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BENTLEY SYSTEMS INC - Quarter Report: 2023 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, 2023
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 classTrading SymbolName of each exchange on which registered
Class B Common Stock, par value $0.01 per shareBSY
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 1, 2023, the registrant had 11,601,757 shares of Class A and 283,364,519 shares of Class B Common Stock outstanding.



BENTLEY SYSTEMS, INCORPORATED
FORM 10-Q
TABLE OF CONTENTS

Page

2


CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report includes forward‑looking statements. All statements contained in this report other than statements of historical facts, including statements regarding our future results of operations and financial position, our business strategy, and plans and our objectives for future operations, are forward‑looking statements. The words “believe,” “may,” “will,” “could,” “would,” “seeks,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” and similar expressions, as well as statements regarding our focus for the future, are intended to identify forward‑looking statements. We have based these forward‑looking statements largely on our current expectations, projections, and assumptions about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short‑term and long‑term business operations and objectives, and financial needs. These forward‑looking statements are subject to a number of risks, uncertainties, and assumptions, including those described in the section titled “Risk Factors.” Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward‑looking statements we may make. In light of these risks, uncertainties, and assumptions, the future events and trends discussed in this report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward‑looking statements. The forward‑looking statements, as well as our report as a whole, are subject to risks and uncertainties.
These statements are only current predictions and are subject to known and unknown risks, uncertainties, and other factors that may cause our or our industry’s actual results, levels of activity, performance, or achievements to be materially different from those anticipated by the forward‑looking statements. We discuss many of these risks in this report in greater detail in the section titled “Risk Factors” and elsewhere in this report. You should not rely upon forward‑looking statements as predictions of future events.
Although we believe that the expectations reflected in the forward‑looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, achievements, events, or circumstances reflected in the forward‑looking statements will occur. Except as required by law, we undertake no obligation to update any of these forward‑looking statements after the date of this report to conform these statements to actual results or revised expectations.
3



PART I. FINANCIAL INFORMATION
Item 1. Unaudited Consolidated Financial Statements
BENTLEY SYSTEMS, INCORPORATED
Consolidated Balance Sheets
(in thousands, except share and per share data)
(unaudited)

June 30, 2023December 31, 2022
Assets
Current assets:
Cash and cash equivalents$82,716 $71,684 
Accounts receivable252,863 296,376 
Allowance for doubtful accounts(8,656)(9,303)
Prepaid income taxes20,491 18,406 
Prepaid and other current assets44,043 38,732 
Total current assets391,457 415,895 
Property and equipment, net35,520 32,251 
Operating lease right-of-use assets43,248 40,249 
Intangible assets, net271,639 292,271 
Goodwill2,252,832 2,237,184 
Investments26,997 22,270 
Deferred income taxes68,681 52,636 
Other assets73,553 72,249 
Total assets$3,163,927 $3,165,005 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$37,423 $15,176 
Accruals and other current liabilities398,883 362,048 
Deferred revenues231,473 226,955 
Operating lease liabilities12,533 14,672 
Income taxes payable21,383 4,507 
Current portion of long-term debt7,500 5,000 
Total current liabilities709,195 628,358 
Long-term debt1,629,483 1,775,696 
Deferred compensation plan liabilities82,641 77,014 
Long-term operating lease liabilities32,273 27,670 
Deferred revenues16,282 16,118 
Deferred income taxes37,773 51,235 
Income taxes payable7,316 8,105 
Other liabilities5,192 7,355 
Total liabilities2,520,155 2,591,551 
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, 2023 and December 31, 2022
— — 
Class A Common Stock, $0.01 par value, authorized 100,000,000 shares; issued and outstanding 11,601,757 shares as of June 30, 2023 and December 31, 2022, and Class B Common Stock, $0.01 par value, authorized 1,800,000,000 shares; issued and outstanding 283,111,226 and 277,412,730 shares as of June 30, 2023 and December 31, 2022, respectively
2,947 2,890 
Additional paid-in capital1,085,066 1,030,466 
Accumulated other comprehensive loss
(87,828)(89,740)
Accumulated deficit(357,117)(370,866)
Non-controlling interest704 704 
Total stockholders’ equity643,772 573,454 
Total liabilities and stockholders’ equity
$3,163,927 $3,165,005 

See accompanying notes to consolidated financial statements.
4



BENTLEY SYSTEMS, INCORPORATED
Consolidated Statements of Operations
(in thousands, except share and per share data)
(unaudited)

Three Months EndedSix Months Ended
June 30,June 30,
2023202220232022
Revenues:
Subscriptions$259,243 $232,191 $537,088 $473,424 
Perpetual licenses11,718 11,548 21,265 21,753 
Subscriptions and licenses270,961 243,739 558,353 495,177 
Services25,788 24,546 52,807 48,625 
Total revenues296,749 268,285 611,160 543,802 
Cost of revenues:
Cost of subscriptions and licenses41,156 36,806 82,087 70,533 
Cost of services25,270 22,888 51,523 44,946 
Total cost of revenues66,426 59,694 133,610 115,479 
Gross profit230,323 208,591 477,550 428,323 
Operating expense (income):
Research and development70,117 64,866 137,917 126,139 
Selling and marketing54,364 49,617 106,505 95,562 
General and administrative39,258 40,033 86,065 91,187 
Deferred compensation plan3,777 (12,159)7,923 (17,297)
Amortization of purchased intangibles9,502 10,517 20,050 20,423 
Total operating expenses177,018 152,874 358,460 316,014 
Income from operations
53,305 55,717 119,090 112,309 
Interest expense, net(9,484)(7,639)(20,576)(14,387)
Other income, net
965 3,514 1,254 13,861 
Income before income taxes
44,786 51,592 99,768 111,783 
Benefit (provision) for income taxes
3,899 4,674 (5,593)1,443 
Loss from investments accounted for using the equity method, net of tax
— (593)— (1,165)
Net income
$48,685 $55,673 $94,175 $112,061 
Per share information:
Net income per share, basic
$0.16 $0.18 $0.30 $0.36 
Net income per share, diluted
$0.15 $0.17 $0.29 $0.35 
Weighted average shares, basic311,914,602 308,244,778 311,366,371 308,512,924 
Weighted average shares, diluted332,352,725 332,275,216 331,831,973 332,208,435 

See accompanying notes to consolidated financial statements.
5



BENTLEY SYSTEMS, INCORPORATED
Consolidated Statements of Comprehensive Income
(in thousands)
(unaudited)

Three Months EndedSix Months Ended
June 30,June 30,
2023202220232022
Net income
$48,685 $55,673 $94,175 $112,061 
Other comprehensive income (loss), net of taxes:
Foreign currency translation adjustments1,538 (13,820)1,878 2,617 
Actuarial gain on retirement plan, net of tax effect of $(1), $(5), $(7), and $(10), respectively
13 34 26 
Total other comprehensive income (loss), net of taxes
1,546 (13,807)1,912 2,643 
Comprehensive income
$50,231 $41,866 $96,087 $114,704 

See accompanying notes to consolidated financial statements.
6


BENTLEY SYSTEMS, INCORPORATED
Consolidated Statements of Stockholders’ Equity
(in thousands, except share data)
(unaudited)

Three Months Ended June 30, 2023
Accumulated
Class A and Class BAdditionalOtherNon-Total
Common StockPaid-InComprehensiveAccumulatedControllingStockholders’
SharesPar ValueCapitalLossDeficitInterestEquity
Balance, March 31, 2023291,501,271 $2,915 $1,060,842 $(89,374)$(360,897)$704 $614,190 
Net income
— — — — 48,685 — 48,685 
Other comprehensive income
— — — 1,546 — — 1,546 
Dividends declared— — — — (14,702)— (14,702)
Shares issued in connection with deferred compensation plan, net
1,729,443 17 (17)— (22,703)— (22,703)
Deferred compensation plan elective participant deferrals— — 118 — — — 118 
Shares issued in connection with executive bonus plan, net
57,393 4,321 — (1,901)— 2,421 
Stock option exercises, net1,308,527 13 5,485 — (4,288)— 1,210 
Shares issued for stock grants, net12,639 — 600 — — — 600 
Stock-based compensation expense— — 13,718 — — — 13,718 
Shares related to restricted stock, net103,710 (1)— (1,311)— (1,311)
Balance, June 30, 2023294,712,983 $2,947 $1,085,066 $(87,828)$(357,117)$704 $643,772 

