BENTLEY SYSTEMS INC (BSY)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our unaudited consolidated financial statements and notes thereto appearing in Part I, Item 1 of this Quarterly Report on Form 10‑Q and with our audited consolidated financial statements and notes thereto included in our 2025 Annual Report on Form 10‑K.

All amounts presented in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, except share and per share amounts, are presented in thousands. Additionally, many of the amounts and percentages have been rounded for convenience of presentation. Minor differences in totals and percentage calculations may exist due to rounding.

Overview:

Bentley Systems is the infrastructure engineering software company. Our purpose is to advance the world’s infrastructure for better quality of life. Our mission is to reshape how infrastructure systems and critical resources are delivered and optimized. We manage our business globally within one reportable segment, the development and marketing of computer software and related services, which is consistent with how our CODM reviews and manages our business.

Executive Summary:

•Total revenues were $410,727 for the three months ended June 30, 2026, up 12.8% or 12.2% on a constant currency basis(1) compared to the three months ended June 30, 2025. Total revenues were $834,908 for the six months ended June 30, 2026, up 13.6% or 12.1% on a constant currency basis(1) compared to the six months ended June 30, 2025;

•Subscriptions revenues were $378,635 for the three months ended June 30, 2026, up 13.6% or 13.0% on a constant currency basis(1) compared to the three months ended June 30, 2025. Subscriptions revenues were $771,119 for the six months ended June 30, 2026, up 14.1% or 12.6% on a constant currency basis(1) compared to the six months ended June 30, 2025;

•Annualized recurring revenues (“ARR”)(2) was $1,535,988 as of June 30, 2026, compared to $1,379,161 as of June 30, 2025. Constant currency(1) ARR growth rate(2) was 12%;

•Last twelve-month recurring revenues dollar-based net retention rate(2) was 109% as of June 30, 2026, consistent with the same period in the prior year;

•Operating income was $88,608 for the three months ended June 30, 2026, compared to $84,430 for the three months ended June 30, 2025. Operating income was $214,868 for the six months ended June 30, 2026, compared to $199,614 for the six months ended June 30, 2025;

•AOI less Operating SBC(1) was $116,036 for the three months ended June 30, 2026, compared to $106,769 for the three months ended June 30, 2025. AOI less Operating SBC(1) was $256,959 for the six months ended June 30, 2026, compared to $235,077 for the six months ended June 30, 2025; and

•Cash flows from operating activities were $264,921 for the six months ended June 30, 2026, compared to $280,500 for the six months ended June 30, 2025.

(1)Constant currency and AOI less Operating SBC are non‑GAAP financial measures. Refer to the “Non‑GAAP Financial Measures” section for additional information, including our definitions and our uses of constant currency and AOI less Operating SBC.

(2)Refer to the “Key Business Metrics” section for additional information, including our definitions and our uses of ARR, ARR growth rate, and recurring revenues dollar-based net retention rate.

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Results of Operations:

Our results of operations have been, and in the future will be, affected by changes in foreign currency exchange rates. Other than the natural hedge attributable to matching revenues and expenses in the same currencies, we do not currently hedge foreign currency exposure.

We identify the effects of foreign currency on our operations and present constant currency growth rates and fluctuations because we believe exchange rates are an important factor in understanding period‑over‑period comparisons and enhance the understanding of our results and evaluation of our performance. Refer to the “Non‑GAAP Financial Measures” section for additional information, including our definition and our use of constant currency.

Revenues

Consolidated Revenues

(1)Constant currency is a non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures” section for additional information, including our definition and our use of constant currency, and for a reconciliation of constant currency growth rates.

The increase in total revenues for the three and six months ended June 30, 2026 was primarily driven by an increase in subscriptions revenues, and to a lesser extent, an increase in services revenues, partially offset by a decrease in perpetual licenses revenues. Our business performance includes the impact from programmatic acquisitions, which generally are immaterial, individually and in the aggregate.

Subscriptions. For the three and six months ended June 30, 2026, subscriptions revenues increased $45,183 ($43,382 on a constant currency basis) and $95,349 ($85,116 on a constant currency basis), respectively, primarily driven by expansion from accounts with revenues in the same period in the prior year (“existing accounts”), and growth of 3% attributable to new accounts, most notably small- and medium-sized accounts. Increases in subscriptions revenues for the three and six months ended June 30, 2026 were led by Bentley Open Applications and Seequent applications, and to a lesser extent, Bentley Infrastructure Cloud.

Perpetual licenses. For the three and six months ended June 30, 2026, perpetual licenses revenues decreased $486 ($610 on a constant currency basis) and $2,221 ($2,556 on a constant currency basis), respectively.

