Infrastructure design software provider Bentley Systems (NASDAQ:BSY) met Wall Street’s revenue expectations in Q2 CY2025, with sales up 10.2% year on year to $364.1 million. Its non-GAAP profit of $0.32 per share was 12% above analysts’ consensus estimates.
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Bentley (BSY) Q2 CY2025 Highlights:
- Revenue: $364.1 million vs analyst estimates of $363.4 million (10.2% year-on-year growth, in line)
- Adjusted EPS: $0.32 vs analyst estimates of $0.29 (12% beat)
- Adjusted Operating Income: $124.5 million vs analyst estimates of $121.5 million (34.2% margin, 2.5% beat)
- Operating Margin: 23.2%, down from 24.3% in the same quarter last year
- Free Cash Flow Margin: 15.7%, down from 58.4% in the previous quarter
- Net Revenue Retention Rate: 109%, down from 110% in the previous quarter
- Annual Recurring Revenue: $1.38 billion at quarter end, up 13.4% year on year
- Market Capitalization: $18 billion
CEO Nicholas Cumins said, “We delivered another strong quarter despite ongoing global uncertainties. This performance underscores the resilience of our business model and the strength of our end markets, driven by secular infrastructure investment. One year into my new role as CEO, engaging with users and colleagues around the world, I am more energized than ever by how our software plays a crucial role in helping infrastructure engineers achieve more with less.”
Company Overview
Founded by brothers Keith and Barry Bentley, Bentley Systems (NASDAQ:BSY) offers a software-as-a-service platform that addresses the lifecycle of infrastructure projects such as road networks, tunnel systems, and wastewater facilities.
Revenue Growth
A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last three years, Bentley grew its sales at a 10.1% annual rate. Although this growth is acceptable on an absolute basis, it fell short of our standards for the software sector, which enjoys a number of secular tailwinds. Luckily, there are other things to like about Bentley.
This quarter, Bentley’s year-on-year revenue growth was 10.2%, and its $364.1 million of revenue was in line with Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 9.7% over the next 12 months, similar to its three-year rate. This projection doesn't excite us and suggests its newer products and services will not catalyze better top-line performance yet. At least the company is tracking well in other measures of financial health.
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Annual Recurring Revenue
While reported revenue for a software company can include low-margin items like implementation fees, annual recurring revenue (ARR) is a sum of the next 12 months of contracted revenue purely from software subscriptions, or the high-margin, predictable revenue streams that make SaaS businesses so valuable.
Bentley’s ARR punched in at $1.38 billion in Q2, and over the last four quarters, its growth slightly outpaced the sector as it averaged 11.7% year-on-year increases. This performance aligned with its total sales growth and shows the company is securing longer-term commitments. Its growth also contributes positively to Bentley’s revenue predictability, a trait long-term investors typically prefer. 
Customer Retention
One of the best parts about the software-as-a-service business model (and a reason why they trade at high valuation multiples) is that customers typically spend more on a company’s products and services over time.
Bentley’s net revenue retention rate, a key performance metric measuring how much money existing customers from a year ago are spending today, was 110% in Q2. This means Bentley would’ve grown its revenue by 9.5% even if it didn’t win any new customers over the last 12 months.
Bentley has a decent net retention rate, showing us that its customers not only tend to stick around but also get increasing value from its software over time.
Key Takeaways from Bentley’s Q2 Results
It was encouraging to see Bentley beat analysts’ annual recurring revenue, EPS, and EBITDA expectations this quarter. Overall, this print had some key positives. The stock remained flat at $57 immediately after reporting.
So should you invest in Bentley right now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.