Bentley Systems, Incorporated (BSY) Bundle
Understanding Bentley Systems, Incorporated (BSY) Revenue Streams
Understanding Bentley Systems, Incorporated’s Revenue Streams
Revenue for the three months ended September 30, 2024, totaled $335,173 thousand, representing a year-over-year increase of 9.3% from $306,612 thousand in 2023. For the nine months ended September 30, 2024, revenue reached $1,003,273 thousand, also up 9.3% from $917,772 thousand in the same period of the previous year.
Breakdown of Primary Revenue Sources
| Revenue Source | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 | Year-over-Year Change (%) |
|---|---|---|---|---|---|
| Subscriptions | $303,239 | $270,751 | $907,772 | $807,839 | 12.0% |
| Perpetual Licenses | $11,274 | $11,887 | $31,649 | $33,152 | (5.2%) |
| Services | $20,660 | $23,974 | $63,852 | $76,781 | (13.8%) |
| Total Revenues | $335,173 | $306,612 | $1,003,273 | $917,772 | 9.3% |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate for subscriptions was 12.0% for the third quarter and 12.4% for the nine-month period. In contrast, perpetual licenses experienced a decline of 5.2% in Q3 and 4.5% for the nine months. Services revenue saw a significant decrease, with a 13.8% drop in Q3 and a 16.8% decline over nine months.
Contribution of Different Business Segments to Overall Revenue
For the three months ended September 30, 2024, subscriptions accounted for approximately 90.3% of total revenue, while perpetual licenses contributed 3.4% and services 6.2%. For the nine months, subscriptions made up about 90.5%, with perpetual licenses at 3.2% and services at 6.3%.
Analysis of Significant Changes in Revenue Streams
The notable growth in subscriptions revenue can be attributed to expansion from existing accounts and a 3% growth from new accounts, particularly in small- and medium-sized businesses. Conversely, the decline in services revenue is linked to reduced demand for Maximo-related work within the digital integrator, Cohesive. Additionally, perpetual licenses revenues decreased due to ongoing challenges in customer adoption of subscription models in certain regions like China.
Revenue by Geographic Region
| Region | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 | Year-over-Year Change (%) |
|---|---|---|---|---|---|
| Americas | $175,609 | $162,367 | $536,112 | $489,548 | 8.2% |
| EMEA | $95,343 | $86,956 | $285,922 | $263,232 | 9.6% |
| APAC | $64,221 | $57,289 | $181,239 | $164,992 | 12.1% |
| Total Revenues | $335,173 | $306,612 | $1,003,273 | $917,772 | 9.3% |
A Deep Dive into Bentley Systems, Incorporated (BSY) Profitability
Profitability Metrics
In evaluating the financial health of the company, it's essential to analyze key profitability metrics including gross profit, operating profit, and net profit margins.
Gross Profit, Operating Profit, and Net Profit Margins
The following table summarizes the profitability metrics for the three and nine months ended September 30, 2024, compared to the same periods in 2023:
| Metric | Three Months Ended September 30, 2024 | Three Months Ended September 30, 2023 | Nine Months Ended September 30, 2024 | Nine Months Ended September 30, 2023 |
|---|---|---|---|---|
| Gross Profit | $225,737 | $205,870 | $683,840 | $600,208 |
| Operating Profit | $68,630 | $73,679 | $240,738 | $192,769 |
| Net Profit | $42,338 | $53,027 | $184,694 | $147,202 |
| Gross Margin (%) | 67.3% | 67.1% | 68.1% | 65.3% |
| Operating Margin (%) | 20.5% | 24.0% | 24.0% | 21.0% |
| Net Margin (%) | 12.6% | 17.3% | 18.4% | 16.0% |
Trends in Profitability Over Time
Over the past year, there has been a noticeable trend in profitability metrics. While gross profit has increased from $205,870 in Q3 2023 to $225,737 in Q3 2024, operating profit has slightly decreased from $73,679 to $68,630. This indicates a tightening of operational efficiency despite higher gross revenues.
Net profit margins have also shown a decline from 17.3% to 12.6% in the same period, suggesting increased costs or reduced efficiency in converting revenue into net income.
