BENTLEY SYSTEMS INC - Quarter Report: 2022 June (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________________

FORM 10-Q

___________________________________


(Mark One)
☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the quarterly period ended June 30, 2022
OR
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from to

Commission File Number: 001-39548

___________________________________

BENTLEY SYSTEMS, INCORPORATED

(Exact name of registrant as specified in its charter)

___________________________________


Delaware						95-3936623
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

685 Stockton Drive
Exton, Pennsylvania						19341
(Address of principal executive offices)						(Zip Code)

Registrant’s telephone number, including area code: (610) 458-5000

___________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Class B Common Stock, par value $0.01 per share

BSY

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S‑T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non‑accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act.


Large accelerated filer ☒			Accelerated filer ☐
Non-accelerated filer ☐			Smaller reporting company ☐
			Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes ☐ No ☒

As of August 2, 2022, the registrant had 11,601,757 shares of Class A and 276,774,655 shares of Class B Common Stock outstanding.

BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIES

FORM 10-Q

TABLE OF CONTENTS


						Page
PART I. FINANCIAL INFORMATION
Item 1. Unaudited Consolidated Financial Statements
Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021						3
Consolidated Statements of Operations for the three and six months ended June 30, 2022 and 2021						4
Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2022 and 2021						5
Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2022 and 2021						6
Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021						8
Notes to Consolidated Financial Statements						10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations						42
Item 3. Quantitative and Qualitative Disclosures About Market Risk						68
Item 4. Controls and Procedures						68

PART II. OTHER INFORMATION
Item 1. Legal Proceedings						69
Item 1A. Risk Factors						69
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds						69
Item 6. Exhibits						70

SIGNATURE						71

PART I. FINANCIAL INFORMATION

Item 1. Unaudited Consolidated Financial Statements

BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands, except share and per share data)

(unaudited)


	June 30, 2022		December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	93,411	$	329,337
Accounts receivable	218,775		241,807
Allowance for doubtful accounts	(9,053)		(6,541)
Prepaid income taxes	17,641		16,880
Prepaid and other current assets	34,717		34,348
Total current assets	355,491		615,831
Property and equipment, net	29,603		31,823
Operating lease right-of-use assets	45,124		50,818
Intangible assets, net	316,258		245,834
Goodwill	2,215,909		1,588,477
Investments	10,666		6,438
Deferred income taxes	62,473		71,376
Other assets	64,085		48,646
Total assets	$	3,099,609	$	2,659,243
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	16,395	$	16,483
Accruals and other current liabilities	339,395		323,603
Deferred revenues	201,598		224,610
Operating lease liabilities	16,595		17,482
Income taxes payable	12,431		6,696
Current portion of long-term debt	5,000		5,000
Total current liabilities	591,414		593,874
Long-term debt	1,825,505		1,430,992
Deferred compensation plan liabilities	75,525		94,890
Long-term operating lease liabilities	31,024		35,274
Deferred revenues	13,216		7,983
Deferred income taxes	49,490		65,014
Income taxes payable	7,433		7,725
Other liabilities	9,009		14,269
Total liabilities	2,602,616		2,250,021
Commitments and contingencies (Note 18)
Stockholders’ equity:
Preferred stock, $0.01 par value, authorized 100,000,000 shares; none issued or outstanding as of June 30, 2022 and December 31, 2021	—		—
Class A Common Stock, $0.01 par value, authorized 100,000,000 shares; issued and outstanding 11,601,757 shares as of June 30, 2022 and December 31, 2021, and Class B Common Stock, $0.01 par value, authorized 1,800,000,000 shares; issued and outstanding 276,552,402 and 270,924,962 shares as of June 30, 2022 and December 31, 2021, respectively	2,882		2,825
Additional paid-in capital	981,203		937,805
Accumulated other comprehensive loss	(89,131)		(91,774)
Accumulated deficit	(397,961)		(439,634)
Total stockholders’ equity	496,993		409,222
Total liabilities and stockholders’ equity	$	3,099,609	$	2,659,243

See accompanying notes to consolidated financial statements.

BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIES

Consolidated Statements of Operations

(in thousands, except share and per share data)

(unaudited)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Revenues:
Subscriptions	$	232,191	$	186,442	$	473,424	$	374,567
Perpetual licenses	11,548		11,391		21,753		21,507
Subscriptions and licenses	243,739		197,833		495,177		396,074
Services	24,546		26,088		48,625		49,852
Total revenues	268,285		223,921		543,802		445,926
Cost of revenues:
Cost of subscriptions and licenses	36,806		29,881		70,533		58,826
Cost of services	22,888		23,570		44,946		43,914
Total cost of revenues	59,694		53,451		115,479		102,740
Gross profit	208,591		170,470		428,323		343,186
Operating expense (income):
Research and development	64,866		52,776		126,139		100,579
Selling and marketing	49,617		38,014		95,562		70,454
General and administrative	40,033		41,683		91,187		74,904
Deferred compensation plan	(12,159)		195		(17,297)		362
Amortization of purchased intangibles	10,517		4,589		20,423		8,027
Total operating expenses	152,874		137,257		316,014		254,326
Income from operations	55,717		33,213		112,309		88,860
Interest expense, net	(7,622)		(2,453)		(14,664)		(4,772)
Other income (expense), net	3,497		(3,777)		14,138		10,705
Income before income taxes	51,592		26,983		111,783		94,793
Benefit for income taxes	4,674		20,473		1,443		10,115
Loss from investment accounted for using the equity method, net of tax	(593)		(1,829)		(1,165)		(2,275)
Net income	55,673		45,627		112,061		102,633
Less: Net income attributable to participating securities	(11)		(3)		(20)		(3)
Net income attributable to Class A and Class B common stockholders	$	55,662	$	45,624	$	112,041	$	102,630
Per share information:
Net income per share, basic	$	0.18	$	0.15	$	0.36	$	0.34
Net income per share, diluted	$	0.17	$	0.14	$	0.35	$	0.32
Weighted average shares, basic	308,244,778		304,066,038		308,512,924		303,311,423
Weighted average shares, diluted	332,275,216		324,478,086		332,208,435		323,094,045

See accompanying notes to consolidated financial statements.

BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

(in thousands)

(unaudited)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Net income	$	55,673	$	45,627	$	112,061	$	102,633
Other comprehensive (loss) income, net of taxes:
Foreign currency translation adjustments	(13,820)		(19,513)		2,617		(28,695)
Actuarial gain on retirement plan, net of tax effect of $(5), $(9), $(10), and $(17), respectively	13		21		26		42
Total other comprehensive (loss) income, net of taxes	(13,807)		(19,492)		2,643		(28,653)
Comprehensive income	$	41,866	$	26,135	$	114,704	$	73,980

See accompanying notes to consolidated financial statements.

BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIES

Consolidated Statements of Stockholders’ Equity

(in thousands, except share data)

(unaudited)


	Three Months Ended June 30, 2022
						Accumulated
	Class A and Class B			Additional		Other				Total
	Common Stock			Paid-in		Comprehensive		Accumulated		Stockholders’
	Shares	Par Value		Capital		Loss		Deficit		Equity
Balance, March 31, 2022	285,134,093	$	2,851	$	957,498	$	(75,324)	$	(427,372)	$	457,653
Net income	—	—		—		—		55,673		55,673
Other comprehensive loss	—	—		—		(13,807)		—		(13,807)
Dividends declared	—	—		—		—		(8,678)		(8,678)
Shares issued in connection with deferred compensation plan	2,616,044	26		(26)		—		—		—
Deferred compensation plan elective participant deferrals	—	—		2,439		—		—		2,439
Shares issued in connection with Executive Bonus Plan, net	87,692	1		6,896		—		(3,005)		3,892

Stock option exercises, net	653,336	7		3,086		—		(749)		2,344
Acquisition option exercises, net	35,323	1		(1)		—		—		—
Shares issued for stock grants, net	13,632	—		450		—		—		450
Stock-based compensation expense	—	—		10,862		—		—		10,862
Shares related to restricted stock, net	77,040	1		(1)		—		(593)		(593)
Repurchase of Class B Common Stock under approved program	(463,001)	(5)		—		—		(13,237)		(13,242)
Balance, June 30, 2022	288,154,159	$	2,882	$	981,203	$	(89,131)	$	(397,961)	$	496,993


	Six Months Ended June 30, 2022
						Accumulated
	Class A and Class B			Additional		Other				Total
	Common Stock			Paid-in		Comprehensive		Accumulated		Stockholders’
	Shares	Par Value		Capital		Loss		Deficit		Equity
Balance, December 31, 2021	282,526,719	$	2,825	$	937,805	$	(91,774)	$	(439,634)	$	409,222
Net income	—	—		—		—		112,061		112,061
Other comprehensive income	—	—		—		2,643		—		2,643
Dividends declared	—	—		—		—		(17,031)		(17,031)
Shares issued in connection with deferred compensation plan, net	3,425,795	34		(26)		—		(24,254)		(24,246)
Deferred compensation plan elective participant deferrals	—	—		3,108		—		—		3,108
Shares issued in connection with Executive Bonus Plan, net	159,797	2		11,891		—		(5,197)		6,696
Shares issued in connection with employee stock purchase plan	109,749	1		4,610		—		(121)		4,490
Stock option exercises, net	2,054,585	21		5,840		—		(8,400)		(2,539)
Acquisition option exercises, net	185,178	2		(2)		—		—		—
Shares issued for stock grants, net	13,632	—		450		—		—		450
Stock-based compensation expense	—	—		17,529		—		—		17,529
Shares related to restricted stock, net	141,705	2		(2)		—		(2,148)		(2,148)
Repurchase of Class B Common Stock under approved program	(463,001)	(5)		—		—		(13,237)		(13,242)
Balance, June 30, 2022	288,154,159	$	2,882	$	981,203	$	(89,131)	$	(397,961)	$	496,993

See accompanying notes to consolidated financial statements.

BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIES

Consolidated Statements of Stockholders’ Equity

(in thousands, except share data)

(unaudited)


	Three Months Ended June 30, 2021
						Accumulated
	Class A and Class B			Additional		Other				Total
	Common Stock			Paid-in		Comprehensive		Accumulated		Stockholders’
	Shares	Par Value		Capital		Loss		Deficit		Equity
Balance, March 31, 2021	273,722,483	$	2,737	$	732,635	$	(35,394)	$	(345,981)	$	353,997
Net income	—	—		—		—		45,627		45,627
Other comprehensive loss	—	—		—		(19,492)		—		(19,492)
Shares issued related to acquisition	3,141,342	31		182,359		—		—		182,390
Purchase of capped call options, net of tax of $6,334	—	—		(19,591)		—		—		(19,591)
Dividends declared	—	—		—		—		(8,372)		(8,372)
Shares issued in connection with deferred compensation plan, net	1,862,576	19		—		—		(53,072)		(53,053)
Deferred compensation plan elective participant deferrals	—	—		639		—		—		639

Shares issued in connection with Executive Bonus Plan, net	69,486	1		6,148		—		(2,679)		3,470

Stock option exercises, net	2,393,937	24		2,549		—		(21,869)		(19,296)
Shares issued for stock grants	7,824	—		450		—		—		450
Stock-based compensation expense	—	—		5,762		—		—		5,762
Shares related to restricted stock, net	(8,521)	—		—		—		—		—
Balance, June 30, 2021	281,189,127	$	2,812	$	910,951	$	(54,886)	$	(386,346)	$	472,531


	Six Months Ended June 30, 2021
						Accumulated
	Class A and Class B			Additional		Other				Total
	Common Stock			Paid-in		Comprehensive		Accumulated		Stockholders’
	Shares	Par Value		Capital		Loss		Deficit		Equity
Balance, December 31, 2020	272,154,504	$	2,722	$	741,113	$	(26,233)	$	(376,003)	$	341,599
Net income	—	—		—		—		102,633		102,633
Other comprehensive loss	—	—		—		(28,653)		—		(28,653)
Shares issued related to acquisition	3,141,342	31		182,359		—		—		182,390
Purchase of capped call options, net of tax of $12,584	—	—		(39,021)		—		—		(39,021)
Dividends declared	—	—		—		—		(16,591)		(16,591)
Shares issued in connection with deferred compensation plan, net	2,202,079	22		—		—		(61,934)		(61,912)
Deferred compensation plan elective participant deferrals	—	—		1,493		—		—		1,493

Shares issued in connection with Executive Bonus Plan, net	149,447	2		11,721		—		(4,716)		7,007

Stock option exercises, net	3,657,058	36		4,288		—		(29,027)		(24,703)
Shares issued for stock grants	7,824	—		450		—		—		450
Stock-based compensation expense	—	—		8,548		—		—		8,548
Shares related to restricted stock, net	(123,127)	(1)		—		—		(708)		(709)
Balance, June 30, 2021	281,189,127	$	2,812	$	910,951	$	(54,886)	$	(386,346)	$	472,531

See accompanying notes to consolidated financial statements.

BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


	Six Months Ended
	June 30,
	2022		2021
Cash flows from operating activities:
Net income	$	112,061	$	102,633
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	35,730		19,280
Bad debt allowance	3,791		291
Deferred income taxes	(16,806)		(915)
Stock-based compensation expense	32,568		20,598
Deferred compensation plan	(17,297)		1,855
Amortization and write-off of deferred debt issuance costs	3,646		2,371
Change in fair value of derivative	(19,490)		(7,735)
Change in fair value of contingent consideration	500		—
Change on fair value of investments	(112)		—
Gain on sale of aircraft	(2,029)		—
Foreign currency remeasurement loss (gain)	5,748		(2,371)
Loss from investment accounted for using the equity method, net of tax	1,165		2,275
Changes in assets and liabilities, net of effect from acquisitions:
Accounts receivable	15,581		(4,665)
Prepaid and other assets	3,325		10,485
Accounts payable, accruals, and other liabilities	25,683		37,623
Deferred revenues	(20,292)		(5,746)
Income taxes payable, net of prepaid income taxes	4,958		(26,957)
Net cash provided by operating activities	168,730		149,022
Cash flows from investing activities:
Purchases of property and equipment and investment in capitalized software	(6,589)		(4,750)
Proceeds from sale of aircraft	2,380		—
Acquisitions, net of cash acquired	(714,197)		(1,002,551)
Other investing activities	(5,561)		(700)
Net cash used in investing activities	(723,967)		(1,008,001)
Cash flows from financing activities:
Proceeds from credit facilities	657,981		581,233
Payments of credit facilities	(264,107)		(790,846)
Proceeds from convertible senior notes, net of discounts and commissions	—		1,233,377
Payments of debt issuance costs	—		(4,951)
Purchase of capped call options	—		(51,555)

Repayment of term loan	(2,500)		—
Payments of financing leases	(89)		(101)
Payments of acquisition debt and other consideration	(5,059)		(544)
Payments of dividends	(17,163)		(16,591)
Proceeds from stock purchases under employee stock purchase plan	4,611		—
Proceeds from exercise of stock options	5,861		4,324
Payments for shares acquired including shares withheld for taxes	(40,520)		(87,836)
Repurchase of Class B Common Stock under approved program	(13,242)		—
Net cash provided by financing activities	325,773		866,510
Effect of exchange rate changes on cash and cash equivalents	(6,462)		1,617
(Decrease) increase in cash and cash equivalents	(235,926)		9,148
Cash and cash equivalents, beginning of year	329,337		122,006
Cash and cash equivalents, end of period	$	93,411	$	131,154

BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


	Six Months Ended
	June 30,
	2022		2021
Supplemental information:
Cash paid for income taxes	$	11,606	$	25,109
Income tax refunds	1,076		5,895
Interest paid	10,528		1,871
Non-cash investing and financing activities:
Shares issued related to acquisition	—		182,390
Contingent acquisition consideration	—		4,991
Deferred, non-contingent consideration, net	—		9,593
Convertible senior notes expenses included in Accounts payable and Accruals and other current liabilities	—		692
Capped call options expenses included in Accounts payable and Accruals and other current liabilities	—		50

Share-settled Executive Bonus Plan awards	11,893		11,723
Deferred compensation plan elective participant deferrals	3,108		1,493

See accompanying notes to consolidated financial statements.

BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

(unaudited)

Note 1: Basis of Presentation

Basis of Presentation — The accompanying unaudited consolidated financial statements include the accounts of Bentley Systems, Incorporated (“Bentley” or the “Company”) and its wholly-owned subsidiaries, and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all the information and notes required by U.S. GAAP for annual financial statements. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in Part II, Item 8 of the Company’s 2021 Annual Report on Form 10‑K on file with the SEC. In management’s opinion, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal, recurring and non-recurring adjustments) that were considered necessary for the fair statement of the Company’s financial position, results of operations, and cash flows at the dates and for the periods indicated. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts in the financial statements and accompanying notes. Actual results could differ materially from those estimates. The December 31, 2021 consolidated balance sheet included herein is derived from the Company’s audited consolidated financial statements.

Certain reclassifications of prior period amounts have been made to conform to the current period presentation.

Business Combinations — On January 31, 2022, the Company completed the acquisition of Power Line Systems, a leader in software for the design of overhead electric power transmission lines and their structures, for $695,968 in cash, net of cash acquired. On June 17, 2021, the Company completed the acquisition of Seequent Holdings Limited (“Seequent”), a leader in software for geological and geophysical modeling, geotechnical stability, and cloud services for geodata management and collaboration, for $883,336 in cash, net of cash acquired, plus 3,141,342 shares of the Company’s Class B Common Stock (see Note 4).

Note 2: Recent Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2020‑04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020‑04”), which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. ASU 2020‑04 applies only to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform between March 12, 2020 and December 31, 2022. The expedients and exceptions provided by ASU 2020‑04 do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The Company had no transactions that were impacted by ASU 2020‑04 during the six months ended June 30, 2022.

Recently Adopted Accounting Guidance

In October 2021, the FASB issued ASU No. 2021‑08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021‑08”), which improves the comparability of accounting for acquired revenue contracts with customers in a business combination. The new guidance is meant to reduce diversity in practice and inconsistencies related to recognition of an acquired contract liability and revenue contract payment terms and their effect on subsequent revenue recognized by the acquirer. During the fourth quarter of 2021, the Company early adopted the ASU effective January 1, 2021 using the modified retrospective method of adoption and retrospectively recasted interim prior period amounts presented in the accompanying unaudited consolidated financial statements for acquisitions subsequent to January 1, 2021. The adoption of this ASU did not have a material impact on the accompanying unaudited consolidated financial statements.

Note 3: Revenue from Contracts with Customers

Nature of Products and Services

The Company generates revenues from subscriptions, perpetual licenses, and services.

Subscriptions

SELECT subscriptions — The Company provides prepaid annual recurring subscriptions that accounts (which are based on distinct contractual and billing relationships with the Company, where affiliated entities of a single parent company may each have an independent account with the Company) can elect to add to a new or previously purchased perpetual license. SELECT provides accounts with benefits, including upgrades, comprehensive technical support, pooled licensing benefits, annual portfolio balancing exchange rights, learning benefits, certain Azure‑based cloud collaboration services, mobility advantages, and access to other available benefits. SELECT subscriptions revenues are recognized as distinct performance obligations are satisfied. The performance obligations within the SELECT offering, outside of the portfolio balancing exchange right, are concurrently delivered and have the same pattern of recognition. These performance obligations are accounted for ratably over the term as a single performance obligation.

Enterprise subscriptions — The Company also provides enterprise subscription offerings, which provide its largest accounts with complete and unlimited global access to the Company’s comprehensive portfolio of solutions. Enterprise License Subscriptions (“ELS”) provide access for a prepaid fee, which is based on the account’s usage of software in the preceding year, to effectively create a fee‑certain consumption‑based arrangement. ELS contain a term license component, SELECT maintenance and support, and performance consulting days. The SELECT maintenance and support benefits under ELS do not include a portfolio balancing performance obligation. Revenue is allocated to the various performance obligations based on their respective standalone selling price (“SSP”). Revenue allocated to the term license component is recognized upon delivery at the start of the subscription term while revenues for the SELECT maintenance and support and the performance consulting days are recognized as delivered over the subscription term. Billings in advance are recorded as Deferred revenues in the consolidated balance sheets.

Enterprise 365 (“E365”) subscriptions provide unrestricted access to the Company’s comprehensive software portfolio, similar to ELS, however, the accounts are charged based upon daily usage. The daily usage fee also includes a term license component, SELECT maintenance and support, hosting, and Success Blueprints, which are designed to achieve business outcomes through more efficient and effective use of the Company’s software. E365 revenues are recognized based upon usage incurred by the account. Usage is defined as distinct user access on a daily basis. E365 subscriptions can contain quarterly usage floors or collars as accounts transition to the usage model or for accounts within the public sector. The term of E365 subscriptions aligns with calendar quarters and revenue is recognized based on actual usage.

Term license subscriptions — The Company provides annual, quarterly, and monthly term licenses for its software products. Term license subscriptions contain a term license component and SELECT maintenance and support. Revenue is allocated to the various performance obligations based on their SSP. Annual term licenses (“ATL”) are generally prepaid annually for named user access to specific products and include the Company’s Virtuoso subscriptions sold via the Company’s Virtuosity eStore for practitioner licenses. Virtuoso subscriptions are bundles with customizable training and expert consultation administered through “keys” or credits. Quarterly term license (“QTL”) subscriptions allow accounts to pay quarterly in arrears for license usage that is beyond their prepaid subscriptions. Monthly term license (“MTL”) subscriptions are identical to QTL subscriptions, except for the term of the license, and the manner in which they are monetized. MTL subscriptions require a Cloud Services Subscription (“CSS”), which is described below. For ATL, revenue allocated to the term license component is recognized upon delivery at the start of the subscription term while revenue for the SELECT maintenance and support is recognized as delivered over the subscription term. For Virtuoso keys, revenue is recognized as services are delivered. Billings in advance are recorded as Deferred revenues in the consolidated balance sheets. For usage‑based QTL and MTL subscriptions, revenues are recognized based upon usage incurred by the account. Usage is defined as peak usage over the respective terms. The terms of QTL and MTL subscriptions align with calendar quarters and calendar months, respectively, and revenue is recognized based on actual usage.

Visas and Passports are quarterly or annual term licenses enabling users to access specific project or enterprise information and entitles users to certain functionality of the Company’s ProjectWise and AssetWise systems. The Company’s standard offerings are usage based with monetization through the Company’s CSS program as described below.

CSS is a program designed to streamline the procurement, administration, and payment process. The program requires an estimation of annual usage for CSS eligible offerings and a deposit of funds in advance. Actual consumption is monitored and invoiced against the deposit on a calendar quarter basis. CSS balances not utilized for eligible products or services may roll over to future periods or are refundable. Paid and unconsumed CSS balances are recorded in Accruals and other current liabilities in the consolidated balance sheets. Software and services consumed under CSS are recognized pursuant to the applicable revenue recognition guidance for the respective software or service and classified as subscriptions or services based on their respective nature.

Perpetual licenses

Perpetual licenses may be sold with or without attaching a SELECT subscription. Historically, attachment and retention of the SELECT subscription has been high given the benefits of the SELECT subscription discussed above. Perpetual licenses revenues are recognized upon delivery of the license to the user.

Services

The Company provides professional services, including training, implementation, configuration, customization, and strategic consulting services. The Company performs projects on both a time and materials and a fixed fee basis. Certain of the Company’s fixed‑fee arrangements, including its Success Services offerings, are structured as subscription‑like, packaged offerings that are annually recurring in nature. Success Services are standard service offerings that provide a level of dedicated professional services above the standard technical support offered to all accounts as part of their SELECT or enterprise agreement. Revenues are recognized as services are performed.

The Company primarily utilizes its direct internal sales force and also has arrangements through independent channel partners to promote and sell Bentley products and subscriptions to end‑users. Channel partners are authorized to promote the sale of an authorized set of Bentley products and subscriptions within an authorized geography under a Channel Partner Agreement.

Significant Judgments and Estimates

The Company’s contracts with customers may include promises to transfer licenses (perpetual or term‑based), maintenance, and services to a user. Judgment is required to determine if the promises are separate performance obligations, and if so, the allocation of the transaction price to each performance obligation. When an arrangement includes multiple performance obligations which are concurrently delivered and have the same pattern of transfer to the customer, the Company accounts for those performance obligations as a single performance obligation. For contracts with more than one performance obligation, the transaction price is allocated among the performance obligations in an amount that depicts the relative SSP of each obligation. Judgment is required to determine the SSP for each distinct performance obligation. In instances where SSP is not directly observable, such as when the Company does not sell the product or service separately, the Company determines the SSP using information that may include market conditions and other observable inputs. The Company uses a range of amounts to estimate SSP when it sells each of the products and services separately and needs to determine whether there is a discount that should be allocated based on the relative SSP of the various products and services.

The Company’s SELECT agreement provides users with perpetual licenses a right to exchange software for other eligible perpetual licenses on an annual basis upon renewal. The Company refers to this option as portfolio balancing and has concluded that the portfolio balancing feature represents a material right resulting in the deferral of the associated revenue. Judgment is required to estimate the percentage of users who may elect to portfolio balance and considers inputs such as historical user elections. This feature is available once per term and must be exercised prior to the respective renewal term. The Company recognizes the associated revenue upon election or when the portfolio balancing right expires. This right is included in the initial and subsequent renewal terms and the Company reestablishes the revenue deferral for the material right upon the beginning of the renewal term. As of June 30, 2022 and December 31, 2021, the Company has deferred $17,197 and $18,020, respectively, related to portfolio balancing exchange rights which is included in Deferred revenues in the consolidated balance sheets.

Contract Assets and Contract Liabilities


	June 30, 2022		December 31, 2021


Contract assets	$	434	$	336
Deferred revenues	214,814		232,593

As of June 30, 2022 and December 31, 2021, the Company’s contract assets relate to performance obligations completed in advance of the right to invoice and are included in Prepaid and other current assets in the consolidated balance sheets. Contract assets were not impaired as of June 30, 2022 and December 31, 2021.

Deferred revenues consist of billings made or payments received in advance of revenue recognition from subscriptions and services. The timing of revenue recognition may differ from the timing of billings to users.

For the six months ended June 30, 2022, $139,873 of revenues that were included in the December 31, 2021 deferred revenues balance were recognized. There were additional deferrals of $131,051, which were primarily related to new billings and acquisitions (see Note 4). For the six months ended June 30, 2021, $135,237 of revenues that were included in the December 31, 2020 deferred revenues balance were recognized. There were additional deferrals of $153,133, which were primarily related to new billings.

Remaining Performance Obligations

The Company’s contracts with customers include amounts allocated to performance obligations that will be satisfied at a later date. As of June 30, 2022, amounts allocated to these remaining performance obligations are $214,814, of which the Company expects to recognize approximately 94% over the next 12 months with the remaining amount thereafter.

Disaggregation of Revenues

The Company’s revenues consist of the following:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Subscriptions:
SELECT subscriptions	$	66,579	$	66,934	$	133,177	$	133,074
Enterprise subscriptions (1)	81,593		67,662		163,420		138,677
Term license subscriptions	84,019		51,846		176,827		102,816
Subscriptions	232,191		186,442		473,424		374,567
Perpetual licenses	11,548		11,391		21,753		21,507
Subscriptions and licenses	243,739		197,833		495,177		396,074
Services:
Recurring	4,173		5,006		8,874		11,083
Other	20,373		21,082		39,751		38,769
Services	24,546		26,088		48,625		49,852
Total revenues	$	268,285	$	223,921	$	543,802	$	445,926

(1)Enterprise subscriptions includes revenue attributable to E365 subscriptions of $72,905 and $53,753 for the three months ended June 30, 2022 and 2021, respectively, and $141,503 and $102,018 for the six months ended June 30, 2022 and 2021, respectively.

The Company recognizes perpetual licenses and the term license component of subscriptions as revenue when either the licenses are delivered or at the start of the subscription term. For the three months ended June 30, 2022 and 2021, the Company recognized $129,872 and $88,652 of license related revenues, respectively, of which $118,324 and $77,261, respectively, were attributable to the term license component of the Company’s subscription based commercial offerings recorded in Subscriptions in the consolidated statements of operations. For the six months ended June 30, 2022 and 2021, the Company recognized $255,097 and $184,277 of license related revenues, respectively, of which $233,344 and $162,770, respectively, were attributable to the term license component of the Company’s subscription based commercial offerings recorded in Subscriptions in the consolidated statements of operations.

The Company derived 7% of its total revenues through channel partners for the three months ended June 30, 2022 and 2021, and 7% and 8% of its total revenues through channel partners for the six months ended June 30, 2022 and 2021, respectively.