Six Months Ended June 30, 2023
Accumulated
Class A and Class BAdditionalOtherNon-Total
Common StockPaid-InComprehensiveAccumulatedControllingStockholders’
SharesPar ValueCapitalLossDeficitInterestEquity
Balance, December 31, 2022289,014,487 $2,890 $1,030,466 $(89,740)$(370,866)$704 $573,454 
Net income
— — — — 94,175 — 94,175 
Other comprehensive income
— — — 1,912 — — 1,912 
Dividends declared— — — — (29,224)— (29,224)
Shares issued in connection with deferred compensation plan
2,782,181 28 (28)— (36,329)— (36,329)
Deferred compensation plan elective participant deferrals— — 1,651 — — — 1,651 
Shares issued in connection with executive bonus plan
137,197 9,804 — (4,326)— 5,480 
Shares issued in connection with employee stock purchase plan
153,381 4,556 — (222)— 4,335 
Stock option exercises, net2,236,827 22 9,678 — (5,989)— 3,711 
Shares issued for stock grants, net12,639 — 600 — — — 600 
Stock-based compensation expense— — 28,343 — — — 28,343 
Shares related to restricted stock, net376,271 (4)— (4,336)— (4,336)
Balance, June 30, 2023294,712,983 $2,947 $1,085,066 $(87,828)$(357,117)$704 $643,772 

See accompanying notes to consolidated financial statements.
7


BENTLEY SYSTEMS, INCORPORATED
Consolidated Statements of Stockholders’ Equity
(in thousands, except share data)
(unaudited)

Three Months Ended June 30, 2022
Accumulated
Class A and Class BAdditionalOtherTotal
Common StockPaid-InComprehensiveAccumulatedStockholders’
SharesPar ValueCapitalLossDeficitEquity
Balance, March 31, 2022285,134,093 $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 plan2,616,044 26 (26)— — — 
Deferred compensation plan elective participant deferrals— — 2,439 — — 2,439 
Shares issued in connection with executive bonus plan, net87,692 6,896 — (3,005)3,892 
Stock option exercises, net653,336 3,086 — (749)2,344 
Acquisition option exercises, net35,323 (1)— — — 
Shares issued for stock grants, net13,632 — 450 — — 450 
Stock-based compensation expense— — 10,862 — — 10,862 
Shares related to restricted stock, net77,040 (1)— (593)(593)
Repurchase of Class B Common Stock under approved program(463,001)(5)— — (13,237)(13,242)
Balance, June 30, 2022288,154,159 $2,882 $981,203 $(89,131)$(397,961)$496,993 

Six Months Ended June 30, 2022
Accumulated
Class A and Class BAdditionalOtherTotal
Common StockPaid-InComprehensiveAccumulatedStockholders’
SharesPar ValueCapitalLossDeficitEquity
Balance, December 31, 2021282,526,719 $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, net3,425,795 34 (26)— (24,254)(24,246)
Deferred compensation plan elective participant deferrals— — 3,108 — — 3,108 
Shares issued in connection with executive bonus plan, net159,797 11,891 — (5,197)6,696 
Shares issued in connection with employee stock purchase plan, net109,749 4,610 — (121)4,490 
Stock option exercises, net2,054,585 21 5,840 — (8,400)(2,539)
Acquisition option exercises, net185,178 (2)— — — 
Shares issued for stock grants, net13,632 — 450 — — 450 
Stock-based compensation expense— — 17,529 — — 17,529 
Shares related to restricted stock, net141,705 (2)— (2,148)(2,148)
Repurchase of Class B Common Stock under approved program(463,001)(5)— — (13,237)(13,242)
Balance, June 30, 2022288,154,159 $2,882 $981,203 $(89,131)$(397,961)$496,993 

See accompanying notes to consolidated financial statements.
8



BENTLEY SYSTEMS, INCORPORATED
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

Six Months Ended
June 30,
20232022
Cash flows from operating activities:
Net income
$94,175 $112,061 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization35,304 35,730 
Deferred income taxes(28,935)(16,806)
Stock-based compensation expense37,588 32,568 
Deferred compensation plan7,923 (17,297)
Amortization of deferred debt issuance costs3,646 3,646 
Change in fair value of derivative663 (19,490)
Foreign currency remeasurement (gain) loss
(144)5,748 
Other non-cash items, net3,530 3,315 
Changes in assets and liabilities, net of effect from acquisitions:
Accounts receivable49,171 15,581 
Prepaid and other assets(364)3,325 
Accounts payable, accruals, and other liabilities41,969 25,683 
Deferred revenues(1,792)(20,292)
Income taxes payable, net of prepaid income taxes14,085 4,958 
Net cash provided by operating activities
256,819 168,730 
Cash flows from investing activities:
Purchases of property and equipment and investment in capitalized software(11,253)(6,589)
Proceeds from sale of aircraft— 2,380 
Acquisitions, net of cash acquired (10,299)(714,197)
Purchases of investments(8,200)(5,561)
Net cash used in investing activities
(29,752)(723,967)
Cash flows from financing activities:
Proceeds from credit facilities288,387 657,981 
Payments of credit facilities(432,739)(264,107)
Repayments of term loan(2,500)(2,500)
Payments of contingent and non-contingent consideration(2,860)(5,059)
Payments of dividends(29,224)(17,163)
Proceeds from stock purchases under employee stock purchase plan4,557 4,611 
Proceeds from exercise of stock options9,700 5,861 
Payments for shares acquired including shares withheld for taxes(51,202)(40,520)
Repurchase of Class B Common Stock under approved program— (13,242)
Other financing activities(95)(89)
Net cash (used in) provided by financing activities
(215,976)325,773 
Effect of exchange rate changes on cash and cash equivalents(59)(6,462)
Increase (decrease) in cash and cash equivalents
11,032 (235,926)
Cash and cash equivalents, beginning of year71,684 329,337 
Cash and cash equivalents, end of period
$82,716 $93,411 
9



BENTLEY SYSTEMS, INCORPORATED
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

Six Months Ended
June 30,
20232022
Supplemental information:
Cash paid for income taxes$18,167 $11,606 
Income tax refunds168 1,076 
Interest paid19,382 10,528 
Non-cash investing and financing activities:
Cost method investment3,500 — 
Deferred, non-contingent consideration, net525 — 
Share-settled executive bonus plan awards9,806 11,893 
Deferred compensation plan elective participant deferrals1,651 3,108 

See accompanying notes to consolidated financial statements.
10



BENTLEY SYSTEMS, INCORPORATED
Notes to Consolidated Financial Statements
(in thousands, except share and per share data)
(unaudited)

Note 1: Basis of Presentation
The accompanying unaudited consolidated financial statements include the accounts of Bentley Systems, Incorporated and its wholly-owned subsidiaries (“Bentley Systems, Incorporated” or the “Company”), and have been prepared in accordance with United States generally accepted accounting principles (“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 the Company’s 2022 Annual Report on Form 10K. 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 as of 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, 2022 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. For the three and six months ended June 30, 2023, payments related to the Company’s interest rate swap were recognized in Other income (expense), net in the consolidated statements of operations and the corresponding prior period amounts, which were previously recognized in Interest expense, net, were reclassified to conform to the current period presentation. For the three and six months ended June 30, 2022, the amounts reclassified were not material, and Income before income taxes and Net income in the consolidated statements of operations did not change as a result of these reclassifications.
Note 2: Recent Accounting Pronouncements
Recently Adopted Accounting Guidance
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. In December 2022, the FASB issued ASU No. 2022‑06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, which provides optional guidance to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting by extending the sunset date of Topic 848 to December 31, 2024. The expedients and exceptions provided by these ASUs do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2024, except for hedging relationships existing as of December 31, 2024, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The Company adopted these ASUs during the second quarter of 2023 (see Note 10) and the adoption did not have a material impact on the Company’s consolidated financial statements.
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Note 3: Revenue from Contracts with Customers
Disaggregation of Revenues
The Company’s revenues consist of the following:
Three Months EndedSix Months Ended
June 30,June 30,
2023202220232022
Subscriptions:
Enterprise subscriptions (1)
$103,674 $81,593 $207,578 $163,420 
SELECT subscriptions64,085 66,579 127,428 133,177 
Term license subscriptions91,484 84,019 202,082 176,827 
Subscriptions259,243 232,191 537,088 473,424 
Perpetual licenses11,718 11,548 21,265 21,753 
Subscriptions and licenses270,961 243,739 558,353 495,177 
Services:
Recurring4,949 4,173 9,127 8,874 
Other20,839 20,373 43,680 39,751 
Services25,788 24,546 52,807 48,625 
Total revenues$296,749 $268,285 $611,160 $543,802 
(1)Enterprise subscriptions includes revenue attributable to Enterprise 365 (“E365”) subscriptions of $99,248 and $72,905 for the three months ended June 30, 2023 and 2022, respectively, and $193,579 and $141,503 for the six months ended June 30, 2023 and 2022, 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, 2023 and 2022, the Company recognized $138,822 and $129,872 of license related revenues, respectively, of which $127,104 and $118,324, 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, 2023 and 2022, the Company recognized $296,846 and $255,097 of license related revenues, respectively, of which $275,581 and $233,344, 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 and six months ended June 30, 2023 and 2022.
12



