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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 March 31, 2021
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 May 4, 2021, the registrant had 11,601,757 shares of Class A and 265,119,441 shares of Class B Common Stock, par value $0.01 per share, outstanding.




BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIES
FORM 10-Q
TABLE OF CONTENTS

Page

2



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

March 31, 2021December 31, 2020
Assets
Current assets:
Cash and cash equivalents$569,536 $122,006 
Accounts receivable189,530 195,782 
Allowance for doubtful accounts(6,370)(5,759)
Prepaid income taxes3,994 3,535 
Prepaid and other current assets25,118 24,694 
Total current assets781,808 340,258 
Property and equipment, net27,767 28,414 
Operating lease right-of-use assets41,691 46,128 
Intangible assets, net53,697 45,627 
Goodwill622,756 581,174 
Investments5,245 5,691 
Deferred income taxes42,133 39,224 
Other assets51,771 39,519 
Total assets$1,626,868 $1,126,035 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$15,947 $16,492 
Accruals and other current liabilities296,497 226,793 
Deferred revenues186,396 202,294 
Operating lease liabilities15,894 16,610 
Income taxes payable11,721 3,366 
Total current liabilities526,455 465,555 
Long-term debt672,599 246,000 
Long-term operating lease liabilities27,861 31,767 
Deferred revenues7,108 7,020 
Deferred income taxes14,305 10,849 
Income taxes payable7,883 7,883 
Other liabilities16,660 15,362 
Total liabilities1,272,871 784,436 
Commitments and contingencies (Note 18)
Stockholders’ equity:
Preferred stock, $0.01 par value, authorized 100,000,000 shares; none issued or outstanding as of March 31, 2021 and December 31, 2020
  
Class A Common Stock, $0.01 par value, authorized 100,000,000 shares; issued and outstanding 11,601,757 shares as of March 31, 2021 and December 31, 2020, and Class B Common Stock, $0.01 par value, authorized 1,800,000,000 shares; issued and outstanding 262,120,726 and 260,552,747 shares as of March 31, 2021 and December 31, 2020, respectively
2,737 2,722 
Additional paid-in capital732,635 741,113 
Accumulated other comprehensive loss
(35,394)(26,233)
Accumulated deficit(345,981)(376,003)
Total stockholders’ equity353,997 341,599 
Total liabilities and stockholders’ equity
$1,626,868 $1,126,035 

See accompanying notes to consolidated financial statements.
3



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

Three Months Ended
March 31,
20212020
Revenues:
Subscriptions$188,125 $170,182 
Perpetual licenses10,116 10,814 
Subscriptions and licenses198,241 180,996 
Services23,764 13,694 
Total revenues222,005 194,690 
Cost of revenues:
Cost of subscriptions and licenses28,945 21,327 
Cost of services20,344 15,932 
Total cost of revenues49,289 37,259 
Gross profit172,716 157,431 
Operating expenses:
Research and development47,803 45,135 
Selling and marketing32,440 36,095 
General and administrative33,388 26,804 
Amortization of purchased intangibles3,438 3,436 
Total operating expenses117,069 111,470 
Income from operations55,647 45,961 
Interest expense, net(2,319)(1,388)
Other income (expense), net
14,482 (7,390)
Income before income taxes67,810 37,183 
Provision for income taxes
(10,358)(7,176)
Loss from investment accounted for using the equity method, net of tax
(446)(338)
Net income57,006 29,669 
Less: Net income attributable to participating securities  
Net income attributable to Class A and Class B common stockholders$57,006 $29,669 
Per share information:
Net income per share, basic$0.19 $0.10 
Net income per share, diluted$0.18 $0.10 
Weighted average shares, basic302,583,452 285,486,972 
Weighted average shares, diluted321,736,649 292,378,627 

See accompanying notes to consolidated financial statements.
4


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

Three Months Ended
March 31,
20212020
Net income$57,006 $29,669 
Other comprehensive loss, net of taxes:
Foreign currency translation adjustments(9,182)(5,085)
Actuarial gain on retirement plan, net of tax effect of $(8) and $(7), respectively
21 9 
Total other comprehensive loss, net of taxes
(9,161)(5,076)
Comprehensive income$47,845 $24,593 