Revenue from external customers is attributed to individual countries based upon the location of the customer. Revenues by geographic region are as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Americas (1)	$	144,359	$	112,894	$	298,619	$	221,756
Europe, the Middle East, and Africa (“EMEA”)	74,800		69,157		152,280		143,005
Asia-Pacific (“APAC”)	49,126		41,870		92,903		81,165
Total revenues	$	268,285	$	223,921	$	543,802	$	445,926

(1)Americas includes the United States (“U.S.”), Canada, and Latin America (including the Caribbean). Revenue attributable to the U.S. totaled $108,456 and $91,689 for the three months ended June 30, 2022 and 2021, respectively, and $224,589 and $184,629 for the six months ended June 30, 2022 and 2021, respectively.

Note 4: Acquisitions

For the six months ended June 30, 2022 and the year ended December 31, 2021, the Company completed a number of acquisitions, for an aggregate purchase price of $733,190 and $1,269,844, respectively. On January 31, 2022, the Company completed the acquisition of Power Line Systems, a leader in software for the design of overhead electric power transmission lines and their structures, for $695,968 in cash, net of cash acquired. On June 17, 2021, the Company completed the acquisition of Seequent, a leader in software for geological and geophysical modeling, geotechnical stability, and cloud services for geodata management and collaboration, for $883,336 in cash, net of cash acquired, plus 3,141,342 shares of the Company’s Class B Common Stock. The operating results of the acquired businesses, except for Seequent, were not material, individually or in the aggregate, to the Company’s consolidated statements of operations.

The aggregate details of the Company’s acquisition activity are as follows:


	Acquisitions Completed in
	Six Months Ended		Year Ended
	June 30, 2022		December 31, 2021


Number of acquisitions	2		13
Cash paid at closing (1)	$	733,343	$	1,072,820
Cash acquired	(19,146)		(37,837)
Net cash paid	$	714,197	$	1,034,983

(1)Of the cash paid at closing for the six months ended June 30, 2022 and year ended December 31, 2021, $3,000 and $8,701, respectively, was deposited into an escrow account to secure any potential indemnification and other obligations of the seller.

The fair value of the contingent consideration from acquisitions is included in the consolidated balance sheets as follows:


	June 30, 2022		December 31, 2021


Accruals and other current liabilities	$	1,923	$	5,382
Other liabilities	—		1,231
Contingent consideration from acquisitions	$	1,923	$	6,613

The fair value of non-contingent consideration from acquisitions is included in the consolidated balance sheets as follows:


	June 30, 2022		December 31, 2021


Accruals and other current liabilities	$	5,487	$	4,751
Other liabilities	2,983		6,177
Non-contingent consideration from acquisitions	$	8,470	$	10,928

The operating results of the acquired businesses are included in the Company’s consolidated financial statements from the closing date of each respective acquisition. The purchase price for each acquisition has been allocated to the net tangible and intangible assets and liabilities based on their estimated fair values at the respective acquisition date.

The Company is in the process of finalizing the purchase accounting for two acquisitions completed during the six months ended June 30, 2022. Identifiable assets acquired and liabilities assumed were provisionally recorded at their estimated fair values on the respective acquisition date. The initial accounting for these business combinations is not complete because the evaluation necessary to assess the fair values of certain net assets acquired is still in process. The provisional amounts are subject to revision until the evaluations are completed to the extent that additional information is obtained about the facts and circumstances that existed as of the acquisition date. The allocation of the purchase price may be modified from the date of the acquisition as more information is obtained about the fair values of assets acquired and liabilities assumed, however, such measurement period cannot exceed one year.

Acquisition costs are expensed as incurred and are recorded in General and administrative in the consolidated statements of operations. For the three months ended June 30, 2022 and 2021, the Company incurred acquisition expenses of $677 and $10,233, respectively, and $11,251 and $17,094 for the six months ended June 30, 2022 and 2021, respectively, which include costs related to legal, accounting, valuation, insurance, general administrative, and other consulting fees. For the three and six months ended June 30, 2022, $26 and $9,799, respectively, of the Company’s acquisition expenses related to the acquisition of Power Line Systems. For the three and six months ended June 30, 2021, $9,180 and $15,896, respectively, of the Company’s acquisition expenses related to the acquisition of Seequent.

The following summarizes the fair values of the assets acquired and liabilities assumed, as well as the weighted average useful lives assigned to acquired intangible assets at the respective date of each acquisition (including contingent consideration):


	Acquisitions Completed in
	Six Months Ended		Year Ended
	June 30, 2022		December 31, 2021
Consideration:
Cash paid at closing	$	733,343	$	1,072,820
Shares issued at closing (1)(2)	—		182,390
Contingent consideration	—		4,544
Deferred, non-contingent consideration, net	—		10,090
Other	(153)		—
Total consideration	$	733,190	$	1,269,844
Assets acquired and liabilities assumed:
Cash	$	19,146	$	37,837
Accounts receivable and other current assets	1,630		24,174
Operating lease right-of-use assets	1,237		12,095
Property and equipment	963		4,383
Other assets	—		874
Software and technology (weighted average useful life of 5 years)	10,400		43,560
Customer relationships (weighted average useful life of 10 and 9 years, respectively)	79,800		158,555
Trademarks (weighted average useful life of 10 years)	5,600		38,256

In-process research and development	—		3,700
Total identifiable assets acquired excluding goodwill	118,776		323,434
Accruals and other current liabilities	(714)		(27,649)
Deferred revenues	(11,292)		(26,245)
Operating lease liabilities	(1,237)		(11,988)
Deferred income taxes	(6,865)		(53,342)
Other liabilities	—		(716)
Total liabilities assumed	(20,108)		(119,940)
Net identifiable assets acquired excluding goodwill	98,668		203,494
Goodwill	634,522		1,066,350
Net assets acquired	$	733,190	$	1,269,844

(1)Of the total 3,141,342 shares issued at closing, 83,627 shares are subject to forfeiture if post‑closing employment service conditions are not met and accordingly are being recorded as stock‑based compensation expense over the related forfeiture period of two years (see Note 15).

(2)A fair value adjustment of $16,943 was applied to the stock consideration due to restrictions on the transfer of securities.

The fair values of the working capital, other assets (liabilities), and property and equipment approximated their respective carrying values as of the acquisition date.

The fair values of deferred revenues were determined in accordance with the Company’s revenue recognition policies (see Note 3).

The fair values of the intangible assets were primarily determined using the income approach. When applying the income approach, indications of fair values were developed by discounting future net cash flows to their present values at market‑based rates of return. The cash flows were based on estimates used to price the acquisitions and the discount rates applied were benchmarked with reference to the implied rate of return from the Company’s pricing model and the weighted average cost of capital.

Goodwill recorded in connection with the acquisitions was attributable to synergies expected to arise from cost saving opportunities, as well as future expected cash flows. The Company expects $524,360 of the goodwill recorded relating to the 2022 acquisitions will be deductible for income tax purposes.

Unaudited Pro Forma Financial Information

Had the acquisition of Seequent been made at the beginning of 2020, unaudited pro forma total revenues for the three and six months ended June 30, 2021 would have been $241,762 and $497,545, respectively. Net income, net income per share, basic, and net income per share, diluted for the three and six months ended June 30, 2021 would not have been materially different than the amounts reported primarily due to the pro forma adjustments to reflect the amortization of purchased intangibles and the cost to finance the transaction, net of the related tax effects.

The unaudited pro forma financial information is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of 2021. The unaudited pro forma financial information combines the historical results of the Company, the adjusted historical results of Seequent considering the date the Company completed the acquisition of Seequent, and the effects of the pro forma adjustments described above.

Note 5: Property and Equipment, Net

Property and equipment, net consist of the following:


	June 30, 2022		December 31, 2021
Land	$	2,811	$	2,811
Building and improvements	36,099		35,188
Computer equipment and software	47,994		47,651
Furniture, fixtures, and equipment	13,980		14,274
Aircraft	2,038		4,075
Other	59		61
Property and equipment, at cost	102,981		104,060
Less: Accumulated depreciation	(73,378)		(72,237)
Total property and equipment, net	$	29,603	$	31,823

Depreciation expense was $2,922 and $2,617 for the three months ended June 30, 2022 and 2021, respectively, and $5,412 and $5,114 for the six months ended June 30, 2022 and 2021, respectively.

Related Party Equipment Sale

In January 2022, the audit committee of the Company’s board of directors authorized the Company to sell 50% of its interest in the Company’s aircraft at fair market value to an entity controlled by the Company’s Chief Executive Officer. The transaction was completed on February 1, 2022 for $2,380 and resulted in a gain of $2,029, which was recorded in Other income (expense), net in the consolidated statement of operations for the six months ended June 30, 2022. Subsequent to the transaction, ongoing operating and fixed costs of the aircraft are shared on a proportional use basis subject to a cost-sharing agreement. Such costs were not material during the six months ended June 30, 2022. Pursuant to FASB Accounting Standards Codification (“ASC”) Topic 850, Related Party Disclosures, the Company determined this transaction was to a related party.

Note 6: Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill are as follows:


Balance, December 31, 2021	$	1,588,477
Acquisitions	634,522
Foreign currency translation adjustments	(7,128)
Other adjustments	38
Balance, June 30, 2022	$	2,215,909

Details of intangible assets other than goodwill are as follows:


		June 30, 2022						December 31, 2021
	Estimated Useful Life	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
Intangible assets subject to amortization:
Software and technology	3-5 years	$	93,811	$	(50,783)	$	43,028	$	101,588	$	(63,225)	$	38,363
Customer relationships	3-10 years	322,437		(97,533)		224,904		245,325		(83,799)		161,526
Trademarks	3-10 years	68,673		(23,763)		44,910		63,080		(20,893)		42,187
Non-compete agreements	5 years	350		(173)		177		350		(139)		211
		485,271		(172,252)		313,019		410,343		(168,056)		242,287
Intangible assets not subject to amortization:
In-process research and development		3,239		—		3,239		3,547		—		3,547
Total intangible assets		$	488,510	$	(172,252)	$	316,258	$	413,890	$	(168,056)	$	245,834

The aggregate amortization expense for purchased intangible assets with finite lives was reflected in the Company’s consolidated statements of operations as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Cost of subscriptions and licenses	$	3,154	$	1,095	$	6,176	$	2,246
Amortization of purchased intangibles	10,517		4,589		20,423		8,027
Total amortization expense	$	13,671	$	5,684	$	26,599	$	10,273

Note 7: Investments

As of June 30, 2022 and December 31, 2021, the Company’s investments consist of cost method investments of $10,666 and $6,438, respectively. The carrying amount of the Company’s equity method investment was zero as of June 30, 2022 and December 31, 2021.

Through iTwin Ventures, the Company invests in technology development companies, generally in the form of equity interests or convertible notes. The Company recorded these investments under the cost method. For the six months ended June 30, 2022, the Company invested $4,361 in cost method investments.

The Company accounts for Digital Construction Works, Inc. (“DCW”) using the equity method. DCW, a 50%‑owned joint venture with Topcon Positioning Systems, Inc., operates as a digital integrator of software and cloud services for the construction industry. DCW’s focus is to transform the construction industry from its legacy document‑centric paradigm by simplifying and enabling digital automated workflows and processes, technology integration, and digital twinning services for infrastructure. For the six months ended June 30, 2022, the Company invested $1,200 in DCW. Pursuant to FASB ASC Topic 850, Related Party Disclosures, the Company has determined that DCW is a related party. For the six months ended June 30, 2022, transactions between the Company and DCW were not material to the Company’s consolidated financial statements.

Note 8: Leases

The Company’s operating leases consist of office facilities, office equipment, and automobiles, and the Company’s finance lease consists of computer equipment. The finance lease is not material for the periods presented and it expired during the second quarter of 2022. As of June 30, 2022, the Company’s leases have remaining terms of less than one year to nine years, some of which include one or more options to renew, with renewal terms from one year to ten years and some of which include options to terminate the leases from less than one year to five years.

For contracts with lease and non‑lease components, the Company has elected not to allocate the contract consideration, and account for the lease and non-lease components as a single lease component. Payments under the Company’s lease arrangements are primarily fixed, however, certain lease agreements contain variable payments, which are expensed as incurred and not included in the operating lease assets and liabilities. Variable lease cost may include common area maintenance, property taxes, utilities, and fluctuations in rent due to a change in an index or rate. The Company has elected not to recognize a right‑of‑use asset or lease liability for short‑term leases (leases with a term of twelve months or less). Short‑term leases are recognized in the consolidated statements of operations on a straight‑line basis over the lease term.

The components of operating lease cost reflected in the consolidated statements of operations were as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Operating lease cost (1)	$	5,195	$	4,845	$	10,948	$	9,388
Variable lease cost	968		920		2,241		1,888
Short-term lease cost	5		7		10		11
Total operating lease cost	$	6,168	$	5,772	$	13,199	$	11,287

(1)Operating lease cost includes rent cost related to operating leases for office facilities of $5,014 and $4,618 for the three months ended June 30, 2022 and 2021, respectively, and $10,567 and $8,969 for the six months ended June 30, 2022 and 2021, respectively.

Other information related to leases was as follows:


	Six Months Ended
	June 30,

	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	10,092	$	9,573
Right-of-use assets obtained in exchange for new operating lease liabilities (1)	$	5,091	$	3,457

(1)Right‑of‑use assets obtained in exchange for new operating lease liabilities does not include the impact from acquisitions of $1,237 and $12,418 for the six months ended June 30, 2022 and 2021, respectively.

The weighted average remaining lease term for operating leases was 4.0 years and 4.1 years as of June 30, 2022 and December 31, 2021, respectively. The weighted average discount rate was 2.8% and 2.5% as of June 30, 2022 and December 31, 2021, respectively.

Maturities of operating lease liabilities are as follows:


	June 30, 2022
Remainder of 2022	$	9,522
2023	14,800
2024	9,736
2025	6,760
2026	4,265
Thereafter	5,993
Total future lease payments	51,076
Less: Imputed interest	(3,457)
Total operating lease liabilities	$	47,619

As of June 30, 2022, the Company had additional operating lease minimum lease payments of $1,720 for executed leases that have not yet commenced, primarily for office locations.