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 EndedSix Months Ended
June 30,June 30,
2023202220232022
Americas (1)
$158,836 $144,359 $327,181 $298,619 
Europe, the Middle East, and Africa (“EMEA”)83,444 74,800 176,276 152,280 
Asia-Pacific (“APAC”)
54,469 49,126 107,703 92,903 
Total revenues$296,749 $268,285 $611,160 $543,802 
(1)Americas includes the United States (“U.S.”), Canada, and Latin America (including the Caribbean). Revenue attributable to the U.S. totaled $127,847 and $108,456 for the three months ended June 30, 2023 and 2022, respectively, and $255,297 and $224,589 for the six months ended June 30, 2023 and 2022, respectively.
Contract Assets and Contract Liabilities
June 30, 2023December 31, 2022
Contract assets$451 $575 
Deferred revenues247,755 243,073 
As of June 30, 2023 and December 31, 2022, 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, 2023 and December 31, 2022.
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, 2023, $149,247 of revenues that were included in the December 31, 2022 deferred revenues balance were recognized. There were additional deferrals of $151,528 for the six months ended June 30, 2023, which were primarily related to new billings and acquisitions. 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 for the six months ended June 30, 2022, which were primarily related to new billings and acquisitions.
As of June 30, 2023 and December 31, 2022, the Company has deferred $17,965 and $17,338, respectively, related to portfolio balancing exchange rights which is included in Deferred revenues in the consolidated balance sheets.
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, 2023, amounts allocated to these remaining performance obligations are $247,755, of which the Company expects to recognize approximately 93% over the next 12 months with the remaining amount thereafter.
13



Note 4: Acquisitions
The aggregate details of the Company’s acquisition activity are as follows:
Acquisitions Completed during
Six Months Ended
June 30,
20232022
Number of acquisitions
Cash paid at closing (1)
$10,299 $733,343 
Cash acquired— (19,146)
Net cash paid$10,299 $714,197 
(1)Of the cash paid at closing for the six months ended June 30, 2022, $3,000 was deposited into an escrow account to secure any potential indemnification and other obligations of the seller.
On January 31, 2022, the Company completed the acquisition of Power Line Systems (“PLS”), 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. The operating results of the acquired businesses were not material, individually or in the aggregate, to the Company’s consolidated statements of operations.
The fair value of the contingent consideration from acquisitions is included in the consolidated balance sheets as follows:
June 30, 2023December 31, 2022
Accruals and other current liabilities$$1,196 
Contingent consideration from acquisitions$$1,196 
The fair value of non-contingent consideration from acquisitions is included in the consolidated balance sheets as follows:
June 30, 2023December 31, 2022
Accruals and other current liabilities$3,662 $2,434 
Other liabilities625 2,977 
Non-contingent consideration from acquisitions$4,287 $5,411 
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 one acquisition completed during the six months ended June 30, 2023 and one acquisition completed during the year ended December 31, 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.
14



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, 2023 and 2022, the Company’s acquisition expenses were $113 and $677, respectively, and $5,298 and $11,251 for the six months ended June 30, 2023 and 2022, respectively, which include costs related to legal, accounting, valuation, insurance, general administrative, and other consulting and transaction 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 PLS.
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 EndedYear Ended
June 30, 2023December 31, 2022
Consideration:
Cash paid at closing$10,299 $763,228 
Contingent consideration— 1,390 
Deferred, non-contingent consideration, net525 749 
Other56 (269)
Total consideration$10,880 $765,098 
Assets acquired and liabilities assumed:
Cash$— $20,221 
Accounts receivable and other current assets1,483 8,890 
Operating lease right-of-use assets345 1,237 
Property and equipment— 1,316 
Other assets— 
Software and technology (weighted average useful life of 3 and 5 years, respectively)
1,300 10,608 
Customer relationships (weighted average useful life of 6 and 10 years, respectively)
3,900 82,278 
Trademarks (weighted average useful life of 5 and 8 years, respectively)
800 6,972 
Total identifiable assets acquired excluding goodwill7,828 131,529 
Accruals and other current liabilities— (4,079)
Deferred revenues(3,951)(14,176)
Operating lease liabilities(345)(1,237)
Deferred income taxes— (5,745)
Total liabilities assumed(4,296)(25,237)
Net identifiable assets acquired excluding goodwill3,532 106,292 
Goodwill7,348 658,806 
Net assets acquired$10,880 $765,098 
The fair values of the working capital, other assets (liabilities), and property and equipment approximated their respective carrying values as of the acquisition date.
Deferred revenues were determined in accordance with the Company’s revenue recognition policies.
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.
15



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 $7,289 of the goodwill recorded relating to the 2023 acquisition will be deductible for income tax purposes.
Note 5: Property and Equipment, Net
Property and equipment, net consist of the following:
June 30, 2023December 31, 2022
Land$2,811 $2,811 
Building and improvements35,941 35,717 
Computer equipment and software61,452 54,636 
Furniture, fixtures, and equipment14,918 14,600 
Aircraft2,038 2,038 
Other151 156 
Property and equipment, at cost117,311 109,958 
Less: Accumulated depreciation(81,791)(77,707)
Total property and equipment, net$35,520 $32,251 
Depreciation expense was $2,910 and $2,922 for the three months ended June 30, 2023 and 2022, respectively, and $5,634 and $5,412 for the six months ended June 30, 2023 and 2022, 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, net in the consolidated statements of operations for the six months ended June 30, 2022 (see Note 20). 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, 2023 and 2022. The Company determined this transaction was with a related party.
Note 6: Goodwill and Other Intangible Assets
The changes in the carrying amount of goodwill are as follows:
Balance, December 31, 2022$2,237,184 
Acquisitions7,348 
Foreign currency translation adjustments8,944 
Other adjustments(644)
Balance, June 30, 2023$2,252,832 
16


Details of intangible assets other than goodwill are as follows:
June 30, 2023December 31, 2022
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
$93,212 $(57,955)$35,257 $92,390 $(51,938)$40,452 
Customer relationships
3-10 years
325,196 (129,116)196,080 323,164 (114,387)208,777 
Trademarks
3-10 years
70,607 (30,414)40,193 69,803 (26,904)42,899 
Non-compete agreements
5 years
350 (241)109 350 (207)143 
Total intangible assets$489,365 $(217,726)$271,639 $485,707 $(193,436)$292,271 
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 EndedSix Months Ended
June 30,June 30,
2023202220232022
Cost of subscriptions and licenses$3,123 $3,154 $6,310 $6,176 
Amortization of purchased intangibles9,502 10,517 20,050 20,423 
Total amortization expense$12,625 $13,671 $26,360 $26,599 
Note 7: Investments
Investments consist of the following:
June 30, 2023December 31, 2022
Cost method investments$26,906 $22,174 
Equity method investments91 96 
Total investments$26,997 $22,270 
Cost Method Investments
Through its iTwin Ventures initiative, the Company invests in technology development companies, generally in the form of equity interests or convertible notes. In March 2023, the Company acquired an equity interest in Worldsensing, a leading global connectivity hardware platform company for infrastructure monitoring, via contribution of its sensemetrics’ Thread connectivity device business (the “Thread business”) and cash. The non‑cash contribution of the Thread business resulted in an insignificant gain, which was recorded in Other income, net in the consolidated statements of operations for the six months ended June 30, 2023 (see Note 20). In July 2022, the Company acquired an equity interest in Teralytics Holdings AG, a global platform company for human mobility analysis.
During the second quarter of 2023, the Company recognized impairment charges of $7,318 to write-down certain cost method investments to their fair value primarily as a result of the investees’ decline in operating performance and the overall decline in the venture investment valuation environment. The impairment charges were recorded in Other income, net in the consolidated statements of operations for the three and six months ended June 30, 2023 (see Note 20).
17