See accompanying notes to consolidated financial statements.
5


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

Three Months Ended March 31, 2021
Accumulated
Class A and Class BAdditionalOtherTotal
Common StockPaid-inComprehensiveAccumulatedStockholders’
SharesPar ValueCapitalLossDeficitEquity
Balance, December 31, 2020272,154,504 $2,722 $741,113 $(26,233)$(376,003)$341,599 
Net income— — — — 57,006 57,006 
Other comprehensive loss
— — — (9,161)— (9,161)
Purchase of capped call options, net of tax of $6,250
— — (19,430)— — (19,430)
Dividends declared— — — — (8,219)(8,219)
Shares issued in connection with deferred compensation plan, net339,503 3 — — (8,862)(8,859)
Deferred compensation plan voluntary contributions— — 854 — — 854 
Shares issued in connection with Executive Bonus Plan, net79,961 1 5,573 (2,037)3,537 
Stock option exercises, net1,263,121 12 1,739 — (7,158)(5,407)
Stock-based compensation expense— — 2,786 — — 2,786 
Shares related to restricted stock, net(114,606)(1)— — (708)(709)
Balance, March 31, 2021273,722,483 $2,737 $732,635 $(35,394)$(345,981)$353,997 

Three Months Ended March 31, 2020
Accumulated
Class A and Class BAdditionalOtherTotal
Common StockPaid-inComprehensiveAccumulatedStockholders’
SharesPar ValueCapitalLossDeficitEquity
Balance, December 31, 2019254,842,949 $2,548 $408,667 $(23,927)$(52,669)$334,619 
Net income— — — — 29,669 29,669 
Other comprehensive loss
— — — (5,076)— (5,076)
Dividends declared— — — — (7,666)(7,666)
Profit‑sharing plan shares, net(186,715)(2)— — (1,848)(1,850)
Shares issued in connection with deferred compensation plan, net683,072 7 — — (308)(301)
Deferred compensation plan voluntary contributions— — 1,003 — — 1,003 
Payment of shareholder Put and Call rights(37,870)— — — (302)(302)
Stock option exercises, net697,833 6 712 — (1,336)(618)
Shares issued for stock grants10,951 — 119 — — 119 
Stock-based compensation expense— — 1,653 — — 1,653 
Shares related to restricted stock, net(285,019)(3)(116)— (121)(240)
Balance, March 31, 2020255,725,201 $2,556 $412,038 $(29,003)$(34,581)$351,010 

See accompanying notes to consolidated financial statements.
6



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

Three Months Ended
March 31,
20212020
Cash flows from operating activities:
Net income$57,006 $29,669 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization8,993 8,050 
Bad debt allowance (recovery)
746 (256)
Deferred income taxes966 1,742 
Deferred compensation plan activity1,021 676 
Stock-based compensation expense8,913 1,653 
Amortization and write-off of deferred debt issuance costs1,229 138 
Change in fair value of derivative(13,661) 
Change in fair value of contingent consideration (1,390)
Foreign currency remeasurement (gain) loss
(583)6,985 
Loss from investment accounted for using the equity method, net of tax
446 338 
Changes in assets and liabilities, net of effect from acquisitions:
Accounts receivable14,903 38,273 
Prepaid and other assets8,257 5,653 
Accounts payable, accruals and other liabilities54,977 6,778 
Deferred revenues(21,889)(28,247)
Income taxes payable11,474 2,550 
Net cash provided by operating activities
132,798 72,612 
Cash flows from investing activities:
Purchases of property and equipment and investment in capitalized software(2,655)(4,500)
Acquisitions, net of cash acquired of $1,326 and $1,986, respectively
(57,975)(39,329)
Other investing activities (1,414)
Net cash used in investing activities
(60,630)(45,243)
Cash flows from financing activities:
Proceeds from credit facilities16,000 58,907 
Payments of credit facilities(262,000)(133,625)
Proceeds from convertible senior notes, net of discounts and commissions672,750  
Payments of debt issuance costs(3,777) 
Purchase of capped call options(25,530) 
Payments of financing leases(50)(47)
Payments of acquisition debt and other consideration(25)(127)
Payments of dividends(8,219)(7,802)
Payments for shares acquired including shares withheld for taxes(18,763)(3,918)
Proceeds from exercise of stock options1,751 724 
Net cash provided by (used in) financing activities
372,137 (85,888)
Effect of exchange rate changes on cash and cash equivalents3,225 (2,293)
Increase (decrease) in cash and cash equivalents
447,530 (60,812)
Cash and cash equivalents, beginning of year122,006 121,101 
Cash and cash equivalents, end of period$569,536 $60,289 
7