Services. For the three and six months ended June 30, 2026, services revenues increased $1,924 ($1,771 on a constant currency basis) and $7,132 ($6,267 on a constant currency basis), respectively, primarily due to strength in Maximo‑related work within our digital integrator.

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Revenues by Geographic Region

Revenue from external customers is attributed to individual countries based upon the location of the customer.

(1)Constant currency is a non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures” section for additional information, including our definition and our use of constant currency, and for a reconciliation of constant currency growth rates.

Americas. For the three and six months ended June 30, 2026, revenues from the Americas increased $25,308 ($24,414 on a constant currency basis) and $51,967 ($49,737 on a constant currency basis), respectively, primarily due to expansion of our subscriptions revenues from existing accounts in the U.S. and Canada, as well as increases in our subscription revenues from new accounts.

EMEA. For the three and six months ended June 30, 2026, revenues from EMEA increased $17,368 ($15,940 on a constant currency basis) and $36,604 ($28,727 on a constant currency basis), respectively, primarily due to expansion of our subscriptions revenues from existing accounts in the United Kingdom, the Middle East, and Africa, as well as increases in our subscriptions revenues from new accounts, and to a lesser extent, an increase in services revenues.

APAC. For the three and six months ended June 30, 2026, revenues from APAC increased $3,945 ($4,189 on a constant currency basis) and $11,689 ($10,363 on a constant currency basis), respectively, primarily due to expansion of our subscriptions revenues from existing accounts in India and Australia, as well as increases in our subscriptions revenues from new accounts, partially offset by a decline in perpetual licenses and services revenues.

Cost of Revenues and Operating Expenses

Cost of Revenues

(1)Constant currency is a non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures” section for additional information, including our definition and our use of constant currency, and for a reconciliation of constant currency growth rates.

Cost of subscriptions and licenses. For the three and six months ended June 30, 2026, on a constant currency basis, cost of subscriptions and licenses expenses increased primarily due to an increase in cloud-related costs of $4,206 and $9,889, respectively.

Cost of services. For the three and six months ended June 30, 2026, on a constant currency basis, cost of services expenses decreased primarily due to a decrease in headcount‑related costs of $1,283 and $615, respectively, mainly due to decreases in headcount, and annual and other compensation costs, partially offset by an increase in third‑party personnel costs.

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Operating Expenses

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our audited consolidated financial statements and notes thereto included in Part II, Item 8 of this Annual Report on Form 10‑K. In addition to historical information, this discussion contains forward‑looking statements that involve risks, uncertainties, and assumptions that could cause actual results to differ materially from management’s expectations. Factors that could cause such differences are set forth in Part I, Item 1A. Risk Factors of this Annual Report on Form 10‑K. Refer to Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2024 Annual Report on Form 10‑K for management’s discussion and analysis of financial condition and results of operations for the year ended December 31, 2024 compared to the year ended December 31, 2023.

All amounts presented in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, except share and per share amounts, are presented in thousands. Additionally, many of the amounts and percentages have been rounded for convenience of presentation. Minor differences in totals and percentage calculations may exist due to rounding.

Overview:

Bentley Systems is the infrastructure engineering software company. Our purpose is to advance the world’s infrastructure for better quality of life. Our mission is to reshape how infrastructure systems and critical resources are delivered and optimized. We manage our business globally within one reportable segment, the development and marketing of computer software and related services, which is consistent with how our chief operating decision maker (“CODM”) reviews and manages our business.

Executive Summary:

•Total revenues were $1,501,779 for the year ended December 31, 2025, up 11.0% or 10.1% on a constant currency basis(1) compared to the prior year;

•Subscriptions revenues were $1,376,696 for the year ended December 31, 2025, up 12.5% or 11.7% on a constant currency basis(1) compared to the prior year;

•ARR(2) was $1,462,145 as of December 31, 2025, compared to $1,283,256 as of December 31, 2024; Constant currency(1) ARR growth rate(2) was 11.5%;

•Last twelve-month recurring revenues dollar-based net retention rate(2) was 109% as of December 31, 2025, compared to 110% as of December 31, 2024;

•Operating income was $362,621 for the year ended December 31, 2025, compared to $302,150 for the prior year;

•Adjusted operating income less stock-based compensation expense (“AOI less SBC”) (previously titled Adjusted operating income inclusive of stock-based compensation expense (“Adjusted OI w/SBC”))(1) was $429,917 for the year ended December 31, 2025, compared to $372,222 for the prior year; and

•Cash flows from operating activities were $538,464 for the year ended December 31, 2025, compared to $435,292 for the prior year.

(1)Constant currency and AOI less SBC are non‑GAAP financial measures. Refer to the “Non‑GAAP Financial Measures” section for additional information, including our definitions and our uses of constant currency and AOI less SBC.