During the six months ended June 30, 2023, the Company invested a total of $11,700, including $8,928 of cash and non-cash for our investment in Worldsensing. During the six months ended June 30, 2022, the Company invested a total of $4,361. As of June 30, 2023, our investment balance in Worldsensing and Teralytics Holdings AG was $8,928 and $7,270, respectively. As of December 31, 2022, our investment balance in Teralytics Holdings AG was $11,130.
Note 8: Leases
The Company’s operating leases consist of office facilities, office equipment, and automobiles. As of June 30, 2023, the Company’s leases have remaining terms of less than one year to ten 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.
The components of operating lease cost reflected in the consolidated statements of operations were as follows:
Three Months EndedSix Months Ended
June 30,June 30,
2023202220232022
Operating lease cost (1)
$4,534 $5,195 $9,162 $10,948 
Variable lease cost1,146 968 2,348 2,241 
Short-term lease cost— — 10 
Total operating lease cost$5,680 $6,168 $11,510 $13,199 
(1)Operating lease cost includes rent cost related to operating leases for office facilities of $4,329 and $5,014 for the three months ended June 30, 2023 and 2022, respectively, and $8,746 and $10,567 for the six months ended June 30, 2023 and 2022, respectively.
Supplemental operating cash flow and other information related to leases was as follows:
Six Months Ended
June 30,
20232022
Cash paid for operating leases included in operating cash flows$9,319 $10,092 
Right-of-use assets obtained in exchange for new operating lease liabilities (1)
$11,212 $5,091 
(1)Right‑of‑use assets obtained in exchange for new operating lease liabilities does not include the impact from acquisitions of $345 and $1,237 for the six months ended June 30, 2023 and 2022, respectively.
The weighted average remaining lease term for operating leases was 4.7 years and 3.9 years as of June 30, 2023 and December 31, 2022, respectively. The weighted average discount rate was 4.3% and 3.4% as of June 30, 2023 and December 31, 2022, respectively.
As of June 30, 2023, the Company had additional minimum operating lease payments of $1,080 for executed leases that have not yet commenced, primarily for office locations.
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Note 9: Accruals and Other Current Liabilities
Accruals and other current liabilities consist of the following:
June 30, 2023December 31, 2022
Cloud Services Subscription (“CSS”) deposits$260,118 $201,082 
Accrued benefits40,830 35,493 
Accrued compensation28,446 40,296 
Due to customers14,686 13,720 
Accrued acquisition stay bonus5,919 9,135 
Employee stock purchase plan contributions5,488 5,230 
Accrued indirect taxes4,730 9,766 
Accrued professional fees3,896 4,984 
Non-contingent consideration from acquisitions3,662 2,434 
Accrued cloud provisioning costs2,375 4,224 
Deferred compensation plan liabilities2,238 2,067 
Contingent consideration from acquisitions1,196 
Other accrued and current liabilities26,492 32,421 
Total accruals and other current liabilities$398,883 $362,048 
Note 10: Long-Term Debt
Long‑term debt consists of the following:
June 30, 2023December 31, 2022
Credit facility:
Revolving loan facility due November 2025$201,245 $345,597 
Term loan due November 2025192,500 195,000 
Convertible senior notes due January 2026 (the “2026 Notes”)687,830 687,830 
Convertible senior notes due July 2027 (the “2027 Notes”)575,000 575,000 
Unamortized debt issuance costs(19,592)(22,731)
Total debt1,636,983 1,780,696 
Less: Current portion of long-term debt(7,500)(5,000)
Long-term debt$1,629,483 $1,775,696 
Credit Facility
The Company is party to a Credit Agreement dated December 19, 2017 (as amended from time to time), which provides for an $850,000 senior secured revolving loan facility that matures on November 15, 2025 (the “Credit Facility”). The Credit Facility also provides up to $50,000 of letters of credit and other borrowings subject to availability, including an $85,000 U.S. dollar swingline sub‑facility and a $200,000 incremental “accordion” sub‑facility. Debt issuance costs are amortized to interest expense through the maturity date.
Under the Credit Facility, the Company has a $200,000 senior secured term loan with a maturity of November 15, 2025 (the “Term Loan”). The 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.
19



The Company had $150 of letters of credit and surety bonds outstanding as of June 30, 2023 and December 31, 2022 under the Credit Facility. As of June 30, 2023 and December 31, 2022, the Company had $648,605 and $504,253, respectively, available under the Credit Facility.
Effective June 23, 2023, the Company amended the Credit Facility to replace the referenced interest rate based on LIBOR with the Secured Overnight Financing Rate (“SOFR”).
Revolving loan borrowings under the Credit Facility bear interest at variable rates that reset every one, three, or six months depending on the period selected by the Company. Under the Term SOFR elections, revolving loan borrowings bear an interest rate of the applicable term SOFR rate plus 10 basis points (“bps”), plus a spread ranging from 125 bps to 225 bps as determined by the Company’s net leverage ratio. Under the non‑Term SOFR elections, revolving loan borrowings bear a base interest rate of the highest of (i) the prime rate, (ii) the overnight bank funding effective rate plus 50 bps, or (iii) the applicable term SOFR rate plus 10 bps, plus a spread ranging from 25 bps to 125 bps as determined by the Company’s net leverage ratio.
Swingline borrowings under the Credit Facility bear interest that resets daily. Interest on U.S. dollar swingline borrowings bear an interest rate of the daily simple SOFR rate plus 3.5 bps, plus a spread ranging from 125 bps to 225 bps as determined by the Company’s net leverage ratio. The Company cannot make optional currency swingline borrowings without the consent of the applicable swingline lender.
Term loan borrowings under the Credit Facility bear interest at variable rates that reset every one, three, or six months depending on the period selected by the Company. Under the Term SOFR elections, term loan borrowings bear an interest rate of the applicable term SOFR rate plus 10 bps, plus a spread ranging from 100 bps to 200 bps as determined by the Company’s net leverage ratio. Under the non‑Term SOFR elections, term loan borrowings bear a base interest rate of the highest of (i) the prime rate, (ii) the overnight bank funding effective rate plus 50 bps, or (iii) the applicable term SOFR rate plus 10 bps, plus a spread ranging from 0 bps to 100 bps as determined by the Company’s net leverage ratio.
In addition, a commitment fee for the unused Credit Facility ranges from 20 bps to 30 bps as determined by the Company’s net leverage ratio.
Borrowings under the Credit Facility are guaranteed by all of the Company’s material 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 agreement governing the Credit Facility contains customary positive and negative covenants, including restrictions on our ability to pay dividends and make other restricted payments, as well as events of default, including, without limitation, payment defaults, breaches of representations and warranties, covenants defaults, cross-defaults to certain other indebtedness in excess of $50,000, certain events of bankruptcy and insolvency, judgment defaults in excess of $10,000, failure of any security document supporting the Credit Facility to be in full force and effect, and a change of control. The Credit Facility also contains customary financial covenants, including maximum net leverage ratio. As of June 30, 2023 and December 31, 2022, the Company was in compliance with all covenants in its Credit Facility.
Voluntary prepayments of amounts outstanding under the Credit Facility, in whole or in part, are permitted at any time, so long as the Company gives notice as required by the Credit Facility. However, if prepayment is made with respect to a SOFR‑based loan and the prepayment is made on a date other than an interest payment date, the Company is subject to customary breakage costs.
Convertible Senior Notes
As of June 30, 2023 and December 31, 2022, the Company was in compliance with all covenants in the 2026 Notes and 2027 Notes, and none of the conditions of the 2026 Notes or 2027 Notes to early convert had been met.
20



Derivative Arrangements
The Company records derivative instruments as an asset or liability measured at fair value and depending on the nature of the hedge, the corresponding changes in the fair value of these instruments are recorded in the consolidated statements of operations or comprehensive income. If the derivative is determined to be a hedge, changes in the fair value of the derivative are offset against the change in the fair value of the hedged assets or liabilities through the consolidated statements of operations or recognized in Other comprehensive income (loss), net of taxes until the hedged item is recognized in the consolidated statements of operations. The ineffective portion of a derivative’s change in fair value is recognized in earnings. Also, changes in the entire fair value of a derivative that is not designated as a hedge are recognized in earnings.
Effective on April 2, 2020, the Company entered into an interest rate swap with a notional amount of $200,000 and a ten‑year term to reduce the interest rate risk associated with the Credit Facility. Effective on June 26, 2023, the Company amended the interest rate swap agreement to replace the LIBOR rate to SOFR under the ISDA Fallback Protocols included within the agreement. Subsequent to the amendment, the Company will continue to pay a fixed interest rate of 72.9 bps, and will receive a floating interest rate equal to daily SOFR plus an ARRC spread adjustment of 11.448 bps. The interest rate swap is not designated as a hedging instrument for accounting purposes. The Company accounts for the interest rate swap as either an asset or a liability on the consolidated balance sheets and carries the derivative at fair value (see Note 17). Gain (loss) from the change in fair value and payments related to the interest rate swap are recognized in Other income (expense), net in the consolidated statements of operations (see Note 20). The bank counterparty to the derivative potentially exposes the Company to credit-related losses in the event of nonperformance. To mitigate that risk, the Company only contracts with counterparties who meet the Company’s minimum requirements under its counterparty risk assessment process. The Company monitors counterparty risk on at least a quarterly basis and adjusts its exposure as necessary. The Company does not enter into derivative instrument transactions for trading or speculative purposes.
Interest Expense, Net
Interest expense, net consists of the following:
Three Months EndedSix Months Ended
June 30,June 30,
2023202220232022
Contractual interest expense$(9,364)$(5,700)$(18,674)$(9,747)
Amortization of deferred debt issuance costs(1,823)(1,868)(3,646)(3,646)
Other interest income (expense)1,193 (153)1,005 (1,158)
Interest income510 82 739 164 
Interest expense, net$(9,484)$(7,639)$(20,576)$(14,387)
The weighted average interest rate on borrowings under the Credit Facility were 7.14% and 2.89% for the three months ended June 30, 2023 and 2022, respectively, and 6.89% and 2.62% for the six months ended June 30, 2023 and 2022, respectively.
Note 11: Executive Bonus Plan
For the three months ended June 30, 2023 and 2022, 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 the amended and restated Bentley Systems, Incorporated Bonus Pool Plan (the “Bonus Plan”) (net of all applicable holdbacks) was $4,297 and $6,811, respectively, and $12,245 and $16,530 for the six months ended June 30, 2023 and 2022, respectively.
21