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

Three Months Ended
March 31,
20212020
Supplemental information:
Cash paid for income taxes$4,214 $4,181 
Income tax refunds4,519 117 
Interest paid766 1,842 
Non-cash investing and financing activities:
Contingent acquisition consideration549  
Deferred, non-contingent consideration, net1,718  
Convertible senior notes expenses included in Accounts payable and Accruals and other current liabilities
605  
Capped call options expenses included in Accounts payable
150  
Share-settled Executive Bonus Plan awards5,574  
Voluntary deferred compensation plan contributions855 1,003 

See accompanying notes to consolidated financial statements.
8


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

Note 1: Basis of Presentation
Basis of Presentation — The accompanying unaudited consolidated financial statements include the accounts of Bentley Systems, Incorporated (“Bentley” or the “Company”) and its wholly-owned subsidiaries, and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all the information and notes required by U.S. GAAP for annual financial statements. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in Part II, Item 8 of the Company’s 2020 Annual Report on Form 10K on file with the SEC. In management’s opinion, the Company made all adjustments (consisting of normal, recurring and non-recurring adjustments) during the quarter that were considered necessary for the fair statement of the financial position and operating results of the Company. 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 from those estimates. The December 31, 2020 consolidated balance sheet included herein is derived from the Company’s audited consolidated financial statements.
Convertible Notes — On January 26, 2021, the Company completed a private offering of $690,000 of 0.125% convertible senior notes due 2026 (the “2026 Notes”). The Company incurred $18,055 of expenses in connection with the 2026 Notes offering consisting of the payment of initial purchasers’ discounts and commissions, professional fees, and other expenses (“transaction costs”). In connection with the pricing of the 2026 Notes, the Company entered into capped call options with certain of the initial purchasers or their respective affiliates and certain other financial institutions. The capped call options are expected to reduce potential dilution to the Company’s Class B Common Stock upon any conversion of 2026 Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted notes, as the case may be, with such reduction and/or offset subject to a cap. The Company paid premiums of $25,530 in connection with the capped call options (See Note 10).
Initial Public Offering — On September 25, 2020, the Company completed its initial public offering (“IPO”). The selling stockholders sold 12,360,991 shares of Class B Common Stock at a public offering price of $22.00 per share. The Company did not sell any shares in the IPO and did not receive any of the proceeds from the sale of the Class B Common Stock sold by the selling stockholders. For further detail, see the audited consolidated financial statements and notes thereto included in Part II, Item 8 of the Company’s 2020 Annual Report on Form 10‑K on file with the SEC.
Follow-On Public Offering — On November 17, 2020, the Company completed its follow‑on public offering of 11,500,000 shares of Class B Common Stock at a public offering price of $32.00 per share (the “Follow‑On Offering”). The Company sold 9,603,965 shares of Class B Common Stock (inclusive of 1,500,000 shares sold upon the exercise by the underwriters of their option to purchase additional shares of the Company’s Class B Common Stock). The selling stockholders sold 1,896,035 shares of Class B Common Stock. The Company received net proceeds of $294,429 after deducting expenses of $12,898. The Company did not receive any of the proceeds from the sale of the Class B Common Stock sold by the selling stockholders. For further detail, see the audited consolidated financial statements and notes thereto included in Part II, Item 8 of the Company’s 2020 Annual Report on Form 10‑K on file with the SEC.
9



Risks and Uncertainties — COVID‑19 Pandemic — In March 2020, the World Health Organization declared a global pandemic related to the rapidly growing outbreak of the disease COVID‑19, caused by a novel strain of coronavirus, SARS‑CoV‑2. The COVID‑19 outbreak and certain preventative or protective actions that governments, businesses, and individuals have taken in respect of COVID‑19 have resulted in global business disruptions.
In response to the COVID‑19 pandemic, the Company implemented a number of initiatives to ensure the safety of its colleagues and enable them to move to a work from home environment seamlessly and continue working effectively. The Company’s business model is such that there was minimal disruption to the Company’s ability to deliver its solutions to accounts, and the Company believes it did not have any significant loss of productivity during this transition. The Company has also taken measures to reduce selected operating expenses, including various costs associated with travel and facilities.
Note 2: Recent Accounting Pronouncements
In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2020‑04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020‑04”), which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. ASU 2020‑04 applies only to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform between March 12, 2020 and December 31, 2022. The expedients and exceptions provided by ASU 2020‑04 do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The Company had no transactions that were impacted by ASU 2020‑04 during the three months ended March 31, 2021.
Recently Adopted Accounting Guidance
In January 2017, the FASB issued ASU No. 2017‑04, Intangibles–Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which removes Step 2 of the goodwill impairment test. A goodwill impairment will now be calculated as the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The new guidance is required to be applied on a prospective basis and as such, the Company will use the simplified test in its annual fourth quarter testing or more often if circumstances indicate a potential impairment may exist. The Company does not believe this ASU will have a material impact on its consolidated results of operations and financial position.
In August 2018, the FASB issued ASU No. 2018‑15, Intangibles–Goodwill and Other–Internal-Use Software (Subtopic 350‑40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018‑15”), which aligns the requirements for capitalizing implementation costs in cloud computing arrangements with the requirements for capitalizing implementation costs incurred to develop or obtain internal‑use software. The Company prospectively adopted the ASU effective January 1, 2021. Capitalized costs related to cloud computing arrangements for the three months ended March 31, 2021, which are included in Prepaid and other current assets in the consolidated balance sheet, were not material.
In August 2020, the FASB issued ASU No. 2020‑06, Debt–Debt with Conversion and Other Options (Subtopic 470‑20) and Derivatives and Hedging–Contracts in Entity’s Own Equity (Subtopic 815‑40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020‑06”), which simplifies the accounting for convertible instruments by reducing the number of accounting models available for convertible debt instruments. This guidance also eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if‑converted method. The Company early adopted the ASU effective January 1, 2021 using the modified retrospective method of adoption (see Notes 10 and 23).
10