Supplemental balance sheet information related to the financing lease was as follows:


	June 30, 2022		December 31, 2021


Property and equipment	$	437	$	484
Accumulated depreciation	(437)		(453)
Property and equipment, net	$	—	$	31



Total financing lease liabilities included in Accruals and other current liabilities	$	—	$	98

Note 9: Accruals and Other Current Liabilities

Accruals and other current liabilities consist of the following:


	June 30, 2022		December 31, 2021


CSS deposits	$	196,449	$	162,046
Accrued benefits	41,103		36,656
Accrued compensation	29,161		37,725
Due to customers	12,797		12,798
Employee stock purchase plan contributions	5,820		4,818
Non-contingent consideration from acquisitions	5,487		4,751
Accrued acquisition stay bonus	5,449		9,461
Accrued cloud provisioning costs	4,773		5,862
Accrued professional fees	4,465		6,940
Accrued indirect taxes	4,206		7,520
Deferred compensation plan liabilities	2,041		7,309
Contingent consideration from acquisitions	1,923		5,382
Other accrued and current liabilities	25,721		22,335
Total accruals and other current liabilities	$	339,395	$	323,603

Note 10: Long‑Term Debt

Long‑term debt consists of the following:


	June 30, 2022		December 31, 2021


Bank credit facility:
Revolving loan facility	$	393,874	$	—
Term loan:
Principal	197,500		200,000
Unamortized debt issuance costs	(465)		(534)
Term loan net carrying value	197,035		199,466
Bank credit facility net carrying value	590,909		199,466
2026 Notes:
Principal	690,000		690,000
Unamortized debt issuance costs	(12,861)		(14,677)
2026 Notes net carrying value	677,139		675,323
2027 Notes:
Principal	575,000		575,000
Unamortized debt issuance costs	(12,543)		(13,797)
2027 Notes net carrying value	562,457		561,203
Total net carrying value	1,830,505		1,435,992
Less: Current portion of long-term debt	(5,000)		(5,000)
Total long-term debt	$	1,825,505	$	1,430,992

Bank Credit Facility

The Company has an amended and restated Credit Agreement, which provides for an $850,000 senior secured revolving loan facility with a maturity date of November 15, 2025 and a $200,000 senior secured term loan as described further below (the “Credit Facility”).

The Company’s $200,000 senior secured term loan has a maturity of November 15, 2025 (the “2021 Term Loan”). The 2021 Term Loan requires principal repayment at the end of each calendar quarter. Beginning with March 31, 2022 and ending with December 31, 2023, the Company is required to repay $1,250 per quarter. Beginning with March 31, 2024 and ending with the last such date prior to the maturity date, the Company is required to repay $2,500 per quarter. The Company incurred $540 of debt issuance costs related to the 2021 Term Loan. The Company used borrowings under the 2021 Term Loan to pay down borrowings under the swingline sub‑facility and revolving loan facility under the Credit Facility.

In addition to the senior secured revolving loan facility, the Credit Facility also provides up to $50,000 of letters of credit and other borrowings subject to availability, including a $85,000 U.S. Dollar swingline sub‑facility and a $200,000 incremental “accordion” sub‑facility. The Company had $150 of letters of credit and surety bonds outstanding as of June 30, 2022 and December 31, 2021. As of June 30, 2022 and December 31, 2021, the Company had $455,976 and $849,850, respectively, available under the Credit Facility.

Borrowings under the Credit Facility are guaranteed by all of the Company’s first tier domestic subsidiaries and are secured by a first priority security interest in substantially all of the Company’s and the guarantors’ U.S. assets and 65% of the stock of their directly owned foreign subsidiaries. The Credit Facility contains both affirmative and negative covenants, including maximum net leverage ratios. As of June 30, 2022 and December 31, 2021, the Company was in compliance with all covenants in its Credit Facility.

Convertible Senior Notes

2026 Notes

On January 26, 2021, the Company completed a private offering of $690,000 of 0.125% convertible senior notes due 2026 (the “2026 Notes”). The 2026 Notes were issued pursuant to an indenture, dated as of January 26, 2021, between the Company and Wilmington Trust, National Association, as trustee (the “2026 Indenture”). Interest will accrue from January 26, 2021 and will be payable semi‑annually in arrears in cash on January 15 and July 15 of each year, with the first payment due on July 15, 2021. The 2026 Notes will mature on January 15, 2026, unless earlier converted, redeemed or repurchased. The Company incurred $18,055 of expenses in connection with the 2026 Notes offering consisting of the payment of initial purchasers’ discounts and commissions, professional fees, and other expenses (“transaction costs”). The Company used $25,530 of the net proceeds from the sale of the 2026 Notes to pay the premiums of the capped call options described further below, and approximately $250,500 to repay outstanding indebtedness under the Credit Facility and to pay related fees and expenses. The Company used the remainder of the net proceeds from the sale of the 2026 Notes for general corporate purposes and towards funding certain acquisitions, including Seequent (see Note 4).

Prior to October 15, 2025, the 2026 Notes will be convertible at the option of the holder only under the following circumstances: (1) during any calendar quarter (and only during such quarter) commencing after the calendar quarter ending on June 30, 2021, if the last reported sale price per share of the Company’s Class B Common Stock exceeds 130% of the conversion price for each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (2) during the five consecutive business days immediately after any ten consecutive trading day period (such ten consecutive trading day period, the “measurement period”) in which the trading price per $1 principal amount of 2026 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of the Company’s Class B Common Stock on such trading day and the conversion rate on such trading day; (3) upon the occurrence of certain corporate events or distributions on the Company’s Class B Common Stock, as described in the 2026 Indenture; and (4) if the Company calls the 2026 Notes for redemption. On or after October 15, 2025 until 5:00 p.m., New York City time, on the second scheduled trading day immediately before the maturity date, the 2026 Notes will be convertible at the option of the holder at any time.

The Company will settle conversions by paying or delivering, as applicable, cash, shares of the Company’s Class B Common Stock or a combination of cash and shares of the Company’s Class B Common Stock, at the Company’s election, based on the applicable conversion rate. The initial conversion rate is 15.5925 shares of the Company’s Class B Common Stock per $1 principal amount of 2026 Notes, which represents an initial conversion price of approximately $64.13 per share, and is subject to adjustment as described in the 2026 Indenture. If a “make-whole fundamental change” (as defined in the 2026 Indenture) occurs, then the Company will, in certain circumstances, increase the conversion rate for a specified period of time.

The Company will have the option to redeem the 2026 Notes in whole or in part at any time on or after January 20, 2024 and on or before the 40th scheduled trading day immediately before the maturity date if the last reported sale price per share of the Company’s Class B common stock exceeds 130% of the conversion price on (1) each of at least 20 trading days, whether or not consecutive, during any 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice; and (2) the trading day immediately before the date the Company sends such notice. The redemption price will be equal to the principal amount of the 2026 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

Upon a fundamental change (as defined in the 2026 Indenture), holders may, subject to certain exceptions, require the Company to purchase their 2026 Notes in whole or in part for cash at a price equal to the principal amount of the 2026 Notes to be purchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date (as defined in the 2026 Indenture). In addition, upon a Make‑Whole Fundamental Change (as defined in the 2026 Indenture), the Company will, under certain circumstances, increase the applicable conversion rate for a holder that elects to convert its 2026 Notes in connection with such Make‑Whole Fundamental Change. No adjustment to the conversion rate will be made if the stock price in such Make‑Whole Fundamental Change is either less than $44.23 per share or greater than $210.00 per share. The Company will not increase the conversion rate to an amount that exceeds 22.6090 shares per $1 principal amount of 2026 Notes, subject to adjustment. The 2026 Indenture also contains a customary merger covenant.

The 2026 Notes were accounted for as debt, with no bifurcation of the embedded conversion feature. Transaction costs were recorded as a direct deduction from the related debt liability in the consolidated balance sheet and are amortized to interest expense over the term of the 2026 Notes. The effective interest rate for the 2026 Notes is 0.658%.

As of June 30, 2022, none of the conditions of the 2026 Notes to early convert has been met.

The 2026 Notes contain both affirmative and negative covenants. As of June 30, 2022, the Company was in compliance with all covenants in the 2026 Notes.

Capped Call Options — In connection with the pricing of the 2026 Notes, the Company entered into capped call options with certain of the initial purchasers or their respective affiliates and certain other financial institutions. The Company incurred $150 of expenses in connection with the capped call options. The capped call options are expected to reduce potential dilution to the Company’s Class B Common Stock upon any conversion of 2026 Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted notes, as the case may be, with such reduction and/or offset subject to a cap. The cap price of the capped call options is initially $72.9795 per share, which represents a premium of 65% above the last reported sale price per share of the Company’s Class B Common Stock on the Nasdaq Global Select Market on January 21, 2021 and is subject to customary adjustments under the terms of the capped call options.

The capped call options were entered into in conjunction with the issuance of the 2026 Notes, however, they are legally separate agreements that can be separately exercised, with the receipt of shares under the capped call options having no effect on the 2026 Notes, and are legally detachable. As the capped call options are both legally detachable and separately exercisable from the 2026 Notes, the Company accounts for the capped call options separately from the 2026 Notes. The capped call options are indexed to the Company’s own common stock and classified in stockholders’ equity. As such, the premiums paid for the capped call options have been included as a net reduction to Additional paid-in capital in the consolidated balance sheet.

2027 Notes

On June 28, 2021, the Company completed a private offering of $575,000 of 0.375% convertible senior notes due 2027 (the “2027 Notes”). The 2027 Notes were issued pursuant to an indenture, dated as of June 28, 2021, between the Company and Wilmington Trust, National Association, as trustee (the “2027 Indenture”). Interest will accrue from June 28, 2021 and will be payable semi‑annually in arrears in cash on January 1 and July 1 of each year, with the first payment due on January 1, 2022. The 2027 Notes will mature on July 1, 2027, unless earlier converted, redeemed or repurchased. The Company incurred $15,065 of expenses in connection with the 2027 Notes offering consisting of transaction costs. The Company used $25,875 of the net proceeds from the sale of the 2027 Notes to pay the premiums of the capped call options described further below, and $536,062 to repay outstanding indebtedness under the Credit Facility and to pay related fees and expenses.

Prior to April 1, 2027, the 2027 Notes will be convertible at the option of the holder only under the following circumstances: (1) during any calendar quarter (and only during such quarter) commencing after the calendar quarter ending on September 30, 2021, if the last reported sale price per share of the Company’s Class B Common Stock exceeds 130% of the conversion price for each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (2) during the five consecutive business days immediately after any ten consecutive trading day period (such ten consecutive trading day period, the “measurement period”) in which the trading price per $1 principal amount of 2027 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of the Company’s Class B Common Stock on such trading day and the conversion rate on such trading day; (3) upon the occurrence of certain corporate events or distributions on the Company’s Class B Common Stock, as described in the 2027 Indenture; and (4) if the Company calls the 2027 Notes for redemption. On or after April 1, 2027 until 5:00 p.m., New York City time, on the second scheduled trading day immediately before the maturity date, the 2027 Notes will be convertible at the option of the holder at any time.

The Company will settle conversions by paying or delivering, as applicable, cash, shares of the Company’s Class B Common Stock or a combination of cash and shares of the Company’s Class B Common Stock, at the Company’s election, based on the applicable conversion rate. The initial conversion rate is 12.0153 shares of the Company’s Class B Common Stock per $1 principal amount of 2027 Notes, which represents an initial conversion price of approximately $83.23 per share, and is subject to adjustment as described in the 2027 Indenture. If a “make-whole fundamental change” (as defined in the 2027 Indenture) occurs, then the Company will, in certain circumstances, increase the conversion rate for a specified period of time.

The Company will have the option to redeem the 2027 Notes in whole or in part at any time on or after July 5, 2024 and on or before the 40th scheduled trading day immediately before the maturity date if the last reported sale price per share of the Company’s Class B common stock exceeds 130% of the conversion price on (1) each of at least 20 trading days, whether or not consecutive, during any 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice; and (2) the trading day immediately before the date the Company sends such notice. The redemption price will be equal to the principal amount of the 2027 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

Upon a fundamental change (as defined in the 2027 Indenture), holders may, subject to certain exceptions, require the Company to purchase their 2027 Notes in whole or in part for cash at a price equal to the principal amount of the 2027 Notes to be purchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date (as defined in the 2027 Indenture). In addition, upon a Make‑Whole Fundamental Change (as defined in the 2027 Indenture), the Company will, under certain circumstances, increase the applicable conversion rate for a holder that elects to convert its 2027 Notes in connection with such Make‑Whole Fundamental Change. No adjustment to the conversion rate will be made if the stock price in such Make‑Whole Fundamental Change is either less than $61.65 per share or greater than $325.00 per share. The Company will not increase the conversion rate to an amount that exceeds 16.2206 shares per $1 principal amount of 2027 Notes, subject to adjustment. The 2027 Indenture also contains a customary merger covenant.

The 2027 Notes were accounted for as debt, with no bifurcation of the embedded conversion feature. Transaction costs were recorded as a direct deduction from the related debt liability in the consolidated balance sheet and are amortized to interest expense over the term of the 2027 Notes. The effective interest rate for the 2027 Notes is 0.864%.

As of June 30, 2022, none of the conditions of the 2027 Notes to early convert has been met.

The 2027 Notes contain both affirmative and negative covenants. As of June 30, 2022, the Company was in compliance with all covenants in the 2027 Notes.

Capped Call Options — In connection with the pricing of the 2027 Notes, the Company entered into capped call options with certain of the initial purchasers or their respective affiliates and certain other financial institutions. The Company incurred $50 of expenses in connection with the capped call options. The capped call options are expected to reduce potential dilution to the Company’s Class B Common Stock upon any conversion of 2027 Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted notes, as the case may be, with such reduction and/or offset subject to a cap. The cap price of the capped call options is initially $95.5575 per share, which represents a premium of 55% above the last reported sale price per share of the Company’s Class B Common Stock on the Nasdaq Global Select Market on June 23, 2021 and is subject to customary adjustments under the terms of the capped call options.

The capped call options were entered into in conjunction with the issuance of the 2027 Notes, however, they are legally separate agreements that can be separately exercised, with the receipt of shares under the capped call options having no effect on the 2027 Notes, and are legally detachable. As the capped call options are both legally detachable and separately exercisable from the 2027 Notes, the Company accounts for the capped call options separately from the 2027 Notes. The capped call options are indexed to the Company’s own common stock and classified in stockholders’ equity. As such, the premiums paid for the capped call options have been included as a net reduction to Additional paid-in capital in the consolidated balance sheet.