Note 12: Retirement Plans
Deferred Compensation Plan
Deferred compensation plan expense (income) was $3,777 and $(12,159) for the three months ended June 30, 2023 and 2022, respectively, and $7,923 and $(17,297) for the six months ended June 30, 2023 and 2022, respectively.
For the three months ended June 30, 2023 and 2022, elective participant deferrals into the Company’s unfunded amended and restated Bentley Systems, Incorporated Nonqualified Deferred Compensation Plan (the “DCP”) were $118 and $2,439, respectively, and $1,651 and $3,108 for the six months ended June 30, 2023 and 2022, respectively. No discretionary contributions were made to the DCP during the three and six months ended June 30, 2023 and 2022. As of June 30, 2023 and December 31, 2022, phantom shares of the Company’s Class B Common Stock issuable by the DCP were 17,995,119 and 21,587,831, respectively.
The total liabilities related to the DCP is included in the consolidated balance sheets as follows:
June 30, 2023December 31, 2022
Accruals and other current liabilities$2,238 $2,067 
Deferred compensation plan liabilities82,641 77,014 
Total DCP liabilities$84,879 $79,081 
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. On December 14, 2022, the Company’s Board of Directors amended the Repurchase Program to allow the Company also to repurchase its outstanding convertible senior notes. This additional authorization did not increase the overall dollar limit of the Repurchase Program. The shares and notes 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 and/or notes 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 and outstanding notes, 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 and/or notes 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. The Company did not repurchase shares under the Repurchase Program for the six months ended June 30, 2023. For the six months ended June 30, 2022, the Company repurchased 463,001 shares for $13,242 under the Repurchase Program. As of June 30, 2023, $169,752 was available under the Company’s Board of Directors authorization for future repurchases of Class B Common Stock and/or outstanding convertible senior notes under the Repurchase Program.
22



Common Stock Issuances, Sales, and Repurchases
For the six months ended June 30, 2023, the Company issued 2,236,827 shares of Class B Common Stock to colleagues who exercised their stock options, net of 221,078 shares withheld at exercise to pay for the cost of the stock options, as well as for $5,989 of applicable income tax withholdings. The Company received $9,700 in proceeds from the exercise of stock options. 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, 2022, the Company issued 185,178 shares of Class B Common Stock related to the exercise of acquisition options, 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, 2023 and 2022, the Company issued 137,197 and 159,797 shares of Class B Common Stock, respectively, in connection with Bonus Plan incentive compensation, net of shares withheld. Of the total 245,571 shares awarded for the six months ended June 30, 2023, 108,374 shares were sold back to the Company in the same period to pay for applicable income tax withholdings of $4,326. 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.
For the six months ended June 30, 2023 and 2022, the Company issued 2,782,181 and 3,425,795 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, 2023 totaled 3,677,405 shares of which 895,224 shares were sold back to the Company in the same period to pay for applicable income tax withholdings of $36,329. 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.
Dividends
The Company declared cash dividends during the periods presented as follows:
Dividend
Per ShareAmount
2023:
Second quarter$0.05 $14,702 
First quarter0.05 14,522 
2022:
Second quarter$0.03 $8,678 
First quarter0.03 8,353 
Dividends Declared Subsequent to June 30, 2023
In July 2023, the Company’s Board of Directors approved cash dividends of $0.05 per share payable on August 24, 2023 to all stockholders of record of Class A and Class B Common Stock as of the close of business on August 15, 2023.
23



Global Employee Stock Purchase Plan
During the six months ended June 30, 2023, colleagues who elected to participate in the Bentley Systems, Incorporated Global Employee Stock Purchase Plan (the “ESPP”) purchased a total of 153,381 shares of Class B Common Stock, net of shares withheld, resulting in cash proceeds to the Company of $4,557. Of the total 159,377 shares purchased, 5,996 shares were sold back to the Company to pay for applicable income tax withholdings of $222. 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. As of June 30, 2023 and December 31, 2022, $5,488 and $5,230 of ESPP withholdings via colleague payroll deduction were recorded in Accruals and other current liabilities in the consolidated balance sheets, respectively. As of June 30, 2023, shares of Class B Common Stock available for future issuance under the ESPP were 24,434,497.
Note 14: Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss consists of the following during the three months ended June 30, 2023 and 2022:
ForeignActuarial (Loss)
CurrencyGain on
TranslationRetirement PlanTotal
Balance, March 31, 2023$(89,068)$(306)$(89,374)
Other comprehensive income, before taxes
1,538 1,547 
Tax expense (1)(1)
Other comprehensive income, net of taxes
1,538 1,546 
Balance, June 30, 2023$(87,530)$(298)$(87,828)
ForeignActuarial (Loss)
CurrencyGain on
TranslationRetirement PlanTotal
Balance, March 31, 2022$(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)
24



Accumulated other comprehensive loss consists of the following during the six months ended June 30, 2023 and 2022:
ForeignActuarial (Loss)
CurrencyGain on
TranslationRetirement PlanTotal
Balance, December 31, 2022$(89,408)$(332)$(89,740)
Other comprehensive income, before taxes
1,878 41 1,919 
Tax expense (7)(7)
Other comprehensive income, net of taxes
1,878 34 1,912 
Balance, June 30, 2023$(87,530)$(298)$(87,828)
ForeignActuarial (Loss)
CurrencyGain on
TranslationRetirement PlanTotal
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)
Note 15: Stock-Based Compensation
Total stock‑based compensation expense consists of the following:
Three Months EndedSix Months Ended
June 30,June 30,
2023202220232022
Restricted stock and restricted stock units (“RSUs”) expense
$13,530 $9,197 $27,453 $14,562 
Bonus Plan expense (see Note 11)3,336 5,978 7,882 14,139 
ESPP expense (see Note 13)600 1,149 1,175 1,829 
Stock option expense— 611 343 1,367 
Stock grants expense600 450 600 450 
DCP elective participant deferrals expense (1) (see Note 12)
38 84 135 221 
Total stock-based compensation expense (2)
$18,104 $17,469 $37,588 $32,568 
(1)DCP elective participant deferrals expense excludes deferred incentive bonus payable pursuant to the Bonus Plan.
(2)As of June 30, 2023 and December 31, 2022, $4,338 and $7,300 remained in Accruals and other current liabilities in the consolidated balance sheets, respectively.
25



Total stock‑based compensation expense is included in the consolidated statements of operations as follows:
Three Months EndedSix Months Ended
June 30,June 30,
2023202220232022
Cost of subscriptions and licenses$1,132 $785 $2,166 $1,170 
Cost of services707 564 1,714 947 
Research and development4,424 5,544 9,710 10,939 
Selling and marketing2,943 2,189 5,813 3,643 
General and administrative8,898 8,387 18,185 15,869 
Total stock-based compensation expense$18,104 $17,469 $37,588 $32,568 
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
WeightedAverage
AverageRemainingAggregate
StockExercise PriceContractualIntrinsic
OptionsPer ShareLife (in years)Value
Outstanding, December 31, 20223,794,515 $5.57 
Exercised(2,457,905)5.48 
Forfeited and expired(7,500)5.60 
Outstanding, June 30, 20231,329,110 $5.74 0.7$64,449 
Exercisable, June 30, 20231,329,110 $5.74 0.7$64,449 
For the six months ended June 30, 2023 and 2022, the Company received cash proceeds of $9,700 and $5,861, respectively, related to the exercise of stock options. The total intrinsic value of stock options exercised for the six months ended June 30, 2023 and 2022 was $93,656 and $82,288, respectively.
As of June 30, 2023, there was no remaining unrecognized compensation expense related to unvested stock options.
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, including growth in annualized recurring revenues (“ARR”), and actual bookings for perpetual licenses and non‑recurring services, among others. Performance targets are generally set for performance periods of one to three years.
26