Note 3: Revenue from Contracts with Customers
The Company recognizes revenue upon the transfer of promised goods or services to customers in an amount that reflects the expected consideration received in exchange for those goods or services.
Nature of Products and Services
The Company generates revenues from subscriptions, perpetual licenses, and professional services.
Subscriptions
SELECT subscriptions — A prepaid annual recurring subscription that accounts (which are based on distinct contractual and billing relationships with the Company, where affiliated entities of a single parent company may each have an independent account with the Company) can elect to add to a new or previously purchased perpetual license. SELECT provides accounts with benefits, including upgrades, comprehensive technical support, pooled licensing benefits, annual portfolio balancing exchange rights, learning benefits, certain Azure‑based cloud collaboration services, mobility advantages, and access to other available benefits. SELECT subscription revenues are recognized as distinct performance obligations are satisfied. The performance obligations within the SELECT offering, outside of the portfolio balancing exchange right, are concurrently delivered and have the same pattern of recognition. These performance obligations are accounted for ratably over the term as a single performance obligation.
Enterprise subscriptions — The Company also provides Enterprise subscription offerings which provide its largest accounts with complete and unlimited global access to the Company’s comprehensive portfolio of solutions. Enterprise License Subscriptions (“ELS”) provide access for a prepaid fee, which is based on the account’s usage of software in the preceding year, to effectively create a fee‑certain consumption‑based arrangement. ELS contain a term license component, SELECT maintenance and support, and performance consulting days. The SELECT maintenance and support benefits under ELS do not include a portfolio balancing performance obligation. Revenue is allocated to the various performance obligations based on their respective standalone selling price (“SSP”). Revenue allocated to the term license component is recognized upon delivery at the start of the subscription term while revenues for the SELECT maintenance and support and the performance consulting days are recognized as delivered over the subscription term. Billings in advance are recorded as Deferred revenues in the consolidated balance sheets.
Enterprise 365 (“E365”) subscriptions provide unrestricted access to the Company’s comprehensive software portfolio, similar to ELS, however, the accounts are charged based upon daily usage. The daily usage fee also includes a term license component, SELECT maintenance and support, hosting, and Success Plan services, which are designed to achieve business outcomes through more efficient and effective use of the Company’s software. E365 revenues are recognized based upon usage incurred by the account. Usage is defined as distinct user access on a daily basis. E365 subscriptions can contain quarterly usage floors or collars as accounts transition to the usage model or for accounts within the public sector. The term of E365 subscriptions aligns with calendar quarters and revenue is recognized based on actual usage.
11


