes certain expenses and charges, including the non-cash amortization expense resulting from the acquisition of intangible assets, as we believe these may not be indicative of the Company’s core business operating results. We intentionally include stock-based compensation expense in this measure as we believe it better captures the economic costs of our business. Management uses this non-GAAP financial measure to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, to evaluate financial performance, and in our comparison of our financial results to those of other companies. It is also a significant performance measure in certain of our executive incentive compensation programs. Adjusted OI w/SBC is defined as operating income adjusted for the following: amortization of purchased intangibles, expense (income) relating to deferred compensation plan liabilities, acquisition expenses, and realignment expenses (income), for the respective periods. Adjusted OI w/SBC margin is calculated by dividing Adjusted OI w/SBC by total revenues. Adjusted operating income Adjusted operating income is a non-GAAP financial measure that we believe is useful to investors in making comparisons to other companies, although this measure may not be directly comparable to similar measures used by other companies. Adjusted operating income is defined as operating income adjusted for the following: amortization of purchased intangibles, expense (income) relating to deferred compensation plan liabilities, acquisition expenses, realignment expenses (income), and stock‑based compensation expense, for the respective periods. Adjusted net income and Adjusted EPS Adjusted net income and Adjusted EPS are non-GAAP financial measures presenting the earnings generated by our ongoing operations that we believe is useful to investors in making meaningful comparisons to other companies, although these measures may not be directly comparable to similar measures used by other companies, and period-over-period comparisons. Adjusted net income is defined as net income adjusted for the following: amortization of purchased intangibles, stock‑based compensation expense, expense (income) relating to deferred compensation plan liabilities, acquisition expenses, realignment expenses (income), other non‑operating (income) expense, net, the tax effect of the above adjustments to net income, and (income) loss from investments accounted for using the equity method, net of tax, for the respective periods. The income tax effect of non‑GAAP adjustments was determined using the applicable rates in the taxing jurisdictions in which income or expense occurred, and represent both current and deferred income tax expense or benefit based on the nature of the non‑GAAP adjustments, including the tax effects of non‑cash stock‑based compensation expense. Adjusted EPS is calculated as Adjusted net income, less net income attributable to participating securities, plus interest expense, net of tax, attributable to the convertible senior notes using the if‑converted method, if applicable, (numerator) divided by Adjusted weighted average shares, diluted (denominator). Adjusted weighted average shares, diluted is calculated by adding incremental shares related to the dilutive effect of convertible senior notes using the if‑converted method, if applicable, to weighted average shares, diluted. Adjusted EBITDA Adjusted EBITDA is our liquidity measure in the context of conversion of Adjusted EBITDA to cash flow from operations (i.e., the ratio of GAAP cash flow from operations to Adjusted EBITDA). We believe this non-GAAP financial measure provides a meaningful measure of liquidity and a useful basis for assessing our ability to repay debt, make strategic acquisitions and investments, and return capital to investors. Adjusted EBITDA is defined as cash flow from operations adjusted for the following: cash interest, cash taxes, cash deferred compensation plan distributions, cash acquisition expenses, changes in operating assets and liabilities, and other cash items (such as those related to our interest rate swap). From time to time, we may exclude from Adjusted EBITDA the impact of certain cash receipts or payments that affect period-to-period comparability. View source version on businesswire.com: https://www.businesswire.com/news/home/20231107889084/en/