Bentley Systems, Incorporated is an Exton, Pennsylvania-headquartered infrastructure engineering software company (Nasdaq: BSY, Class B common stock) that provides software for the design, construction, and operations of infrastructure assets (roads, bridges, rail, water, power grids, industrial plants, cities, and digital twins), with the Company's portfolio spanning MicroStation (modeling), OpenRoads/OpenRail/OpenBridge (civil), OpenPlant/OpenUtilities (plant/utilities), ProjectWise (project delivery), AssetWise (asset performance), iTwin (digital twins), and the newer AI-infused applications. For the second quarter ended June 30, 2026, the Company generated total revenues of $410.7 million, up 12.8 percent year-over-year (12.2 percent constant currency), with subscription revenues of $378.6 million (up 13.6 percent, 13.0 percent constant currency). Annualized Recurring Revenue (ARR) reached $1,536.0 million as of June 30, 2026 (up from $1,379.2 million, 12 percent constant currency growth). The last-twelve-month dollar-based net retention rate was 109 percent (consistent with prior year). Operating income margin was 21.6 percent (down from 23.2 percent), while AOI less Operating SBC margin was 28.3 percent (down from 29.3 percent). GAAP diluted EPS was $0.25 (up from $0.22), adjusted EPS was $0.35 (up from $0.32). Operating cash flow of $71.5 million and free cash flow of $63.8 million (up from $57.0 million). For H1 2026: total revenues $834.9 million (+13.6%, +12.1% CC), subscriptions $771.1 million (+14.1%, +12.6% CC), ARR growth 12% CC, net retention 109%, operating margin 25.7%, AOI less Operating SBC margin 30.8%, adjusted EPS $0.73 (+9% from $0.67), free cash flow $251.7 million. The Company repurchased shares meaningfully in H1, maintains net debt leverage of 1.9x, and has mid-2027 convertible notes maturity on the horizon.
The investment thesis rests on three variables. The ARR compounding and net retention durability is the load-bearing recurring revenue variable, with ARR of $1.536 billion (up 12% CC), subscription revenue of $378.6 million (+13.0% CC), net retention of 109% (stable), and the Resources sector leading growth followed by Public Works/Utilities (electric grid), and the strategic intent is to sustain the low-teens constant currency ARR growth through sector diversification and the installed base expansion. The Infrastructure AI integration and monetization trajectory is the load-bearing product innovation variable, with the Company "instrumenting more engineering applications so users can combine trusted deterministic engines for modeling, analysis, and simulation with reasoning capabilities of their preferred AI assistants," and the strategic intent is to monetize the AI capabilities as they mature from pilot to production across the account base. The free cash flow compounding and capital allocation discipline is the load-bearing financial variable, with LTM free cash flow growth of 15 percent, net debt leverage of 1.9x, meaningful H1 share repurchases, the mid-2027 convertible notes maturity, and the strategic intent to balance programmatic acquisitions, dividends, and buybacks while maintaining the leverage discipline.