Interest Expense

Interest expense consists of the following:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Bank credit facility (1):
Revolving loan facility	$	3,540	$	850	$	5,765	$	1,579
Term loan	1,391		—		2,458		—
Interest rate swap	(17)		316		277		617
Amortization and write-off of deferred debt issuance costs	333		221		576		796
	5,247		1,387		9,076		2,992
2026 Notes:
0.125% Coupon interest	230		217		446		371
Amortization of deferred debt issuance costs	908		907		1,816		1,561
	1,138		1,124		2,262		1,932
2027 Notes:
0.375% Coupon interest	539		12		1,078		12
Amortization of deferred debt issuance costs	627		14		1,254		14
	1,166		26		2,332		26
Other obligations	153		45		1,158		33
Total interest expense	$	7,704	$	2,582	$	14,828	$	4,983

(1)The weighted average interest rate was 2.89% and 2.11% for the three months ended June 30, 2022 and 2021, respectively, and 2.62% and 2.18% for the six months ended June 30, 2022 and 2021, respectively.

Interest rate risk associated with the Credit Facility is managed through an interest rate swap which has a termination date of April 2, 2030. Under the terms of the interest rate swap, the Company fixed its LIBOR borrowing rate at 0.73% on a notional amount of $200,000. The interest rate swap is not designated as a hedging instrument for accounting purposes. The Company accounts for the interest rate swap as either an asset or a liability in the consolidated balance sheets and carries the derivative at fair value. Gains and losses from the change in fair value are recognized in Other income (expense), net in the consolidated statements of operations. As of June 30, 2022 and December 31, 2021, the Company recorded a swap related asset at fair value of $29,607 and $10,117, respectively, in Other assets in the consolidated balance sheets.

Note 11: Executive Bonus Plan

Certain of the Company’s key employees, including its named executive officers, participate in the amended and restated Bentley Systems, Incorporated Bonus Pool Plan (the “Bonus Plan”). Pursuant to the Bonus Plan, participants are eligible to receive incentive bonuses that are determined based on the Company’s adjusted Management Report Operating Income (“MROI”), as defined in the plan agreement and before deduction for such plan payments. For purposes of the Bonus Plan, the bonus pool thereunder may be funded with up to an aggregate of 20% of the Company’s adjusted MROI, subject to approval by the board of directors, with payments made to plan participants based on each such participant’s allocated interest in the bonus pool. The plan permits the deduction of certain holdback amounts from the plan’s pool, from which amounts can then be allocated to fund items including equity and/or cash incentive compensation for non‑plan participants and participant charitable contributions.

A participant may defer any portion, or all, of such participant’s incentive bonus payable pursuant to the Bonus Plan into the deferred compensation plan (see Note 12). A participant’s non‑deferred incentive bonus is payable in cash, however, the Bonus Plan provides, in part, that a participant may elect to receive any portion, or all, of such participant’s non‑deferred incentive bonus in the form of shares of fully vested Class B Common Stock issued under the Bentley Systems, Incorporated 2020 Omnibus Incentive Plan, subject to the limitation described below. The Company records the election of non‑deferred incentive bonus in the form of shares of fully vested Class B Common Stock as stock‑based compensation expense in the consolidated statements of operations (see Note 15). Such election must be made prior to the start of the applicable calendar quarter for which the incentive bonus is to be paid, and the number of shares of Class B Common Stock payable in respect of such elected amount is calculated using a volume-weighted average price of the Company’s Class B Common Stock for the period commencing on the tenth trading day prior to the end of the applicable calendar quarter and ending on the tenth trading day following the end of the applicable calendar quarter. Notwithstanding participants’ elections to receive shares of fully vested Class B Common Stock in respect of their non‑deferred incentive bonus payments, if, in any calendar quarter, the aggregate U.S. Dollar value of shares of fully vested Class B Common Stock payable in respect of the non‑deferred incentive bonuses exceeds $7,500, the portion of each participant’s non‑deferred incentive bonus payable in shares of fully vested Class B Common Stock will be reduced pro rata such that the $7,500 limit is not exceeded, and, for each affected participant, the amount of such reduction will be payable in cash.

For the three months ended June 30, 2022 and 2021, the incentive compensation, including cash payments, election to receive shares of fully vested Class B Common Stock, and deferred compensation to plan participants, recognized under this plan (net of all applicable holdbacks) was $6,811 and $7,683, respectively, and $16,530 and $16,558 for the six months ended June 30, 2022 and 2021, respectively.

Note 12: Retirement Plans

Deferred Compensation Plan

Under the Company’s unfunded amended and restated Bentley Systems, Incorporated Nonqualified Deferred Compensation Plan (the “DCP”), certain officers and key employees may defer all or any part of their incentive compensation, and the Company may make discretionary awards on behalf of such participants. Elective participant deferrals and discretionary Company awards are received in the form of phantom shares of the Company’s Class B Common Stock, which are valued for tax and accounting purposes in the same manner as actual shares of Class B Common Stock, and are recorded as stock‑based compensation expense in the consolidated statements of operations (see Note 15).

DCP participants’ holdings in phantom shares of the Company’s Class B Common Stock are equity classified as they will be settled in shares of Class B Common Stock upon eventual distribution.

In August 2021, the Company’s board of directors approved an amendment to the DCP, which offered to certain active executives in the DCP a one‑time, short‑term election to reallocate a limited portion of their DCP holdings from phantom shares of the Company’s Class B Common Stock into other phantom investment funds. For further discussion of the aforementioned DCP reallocation, see Note 12 to the Company’s consolidated financial statements included in Part II, Item 8 of the Company’s 2021 Annual Report on Form 10‑K.

DCP participants’ holdings in phantom investment funds are classified as liabilities in either Accruals and other current liabilities or Deferred compensation plan liabilities in the consolidated balance sheets as they will be settled in cash upon eventual distribution. The deferred compensation plan liabilities are marked to market at the end of each reporting period, with changes in the liabilities recorded as an expense (income) to Deferred compensation plan in the consolidated statements of operations.

Deferred compensation plan (income) expense was $(12,159) and $195 for the three months ended June 30, 2022 and 2021, respectively, and $(17,297) and $362 for the six months ended June 30, 2022 and 2021, respectively.

For the six months ended June 30, 2022 and 2021, DCP elective participant deferrals were $3,108 and $1,493, respectively. No discretionary contributions were made to the DCP during the three and six months ended June 30, 2022 and 2021. As of June 30, 2022 and December 31, 2021, phantom shares of the Company’s Class B Common Stock issuable by the DCP were 21,570,161 and 25,384,449, respectively.

The total liabilities related to the DCP is included in the consolidated balance sheets as follows:


	June 30, 2022		December 31, 2021


Accruals and other current liabilities	$	2,041	$	7,309
Deferred compensation plan liabilities	75,525		94,890
Total DCP liabilities	$	77,566	$	102,199

Note 13: Common Stock

BSY Stock Repurchase Program

On May 11, 2022, the Company announced that its board of directors approved the BSY Stock Repurchase Program (the “Repurchase Program”) authorizing the Company to repurchase up to $200,000 of the Company’s Class B Common Stock through June 30, 2024. The Repurchase Program is used to offset dilution from the issuance of the Company’s Class B Common Stock under the Company’s stock‑based plans to enhance stockholder value. The shares proposed to be acquired in the Repurchase Program may be repurchased from time to time in open market transactions, through privately negotiated transactions, or by other means in accordance with federal securities laws. The Company intends to fund repurchases from available working capital and cash provided by operating activities. The timing, as well as the number and value of shares repurchased under the Repurchase Program, will be determined by the Company at its discretion and will depend on a variety of factors, including management’s assessment of the intrinsic value of the Company’s shares, the market price of the Company’s Class B Common Stock, general market and economic conditions, available liquidity, compliance with the Company’s debt and other agreements, and applicable legal requirements. The exact number of shares to be repurchased by the Company is not guaranteed, and the Repurchase Program may be suspended, modified, or discontinued at any time without prior notice. For the six months ended June 30, 2022, the Company repurchased 463,001 shares for $13,242.

Common Stock Issuances, Sales, and Repurchases

On June 17, 2021, the Company issued 3,141,342 shares of the Company’s Class B Common Stock pursuant to the acquisition of Seequent (see Note 4).

For the six months ended June 30, 2022, the Company issued 2,054,585 shares of Class B Common Stock to colleagues who exercised their stock options, net of 355,063 shares withheld at exercise to pay for the cost of the stock options, as well as for $8,400 of applicable income tax withholdings. The Company received $5,861 in proceeds from the exercise of stock options. For the six months ended June 30, 2021, the Company issued 3,657,058 shares of Class B Common Stock to colleagues who exercised their stock options, net of 860,335 shares withheld at exercise to pay for the cost of the stock options, as well as for $29,027 of applicable income tax withholdings. The Company received $4,324 in proceeds from the exercise of stock options.

For the six months ended June 30, 2022, the Company issued 185,178 shares of Class B Common Stock related to the exercise of acquisition options (see Note 15), net of 714,822 shares withheld at exercise to pay for the cost of the options. The Company did not receive any proceeds from the exercise of these options.

For the six months ended June 30, 2022 and 2021, the Company issued 159,797 and 149,447 shares of Class B Common Stock, respectively, in connection with Bonus Plan incentive compensation, net of shares withheld. Of the total 283,913 shares awarded for the six months ended June 30, 2022, 124,116 shares were sold back to the Company in the same period to pay for applicable income tax withholdings of $5,197. Of the total 249,189 shares awarded for the six months ended June 30, 2021, 99,742 shares were sold back to the Company in the same period to pay for applicable income tax withholdings of $4,716.

For the six months ended June 30, 2022 and 2021, the Company issued 3,425,795 and 2,202,079 shares of Class B Common Stock, respectively, to DCP participants in connection with distributions from the plan. The distribution in shares for the six months ended June 30, 2022 totaled 3,926,105 shares of which 500,310 shares were sold back to the Company in the same period to pay for applicable income tax withholdings of $24,246. The distribution in shares for the six months ended June 30, 2021 totaled 3,527,023 shares of which 1,324,944 shares were sold back to the Company in the same period to pay for applicable income tax withholdings of $61,912.

Dividends

The Company declared cash dividends during the periods presented as follows:


	Dividend
	Per Share		Amount
2022:

Second quarter	$	0.03	$	8,678
First quarter	0.03		8,353
2021:

Second quarter	$	0.03	$	8,372
First quarter	0.03		8,219

Global Employee Stock Purchase Plan

The Bentley Systems, Incorporated Global Employee Stock Purchase Plan (the “ESPP”) provides eligible colleagues of the Company with an opportunity to contribute up to 15% of their eligible compensation toward the purchase of the Company’s Class B Common Stock at a discounted price, up to a maximum of $25 per year and subject to any other plan limitations. Unless otherwise determined by the board of directors, offering periods will run from January 1st (or the first trading day thereafter) through June 30th (or the first trading day prior to such date), and from July 1st (or the first trading day thereafter) through December 31st (or the first trading day prior to such date). The purchase price per share at which shares of Class B Common Stock are sold in an offering period under the ESPP will be equal to the lesser of 85% of the fair market value of a share of Class B Common Stock (i) on the first trading day of the offering period, or (ii) on the purchase date (i.e., the last trading day of the purchase period). During the six months ended June 30, 2022, colleagues who elected to participate in the ESPP purchased a total of 109,749 shares of Class B Common Stock, net of shares withheld, resulting in cash proceeds to the Company of $4,611. Of the total 112,249 shares purchased, 2,500 shares were sold back to the Company to pay for applicable income tax withholdings of $121. During the six months ended June 30, 2021, no shares were issued under the ESPP. As of June 30, 2022 and December 31, 2021, $5,820 and $4,818 of ESPP withholding via colleague payroll deduction were recorded in Accruals and other current liabilities in the consolidated balance sheets, respectively.

Note 14: Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss consists of the following during the three months ended June 30, 2022 and 2021:


	Foreign		Actuarial (Loss)
	Currency		Gain on
	Translation		Retirement Plan		Total
Balance, March 31, 2022	$	(74,430)	$	(894)	$	(75,324)
Other comprehensive (loss) income, before taxes	(13,820)		18		(13,802)
Tax expense	—		(5)		(5)
Other comprehensive (loss) income, net of taxes	(13,820)		13		(13,807)
Balance, June 30, 2022	$	(88,250)	$	(881)	$	(89,131)


	Foreign		Actuarial (Loss)
	Currency		Gain on
	Translation		Retirement Plan		Total
Balance, March 31, 2021	$	(34,401)	$	(993)	$	(35,394)
Other comprehensive (loss) income, before taxes	(19,513)		30		(19,483)
Tax expense	—		(9)		(9)
Other comprehensive (loss) income, net of taxes	(19,513)		21		(19,492)
Balance, June 30, 2021	$	(53,914)	$	(972)	$	(54,886)

Accumulated other comprehensive loss consists of the following during the six months ended June 30, 2022 and 2021:


	Foreign		Actuarial (Loss)
	Currency		Gain on
	Translation		Retirement Plan		Total
Balance, December 31, 2021	$	(90,867)	$	(907)	$	(91,774)
Other comprehensive income, before taxes	2,617		36		2,653
Tax expense	—		(10)		(10)
Other comprehensive income, net of taxes	2,617		26		2,643
Balance, June 30, 2022	$	(88,250)	$	(881)	$	(89,131)


	Foreign		Actuarial (Loss)
	Currency		Gain on
	Translation		Retirement Plan		Total
Balance, December 31, 2020	$	(25,219)	$	(1,014)	$	(26,233)
Other comprehensive (loss) income, before taxes	(28,695)		59		(28,636)
Tax expense	—		(17)		(17)
Other comprehensive (loss) income, net of taxes	(28,695)		42		(28,653)
Balance, June 30, 2021	$	(53,914)	$	(972)	$	(54,886)

Note 15: Equity Awards and Instruments

Stock-Based Compensation Expense

Total stock‑based compensation expense consists of the following:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Bonus Plan expense (see Note 11)	$	5,978	$	5,471	$	14,139	$	11,595
Restricted stock and restricted stock units (“RSUs”) expense (1)	9,197		4,961		14,562		6,458
ESPP expense (see Note 13)	1,149		428		1,829		877
Stock option expense	611		723		1,367		1,721
Stock grants expense	450		450		450		450
DCP elective participant deferrals expense (2) (see Note 12)	84		—		221		—
Total stock-based compensation expense (3)	$	17,469	$	12,033	$	32,568	$	21,101

(1)Includes acquisition‑related shares (see Note 4).

(2)DCP elective participant deferrals expense excludes deferred incentive bonus payable pursuant to the Bonus Plan.

(3)As of June 30, 2022 and December 31, 2021, $6,163 and $6,749 remained in Accruals and other current liabilities in the consolidated balance sheets, respectively.