Term license subscriptions — The Company provides annual, quarterly, and monthly term licenses for its software products. Term license subscriptions contain a term license component and SELECT maintenance and support. Revenue is allocated to the various performance obligations based on their SSP. Annual term licenses (“ATL”) are generally prepaid annually for named user access to specific products. Quarterly term license (“QTL”) subscriptions allow accounts to pay quarterly in arrears for license usage that is beyond their prepaid subscriptions. Monthly term license (“MTL”) subscriptions are identical to QTL subscriptions, except for the term of the license, and the manner in which they are monetized. MTL subscriptions require a Cloud Services Subscription (“CSS”), which is described below. For ATL, revenue allocated to the term license component is recognized upon delivery at the start of the subscription term while revenue for the SELECT maintenance and support is recognized as delivered over the subscription term. Billings in advance are recorded as Deferred revenues in the consolidated balance sheets. For usage‑based QTL and MTL subscriptions, revenues are recognized based upon usage incurred by the account. Usage is defined as peak usage over the respective terms. The terms of QTL and MTL subscriptions align with calendar quarters and calendar months, respectively, and revenue is recognized based on actual usage.
Visas and Passports are quarterly or annual term licenses enabling users to access specific project or enterprise information and entitles users to certain functionality of the Company’s ProjectWise and AssetWise systems. The Company’s standard offerings are usage based with monetization through the Company’s CSS program as described below.
CSS is a program designed to streamline the procurement, administration, and payment process. The program requires an account to estimate their annual usage for CSS eligible offerings and deposit funds in advance. Actual consumption is monitored and invoiced against the deposit on a calendar quarter basis. CSS balances not utilized for eligible products or services may roll over to future periods or are refundable. Paid and unconsumed CSS balances are recorded in Accruals and other current liabilities in the consolidated balance sheets. Software and services consumed under CSS are recognized pursuant to the applicable revenue recognition guidance for the respective software or service and classified as subscriptions or services based on their respective nature.
Perpetual licenses
Perpetual licenses may be sold with or without attaching a SELECT subscription. Historically, attachment and retention of the SELECT subscription has been high given the benefits of the SELECT subscription. Perpetual license revenue is recognized upon delivery of the license to the user.
Services
The Company provides professional services including training, implementation, configuration, customization, and strategic consulting services. The Company performs projects on both a time and materials and a fixed fee basis. The Company’s recent and preferred contractual structures for delivering professional services include (i) delivery of the services in the form of subscription‑like, packaged offerings which are annually recurring in nature, and (ii) delivery of the Company’s growing portfolio of Success Plans in standard offerings which offer a level of subscription service over and above the standard technical support offered to all accounts as part of their SELECT or Enterprise agreement. Revenues are recognized as services are performed.
The Company primarily utilizes its direct internal sales force and also has arrangements through independent channel partners to promote and sell Bentley products and subscriptions to end‑users. Channel partners are authorized to promote the sale of an authorized set of Bentley products and subscriptions within an authorized geography under a Channel Partner Agreement.
12


Significant Judgments and Estimates
The Company’s contracts with customers may include promises to transfer licenses (perpetual or term‑based), maintenance, and services to a user. Judgment is required to determine if the promises are separate performance obligations, and if so, the allocation of the transaction price to each performance obligation. When an arrangement includes multiple performance obligations which are concurrently delivered and have the same pattern of transfer to the customer, the Company accounts for those performance obligations as a single performance obligation. For contracts with more than one performance obligation, the transaction price is allocated among the performance obligations in an amount that depicts the relative SSP of each obligation. Judgment is required to determine the SSP for each distinct performance obligation. In instances where SSP is not directly observable, such as when the Company does not sell the product or service separately, the Company determines the SSP using information that may include market conditions and other observable inputs. The Company uses a range of amounts to estimate SSP when it sells each of the products and services separately and needs to determine whether there is a discount that should be allocated based on the relative SSP of the various products and services.
The Company’s SELECT agreement provides users with perpetual licenses a right to exchange software for other eligible perpetual licenses on an annual basis upon renewal. The Company refers to this option as portfolio balancing and has concluded that the portfolio balancing feature represents a material right resulting in the deferral of the associated revenue. Judgment is required to estimate the percentage of users who may elect to portfolio balance and considers inputs such as historical user elections. This feature is available once per term and must be exercised prior to the respective renewal term. The Company recognizes the associated revenue upon election or when the portfolio balancing right expires. This right is included in the initial and subsequent renewal terms and the Company reestablishes the revenue deferral for the material right upon the beginning of the renewal term. As of March 31, 2021 and December 31, 2020, the Company has deferred $18,016 and $18,166, respectively, related to portfolio balancing exchange rights which is included in Deferred revenues in the consolidated balance sheets.
Contract Assets and Contract Liabilities
March 31, 2021December 31, 2020
Contract assets$395 $446 
Deferred revenues193,504 209,314 
As of March 31, 2021 and December 31, 2020, 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 March 31, 2021 and December 31, 2020.
Deferred revenues consist of billings made or payments received in advance of revenue recognition from subscriptions and professional services. The timing of revenue recognition may differ from the timing of billings to users.
For the three months ended March 31, 2021, $91,125 of revenue that was included in the December 31, 2020 deferred revenue balance was recognized. There were additional deferrals of $78,210, which were primarily related to new billings. For the three months ended March 31, 2020, $98,928 of revenue that was included in the December 31, 2019 deferred revenue opening balance was recognized. There were additional deferrals of $73,512, which were primarily related to new billings.
Remaining Performance Obligations
The Company’s contracts with customers include amounts allocated to performance obligations that will be satisfied at a later date. As of March 31, 2021, amounts allocated to these remaining performance obligations are $193,504, of which the Company expects to recognize 96.3% over the next 12 months with the remaining amount thereafter.
13