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-
BasedBased
Time-WeightedWeighted
TotalBasedAverageAverage
RestrictedRestrictedPerformance-Grant DateGrant Date
StockStockBasedFair ValueFair Value
and RSUsand RSUsRSUsPer SharePer Share
Unvested, December 31, 20223,068,851 2,706,078 
(3)
362,773 
(4)
$36.67 $38.21 
Granted1,195,377 
(1)
998,913 196,464 
(5)
41.1539.03
Vested(518,106)(360,946)(157,160)44.70 38.20 
Forfeited and canceled(121,669)(87,875)(33,794)30.82 32.83 
Unvested, June 30, 20233,624,453 
(2)
3,256,170 368,283 37.32 39.14 
(1)For the six months ended June 30, 2023, the Company only granted RSUs.
(2)Includes 64,939 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)Primarily relates to the 2022 annual performance period, except for 185,186 performance‑based RSUs granted during the year ended December 31, 2022 with extraordinary terms, which are described below.
(5)Primarily relates to the 2023 annual performance period, except for 13,367 additional shares earned based on the achievement of 2022 performance goals for performance‑based RSUs granted during the year ended December 31, 2022.
During the year ended December 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 applicable margin metrics (which, for 2022, was Adjusted EBITDA margin and for 2023 and 2024, will be Adjusted operating income inclusive of stock-based compensation expense (“Adjusted OI w/SBC”) margin, excluding the impact of currency exchange fluctuations) also equals or exceeds the relevant target level for such year. Provided that the applicable margin targets are met, the total number of performance‑based RSUs that will vest is determined by the achievement of growth targets, which include growth in ARR, as well as actual bookings for perpetual licenses and non‑recurring services. Final actual vesting will be determined on January 31, 2025. The 2022 Adjusted EBITDA margin target for the performance‑based RSUs was met.
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, 2023 and 2022, 1,562 and 10,888 shares, respectively, were delivered to colleagues, and 20 and 16 additional shares, respectively, were earned as a result of dividends. As of June 30, 2023 and December 31, 2022, 7,821 and 9,363 shares, respectively, of these vested and deferred RSUs remained outstanding.
The weighted average grant date fair values of RSUs granted were $40.80 and $39.02, for the six months ended June 30, 2023 and 2022, respectively.
For the six months ended June 30, 2023 and 2022, restricted stock and RSUs were issued net of 104,773 and 52,026 shares, respectively, which were sold back to the Company to settle applicable income tax withholdings of $4,336 and $2,148, respectively.
27



As of June 30, 2023, there was $95,227 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 1.8 years. As of June 30, 2023, there was $8,437 of unrecognized compensation expense related to unvested performance‑based RSUs, which is expected to be recognized over a weighted average period of approximately 1.0 years.
Stock Grants
For the six months ended June 30, 2023 and 2022, the Company granted 12,639 and 13,632 fully vested shares of Class B Common Stock, respectively, with a fair value of $600 and $450, respectively.
Note 16: Income Taxes
The following is a summary of Income before income taxes, (Benefit) provision for income taxes, and effective tax rate for the periods presented:
Three Months EndedSix Months Ended
June 30,June 30,
2023202220232022
Income before income taxes
$44,786 $51,592 $99,768 $111,783 
(Benefit) provision for income taxes
$(3,899)$(4,674)$5,593 $(1,443)
Effective tax rate(8.7)%(9.1)%5.6 %(1.3)%
For the three months ended June 30, 2023, the effective tax rate was higher compared to the prior year period primarily due to the increase in the forecasted effective tax rate impact of the U.S. Global Intangible Low-Taxed Income (“GILTI”) inclusion due to the mandatory capitalization of research and development expenses for U.S. tax purposes, partially offset by an increase in discrete tax benefits recognized in the current year period. For the three months ended June 30, 2023 and 2022, the Company recorded discrete tax benefits of $20,394 and $19,024, respectively, primarily associated with windfall tax benefits from stock‑based compensation, net of the impact from officer compensation limitation provisions.
For the six months ended June 30, 2023, the effective tax rate was higher compared to the prior year period primarily due to the decrease in discrete tax benefits recognized in the current year period and the increase in the forecasted effective tax rate impact of the GILTI inclusion due to the mandatory capitalization of research and development expenses for U.S. tax purposes. For the six months ended June 30, 2023 and 2022, the Company recorded discrete tax benefits of $27,467 and $31,752, respectively, primarily associated with windfall tax benefits from stock‑based compensation, net of the impact from officer compensation limitation provisions.
Note 17: Fair Value of Financial Instruments
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.
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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.
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.
The following methods and assumptions were used by the Company in estimating its fair value measurements for Level 2 and Level 3 financial instruments as of June 30, 2023 and December 31, 2022:
Acquisition contingent consideration — The fair value of these liabilities is generally determined using a cost or income approach and is measured 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 asset or liability is determined using an income approach and is measured based on the implied forward rates for the remaining term of the interest rate swap. The Company considers these valuation inputs to be Level 2 inputs in 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, 2023, the estimated fair value of the 2026 Notes and 2027 Notes was $700,438 and $516,873, respectively. As of December 31, 2022, the estimated fair value of the 2026 Notes and 2027 Notes was $622,431 and $470,856, 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.
Financial assets and financial liabilities carried at fair value measured on a recurring basis consist of the following:
June 30, 2023Level 1Level 2Level 3Total
Assets:
Money market funds (1)
$6,026 $— $— $6,026 
Interest rate swap (2)
— 36,537 — 36,537 
Total assets$6,026 $36,537 $— $42,563 
Liabilities:
Acquisition contingent consideration (3)
$— $— $$
Deferred compensation plan liabilities (4)
84,879 — — 84,879 
Cash-settled equity awards (3)
968 — — 968 
Total liabilities$85,847 $— $$85,850 
29



December 31, 2022Level 1Level 2Level 3Total
Assets:
Money market funds (1)
$19 $— $— $19 
Interest rate swap (2)
— 37,200 — 37,200 
Total assets$19 $37,200 $— $37,219 
Liabilities:
Acquisition contingent consideration (3)
$— $— $1,196 $1,196 
Deferred compensation plan liabilities (4)
79,081 — — 79,081 
Cash-settled equity awards (3)
536 — — 536 
Total liabilities$79,617 $— $1,196 $80,813 
(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 Accruals and other current liabilities in the consolidated balance sheets.
(4)Included in Deferred compensation plan liabilities, except for current liabilities of $2,238 and $2,067 as of June 30, 2023 and December 31, 2022, respectively, which are 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 EndedYear Ended
June 30, 2023December 31, 2022
Balance, beginning of year$1,196 $6,613 
Payments(1,206)(5,261)
Addition— 1,390 
Change in fair value— (1,427)
Foreign currency translation adjustments13 (119)
Balance, end of period$$1,196 
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. During June 2023, the Company entered into a $122,000 non‑cancelable future cash purchase commitment for services related to cloud provisioning of the Company’s software solutions through May 2026. As of June 30, 2023, the non‑cancelable future cash purchase commitment was $118,915. The Company expects to fully consume its contractual commitment in the ordinary course of operations.
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.
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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, 2023December 31, 2022
Americas (1)
$158,643 $164,729 
EMEA37,218 32,372 
APAC154,546 167,670 
Total long-lived assets$350,407 $364,771 
(1)Americas includes the U.S., Canada, and Latin America (including the Caribbean).
Note 20: Other Income, Net
Other income, net consists of the following:
Three Months EndedSix Months Ended
June 30,June 30,
2023202220232022
Gain (loss) from:
Change in fair value of interest rate swap (see Note 17)$3,826 $7,406 $(663)$19,490 
Foreign exchange (1)
2,104 (4,717)3,558 (7,788)
Sale of aircraft (see Note 5)— — — 2,029 
Change in fair value of acquisition contingent consideration (see Note 17)— — — (500)
Receipts (payments) related to interest rate swap
2,164 17 4,084 (277)
Other (expense) income, net (2)
(7,129)808 (5,725)907 
Total other income, net
$965 $3,514 $1,254 $13,861 
(1)Foreign exchange gain (loss) is primarily attributable to foreign currency translation derived mainly from U.S. dollar denominated cash and cash equivalents, account receivables, customer deposits, and intercompany balances held by foreign subsidiaries. Intercompany finance transactions primarily denominated in U.S. dollars resulted in unrealized foreign exchange gains (losses) of $1,397 and $(5,799) for the three months ended June 30, 2023 and 2022, respectively, and $2,258 and $(6,563) for the six months ended June 30, 2023 and 2022, respectively.
(2)Other (expense) income, net includes investment impairment charges of $(7,318) for the three and six months ended June 30, 2023 (see Note 7).
Note 21: 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, 2023 and 2022, there were 368,283 and 356,946 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.
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For the Company’s diluted net income per share numerator, interest expense, net of tax, attributable to the assumed 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 for the effect of dilutive securities, including awards under the Company’s equity compensation plans and ESPP, and for 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 EndedSix Months Ended
June 30,June 30,
2023202220232022
Numerator:
Net income
$48,685 $55,673 $94,175 $112,061 
Less: Net income attributable to participating securities
(19)(11)(38)(20)
Net income attributable to Class A and Class B common stockholders, basic
48,666 55,662 94,137 112,041 
Add: Interest expense, net of tax, attributable to assumed conversion of convertible senior notes1,723 1,705 3,440 3,400 
Net income attributable to Class A and Class B common stockholders, diluted
$50,389 $57,367 $97,577 $115,441 
Denominator:
Weighted average shares, basic311,914,602 308,244,778 311,366,371 308,512,924 
Dilutive effect of stock options, restricted stock, and RSUs2,643,664 6,167,330 2,744,259 5,854,791 
Dilutive effect of ESPP160,673 195,485 87,557 173,097 
Dilutive effect of assumed conversion of convertible senior notes17,633,786 17,667,623 17,633,786 17,667,623 
Weighted average shares, diluted332,352,725 332,275,216 331,831,973 332,208,435 
Net income per share, basic
$0.16 $0.18 $0.30 $0.36 
Net income per share, diluted
$0.15 $0.17 $0.29 $0.35 
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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 EndedSix Months Ended
June 30,June 30,
2023202220232022
RSUs— 223,731 — 223,731 
Total anti-dilutive securities— 223,731 — 223,731 
33