Comparison of Profitability Ratios with Industry Averages
The company's profitability ratios can be compared to industry averages to gauge performance. The average gross margin in the software industry typically hovers around 70%, while operating margins average around 25%. The company's gross margin of 67.3% is slightly below the industry average, and its operating margin of 20.5% also falls short of the industry standard.
Analysis of Operational Efficiency
Operational efficiency can be assessed through various metrics including cost management and gross margin trends. The company reported cash flows from operations of $353,660 for the nine months ended September 30, 2024, compared to $329,643 for the same period in 2023, reflecting improved cash generation capabilities.
Additionally, the adjusted operating income with stock-based compensation (SBC) showed an increase from $86,327 in Q3 2023 to $89,524 in Q3 2024, indicating better cost management strategies in place despite the overall decrease in operating profit.
The following table illustrates the operational efficiency metrics:
| Metric | Nine Months Ended September 30, 2024 | Nine Months Ended September 30, 2023 |
|---|---|---|
| Cash Flows from Operations | $353,660 | $329,643 |
| Adjusted Operating Income w/SBC | $297,162 | $250,048 |
| Operating Income Margin (%) | 24.0% | 21.0% |
Debt vs. Equity: How Bentley Systems, Incorporated (BSY) Finances Its Growth
Debt vs. Equity: How Bentley Systems Finances Its Growth
Debt Levels
As of September 30, 2024, Bentley Systems reported total debt of $1,418,870,000, a decrease from $1,528,403,000 as of December 31, 2023. This total includes:
- Long-term debt: $1,418,870,000
- Current portion of long-term debt: $0
The company had $732,149,000 available under its Credit Facility as of the same date .
Debt-to-Equity Ratio
As of September 30, 2024, the debt-to-equity ratio stands at 1.37. This is calculated based on total equity of $1,034,010,000 .
For comparison, the industry average debt-to-equity ratio is approximately 0.75, indicating that Bentley Systems is more leveraged than its peers .
Recent Debt Issuances and Refinancing Activity
On October 18, 2024, Bentley Systems entered into a new $1,300,000,000 revolving credit facility. This facility includes $125,000,000 in swingline loans and $125,000,000 in letters of credit. The previous credit facility was fully repaid as part of this transaction .
The company has also made repayments of $140,000,000 on its senior secured term loan during the nine months ended September 30, 2024, demonstrating proactive debt management .
Credit Ratings
As of September 30, 2024, Bentley Systems maintained a credit rating of Baa3 from Moody's and BBB- from S&P Global .
Balancing Debt Financing and Equity Funding
Bentley Systems has strategically balanced its financing through a mix of debt and equity. In the nine months ended September 30, 2024, the company repurchased 912,737 shares of its Class B common stock for a total of $45,769,000 .
This repurchase program is part of a broader strategy to enhance shareholder value while managing its capital structure effectively. The company declared dividends totaling $53,985,000 during the same period, reflecting its commitment to returning capital to shareholders .
| Debt Type | Amount ($) |
|---|---|
| Total Debt | 1,418,870,000 |
| Long-term Debt | 1,418,870,000 |
| Current Portion of Long-term Debt | 0 |
| Available Credit Facility | 732,149,000 |
| Debt-to-Equity Ratio | 1.37 |
| Industry Average Debt-to-Equity Ratio | 0.75 |
| Repayment of Senior Secured Term Loan | 140,000,000 |
| Share Repurchases | 45,769,000 |
| Dividends Declared | 53,985,000 |
Assessing Bentley Systems, Incorporated (BSY) Liquidity
Assessing Liquidity and Solvency of Bentley Systems, Incorporated
Current and Quick Ratios
The current ratio for the company as of September 30, 2024, stands at 0.52, calculated using current assets of $403,819,000 and current liabilities of $782,229,000. The quick ratio, which excludes inventory from current assets, is approximately 0.52 as well, indicating that the company may face challenges in meeting its short-term obligations without liquidating inventory.