Disaggregation of Revenues
The following table details revenues:
Three Months Ended
March 31,
20212020
Revenues:
Subscriptions:
SELECT subscriptions$66,140 $67,891 
Enterprise subscriptions71,015 58,734 
Term license subscriptions50,970 43,557 
Subscriptions188,125 170,182 
Perpetual licenses:
Perpetual licenses10,116 10,814 
Subscriptions and licenses198,241 180,996 
Services:
Professional services (recurring)6,077 3,780 
Professional services (other)17,687 9,914 
Services23,764 13,694 
Total revenues$222,005 $194,690 
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 March 31, 2021 and 2020, the Company recognized $95,625 and $85,417 of license related revenues, respectively, of which $85,509 and $74,603, 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 8% and 7% and of its total revenues through channel partners for the three months ended March 31, 2021 and 2020, respectively.
Revenue to external customers is attributed to individual countries based upon the location of the customer.
Three Months Ended
March 31,
20212020
Revenues:
Americas (1)
$108,862 $97,900 
Europe, the Middle East, and Africa (“EMEA”) (2)
73,848 62,114 
Asia-Pacific (“APAC”)
39,295 34,676 
Total revenues$222,005 $194,690 
(1)Americas includes the United States (“U.S.”), Canada, and Latin America (including the Caribbean). Revenue attributable to the U.S. totaled $92,940 and $82,420 for the three months ended March 31, 2021 and 2020, respectively.
(2)Revenue attributable to the United Kingdom (“U.K.”) totaled $22,383 and $13,680 for the three months ended March 31, 2021 and 2020, respectively.
14


Note 4: Acquisitions
For the three months ended March 31, 2021 and the year ended December 31, 2020, the Company completed a number of acquisitions, none of which were material, individually or in the aggregate, to the Company’s consolidated statements of operations and financial position. The aggregate details of the Company’s acquisition activity are as follows:
Acquisitions Completed in
Three Months EndedYear Ended
March 31, 2021December 31, 2020
Number of acquisitions3 6 
Cash paid at closing$59,301 $98,298 
Cash acquired(1,326)(5,266)
Net cash paid$57,975 $93,032 
The fair value of the contingent consideration from acquisitions is included in the consolidated balance sheets as follows:
March 31, 2021December 31, 2020
Accruals and other current liabilities$3,093 $2,884 
Other liabilities1,692 1,415 
Contingent consideration from acquisitions$4,785 $4,299 
The fair value of non-contingent consideration from acquisitions is included in the consolidated balance sheets as follows:
March 31, 2021December 31, 2020
Accruals and other current liabilities$2,323 $685 
Other liabilities2,635 1,774 
Non-contingent consideration from acquisitions$4,958 $2,459 
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. Independent valuations are obtained to support purchase price allocations when deemed appropriate.
In connection with the purchase price allocations related to the Company’s acquisitions, the Company has estimated the fair values of the support obligations assumed relative to acquired deferred revenue. The estimated fair values of the support obligations assumed were determined using a cost‑build‑up approach. The cost‑build‑up approach determines fair value by estimating the costs related to fulfilling the obligations plus a normal profit margin. For accounting purposes, the sum of the costs and operating profit approximates the amount that the Company would be required to pay a third party to assume the support obligations. These fair value adjustments reduce the revenues recognizable over the remaining support contract term of the Company’s acquired contracts. For the three months ended March 31, 2021 and 2020, the fair value adjustments to reduce revenue were $12 and $116, respectively.
15


