SEC Filing | Bentley Systems, Incorporated

View:

bsy-20220630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________________

FORM 10-Q

___________________________________


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

Commission File Number: 001-39548

___________________________________

BENTLEY SYSTEMS, INCORPORATED

(Exact name of registrant as specified in its charter)

___________________________________


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

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

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

___________________________________

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

Title of each class

Trading Symbol

Name of each exchange on which registered

Class B Common Stock, par value $0.01 per share

BSY

The Nasdaq Stock Market LLC

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

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

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


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

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

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

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

BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIES

FORM 10-Q

TABLE OF CONTENTS


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

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

SIGNATURE						71

PART I. FINANCIAL INFORMATION

Item 1. Unaudited Consolidated Financial Statements

BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands, except share and per share data)

(unaudited)


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

See accompanying notes to consolidated financial statements.

BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIES

Consolidated Statements of Operations

(in thousands, except share and per share data)

(unaudited)


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

See accompanying notes to consolidated financial statements.

BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

(in thousands)

(unaudited)


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

See accompanying notes to consolidated financial statements.

BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIES

Consolidated Statements of Stockholders’ Equity

(in thousands, except share data)

(unaudited)


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

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


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

See accompanying notes to consolidated financial statements.

BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIES

Consolidated Statements of Stockholders’ Equity

(in thousands, except share data)

(unaudited)


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

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

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


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

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

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

See accompanying notes to consolidated financial statements.

BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


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

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

BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


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

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

See accompanying notes to consolidated financial statements.

BENTLEY SYSTEMS, INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

(unaudited)

Note 1: Basis of Presentation

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

Certain reclassifications of prior period amounts have been made to