Total stock‑based compensation expense is included in the consolidated statements of operations as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Cost of subscriptions and licenses	$	785	$	410	$	1,170	$	499
Cost of services	564		207		947		450
Research and development	5,544		4,887		10,939		8,842
Selling and marketing	2,189		1,515		3,643		2,303
General and administrative	8,387		5,014		15,869		9,007
Total stock-based compensation expense	$	17,469	$	12,033	$	32,568	$	21,101

Stock‑based compensation expense is measured at the grant date fair value of the award and is recognized ratably over the requisite service period, which is generally the vesting period. Specifically for performance‑based RSUs, stock‑based compensation expense is measured at the grant date fair value of the award and is recognized ratably over the requisite service period based on the number of awards expected to vest at each reporting date. The Company accounts for forfeitures of equity awards as those forfeitures occur.

Stock Options

The following is a summary of stock option activity and related information under the Company’s applicable equity incentive plans:


				Weighted
		Weighted		Average
		Average		Remaining	Aggregate
	Stock	Exercise Price		Contractual	Intrinsic
	Options	Per Share		Life (in years)	Value
Outstanding, December 31, 2021	6,917,925	$	5.26
Exercised	(2,409,648)	4.71
Forfeited and expired	(91,125)	5.64
Outstanding, June 30, 2022	4,417,152	$	5.56	1.4	$	122,552
Exercisable, June 30, 2022	3,453,277	$	5.50	1.3	$	95,988

For the six months ended June 30, 2022 and 2021, the Company received cash proceeds of $5,861 and $4,324, respectively, related to the exercise of stock options. The total intrinsic value of stock options exercised for the six months ended June 30, 2022 and 2021 was $82,288 and $206,097, respectively.

As of June 30, 2022, there was $1,162 of unrecognized compensation expense related to unvested stock options, which is expected to be recognized over a weighted average period of approximately 0.7 years.

Acquisition Options — In addition to stock options granted under the Company’s equity incentive plans, in connection with an acquisition completed in March 2018, the Company issued to certain selling shareholder entities options to acquire an aggregate of up to 900,000 shares of Class B Common Stock. The options have a five‑year term, were exercisable on March 27, 2022, and have an initial exercise price of $6.805 per share. The exercise price of the options is subject to a cap and collar adjustment mechanism that automatically reduces (but not to less than $0.01) or increases the exercise price based on the difference between the exercise price and the fair market value of the Company’s Class B Common Stock on the exercise date. During the six months ended June 30, 2022, 900,000 shares were exercised. No acquisition options remain outstanding as of June 30, 2022.

Restricted Stock and RSUs

Under the equity incentive plans, the Company may grant both time‑based and performance‑based shares of restricted Class B Common Stock and RSUs to eligible colleagues. Time‑based awards generally vest ratably on each of the first four anniversaries of the grant date. Performance‑based awards vesting is determined by the achievement of certain business profitability and growth targets, which include growth in annualized recurring revenues, as well as actual bookings for perpetual licenses and non‑recurring services, and certain non‑financial performance targets. Performance targets are generally set for performance periods of one to three years.

The following is a summary of unvested restricted stock and RSU activity and related information under the Company’s applicable equity incentive plans:


							Time-		Performance-
							Based		Based
			Time-		Performance-		Weighted		Weighted
	Total		Based		Based		Average		Average
	Restricted		Restricted		Restricted		Grant Date		Grant Date
	Stock		Stock		Stock		Fair Value		Fair Value
	and RSUs		and RSUs		and RSUs		Per Share		Per Share
Unvested, December 31, 2021	1,708,545		1,611,862		96,683	(4)	$	32.81	$	49.93
Granted	1,431,550	(1)	1,074,604	(3)	356,946	(5)	39.27		38.26
Vested	(214,382)		(123,212)		(91,170)	(4)	49.78		49.93
Forfeited and canceled	(89,997)		(84,484)		(5,513)		33.48		49.93
Unvested, June 30, 2022	2,835,716	(2)	2,478,770		356,946		34.74		38.26

(1)For the six months ended June 30, 2022, the Company only granted RSUs.

(2)Includes 63,422 RSUs which are expected to be settled in cash.

(3)Includes 199,076 time‑based RSUs granted during the three months ended March 31, 2022 to certain officers and key employees, which cliff vest on January 31, 2025.

(4)Relates to the 2021 annual performance period. Total stock‑based compensation expense associated with these awards was fully recognized as of December 31, 2021.

(5)Primarily relates to the 2022 annual performance period, except for 185,186 performance‑based RSUs granted during the three months ended March 31, 2022 with extraordinary terms, which are described below.

During the three months ended March 31, 2022, the Company granted 185,186 performance‑based RSUs to certain officers and key employees, which vest subject to the achievement of certain performance goals over a three‑year performance period (the “Performance Period”). For each year of the Performance Period, one‑third of the performance‑based RSUs will be subject to a cliff, whereby no vesting of that portion will occur unless the Company’s Adjusted EBITDA margin also equals or exceeds the relevant target level for such year. Provided Adjusted EBITDA margin targets are met, the total number of performance‑based RSUs that will vest is determined by the achievement of certain business profitability and growth targets, which include growth in annualized recurring revenues, as well as actual bookings for perpetual licenses and non‑recurring services. Final actual vesting will be determined on January 31, 2025.

During the three months ended March 31, 2022, the Company granted 120,599 performance‑based RSUs to certain officers and key employees, which vest subject to the achievement of certain performance goals related to the 2022 annual performance period. Provided Adjusted EBITDA margin targets are met, the total number of performance‑based RSUs that will vest is determined by the achievement of certain business profitability and growth targets, which include growth in annualized recurring revenues, as well as actual bookings for perpetual licenses and non‑recurring services. To the extent performance exceeds the applicable targets for 2022, these grantees could realize a maximum of 1.25x the number of annual performance‑based RSUs granted or 150,749 performance‑based RSUs.

In 2016, the Company granted RSUs subject to performance‑based vesting as determined by the achievement of certain business growth targets. Certain colleagues elected to defer delivery of such shares upon vesting. During the six months ended June 30, 2022 and 2021, 10,888 and 10,864 shares, respectively, were delivered to colleagues, and 16 and 23 additional shares, respectively, were earned as a result of dividends. As of June 30, 2022 and December 31, 2021, 9,349 and 20,221 shares, respectively, of these vested and deferred RSUs remained outstanding.

The weighted average grant date fair values of RSUs granted were $39.02 and $49.86, for the six months ended June 30, 2022 and 2021, respectively.

For the six months ended June 30, 2022 and 2021, restricted stock and RSUs were issued net of 52,026 and 14,869 shares, respectively, which were sold back to the Company to settle applicable income tax withholdings of $2,148 and $708, respectively.

As of June 30, 2022, there was $74,275 of unrecognized compensation expense related to unvested time‑based restricted stock and RSUs, which is expected to be recognized over a weighted average period of approximately 2.0 years. There was no remaining unrecognized compensation expense related to unvested performance‑based restricted stock. As of June 30, 2022, there was $11,006 of unrecognized compensation expense related to unvested performance‑based RSUs, which is expected to be recognized over a weighted average period of approximately 1.9 years.

Stock Grants

For the six months ended June 30, 2022 and 2021, the Company granted 13,632 and 7,824 fully vested shares of Class B Common Stock, respectively, with a fair value of $450.

Note 16: Income Taxes

The following is a summary of Income before income taxes, Benefit for income taxes, and effective tax rate for the periods presented:


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2022			2021			2022			2021
Income before income taxes	$	51,592		$	26,983		$	111,783		$	94,793
Benefit for income taxes	$	(4,674)		$	(20,473)		$	(1,443)		$	(10,115)
Effective tax rate	(9.1)		%	(75.9)		%	(1.3)		%	(10.7)		%

For the three and six months ended June 30, 2022, the effective tax rate was higher primarily due to the decrease in discrete tax benefits recognized in the respective periods. For the three months ended June 30, 2022 and 2021, the Company recorded discrete tax benefits of $19,024 and $28,967, respectively, and $31,752 and $36,452 for the six months ended June 30, 2022 and 2021, respectively, primarily associated with windfall tax benefits from stock‑based compensation, net of the impact from officer compensation limitation provisions.

During the three and six months ended June 30, 2022, the Company repatriated $50,000 and $150,000, respectively, of undistributed previously taxed earnings generated by its foreign subsidiaries to the U.S. The repatriations were used to fund the acquisition of Power Line Systems (see Note 4). The cash repatriations did not have a material impact on Benefit for income taxes for the three and six months ended June 30, 2022.

Note 17: Fair Value of Financial Instruments

Derivatives Not Designated As Hedging Instrument

The Company has an interest rate swap with a notional amount of $200,000 and a termination date of April 2, 2030 to reduce the interest rate risk associated with the Company’s Credit Facility. The interest rate swap is not designated as a hedging instrument for accounting purposes. The Company accounts for the interest rate swap as either an asset or a liability in the consolidated balance sheets and carries the derivative at fair value.

The following is a summary of the interest rate swap activity:


	Three Months Ended				Six Months Ended
	June 30,				June 30,				Recognized in Consolidated
	2022		2021		2022		2021		Statements of Operations
Interest rate swap:
Gain (loss) from change in fair value	$	7,406	$	(5,926)	$	19,490	$	7,735	Other income (expense), net
(Refunds) payments	(17)		316		277		617		Interest expense, net

Fair Value

The Company applies the provisions of FASB ASC Topic 820, Fair Value Measurement, for fair value measurements of financial assets and financial liabilities and for fair value measurements of non‑financial items that are recognized or disclosed at fair value in the consolidated financial statements.

The Company’s financial instruments include cash equivalents, account receivables, certain other assets, accounts payable, accruals, certain other current and long‑term liabilities, and long‑term debt.

The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments as of June 30, 2022 and December 31, 2021:

Current assets and current liabilities — In general, the carrying amounts reported on the Company’s consolidated balance sheets for current assets and current liabilities approximate their fair values due to the short‑term nature of those instruments.

Acquisition contingent consideration — The fair value of these liabilities is based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The valuation of contingent consideration uses assumptions the Company believes would be made by a market participant.

Interest rate swap — The fair value of the Company’s interest rate swap is measured based on the implied forward rates from the U.S. Dollar one‑month LIBOR yield curve and are classified as Level 2 within the fair value hierarchy.

Long-term debt — The fair value of the Company’s borrowings under its Credit Facility approximated its carrying value based upon discounted cash flows at current market rates for instruments with similar remaining terms. The Company considers these valuation inputs to be Level 2 inputs in the fair value hierarchy. As of June 30, 2022, the estimated fair value of the 2026 Notes and 2027 Notes was $601,825 and $450,467, respectively. As of December 31, 2021, the estimated fair value of the 2026 Notes and 2027 Notes was $720,284 and $531,915, respectively. The estimated fair value of the 2026 Notes and 2027 Notes is based on quoted market prices of the Company’s instrument in markets that are not active and are classified as Level 2 within the fair value hierarchy. Considerable judgment is necessary to interpret the market data and develop estimates of fair values. Accordingly, the estimates presented are not necessarily indicative of the amounts at which these instruments could be purchased, sold, or settled.

Deferred compensation plan liabilities — The fair value of deferred compensation plan liabilities, including the liability classified phantom investments in the DCP, are marked to market at the end of each reporting period.

A financial asset or liability classification is determined based on the lowest level input that is significant to the fair value measurement. The fair value hierarchy consists of the following three levels:

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument.

Level 3 inputs are unobservable inputs based on management’s own assumptions used to measure assets and liabilities at fair value.

Financial assets and financial liabilities carried at fair value measured on a recurring basis consist of the following:


June 30, 2022	Level 1		Level 2		Level 3		Total
Assets:
Money market funds (1)	$	19	$	—	$	—	$	19
Interest rate swap (2)	—		29,607		—		29,607
Total assets	$	19	$	29,607	$	—	$	29,626
Liabilities:
Acquisition contingent consideration (3)	$	—	$	—	$	1,923	$	1,923
Deferred compensation plan liabilities (4)	77,566		—		—		77,566
Cash-settled equity awards (5)	447		—		—		447
Total liabilities	$	78,013	$	—	$	1,923	$	79,936


December 31, 2021	Level 1		Level 2		Level 3		Total
Assets:
Money market funds (1)	$	21	$	—	$	—	$	21
Interest rate swap (2)	—		10,117		—		10,117
Total assets	$	21	$	10,117	$	—	$	10,138
Liabilities:
Acquisition contingent consideration (3)	$	—	$	—	$	6,613	$	6,613
Deferred compensation plan liabilities (4)	102,199		—		—		102,199
Cash-settled equity awards (5)	353		—		—		353
Total liabilities	$	102,552	$	—	$	6,613	$	109,165

(1)Included in Cash and cash equivalents in the consolidated balance sheets.

(2)Included in Other assets in the consolidated balance sheets.

(3)Included in Other liabilities, except for current liabilities of $1,923 and $5,382 as of June 30, 2022 and December 31, 2021, respectively, which are included in Accruals and other current liabilities in the consolidated balance sheets. Acquisition contingent consideration liability is measured at fair value and is based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The valuation of contingent consideration uses assumptions the Company believes would be made by a market participant.

(4)Included in Deferred compensation plan liabilities, except for current liabilities of $2,041 and $7,309 as of June 30, 2022 and December 31, 2021, respectively, which are included in Accruals and other current liabilities in the consolidated balance sheets.

(5)Included in Accruals and other current liabilities in the consolidated balance sheets.

The following is a reconciliation of the changes in fair value of the Company’s financial liabilities which have been classified as Level 3 in the fair value hierarchy:


	Six Months Ended		Year Ended
	June 30, 2022		December 31, 2021


Balance, beginning of year	$	6,613	$	4,299
Payments	(5,059)		(2,371)
Addition	—		4,544
Change in fair value	500		294
Foreign currency translation adjustments	(131)		(153)
Balance, end of period	$	1,923	$	6,613

The Company did not have any transfers between levels within the fair value hierarchy.

Note 18: Commitments and Contingencies

Purchase Commitment — In the normal course of business, the Company enters into various purchase commitments for goods and services. As of June 30, 2022, the non‑cancelable future cash purchase commitment for services related to the cloud provisioning of the Company’s software solutions was $33,226 through May 2023. The Company expects to fully consume its contractual commitment in the ordinary course of operations.

Operating Leases — The Company leases certain office facilities, office equipment, and automobiles under operating leases having initial or remaining non‑cancelable terms in excess of one year (see Note 8).