The purchase accounting for the three acquisitions completed for the three months ended March 31, 2021 and two of the acquisitions completed during the year ended December 31, 2020 are not yet completed. Identifiable assets acquired and liabilities assumed were provisionally recorded at their estimated fair values on the respective acquisition date. The initial accounting for these business combinations is not complete because the evaluation necessary to assess the fair values of certain net assets acquired is still in process. The provisional amounts are subject to revision until the evaluations are completed to the extent that additional information is obtained about the facts and circumstances that existed as of the acquisition date. The allocation of the purchase price may be modified from the date of the acquisition as more information is obtained about the fair values of assets acquired and liabilities assumed, however such measurement period cannot exceed one year.
Acquisition and integration costs are expensed as incurred and are recorded in General and administrative in the consolidated statements of operations. For the three months ended March 31, 2021 and 2020, the Company incurred acquisition and integration costs of $6,861 and $813, respectively, which include costs related to legal, accounting, valuation, general administrative, and other consulting fees. For the three months ended March 31, 2021, $6,716 of the Company’s acquisition and integration costs related to entering into the definitive agreement to acquire Seequent Holdings Limited (“Seequent”). See the section titled “—Acquisitions Subsequent to March 31, 2021” below.
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
Three Months EndedYear Ended
March 31, 2021December 31, 2020
Consideration:
Cash paid at closing$59,301 $98,298 
Contingent consideration549 2,380 
Deferred, non-contingent consideration, net1,718 1,416 
Total consideration$61,568 $102,094 
Assets acquired and liabilities assumed:
Cash$1,326 $5,266 
Prepaid and other current assets5,617 8,701 
Operating lease right-of-use assets192 2,529 
Property and equipment550 499 
Other assets300 36 
Customer relationship asset (weighted average useful life of 5 and 6 years, respectively)
11,326 11,371 
Software and technology (weighted average useful life of 3 years)
1,399 2,207 
Non-compete agreement (useful life of 5 years)
 200 
Trademarks (weighted average useful life of 3 and 7 years, respectively)
481 3,953 
Total identifiable assets acquired excluding goodwill21,191 34,762 
Accruals and other current liabilities(3,678)(4,991)
Deferred revenues(1,902)(5,351)
Operating lease liabilities(192)(2,529)
Deferred income taxes(3,280)(1,701)
Other liabilities(178)(86)
Total liabilities assumed(9,230)(14,658)
Net identifiable assets acquired excluding goodwill11,961 20,104 
Goodwill49,607 81,990 
Net assets acquired$61,568 $102,094 
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The fair values of the working capital, other assets (liabilities), and property and equipment approximated their respective carrying values as of the acquisition date.
As discussed above, the fair values of deferred revenues were determined using the cost‑build‑up approach.
The fair values of the intangible assets were primarily determined using the income approach. When applying the income approach, indications of fair values were developed by discounting future net cash flows to their present values at market‑based rates of return. The cash flows were based on estimates used to price the acquisitions and the discount rates applied were benchmarked with reference to the implied rate of return from the Company’s pricing model and the weighted average cost of capital.
Goodwill recorded in connection with the acquisitions was attributable to synergies expected to arise from cost saving opportunities, as well as future expected cash flows. Of the goodwill recorded as of March 31, 2021, none is expected to be deductible for tax purposes.
Acquisitions Subsequent to March 31, 2021
In April 2021, the Company completed two acquisitions and entered into a definitive agreement to acquire a third company totaling approximately $54,200 in cash, net of cash acquired and subject to customary adjustments, including for working capital. The third acquisition is expected to close during May 2021. The acquisitions are not expected to be material to the Company’s consolidated statements of operations and financial position.
On March 11, 2021, the Company entered into a definitive agreement to acquire Seequent, a leader in software for geological and geophysical modeling, geotechnical stability, and cloud services for geodata management and collaboration, for approximately $900,000 in cash, net of cash acquired and subject to customary adjustments, including for working capital, plus 3,141,361 shares of the Company’s Class B Common Stock. The transaction is subject to customary closing conditions, including regulatory approvals, and is expected to close during the second quarter of 2021. The Company expects to use readily available cash, including a portion of the net proceeds from the January 26, 2021 convertible debt offering (see Note 10), and borrowings under its bank credit facility (see Note 10), to fund the cash component of the transaction.
Note 5: Property and Equipment, Net
Property and equipment, net consist of the following:
March 31, 2021December 31, 2020
Land$2,811 $2,811 
Building and improvements33,243 33,094 
Computer equipment and software45,161 44,369 
Furniture, fixtures, and equipment13,210 12,849 
Aircraft4,075 4,075 
Other60 58 