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our unaudited consolidated financial statements and notes thereto appearing in Part I, Item 1 of this Quarterly Report on Form 10‑Q and with our audited consolidated financial statements and notes thereto included in our 2022 Annual Report on Form 10‑K.
All amounts presented in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, except share and per share amounts, are presented in thousands. Additionally, many of the amounts and percentages have been rounded for convenience of presentation. Minor differences in totals and percentage calculations may exist due to rounding.
Overview
We are a leading global provider of software for infrastructure engineering, and enable infrastructure professionals and their organizations, by “going digital” through our software and cloud services offerings, to better design, build, and operate better infrastructure. Our users engineer, construct, and operate projects and assets across the following infrastructure sectors: public works/utilities, resources, industrial, and commercial/facilities.
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. We deliver our solutions via on‑premises, cloud, and hybrid environments. Our software enables digital workflows across engineering disciplines, across distributed project teams, and from offices to the field.
We believe that our offerings, in particular our infrastructure digital twin solutions, empower the achievement of sustainable development goals by helping our users – infrastructure professionals – realize outcomes that are more sustainable and resilient.
34


Results of Operations
Three Months EndedSix Months Ended
June 30,June 30,
2023202220232022
Revenues:
Subscriptions$259,243 $232,191 $537,088 $473,424 
Perpetual licenses11,718 11,548 21,265 21,753 
Subscriptions and licenses270,961 243,739 558,353 495,177 
Services25,788 24,546 52,807 48,625 
Total revenues296,749 268,285 611,160 543,802 
Cost of revenues:
Cost of subscriptions and licenses41,156 36,806 82,087 70,533 
Cost of services25,270 22,888 51,523 44,946 
Total cost of revenues66,426 59,694 133,610 115,479 
Gross profit230,323 208,591 477,550 428,323 
Operating expense (income):
Research and development70,117 64,866 137,917 126,139 
Selling and marketing54,364 49,617 106,505 95,562 
General and administrative39,258 40,033 86,065 91,187 
Deferred compensation plan3,777 (12,159)7,923 (17,297)
Amortization of purchased intangibles9,502 10,517 20,050 20,423 
Total operating expenses177,018 152,874 358,460 316,014 
Income from operations
53,305 55,717 119,090 112,309 
Interest expense, net(9,484)(7,639)(20,576)(14,387)
Other income, net
965 3,514 1,254 13,861 
Income before income taxes
44,786 51,592 99,768 111,783 
Benefit (provision) for income taxes
3,899 4,674 (5,593)1,443 
Loss from investments accounted for using the equity method, net of tax
— (593)— (1,165)
Net income
$48,685 $55,673 $94,175 $112,061 
Per share information:
Net income per share, basic
$0.16 $0.18 $0.30 $0.36 
Net income per share, diluted
$0.15 $0.17 $0.29 $0.35 
Weighted average shares, basic311,914,602 308,244,778 311,366,371 308,512,924 
Weighted average shares, diluted332,352,725 332,275,216 331,831,973 332,208,435 
35


Comparison of the Three and Six Months Ended June 30, 2023 and 2022
Revenues
Comparison
Three Months EndedConstant
June 30,Currency
20232022Amount%
   %(1)
Subscriptions$259,243 $232,191 $27,052 11.7 %10.9 %
Perpetual licenses11,718 11,548 170 1.5 %1.4 %
Subscriptions and licenses270,961 243,739 27,222 11.2 %10.5 %
Services25,788 24,546 1,242 5.1 %6.1 %
Total revenues$296,749 $268,285 $28,464 10.6 %10.1 %
Comparison
Six Months EndedConstant
June 30,Currency
20232022Amount%
   %(1)
Subscriptions$537,088 $473,424 $63,664 13.4 %14.5 %
Perpetual licenses21,265 21,753 (488)(2.2 %)(0.7 %)
Subscriptions and licenses558,353 495,177 63,176 12.8 %13.8 %
Services52,807 48,625 4,182 8.6 %11.6 %
Total revenues$611,160 $543,802 $67,358 12.4 %13.6 %
(1)Constant currency is a non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures” section for additional information, including our definition and our use of constant currency.
The increase in total revenues for the three months ended June 30, 2023 was primarily driven by increases in subscriptions revenues, and to a lesser extent, services and perpetual licenses revenues. The increase in total revenues for the six months ended June 30, 2023 was primarily driven by increases in subscriptions revenues, and to a lesser extent, services revenues. Partially offsetting these increases were decreases in perpetual licenses revenues for the six months ended June 30, 2023.
Subscriptions. For the three months ended June 30, 2023, the increase in subscriptions revenues was driven by improvements in our business performance of approximately $27,052 ($25,364 on a constant currency basis). Our business performance excludes the impact of our platform acquisitions and includes the impact from programmatic acquisitions, which generally are immaterial, individually and in the aggregate.
For the six months ended June 30, 2023, the increase in subscriptions revenues was primarily driven by improvements in our business performance of approximately $59,363 ($64,351 on a constant currency basis) and the impact from our platform acquisition of approximately $4,301 ($4,330 on a constant currency basis). The platform acquisition impact relates to our acquisition of PLS and is inclusive of PLS’ organic performance.
For the three and six months ended June 30, 2023, the improvements in business performance were primarily driven by expansion from accounts with revenues in the prior period (“existing accounts”), and growth of 3% attributable to new accounts, most notably smaller- and medium-sized accounts. Improvements in business performance for the three and six months ended June 30, 2023 were led by our civil and structural engineering applications, geoprofessional applications, and our Enterprise Systems for project delivery.
36