Litigation — From time to time, the Company is involved in certain legal actions arising in the ordinary course of business. In management’s opinion, based upon the advice of counsel, the outcome of such actions is not expected to have a material adverse effect on the Company’s future financial position, results of operations, or cash flows.

Note 19: Geographic Data

Revenues by geographic region are presented in Note 3. Long‑lived assets (other than goodwill), net of depreciation and amortization by geographic region (see Notes 5, 6, and 8) are as follows:


	June 30, 2022		December 31, 2021


Americas (1)	$	179,628	$	99,500
EMEA	34,177		44,730
APAC	177,180		184,245
Total long-lived assets	$	390,985	$	328,475

(1)Americas includes the U.S., Canada, and Latin America (including the Caribbean).

Note 20: Interest Expense, Net

Interest expense, net consists of the following:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Interest expense (see Note 10)	$	(7,704)	$	(2,582)	$	(14,828)	$	(4,983)
Interest income	82		129		164		211
Interest expense, net	$	(7,622)	$	(2,453)	$	(14,664)	$	(4,772)

Note 21: Other Income (Expense), Net

Other income (expense), net consists of the following:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Gain (loss) from:
Change in fair value of interest rate swap (see Note 17)	$	7,406	$	(5,926)	$	19,490	$	7,735
Foreign exchange (loss) gain (1)	(4,717)		1,406		(7,788)		2,198
Sale of aircraft (see Note 5)	—		—		2,029		—
Change in fair value of acquisition contingent consideration	—		—		(500)		—
Other income, net	808		743		907		772
Total other income (expense), net	$	3,497	$	(3,777)	$	14,138	$	10,705

(1)Foreign exchange (loss) gain is primarily attributable to foreign currency translation derived primarily from U.S. Dollar denominated cash and cash equivalents, account receivables, customer deposits, and intercompany balances held by foreign subsidiaries. Intercompany finance transactions denominated in U.S. Dollars resulted in unrealized foreign exchange (losses) gains of $(5,799) and $963 for the three months ended June 30, 2022 and 2021, respectively, $(6,563) and $1,443 for the six months ended June 30, 2022 and 2021, respectively.

Note 22: Net Income Per Share

The Company issues certain performance-based RSUs determined to be participating securities because holders of such shares have non-forfeitable dividend rights in the event of the Company’s declaration of a dividend for common shares. As of June 30, 2022 and 2021, there were 356,946 and 99,808 participating securities outstanding, respectively.

Undistributed net income allocated to participating securities are subtracted from net income in determining basic net income attributable to common stockholders. Basic net income per share is computed by dividing basic net income attributable to common stockholders by the weighted average number of shares, inclusive of undistributed shares held in the DCP as phantom shares of the Company’s Class B Common Stock.

For the Company’s diluted net income per share numerator, interest expense, net of tax, attributable to the conversion of the convertible senior notes is added back to basic net income attributable to common stockholders. For the Company’s diluted net income per share denominator, the basic weighted average number of shares is adjusted by the effect of dilutive securities, including awards under the Company’s equity compensation plans and ESPP, and by the dilutive effect of the assumed conversion of the convertible senior notes. Diluted net income per share attributable to common stockholders is computed by dividing diluted net income attributable to common stockholders by the weighted average number of fully diluted common shares.

Except with respect to voting and conversion, the rights of the holders of the Company’s Class A Common Stock and the Company’s Class B Common Stock are identical. Each class of shares has the same rights to dividends and allocation of income (loss) and, therefore, net income per share would not differ under the two‑class method.

The details of basic and diluted net income per share are as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Numerator:
Net income	$	55,673	$	45,627	$	112,061	$	102,633
Less: Net income attributable to participating securities	(11)		(3)		(20)		(3)
Net income attributable to Class A and Class B common stockholders, basic	55,662		45,624		112,041		102,630
Add: Interest expense, net of tax, attributable to assumed conversion of convertible senior notes	1,705		841		3,400		1,430
Net income attributable to Class A and Class B common stockholders, diluted	$	57,367	$	46,465	$	115,441	$	104,060

Denominator:
Weighted average shares, basic	308,244,778		304,066,038		308,512,924		303,311,423
Dilutive effect of stock options, restricted stock, and RSUs	6,167,330		9,389,339		5,854,791		10,388,725
Dilutive effect of ESPP	195,485		110,355		173,097		112,360
Dilutive effect of assumed conversion of convertible senior notes	17,667,623		10,912,354		17,667,623		9,281,537
Weighted average shares, diluted	332,275,216		324,478,086		332,208,435		323,094,045

Net income per share, basic	$	0.18	$	0.15	$	0.36	$	0.34
Net income per share, diluted	$	0.17	$	0.14	$	0.35	$	0.32

The following potential common shares were excluded from the calculation of diluted net income per share attributable to common stockholders because their effect would have been anti‑dilutive for the periods presented:


	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2022	2021	2022	2021
RSUs	223,731	495,368	223,731	495,368


Total anti-dilutive securities	223,731	495,368	223,731	495,368

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 Part II, Item 8 of our 2021 Annual Report on Form 10‑K on file with the United States Securities and Exchange Commission (“SEC”). 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 II, Item 1A. Risk Factors of this Quarterly Report on Form 10‑Q.

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.

Overview:

We are a leading global provider of software for infrastructure engineering, enabling the work of civil, structural, geoprofessional, and plant engineering practitioners, their project delivery enterprises, and owner‑operators of infrastructure assets.

Our enduring commitment is to develop and support the most comprehensive portfolio of integrated software offerings across professional disciplines, project and asset lifecycles, infrastructure sectors, and geographies. Our software enables digital workflows across engineering disciplines, distributed project teams, from offices to the field, and across computing form factors, including desktops, on‑premises servers, cloud‑native services, mobile devices, and web browsers. We deliver our solutions via on‑premises, cloud, and hybrid environments. Our users engineer, construct, and operate projects and assets across the following infrastructure sectors:

•public works (including roads, rail, bridges, tunnels, airports, ports, and federal, state, and municipal agencies)/utilities (including networks for electricity, gas, communications, and water, wastewater, and drainage). We estimate that this sector represents 49% of the net infrastructure asset value of the global top 500 infrastructure owners based on the 2021 edition of the Bentley Infrastructure 500 Top Owners, our annual compilation of the world’s largest infrastructure owners ranked by net depreciated value of their tangible fixed assets;

•industrial (including discrete and process manufacturing, oil and gas “downstream,” and power generation). We estimate that this sector represents 18% of the global top 500 infrastructure owners’ net infrastructure asset value;

•resources (including mining, oil and gas “upstream,” offshore, pipelines, environmental management, and renewable energy). We estimate that this sector represents 22% of the global top 500 infrastructure owners’ net infrastructure asset value; and

•commercial/facilities (including office buildings, retail facilities, hospitals, and campuses). We estimate that this sector represents 11% of the global top 500 infrastructure owners’ net infrastructure asset value.

We offer solutions for enterprises and professionals across the infrastructure lifecycle. Our engineering applications and geoprofessional applications support the breadth of engineering and geoprofessional disciplines and are primarily desktop applications for professional practitioners. Our project delivery and asset performance Enterprise Systems are provided via cloud and hybrid environments, developed respectively to extend enterprise collaboration during project delivery, and to manage and leverage engineering information during operations and maintenance. Our Industry Solutions solve domain‑specific problems for owners of infrastructure assets, and the project delivery ecosystems that support these owners. Our cloud-native iTwin Platform solutions enable digital twin workflows, which can span project and asset lifecycles.

We continue to make substantial investments in research and development because we believe the infrastructure engineering software market presents compelling opportunities for the application of new technologies that advance our current solutions. Our research and development roadmap balances technology advances and new offerings with continuous enhancements to existing offerings. Our allocation of research and development resources is guided by management‑established priorities, input from product managers, and user and sales force feedback.

We bring our offerings to market primarily through direct sales channels that generated approximately 92% of our 2021 total revenues.

Our sources of revenue growth, in order of magnitude and excluding the impact from acquisitions, come from additional subscriptions revenue growth from existing accounts using the same products, additional subscriptions revenue growth from existing accounts using new products, and subscriptions revenue growth from new accounts. For the year ended December 31, 2021, subscriptions represented 84% of our total revenues, and together with certain services revenues that are recurring in nature and represented 2% of our total revenues, brought the proportion of our recurring revenues to 86% of our total revenues. The remaining 14% of our revenues were generated from the sale of perpetual licenses and the delivery of non‑recurring services. We have a highly‑diversified account base, with our largest account representing no more than 2.5% of our total revenues in 2021. Our 2021 total revenues were also diversified by account type, size, and geography. Additionally, we believe that we have a loyal account base, with over 70% of our 2021 total revenues from organizations that have been our accounts for over ten years. Between 2001 and 2021, our total revenues had an approximately 8% compound annual growth rate.

Our Commercial Offerings:

Our solutions are made available to our accounts in a broad range of commercial offerings designed to accommodate the diverse preferences of our accounts, which range from owned versus subscribed, short‑term subscriptions versus longer term annual subscriptions, and fee‑certain arrangements versus variable or consumption‑based arrangements with consumption measurement durations of less than one year. We contract our commercial offerings under a single form of standard contract, which includes liability and other risk protections in our favor, and appropriate standard addendums to the primary contract, which specifically address the commercial offerings provided. Our standard commercial offerings are summarized in the table below, with further descriptions following the table:

SELECT Subscriptions. Our SELECT subscription is a prepaid annual recurring subscription that accompanies a new or previously purchased perpetual license. We believe that the SELECT benefits summarized below support our favorable rates of account retention and growth:

•Software upgrades;

•Comprehensive technical support;

•License pooling providing accounts with efficiency advantages;

•Portfolio balancing providing accounts the opportunity to exchange unused or under used licenses with other of our license offerings;

•Learning benefits, Azure‑based cloud collaboration services, and mobility advantages; and

•Access to our entire application portfolio with usage of licenses not previously purchased monetized quarterly in arrears based on consumption. See the section titled “—Term License Subscriptions” below.

Enterprise Subscriptions. Our enterprise subscription offerings provide our largest accounts with complete and unlimited global access to our comprehensive portfolio of solutions.

•Enterprise License Subscriptions (“ELS”). Our ELS offering provides access to our comprehensive portfolio of solutions for a fixed annual fee. Subsequent annual renewals are based on the account’s usage of software in the preceding year, effectively resulting in an annual consumption‑based arrangement. The majority of our ELS subscribers were historically SELECT subscribers that have grown into a position to take full advantage of our ELS offering.

•Enterprise 365 (“E365”) Subscriptions. Under our E365 subscription, participating accounts have unrestricted access to our comprehensive software portfolio, similar to ELS, however they are charged based upon daily usage. E365 subscriptions can contain quarterly usage floors or collars as accounts transition to the usage model or for accounts within the public sector. The daily usage fee also includes a term license component, SELECT maintenance and support, hosting, and Success Blueprints, which are designed to achieve business outcomes through more efficient and effective use of our software. We are completing efforts to transition ELS subscribers to E365 subscriptions, primarily to simplify pricing, more closely align consumption to monetization, and to establish Success Blueprints as recurring to ensure better business outcomes for our users. In transitioning subscribers to E365, we recognize a greater proportion of our revenues on a quarterly basis rather than substantially upfront. See the section titled “—Key Factors Impacting Comparability and Performance.”

Term License Subscriptions

Annual Term Licenses (“ATL”) Subscription. Annual term licenses are generally prepaid annually for named user access to specific products and include our Virtuoso subscriptions sold via our Virtuosity eStore for practitioner licenses. Virtuoso subscriptions are bundles with customizable training and expert consultation administered through “keys” or credits. ATL are also used to monetize site or enterprise wide access for certain of our AssetWise solutions within given usage bands.

Quarterly Term License (“QTL”) Subscription. Through quarterly term licenses, accounts pay quarterly in arrears for licenses they have used representing usage beyond their contracted quantities. Much like our enterprise subscription programs, a QTL allows smaller- and medium‑sized accounts to match usage to ongoing project requirements.

Monthly Term License (“MTL”) Subscription. Monthly term licenses are identical to QTL subscriptions, except for the term of the license, and the manner in which they are monetized. MTL subscriptions require a Cloud Services Subscription, which is discussed below.

Visas and Passports. Visas and Passports are quarterly or annual term licenses enabling users to access specific project or enterprise information and entitles our users to certain functionality of our ProjectWise and AssetWise systems. Generally, a Passport provides desktop, web, and mobile application access to project information and certain functions, and a Visa provides similar access, plus added functionality depending upon the product to which the Visa is aligned.

While certain legacy arrangements are supported, our standard offering requires Visas and Passports to be fulfilled and contracted via a CSS, which is discussed below.

Cloud Services Subscription (“CSS”). CSS is designed to streamline the procurement, administration, and payment process for us and our accounts. A CSS requires an upfront annual estimation of MTL, Visa and Passport consumption, and any Success Services expected for the upcoming year. A deposit for the annual estimated consumption is submitted in advance. Actual consumption is monitored and invoiced against the deposit on a calendar quarter basis. Accounts are charged only for what gets used and deposited amounts never expire.

Perpetual Licenses

We historically have sold perpetual licenses and continue to offer them to our accounts as an available option for most of our applications. Perpetual licenses are available for accounts that prefer to own their software licenses and may be sold with or without attaching a SELECT subscription. Historically, attachment and retention of the SELECT subscription has been high given the benefits of the SELECT subscription.

Services

We provide professional services, including training, implementation, configuration, customization, and strategic consulting services. We perform projects on both a time and materials and a fixed fee basis. Certain of our fixed‑fee arrangements, including our Success Services offerings, are structured as subscription‑like, packaged offerings that are annually recurring in nature. Success Services are standard service offerings that provide a level of dedicated professional services above the standard technical support offered to all accounts as part of their SELECT or enterprise agreement.

Key Business Metrics:

We regularly review the following key metrics to evaluate our business, measure our performance, identify trends in our business, prepare financial projections, and make strategic decisions.


	June 30,
	2022			2021
Annualized recurring revenues (“ARR”)	$	971,876		$	882,415
Last twelve-months recurring revenues	$	930,798		$	747,159
Twelve-months ended constant currency:
ARR growth rate	14		%	23		%
Account retention rate	98		%	98		%
Recurring revenues dollar-based net retention rate	109		%	106		%

ARR. Our 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. ARR resulting from the annualization of recurring contracts with consumption measurement durations of less than one year, as a percentage of total ARR, was 40% and 36% as of June 30, 2022 and 2021, respectively. Within our consumption‑measured ARR, the continuous uptake of our E365 subscription offering has increased daily consumption‑measured ARR, representing 32% of total ARR as of June 30, 2022. We believe that ARR is an important metric indicating the scale and growth of our business. Furthermore, we believe ARR, considered in connection with our recurring revenues dollar‑based net retention rate, is a leading indicator of revenue growth.