Property and equipment, at cost98,560 97,256 
Less: Accumulated depreciation(70,793)(68,842)
Total property and equipment, net$27,767 $28,414 
Depreciation expense for the three months ended March 31, 2021 and 2020 was $2,497 and $2,423, respectively.
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Note 6: Goodwill and Other Intangible Assets
The changes in the carrying amount of goodwill are as follows:
Balance, December 31, 2020$581,174 
Acquisitions49,607 
Foreign currency translation adjustments(7,861)
Other adjustments(164)
Balance, March 31, 2021$622,756 
Details of intangible assets other than goodwill are as follows:
March 31, 2021December 31, 2020
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 years
$68,501 $(63,646)$4,855 $67,691 $(63,046)$4,645 
Customer relationships
3-10 years
106,976 (68,043)38,933 97,008 (66,030)30,978 
Trademarks
3-10 years
27,002 (17,357)9,645 26,610 (16,888)9,722 
Non-compete agreements
5 years
350 (86)264 350 (68)282 
Total intangible assets$202,829 $(149,132)$53,697 $191,659 $(146,032)$45,627 
The aggregate amortization expense for purchased intangible assets with finite lives was reflected in the Company’s consolidated statements of operations as follows:
Three Months Ended
March 31,
20212020
Cost of subscriptions and licenses$1,151 $1,013 
Amortization of purchased intangibles3,438 3,436 
Total amortization expense$4,589 $4,449 
Note 7: Investments
In September 2020, the Company acquired an interest in a platform as a service technology company with a focus on digital twin integration in the energy sector, which the Company accounts for using the cost method. As of March 31, 2021 and December 31, 2020, the carrying amount of the Company’s cost method investment was $3,440.
In September 2019, the Company and Topcon Positioning Systems, Inc. (“Topcon”) formed Digital Construction Works, Inc. (“DCW”), a joint venture which operates as a digital integrator of software and cloud services for the construction industry, which the Company accounts for using the equity method. DCW’s focus is to transform the construction industry from its legacy document‑centric paradigm by simplifying and enabling digital automated workflows and processes, technology integration, and digital twinning services for infrastructure. The Company and Topcon each have a 50% ownership in DCW. As of March 31, 2021 and December 31, 2020, the carrying amount of the Company’s investment in DCW was $1,805 and $2,251, respectively.
The Company tests its investments for impairment whenever circumstances indicate that the carrying value of the investment may not be recoverable. The Company’s investments were not impaired as of March 31, 2021.
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Related Party Disclosures — Pursuant to Accounting Standards Codification (“ASC”) 850‑10‑20, Related Party Disclosures, the Company has determined that DCW is a related party. For the three months ended March 31, 2021 and 2020, transactions between the Company and DCW were not material to the Company’s consolidated financial statements.
Note 8: Leases
The Company’s operating leases consist of office facilities, office equipment, and automobiles, and the Company’s finance lease consists of computer equipment. The finance lease is not material for the periods presented. As of March 31, 2021, the Company’s leases have remaining terms of less than one year to nine years, some of which include one or more options to renew, with renewal terms from one year to ten years and some of which include options to terminate the leases from less than one year to ten years.
For contracts with lease and non‑lease components, the Company has elected not to allocate the contract consideration, and account for the lease and non-lease components as a single lease component. Payments under the Company’s lease arrangements are primarily fixed, however, certain lease agreements contain variable payments, which are expensed as incurred and not included in the operating lease assets and liabilities. Variable lease cost may include common area maintenance, property taxes, utilities, and fluctuations in rent due to a change in an index or rate. The Company has elected not to recognize a right‑of‑use asset or lease liability for short‑term leases (leases with a term of twelve months or less). Short‑term leases are recognized in the consolidated statement of operations on a straight‑line basis over the lease term. Short‑term lease expense was not material for the periods presented.
The components of operating lease cost reflected in the consolidated statement of operations were as follows:
Three Months Ended
March 31,
20212020
Operating lease cost (1)
$4,543 $4,345 
Variable lease cost968 1,021 
Short-term lease cost4 25 
Total operating lease cost$5,515 $5,391 
(1)Operating lease cost includes rent cost related to operating leases for office facilities of $4,351 and $4,146 for the three months ended March 31, 2021 and 2020, respectively.
Other information related to leases was as follows:
Three Months Ended
March 31,
20212020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$4,686 $4,482 
Right-of-use assets obtained in exchange for new operating lease liabilities$614 $4,467 
The weighted average remaining lease term for operating leases was 3.5 years and 3.7 years as of March 31, 2021 and December 31, 2020, respectively. The weighted average discount rate was 2.1% as of March 31, 2021 and December 31, 2020.
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Maturities of operating lease liabilities are as follows:
March 31, 2021
Remainder of 2021$12,972 
202213,768 
20238,727 
20244,719