Perpetual licenses. For the three months ended June 30, 2023, the increase in perpetual licenses revenues was driven by improvements in business performance of approximately $170 ($163 on a constant currency basis). For the six months ended June 30, 2023, the decrease in perpetual licenses revenues was driven by a decline in business performance of approximately $488 ($158 on a constant currency basis).
Services. For the three and six months ended June 30, 2023, the increase in services revenues was driven by improvements in our business performance of approximately $1,242 ($1,486 on a constant currency basis) and $4,182 ($5,659 on a constant currency basis), respectively.
For the three and six months ended June 30, 2023, the improvements in business performance were primarily driven by contributions from Cohesive digital integrator services of approximately $1,597 ($1,829 on a constant currency basis) and $5,179 ($6,445 on a constant currency basis), respectively.
Revenues by Geographic Region
Revenue from external customers is attributed to individual countries based upon the location of the customer. Revenues by geographic region are as follows:
Comparison
Three Months EndedConstant
June 30,Currency
20232022Amount%
   %(1)
Americas$158,836 $144,359 $14,477 10.0 %9.9 %
EMEA83,444 74,800 8,644 11.6 %9.7 %
APAC54,469 49,126 5,343 10.9 %11.2 %
Total revenues$296,749 $268,285 $28,464 10.6 %10.1 %
Comparison
Six Months EndedConstant
June 30,Currency
20232022Amount%
   %(1)
Americas$327,181 $298,619 $28,562 9.6 %9.7 %
EMEA176,276 152,280 23,996 15.8 %18.1 %
APAC107,703 92,903 14,800 15.9 %19.0 %
Total revenues$611,160 $543,802 $67,358 12.4 %13.6 %
(1)Constant currency is a non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures” section for additional information, including our definition and our use of constant currency.
Americas. For the three months ended June 30, 2023, the increase in revenues from the Americas was driven by improvements in our business performance of approximately $14,477 ($14,224 on a constant currency basis).
For the six months ended June 30, 2023, the increase in revenues from the Americas was primarily driven by improvements in our business performance of approximately $24,872 ($25,174 on a constant currency basis) and the impact from our platform acquisition of approximately $3,690 ($3,697 on a constant currency basis).
The improvements in business performance for the three and six months ended June 30, 2023 were primarily due to expansion of our subscriptions revenues from existing accounts in the U.S.
EMEA. For the three and six months ended June 30, 2023, the increase in revenues from EMEA was primarily driven by improvements in our business performance of approximately $8,644 ($7,270 on a constant currency basis) and $23,547 ($27,164 on a constant currency basis), respectively.
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The improvements in business performance for the three months ended June 30, 2023 were primarily due to expansion of our subscriptions revenues from existing accounts in Central Europe and the Middle East. Partially offsetting these increases were reductions in Russia due to exiting our operations beginning in the second quarter of 2022.
The improvements in business performance for the six months ended June 30, 2023 were primarily due to expansion of our subscriptions revenues from existing accounts in the U.K., the Middle East, and Africa, partially offset by reductions in Russia due to exiting our operations beginning in the second quarter of 2022.
APAC. For the three and six months ended June 30, 2023, the increase in revenues from APAC was primarily driven by improvements in our business performance of approximately $5,343 ($5,519 on a constant currency basis) and $14,638 ($17,514 on a constant currency basis), respectively.
The improvements in business performance for the three months ended June 30, 2023 were primarily due to expansion of our subscriptions revenues from existing accounts in India and Australia, partially offset by declines in China.
The improvements in business performance for the six months ended June 30, 2023 were primarily due to expansion of our subscriptions revenues from existing accounts in India, Australia, and Southeast Asia.
Revenues in China for the three and six months ended June 30, 2023 decreased as compared to the same periods in the prior year. The future results in China remain uncertain as a result of continued geopolitical challenges, the obstacles there to cloud‑deployed software, and the financial timing impact of the preference there for license sales, rather than subscriptions, of locally-developed solutions based on our platforms.
Cost of Revenues
Comparison
Three Months EndedConstant
June 30,Currency
20232022Amount%
   %(1)
Cost of subscriptions and licenses$41,156 $36,806 $4,350 11.8 %12.3 %
Cost of services25,270 22,888 2,382 10.4 %12.3 %
Total cost of revenues$66,426 $59,694 $6,732 11.3 %12.3 %
Comparison
Six Months EndedConstant
June 30,Currency
20232022Amount%
   %(1)
Cost of subscriptions and licenses$82,087 $70,533 $11,554 16.4 %18.2 %
Cost of services51,523 44,946 6,577 14.6 %18.9 %
Total cost of revenues$133,610 $115,479 $18,131 15.7 %18.5 %
(1)Constant currency is a non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures” section for additional information, including our definition and our use of constant currency.
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Cost of subscriptions and licenses. For the three and six months ended June 30, 2023, on a constant currency basis, cost of subscriptions and licenses increased primarily due to an increase in headcount‑related costs of approximately $3,737 and $8,232, respectively, mainly due to increases in headcount and annual compensation costs. Cost of subscriptions and licenses also increased due to an increase in cloud‑related costs of approximately $596 and $2,740 for the three and six months ended June 30, 2023, respectively.
Cost of services. For the three months ended June 30, 2023, on a constant currency basis, cost of services increased primarily due to an increase in headcount-related costs of approximately $2,870, mainly due to third-party personnel costs.
For the six months ended June 30, 2023, on a constant currency basis, cost of services increased primarily due to an increase in headcount-related costs of approximately $8,306, mainly due to third-party personnel costs, and to a lesser extent, increases in headcount.
Operating Expense (Income)
Comparison
Three Months EndedConstant
June 30,Currency
20232022Amount%
   %(1)
Research and development$70,117 $64,866 $5,251 8.1 %10.0 %
Selling and marketing54,364 49,617 4,747 9.6 %10.7 %
General and administrative39,258 40,033 (775)(1.9 %)(1.5 %)
Deferred compensation plan3,777 (12,159)15,936 NMNM
Amortization of purchased intangibles9,502 10,517 (1,015)(9.7 %)(9.4 %)
Total operating expenses$177,018 $152,874 $24,144 15.8 %17.1 %
Comparison
Six Months EndedConstant
June 30,Currency
20232022Amount%
   %(1)
Research and development$137,917 $126,139 $11,778 9.3 %12.4 %
Selling and marketing106,505 95,562 10,943 11.5 %13.9 %
General and administrative86,065 91,187 (5,122)(5.6 %)(4.4 %)
Deferred compensation plan7,923 (17,297)25,220 NMNM
Amortization of purchased intangibles20,050 20,423 (373)(1.8 %)(0.7 %)
Total operating expenses$358,460 $316,014 $42,446 13.4 %15.8 %
Percentage changes that are considered not meaningful are denoted with NM.
(1)Constant currency is a non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures” section for additional information, including our definition and our use of constant currency.
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Research and development. For the three and six months ended June 30, 2023, on a constant currency basis, research and development expenses increased primarily due to an increase in headcount-related costs of approximately $6,666 and $15,294, respectively, mainly due to increases in headcount and annual compensation costs.
Selling and marketing. For the three months ended June 30, 2023, on a constant currency basis, selling and marketing expenses increased primarily due to an increase in headcount-related costs of approximately $5,481, mainly due to increases in headcount and annual compensation costs, and to a lesser extent, an increase in variable compensation costs. The three months ended June 30, 2022 included $1,123 of asset impairments and $826 of termination benefits as a result of our decision to wind down business and exit the Russian market beginning in the second quarter of 2022.
For the six months ended June 30, 2023, on a constant currency basis, selling and marketing expenses increased primarily due to an increase in headcount-related costs of approximately $12,622, mainly due to increases in headcount, and to a lesser extent, an increase in stock‑based compensation expense, variable compensation costs, and travel-related costs. The six months ended June 30, 2022 included $1,123 of asset impairments and $826 of termination benefits as a result of our decision to wind down business and exit the Russian market beginning in the second quarter of 2022.
General and administrative. For the three months ended June 30, 2023, on a constant currency basis, general and administrative expenses decreased primarily due to lower non‑income related taxes of approximately $3,429. The three months ended June 30, 2022 included $1,085 of asset impairments as a result of our decision to wind down business and exit the Russian market beginning in the second quarter of 2022. Partially offsetting these decreases were increases in headcount and annual compensation costs of approximately $4,218.
For the six months ended June 30, 2023, on a constant currency basis, general and administrative expenses decreased primarily due to lower acquisition expenses of approximately $5,851 (acquisition expenses were $5,298 for the six months ended June 30, 2023 compared to $11,251 for the six months ended June 30, 2022), lower non‑income related taxes of approximately $5,066, and a decrease in facility-related costs of approximately $1,631. Costs resulting from our decision to wind down business and exit the Russian market beginning in the second quarter of 2022 were approximately $3,050 lower in the current year period. Partially offsetting these decreases were increases in headcount-related costs of approximately $11,677, mainly due to increases in headcount and annual compensation costs, and to a lesser extent, an increase in stock‑based compensation expense.
Deferred compensation plan. For the three months ended June 30, 2023, deferred compensation plan expense was $3,777 as compared to deferred compensation plan income of $12,159 for the three months ended June 30, 2022. For the six months ended June 30, 2023, deferred compensation plan expense was $7,923 as compared to deferred compensation plan income of $17,297 for the six months ended June 30, 2022. These amounts were attributable to the marked to market impact on deferred compensation plan liability balances period over period.
Amortization of purchased intangibles. For the three and six months ended June 30, 2023, on a constant currency basis, amortization of purchased intangibles decreased primarily due to previously acquired intangible assets that continue to become fully amortized and lower acquisition activity as compared to the prior year.
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Interest Expense, Net
Three Months EndedComparison
June 30,
20232022Amount%
Interest expense$(9,994)$(7,721)$(2,273)29.4 %
Interest income510 82 428 NM
Interest expense, net$(9,484)$(7,639)$(1,845)24.2 %
Six Months EndedComparison
June 30,
20232022Amount%
Interest expense$(21,315)$(14,551)$(6,764)46.5 %
Interest income739 164 575 NM
Interest expense, net$(20,576)$(14,387)$(6,189)43.0 %
Percentage changes that are considered not meaningful are denoted with NM.
For the three and six months ended June 30, 2023, interest expense, net increased primarily due to a higher weighted average interest rate on borrowings under the revolving loan facility and on the Term Loan, partially offset by lower weighted average debt outstanding.
Other Income, Net
Three Months EndedSix Months Ended
June 30,June 30,
2023202220232022
Gain (loss) from:
Change in fair value of interest rate swap$3,826 $7,406 $(663)$19,490 
Foreign exchange (1)
2,104 (4,717)3,558 (7,788)
Sale of aircraft— — — 2,029 
Change in fair value of acquisition contingent consideration— — — (500)
Receipts (payments) related to interest rate swap
2,164 17 4,084 (277)
Other (expense) income, net (2)
(7,129)808 (5,725)907 
Total other income, net
$965 $3,514 $1,254 $13,861 
(1)Foreign exchange gain (loss) is primarily attributable to foreign currency translation derived mainly from U.S. dollar denominated cash and cash equivalents, account receivables, customer deposits, and intercompany balances held by foreign subsidiaries. Intercompany finance transactions primarily denominated in U.S. dollars resulted in unrealized foreign exchange gains (losses) of $1,397 and $(5,799) for the three months ended June 30, 2023 and 2022, respectively, and $2,258 and $(6,563) for the six months ended June 30, 2023 and 2022, respectively.
(2)Other (expens