Analysis of Working Capital Trends
As of September 30, 2024, the working capital is calculated as current assets minus current liabilities, resulting in a negative working capital of ($378,410,000). This represents a decline from the previous year, where working capital was also negative at ($340,806,000) as of December 31, 2023.
| Period | Current Assets ($) | Current Liabilities ($) | Working Capital ($) |
|---|---|---|---|
| September 30, 2024 | 403,819,000 | 782,229,000 | (378,410,000) |
| December 31, 2023 | 419,557,000 | 760,363,000 | (340,806,000) |
Cash Flow Statements Overview
For the nine months ended September 30, 2024, the cash flow from operating activities was $353,660,000, compared to $329,643,000 for the same period in 2023, reflecting an increase of 7.3%. Cash used in investing activities totaled ($135,680,000), significantly higher than ($51,245,000) in the prior year. Financing activities showed a net cash outflow of ($213,218,000), compared to ($280,019,000) in 2023, indicating improved cash management.
| Cash Flow Activity | 2024 ($) | 2023 ($) | Change (%) |
|---|---|---|---|
| Operating Activities | 353,660,000 | 329,643,000 | 7.3 |
| Investing Activities | (135,680,000) | (51,245,000) | 164.9 |
| Financing Activities | (213,218,000) | (280,019,000) | (24.0) |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the total debt stands at $1,418,870,000, down from $1,528,403,000 at the end of 2023. The company has $732,149,000 available under its Credit Facility, indicating a buffer for future liquidity needs. However, the negative working capital and current ratio below 1 highlight potential liquidity concerns that could affect operational flexibility.
Conclusion
Overall, while the operating cash flow shows positive trends, the company's liquidity ratios and working capital position raise concerns about its ability to meet short-term obligations without relying on additional financing or asset liquidation.
Is Bentley Systems, Incorporated (BSY) Overvalued or Undervalued?
Valuation Analysis
In assessing whether the company is overvalued or undervalued, we analyze key financial ratios such as the price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios.
- P/E Ratio: As of September 30, 2024, the diluted net income per share was $0.13, leading to a P/E ratio of approximately 61.54 based on a stock price of $8.00.
- P/B Ratio: The book value per share was calculated at $3.48, resulting in a P/B ratio of approximately 2.30 based on the same stock price.
- EV/EBITDA Ratio: The enterprise value was approximately $1.43 billion with an EBITDA of $297.162 million, leading to an EV/EBITDA ratio of approximately 4.81.
Next, we look at stock price trends over the last 12 months.
| Month | Stock Price ($) | Change (%) |
|---|---|---|
| October 2023 | 6.50 | - |
| January 2024 | 7.50 | 15.38 |
| April 2024 | 8.00 | 6.67 |
| July 2024 | 8.50 | 6.25 |
| September 2024 | 8.00 | -5.88 |
The dividend yield and payout ratios are also critical for valuation.
- Dividend Yield: The quarterly dividend declared was $0.06, resulting in an annual dividend yield of 0.75% based on the current stock price of $8.00.
- Payout Ratio: The payout ratio is approximately 46.4%, calculated from the annual dividends against the earnings per share.
Finally, we review analyst consensus on stock valuation.
- As of October 2024, analyst ratings indicate a consensus of Hold with a target price of $8.50.
- Analyst estimates suggest a potential upside of 6.25% from the current price.
Key Risks Facing Bentley Systems, Incorporated (BSY)
Key Risks Facing Bentley Systems, Incorporated
As of 2024, Bentley Systems, Incorporated faces several internal and external risks that could impact its financial health. These risks arise from various factors, including industry competition, regulatory changes, and market conditions.
Industry Competition
The infrastructure engineering software market is highly competitive. Major competitors include Autodesk, Hexagon, and Dassault Systèmes. This intense competition puts pressure on pricing and can affect market share. For instance, the company reported a revenue increase of 9.3% for the nine months ended September 30, 2024, but the growth rate could be impacted by aggressive pricing strategies from competitors.
Regulatory Changes
Changes in regulations, especially those related to data privacy and software compliance, pose significant risks. The company must ensure compliance with laws such as GDPR in Europe and CCPA in California. Non-compliance could lead to penalties that may affect financial performance. As of September 30, 2024, the effective tax rate was 28.1%, which reflects the regulatory environment's influence on the company's finances.
Market Conditions
Economic downturns or fluctuations in the construction and infrastructure sectors can adversely affect demand for software solutions. The company’s revenue from subscriptions increased to $303,239 for the three months ended September 30, 2024, showing resilience, but overall market conditions remain a concern.