(2)Refer to the “Key Business Metrics” section for additional information, including our definitions and our uses of ARR, ARR growth rate, and recurring revenues dollar-based net retention rate.

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Results of Operations:

Our results of operations have been, and in the future will be, affected by changes in foreign currency exchange rates. For the years ended December 31, 2025, 2024, and 2023, approximately 33%, 34%, and 35%, respectively, of our total revenues and 45%, 42%, and 45%, respectively, of our total operating expenses were denominated in a currency other than the U.S. dollar including most significantly: euros, British pounds, Canadian dollars, Australian dollars, Chinese yuan renminbi, and New Zealand dollars. Other than the natural hedge attributable to matching revenues and expenses in the same currencies, we do not currently hedge foreign currency exposure. Additionally, because we have operations in, and derive revenue from, geographies around the world, we will continue to monitor the impact of tariffs and other trade policies on our business and the businesses of our accounts, as well as on our financial condition, results of operations, and/or cash flows.

We identify the effects of foreign currency on our operations and present constant currency growth rates and fluctuations because we believe exchange rates are an important factor in understanding period‑over‑period comparisons and enhance the understanding of our results and evaluation of our performance. Refer to the “Non‑GAAP Financial Measures” section for additional information, including our definition and our use of constant currency.

Revenues

We generate revenues from subscriptions, perpetual licenses, and services. Our total revenues are diversified by account type, size, and geographic region. The majority of our revenue growth, excluding the impact from acquisitions, is driven by additional subscriptions revenues from existing accounts using the same products. To a lesser extent, our revenue growth is attributable to subscriptions revenues from new accounts and subscriptions revenues from existing accounts using new products. We believe that we have a loyal account base, with over 70% of our total revenues for the years ended December 31, 2025, 2024, and 2023 generated from organizations that have been our accounts for over ten years.

In addition to our results of operations discussed below, the following is supplemental data of our revenues:

The volume, mix, and duration of contract types starting or renewing in any given period may have a material impact on revenue in the period, and as a result can impact the comparability of reported revenue period-over-period. Our subscriptions, perpetual licenses, and services offerings are recognized pursuant to applicable GAAP guidance. See Note 3 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10‑K for additional information on our revenues. We believe that subscription revenues will continue to comprise a majority of our total revenues.

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Consolidated Revenues

(1)Constant currency is a non‑GAAP financial measure. Refer to the “Non‑GAAP Financial Measures” section for additional information, including our definition and our use of constant currency, and for a reconciliation of constant currency growth rates.

The increase in total revenues for the year ended December 31, 2025 was primarily driven by an increase in subscriptions revenues, partially offset by a decrease in services revenues.

Subscriptions. For the year ended December 31, 2025, the increase in subscriptions revenues was driven by improvements in our business performance of $153,334 ($142,592 on a constant currency basis). Our business performance includes the impact from programmatic acquisitions, which generally are immaterial, individually and in the aggregate.

For the year ended December 31, 2025, the improvements in business performance were primarily driven by expansion from accounts with revenues in the prior period (“existing accounts”), and growth of 2.5% attributable to new accounts, most notably small- and medium-sized accounts. Improvements in business performance for the year ended December 31, 2025 were led by Bentley Open Applications, followed by Seequent applications, and Bentley Infrastructure Cloud.

Perpetual licenses. For the year ended December 31, 2025, perpetual licenses revenues were flat compared to the prior year.

Services. For the year ended December 31, 2025, the decrease in services revenues was driven by a decline in our business performance of $4,869 ($5,548 on a constant currency basis), primarily due to the winding down of a large services project in the beginning of 2025.

Revenues by Geographic Region

Revenue from external customers is attributed to individual countries based upon the location of the customer.

(1)Constant currency is a non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures” section for additional information, including our definition and our use of constant currency, and for a reconciliation of constant currency growth rates.

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Americas. For the year ended December 31, 2025, the increase in revenues from the Americas was primarily driven by improvements in our business performance of $73,493 ($74,816 on a constant currency basis).

The improvements in business performance for the year ended December 31, 2025 were primarily due to expansion of our subscriptions revenues from existing accounts in the U.S., as well as increases in our subscriptions revenues from new accounts.

EMEA. For the year ended December 31, 2025, the increase in revenues from EMEA was primarily driven by improvements in our business performance of $48,444 ($35,754 on a constant currency basis).

The improvements in business performance for the year ended December 31, 2025 were primarily due to expansion of our subscriptions revenues from existing accounts in the United Kingdom (“U.K.”) and the Middle East, as well as increases in our subscriptions revenues from new accounts, partially offset by a decline in services revenues.

APAC. For the year ended December 31, 2025, the increase in revenues from APAC was primarily driven by improvements in our business perfo

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