In March 2022, in response to the Russia‑Ukraine war, we announced a pause of sales in Russia and Belarus, in addition to our strict compliance with applicable sanctions, regimes, and other regulatory restrictions on business activities in those countries. As a result of the conflict, we deemed our overall business recurrence in the affected countries to have been reduced by approximately 50%, and accordingly, reduced our related ARR by $5,190 as of March 31, 2022. During the second quarter of 2022, the marked shifts in the Russian business environment and economic outlook have led us to conclude it is no longer viable for us to continue operations in Russia. Accordingly, we have made the decision to wind down business and exit the Russian market, which resulted in a further reduction in our ARR by $6,000.

Last twelve‑months recurring revenues. Last twelve‑months recurring revenues is calculated as recurring revenues recognized over the preceding twelve‑month period. We define recurring revenues as subscriptions revenues that recur monthly, quarterly, or annually with specific or automatic renewal clauses and services revenues in which the underlying contract is based on a fixed fee and contains automatic annual renewal provisions.

We believe that last twelve‑months recurring revenues is an important indicator of our performance during the immediately preceding twelve‑month time period. We believe that we will continue to experience favorable growth in recurring revenues primarily due to our strong account retention and recurring revenues dollar‑based net retention rates, as well as the addition of new accounts with recurring revenues. The last twelve‑months recurring revenues for the periods ended June 30, 2022 compared to the last twelve‑months of the preceding twelve‑month period increased by $183,639. This increase was primarily due to growth in ARR, which is primarily the result of growing our recurring revenues within our existing accounts as expressed in our recurring revenues dollar‑based net retention rate, as well as additional recurring revenues resulting from new accounts and acquisitions, including the favorable impact from our platform acquisitions of Power Line Systems and Seequent Holdings Limited (“Seequent”). For the twelve months ended June 30, 2022, 88% of our revenues were recurring revenues.

Constant currency metrics. 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. Our definition of constant currency may differ from other companies reporting similarly named measures, and these constant currency performance measures should be viewed in addition to, and not as a substitute for, our operating performance measures calculated in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

ARR growth rate. Our ARR growth rate is the growth rate of our ARR, measured on a constant currency basis. Our ARR growth rate was favorably impacted by 2.5% due to the ARR onboarding from our platform acquisition of Power Line Systems during the twelve months ended June 30, 2022. We believe that ARR growth is an important metric indicating the scale and growth of our business.

Account retention rate. Our account retention rate for any given twelve-month period is calculated using the average currency exchange rates for the prior period, as follows: the prior period recurring revenues from all accounts with recurring revenues in the current and prior period, divided by total recurring revenues from all accounts during the prior period. Our account retention rate is an important indicator that provides insight into the long‑term value of our account relationships and our ability to retain our account base. We believe that our consistent and high account retention rates illustrate our ability to retain and cultivate long‑term relationships with our accounts.

Recurring revenues dollar‑based net retention rate. Our 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. We believe our recurring revenues dollar‑based net retention rate is a key indicator of our success in growing our revenues within our existing accounts. Given that recurring revenues represented 88% of our total revenues for the twelve months ended June 30, 2022, this metric helps explain our revenue performance, excluding the impact from acquisitions, as primarily growth into existing accounts. We believe that our consistent and high recurring revenues dollar‑based net retention rate illustrates our ability to consistently retain accounts and grow them.

Our calculation of these metrics may not be comparable to other companies with similarly‑titled metrics.

Non-GAAP Financial Measures:

In addition to our results determined in accordance with U.S. GAAP, we also use the below non‑GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes.


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Adjusted EBITDA	$	86,521	$	69,334	$	184,137	$	152,310
Adjusted Net Income	73,808		74,463		153,364		138,593

Adjusted EBITDA. We define Adjusted EBITDA as net income adjusted for interest expense, net, provision (benefit) for income taxes, depreciation and amortization, stock‑based compensation, expense (income) relating to deferred compensation plan liabilities, acquisition expenses, realignment expenses, other non‑operating (income) expense, net, and (income) loss from investment accounted for using the equity method, net of tax.

Adjusted Net Income. We define Adjusted Net Income as net income adjusted for the following: amortization of purchased intangibles and developed technologies, stock‑based compensation, expense (income) relating to deferred compensation plan liabilities, acquisition expenses, realignment expenses, other non‑operating (income) expense, net, the tax effect of the above adjustments to net income, and (income) loss from investment accounted for using the equity method, net of tax. 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 EBITDA and Adjusted Net Income are not presentations made in accordance with U.S. GAAP, and our use of the terms Adjusted EBITDA and Adjusted Net Income may vary from the use of similarly titled measures by others in our industry due to the potential inconsistencies in the method of calculation and differences due to items subject to interpretation. We believe the presentation of Adjusted EBITDA and Adjusted Net Income provides useful information to management and investors regarding financial and business trends related to our results of operations and that when non‑GAAP financial information is viewed with U.S. GAAP financial information, investors are provided with a more meaningful understanding of our ongoing operating performance. We also use Adjusted EBITDA and Adjusted Net Income to compare our results to those of our competitors and to consistently measure our performance from period to period. During the third quarter of 2021, we modified our definitions of Adjusted EBITDA and Adjusted Net Income to adjust for expense (income) relating to deferred compensation plan liabilities and amounts for all periods herein reflect application of the modified definition.

Adjusted EBITDA and Adjusted Net Income should not be considered as alternatives to net income, operating income, or any other performance measures derived in accordance with U.S. GAAP as measures of operating performance. Adjusted EBITDA and Adjusted Net Income have important limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results as reported under U.S. GAAP.

Reconciliation of net income to Adjusted EBITDA:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Net income	$	55,673	$	45,627	$	112,061	$	102,633
Interest expense, net	7,622		2,453		14,664		4,772
Benefit for income taxes	(4,674)		(20,473)		(1,443)		(10,115)
Depreciation and amortization	18,518		10,287		35,730		19,280
Stock-based compensation (2)	17,395		11,685		32,348		20,598
Deferred compensation plan (3)	(12,159)		195		(17,297)		362
Acquisition expenses (4)	3,856		13,954		17,853		23,210
Realignment expenses (5)	3,194		—		3,194		—
Other (income) expense, net (6)	(3,497)		3,777		(14,138)		(10,705)
Loss from investment accounted for using the equity method, net of tax	593		1,829		1,165		2,275
Adjusted EBITDA	$	86,521	$	69,334	$	184,137	$	152,310

Reconciliation of net income to Adjusted Net Income:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Net income	$	55,673	$	45,627	$	112,061	$	102,633
Non-GAAP adjustments, prior to income taxes:
Amortization of purchased intangibles and developed technologies (1)	13,671		5,781		26,599		10,464
Stock-based compensation (2)	17,395		11,685		32,348		20,598
Deferred compensation plan (3)	(12,159)		195		(17,297)		362
Acquisition expenses (4)	3,856		13,954		17,853		23,210
Realignment expenses (5)	3,194		—		3,194		—
Other (income) expense, net (6)	(3,497)		3,777		(14,138)		(10,705)
Total non-GAAP adjustments, prior to income taxes	22,460		35,392		48,559		43,929
Income tax effect of non-GAAP adjustments	(4,918)		(8,385)		(8,421)		(10,244)
Loss from investment accounted for using the equity method, net of tax	593		1,829		1,165		2,275
Adjusted Net Income	$	73,808	$	74,463	$	153,364	$	138,593

Further explanation of certain of our adjustments in arriving at Adjusted EBITDA and Adjusted Net Income are as follows:

(1)Amortization of purchased intangibles and developed technologies. Amortization of purchased intangibles varies in amount and frequency and is significantly impacted by the timing and size of our acquisitions. Management finds it useful to exclude these non‑cash charges from our operating expenses to assist in budgeting, planning, and forecasting future periods. The use of intangible assets and developed technologies contributed to our revenues earned during the periods presented and will also contribute to our revenues in future periods. Amortization of purchased intangible assets and developed technologies will recur in future periods.

(2)Stock‑based compensation. We exclude certain stock‑based compensation expenses from our non‑GAAP measures primarily because they are non‑cash expenses and management finds it useful to exclude certain non‑cash charges to assess the appropriate level of various operating expenses to assist in budgeting, planning, and forecasting future periods. Moreover, because of the variety of award types and subjective assumptions that companies can use under Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation, we believe excluding stock‑based compensation expenses allows investors to make meaningful comparisons between our recurring core business results of operations and those of other companies.

(3)Deferred compensation plan. In August 2021, our board of directors approved an amendment to the amended and restated Bentley Systems, Incorporated Nonqualified Deferred Compensation Plan (the “DCP”), which offered to certain active executives in the DCP a one‑time, short‑term election to reallocate a limited portion of their DCP holdings from phantom shares of the Company’s Class B Common Stock into other phantom investment funds. For further discussion of the aforementioned DCP reallocation, see Note 12 to our consolidated financial statements included in Part II, Item 8 of our 2021 Annual Report on Form 10‑K. Deferred compensation plan liabilities are marked to market at the end of each reporting period, with changes in the liabilities recorded as an expense (income) to Deferred compensation plan in the consolidated statements of operations. We exclude Deferred compensation plan expense (income) because it is not reflective of our ongoing business and results of operation. We believe it is useful for investors to understand the effects of this item on our total operating expenses.

(4)Acquisition expenses. We incur expenses for professional services rendered in connection with business combinations, which are included in our U.S. GAAP presentation of general and administrative expense. Also included in our acquisition expenses are retention incentives paid to executives of the acquired companies. For the three and six months ended June 30, 2022, $26 and $9,799, respectively, of our acquisition expenses related to our platform acquisition of Power Line Systems. For the three and six months ended June 30, 2021, $9,180 and $15,896, respectively, of our acquisition expenses related to our platform acquisition of Seequent. We exclude these acquisition expenses when we evaluate our continuing operational performance as we would not have otherwise incurred these expenses in the periods presented as part of our continuing operations.

(5)Realignment expenses. During the second quarter of 2022, the marked shifts in the Russian business environment and economic outlook have led us to conclude it is no longer viable for us to continue operations in Russia. Accordingly, we made the decision to wind down business and exit the Russian market. As a result, we incurred exit costs, which are comprised of termination benefits for colleagues whose positions were eliminated and asset impairments (“Russian market exit costs”). We exclude these charges because they are not reflective of our ongoing business and results of operations. We believe it is useful for investors to understand the effects of these items on our total operating expenses. In the ordinary course of operating our business, we incur severance expenses that are not included in this adjustment.

(6)Other (income) expense, net. The table below contains the details of Other (income) expense, net. We exclude these items because they are not reflective of ongoing business and results of operations. We believe it is useful for investors to understand the effects of these items on our results of operations.


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
(Gain) loss from:
Change in fair value of interest rate swap	$	(7,406)	$	5,926	$	(19,490)	$	(7,735)
Foreign exchange loss (gain) (a)	4,717		(1,406)		7,788		(2,198)
Sale of aircraft	—		—		(2,029)		—
Change in fair value of acquisition contingent consideration	—		—		500		—
Other income, net	(808)		(743)		(907)		(772)
Total other (income) expense, net	$	(3,497)	$	3,777	$	(14,138)	$	(10,705)

(a)Foreign exchange loss (gain) is primarily attributable to foreign currency translation derived primarily from United States (“U.S.”) Dollar denominated cash and cash equivalents, account receivables, customer deposits, and intercompany balances held by foreign subsidiaries. Intercompany finance transactions denominated in U.S. Dollars resulted in unrealized foreign exchange losses (gains) of $5,799 and $(963) for the three months ended June 30, 2022 and 2021, respectively, $6,563 and $(1,443) for the six months ended June 30, 2022 and 2021, respectively.

Key Factors Impacting Comparability and Performance:

Acquisitions. Since our founding, we have purposefully pursued a strategy of regularly acquiring and integrating specialized infrastructure engineering software businesses. As a public company, we have been able to make platform acquisitions which appreciably increase our scale and/or the scope of our platform capabilities. Our relatively numerous and frequent programmatic acquisitions, which most often “fill white space” within our ecosystem and add their particular value principally by virtue of our existing platform comprehensiveness, and accordingly we consider this programmatic aspect of our growth as characteristically within our mainstream business performance (unlike platform acquisitions).

We completed two and eight acquisitions for the six months ended June 30, 2022 and 2021, respectively. Our three and six months ended June 30, 2022 consolidated financial statements were meaningfully impacted by our platform acquisition of Power Line Systems, which was completed on January 31, 2022 for $695,968 in cash, net of cash acquired. Our three and six months ended June 30, 2022 and 2021 consolidated financial statements were meaningfully impacted by our platform acquisition of Seequent, which was completed on June 17, 2021 for $883,336 in cash, net of cash acquired, plus 3,141,342 shares of our Class B Common Stock. For the three and six months ended June 30, 2022, $26 and $9,799, respectively, of our acquisition expenses related to the acquisition of Power Line Systems. For the three and six months ended June 30, 2021, $9,180 and $15,896, respectively, of our acquisition expenses related to the acquisition of Seequent.

BSY Stock Repurchase Program. On May 11, 2022, we announced that our board of directors approved the BSY Stock Repurchase Program (the “Repurchase Program”) authorizing us to repurchase up to $200,000 of our Class B Common Stock through June 30, 2024. The Repurchase Program is used to offset dilution from the issuance of our Class B Common Stock under our stock‑based plans to enhance stockholder value. For the six months ended June 30, 2022, we repurchased 463,001 shares for $13,242.

Impact of foreign currency. A portion of our total revenues and operating expenses were derived from outside the U.S. and as such, were denominated in various foreign currencies, including most significantly: Euros, British Pounds, Australian Dollars, Canadian Dollars, Chinese Yuan Renminbi, and New Zealand Dollars. Our financial results are therefore affected by changes in foreign currency rates. In 2021, 47% of our total revenues were denominated in various foreign currencies. Correspondingly, in 2021, 42% of our total operating expenses were denominated in various foreign currencies. Other than the natural hedge attributable to matching revenues and expenses in the same currencies, we do not currently hedge foreign currency exposure. Accordingly, our results of operations have been, and in the future will be, affected by changes in foreign exchange rates.

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. In reporting period to period results, we calculate the effects of foreign currency fluc