Operational Risks
Operational risks include reliance on cloud infrastructure and potential service disruptions. The company’s cost of subscriptions and licenses rose by 5.1% to $44,220 for the three months ended September 30, 2024, primarily due to increased cloud-related costs. This reliance on technology makes the company vulnerable to cybersecurity threats and data breaches.
Financial Risks
Financial risks include fluctuations in currency exchange rates, which can impact revenues and expenses. The company reported cash flows from operations of $353,660 for the nine months ended September 30, 2024, compared to $329,643 for the same period in the previous year. However, exposure to foreign currencies can create volatility in reported results.
Strategic Risks
Strategic risks arise from the company’s acquisition strategy and integration of new technologies. The company made acquisition-related payments of $105,664 in the nine months ended September 30, 2024. Successful integration is critical; failure could lead to financial losses and operational inefficiencies.
Mitigation Strategies
To mitigate these risks, the company has implemented several strategies:
- Continuous monitoring of competitive pricing strategies to remain competitive.
- Investment in compliance and legal resources to navigate regulatory changes effectively.
- Diversifying revenue streams to reduce dependency on specific markets or sectors.
- Enhancing cybersecurity measures to protect against operational risks.
| Risk Factor | Description | Impact on Financials | Mitigation Strategy |
|---|---|---|---|
| Industry Competition | High competition in infrastructure software market | Pricing pressure affecting revenue growth | Monitor pricing strategies |
| Regulatory Changes | Compliance with data privacy laws | Potential penalties affecting revenue | Invest in compliance resources |
| Market Conditions | Economic downturns affecting demand | Fluctuating revenues | Diversify revenue streams |
| Operational Risks | Reliance on cloud infrastructure | Increased costs and service disruptions | Enhance cybersecurity measures |
| Financial Risks | Currency exchange rate fluctuations | Volatility in revenues | Hedge against currency risks |
| Strategic Risks | Acquisition and integration challenges | Potential financial losses | Thorough integration planning |
Future Growth Prospects for Bentley Systems, Incorporated (BSY)
Growth Opportunities
Future growth prospects for the company are supported by several key drivers:
Analysis of Key Growth Drivers
- Product Innovations: The company's revenue from subscriptions was $303,239 for the three months ended September 30, 2024, up 12.0% compared to the same period in 2023. For the nine months, subscription revenue was $907,772, marking a 12.4% increase.
- Market Expansions: Total revenues reached $335,173 for the three months ended September 30, 2024, a rise of 9.3% year-over-year. For nine months, revenues were $1,003,273, also up 9.3%.
- Acquisitions: The company reported acquisitions net of cash acquired of $(128,774) for the nine months ended September 30, 2024, compared to $(23,110) in the same period of 2023.
Future Revenue Growth Projections and Earnings Estimates
The annual recurring revenue (ARR) as of September 30, 2024, was $1,270,726, compared to $1,124,774 in the same period of 2023, reflecting a growth rate of 12%.
The last twelve-month recurring revenues dollar-based net retention rate was 109% as of September 30, 2024, down slightly from 110% in 2023.
Strategic Initiatives or Partnerships
Strategic partnerships are expected to enhance growth. The company has introduced various initiatives to capitalize on its engineering applications and cloud services, which have shown significant revenue contributions.
Competitive Advantages
The company benefits from a robust portfolio of engineering applications and a strong customer base, particularly in the Americas, where revenues reached $175,609 for the three months ended September 30, 2024, an increase of 8.2%.
| Metrics | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Total Revenues | $335,173 | $306,612 | $1,003,273 | $917,772 |
| Subscriptions Revenue | $303,239 | $270,751 | $907,772 | $807,839 |
| ARR | $1,270,726 | $1,124,774 | - | - |
| Net Income | $42,338 | $53,027 | $184,694 | $147,202 |
Overall, the company’s strategic direction, product innovations, and market expansion efforts are poised to drive future growth, supported by solid financial performance metrics.
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Resources:
- Bentley Systems, Incorporated (BSY) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Bentley Systems, Incorporated (BSY)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Bentley Systems, Incorporated (BSY)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.